11 ms·

Letter to Myself in Late 2008

311 points by baxtr 7y ago

czep 7y ago
> Do one layoff, but much much deeper than seems correct. Is this what "leadership" is all about: just transfer all the pain you're having onto the employees who have been doing all the hard work to build your vanity company?
- tardo99 7y ago
  lol
- throwawaypa123 7y ago
  What's the alternative you propose?
  - AnIdiotOnTheNet 7y ago
    I feel fortunate to work at a company that hasn't had any debt since the 80s and keeps a good stockpile of funds. Consequently they didn't have to lay off anyone in 2008 and even the current crisis didn't delay our plans to build an addition to the office.
    - arkh 7y ago
      > since the 80s So not a startup.
    - thanatropism 7y ago
      There’s a lot of survivorship bias to stories like this — and a lot of unobservable opportunity costs. Could the company have grown faster if it had invested its resources to the max and leaned on external funding? Could it have become king ape in a related winner takes it all market?
- ahuth 7y ago
  I'm not familiar with the author, but doing one layoff seems much kinder to everyone than multiple over time. And the company not surviving doesn't help anyone. Being laid off is horrible, but if I'm one of the lucky ones that remain, I'd much rather know that the company is now sound financially (which the author pointed out).
  - texasbigdata 7y ago
    I agree with you but here's the counterpoint: if you were on the bubble and the CEO decided to cut into the bone and perhaps you didn't need to be let go, how would you feel?
    - ahuth 7y ago
      That would be terrible. I'm definitely presuming that the author definitely needed to make the cuts. If that's not the case, and I got laid off, I'd be pissed.
    - nordsieck 7y ago
      > if you were on the bubble and the CEO decided to cut into the bone and perhaps you didn't need to be let go, how would you feel? Your question has the same problem as the modified (blocking the rail with a person) trolly problem. It's a hypothetical so you get to state what's true. In the real world, people have much more limited knowledge. You get to know whether you're cut or not. You get to know whether another cut was needed or not. You get to know whether the company survived or not. No one ever gets to know if someone was cut but didn't need to be. Not even in retrospect. Especially if they're "on the bubble".
      - texasbigdata 7y ago
        No real problem that happened this week. Business had precipitous revenue decrease. Could get better, could not. Had to cut employees. Do you cut 35% or 40% of corporate? Do you cut more just to hedge the economy won't recover? I appreciate the philosophy 101 lesson but your premise is completely not true. If you cut the Sr. Manager of XYZ and hire another one 120 days later...you probably didn't need to cut the one you did.
- zomglings 7y ago
  Running a small company is about keeping that company alive long enough to capitalize on its opportunities for success. I don't know why you called his company a vanity company, but don't see that you have grounds for that. If a company cannot sustain itself on revenue alone, and if fundraising is going to be difficult, it is absolutely the right choice (and kindest to everyone in the long run) to lay off those not critical to its survival. That does not mean that the choice is easy.
- dang 7y ago
  "Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- Foober223 7y ago
  Do you even leadership bro?
- Tade0 7y ago
  Sometimes there is no other option. In 2008 I was employed at a company which did technical support for petrol stations. Initially we didn't feel the hit, but a year later our line manager called a meeting and said that during the previous month not a single new petrol station from the companies we serviced had been opened and therefore the company hadn't had any money from its largest source of revenue, so they had to lay off 80% of the non-permanent staff(which included me). They went bust after a few years, but it was still a better alternative than closing down immediately.
- goatherders 7y ago
  ANd those employees were compensated for the work they did. As long as their final paychecks cleared than the agreement was filled in full. It's filled in full in most every case of employee termination. Your employer owes you what you earned. You owe your employer what you have agreed to provide in exchange for payment. Expecting anything above and beyond that...well THAT is "vanity."
- digitaltrees 7y ago
  Yes. Leadership is about making hard choices to survive in a time of crisis. Good leaders care about their team and their well being.
- hinkley 7y ago
  Have you ever been at a company with multiple rounds of layoffs that affected your division? I have, and Rip the Bandaid Off is absolutely the correct strategy. With multiple rounds everyone starts to develop neuroses. Productivity tanks, people have conversations about when the next round will be, whether they will be in it, whether essential team member that management doesn't care for will be next, and what sort of a clusterfuck you'll have to deal with when they aren't keeping the wheels on? Plus by the second or third round, you're probably getting zero severance at all. After this experience I had a theory that I wanted to be in the first round of layoffs (especially if the company looked like they would do multiples). I got to test that a few years back and it was awesome. None of those people's problems were my problems anymore. No survivor's guilt, no deathmarch. I sat around on my butt for two weeks doing absolutely nothing, and still had severance money left over when my first check cleared at the new job. If you are the only company doing layoffs, your employees will be fine. If lots of people are doing layoffs, what is more humane? Laying them off before the market is saturated with people, or waiting until the last possible moment when their prospects are at the absolute minimum?
dalton 7y ago
Hi, I am the author of this post. As I said at the top my intent was not initially to publish it widely, but here we are. If anyone has questions about what I wrote I'm happy to answer them here.
- raywu 7y ago
  Thanks for sharing with the world OP!
- Tade0 7y ago
  Perhaps a naive question, but I'm not in this business: How does renegotiating a contract look like? I'm picturing a meeting where people haggle over the new price, but that doesn't sound right.
  - dalton 7y ago
    For large dollar value contracts you usually have an account rep/point of contact you can get on the phone. You can explain to your rep what you are dealing with, what your budget is, and make a concrete ask. I get the sense that the larger of a customer you are for someone, the more willing they are to work with you.
    - digitaltrees 7y ago
      I second the concrete ask. Be specific about what you need and ask how to get there. Explaining why helps the rep feel empathy and also be creative. Ultimately they want to preserve revenue too.
  - hayksaakian 7y ago
    It doesn't sound right, but that's how it is most of the time.
  - digitaltrees 7y ago
    Pick up the phone or send an email. State clearly that you need to cut the costs to a specific target. Ask if there is any specific path they can assist you with such as removing features or moving to an alternate plan. Say that you are doing this now with all vendors. Don’t threaten to leave, try to be collaborative and explain that you are doing this to be able to maintain the service in the short term and long term. If they push back hard ask what they want in order to make concessions. The truth is many of your vendors will be fielding these types of requests while at the same time seeing a ton of cancellations and customers going out of business. They may view it as better to cut your bill and thereby preserve the revenue they collect that watch your account go to $0.
deleted 7y ago
[deleted]
benjohnson 7y ago
Can I possibly expand. 2008 happened and I cut drastically and laid off 60% of my employees - that was good and smart. But it shocked me so much that we spent the next four years hunkered down when we should have been marketing and growing. My advice is to cut like that author is saying, but move on from the cut as if nothing happened.
- sg_gabriel 7y ago
  This is an interesting counter-point. Can you elaborate?
  - benjohnson 7y ago
    Sure! The 2008 recession clobbered my IT company - most of our customers were in the construction field and many of them went bankrupt. We did the right thing - we cut deep into the workforce to protect what we could and that was the right thing to do. The remaining employees were able to confidently work knowing that their job was secure. But the act of cutting deeply, and laying off people I liked and admired cause me to want to act like a turtle and to not want to venture out. In hindsight, I should have marketed and reached out to new potential customers because other IT support companies were going out of business left and right. I estimate that my timidity after the traumatic cuts cause my company four years of growth. If I have to do it again, I will. But afterwards I'll act like it never happened - I'll keep growing the company.
    - mjthrowaway1 7y ago
      I’ve been telling my sales staff at every meeting that now is the time to push when others are panicked. Demonstrate your reliability and professionalism. It’s working..
    - turbinerneiter 7y ago
      In Germany, and other European countries, there is a tool called "Kurzarbeit". It allows a company to reduce the workforces hours and temporarily cut pay. The state supports it with tax breaks. The result is that a worker only works i.e. 60%, income drops to 80% (bc of the tax breaks) and the company saves a lot of money. The key point: people keep their jobs AND companies keep their trained staff. So when the crisis is over, they are ready to ramp up again. Also, since people keep their jobs, consumption does not drop that low. This helped the Germany economy massively to recover from the 2008 crisis. Not sure if it would work the same way for all parts of the economy, but it definitively works for the manufacturing industry.
ttul 7y ago
This downturn is vastly sharper and more unexpected than 2008. Time to roll out the Plan B budget and cash flow model where you lose that big customer and everyone else delays their repayment. Oh, also forget adding new logos for six months. Large companies are in a state of paralysis while they try to figure out what to do and when this will all end. You should be too.
my_usernam3 7y ago
I'm probably looking to be combative due to this social isolation, but one of the last lines irked me: > People are counting on you to do the right thing. Only because he says this after talking about layoffs as a purely business decision. I have no moral qualms with doing layoffs, and as others discussed it might be better to do one for the moral of the employees than to be stuck with multiple rounds of layoffs. But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical?
- majormajor 7y ago
  > But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical? My assumption is that "plenty of cash" is conditional on aggressive layoffs. He says "high burn" early on so I was assuming a scenario of "everyone loses their jobs within 6 months" vs "30% keep their jobs."
- nickysielicki 7y ago
  Yeah you are. It's not an after school club where people go to have fun. It's gotta make value.
  - icedchai 7y ago
    I'm guessing you weren't around during the DotCom boom.
    - deleted 7y ago
      [deleted]
    - DonHopkins 7y ago
      Back when pets.com had so much investor's cash and public good will to burn, that not only would they overnight ship you discount bulk dog food for free, but their puppet sued another puppet. https://www.youtube.com/watch?v=bi-Z5uCe7xs https://www.youtube.com/watch?v=bi-Z5uCe7xs >[Triumph is a plaintiff,] a rubber dog, black and brown in color, that wears a gold bow tie, often smokes a cigar, and interacts with animals and with humans through rude and often vulgar comments, through physical actions and/or attacks. >[The pets.com sock puppet] is an advocate of pets, the voice of pets, and often interacts and communicates directly with other animals or with humans in order to convey to pet owners how pets feel about various pet related issues. https://www.youtube.com/watch?v=qgtn7iAXSgc https://www.youtube.com/watch?v=qgtn7iAXSgc https://www.latimes.com/archives/la-xpm-2000-may-04-mn-26524-story.html https://www.latimes.com/archives/la-xpm-2000-may-04-mn-26524... >“Maybe they see a profit potential in the sock puppet, because they sure aren’t going to make much money overnight shipping dog food to America,” says Bob Garfield, media critic for the industry trade publication Advertising Age.
echelon 7y ago
Dalton, Lack of health care during a worldwide medical emergency could outright destroy the lives of those you lay off should they or their families get sick and require medical intervention. Are you trying to give guidance to startups to lay off? Why not advocate for pay cuts instead, that way they can keep their healthcare? I think most would be understanding. Lives are worth immeasurably more than the businesses at risk.
- DoreenMichele 7y ago
  If the company dies, everyone is out of work. That's not an improvement. I posted an article earlier today about expanded unemployment benefits in the US. It's not a founder's job to provide a nanny state (so to speak). It's the job of government to look out for the people in that way.
- dalton 7y ago
  That's a fair point, and there are a number of situation dependent factors. I wrote this letter to myself because I know what I would do differently 12 years ago and I have the benefit of hindsight now. Obviously the crisis is different today, we didn't have a pandemic in 2008, there is definitely no one-size-fits-all advice, and every company needs to be figuring out the right thing to do right now. But keep in mind what ended up happening 12 years ago is that everyone lost their jobs. The letter is my thoughts about what could have prevented that outcome back then, at least partly.
  - echelon 7y ago
    Thanks for the explanation. > I wrote this letter to myself because I know what I would do differently 12 years ago and I have the benefit of hindsight now. > keep in mind what ended up happening 12 years ago is that everyone lost their jobs That's my fear for this pandemic, too. It's a really awful situation. Stay safe.
  - taurath 7y ago
    I have to say, it’s sad to me that your lesson to your past self was to act in a more ruthless and uncaring manner.
gumby 7y ago
> “don’t take too drastic of measures to get profitable because then you won’t be able to sell the company”. Definitely ignore those people and this garbage advice. In what universe/conditions would such advice make sense? I’ve never heard such a thing.
- amflare 7y ago
  I imagine a lot of actions you would have to take to make a small company profitable would make it be unappealing to a company with more money. Better to burn the cash and lay a giant foundation rather than just build a tiny house. Then you can sell the foundation by saying "Look how big of a house could be here!"
  - gumby 7y ago
    Having done a few aquisitions (on both sides of the transaction) over the years it's really easy to dictate terms when the company being bought lacks room to maneuver.
- digitaltrees 7y ago
  Many acquisitions are merely to hire the team. Recruiting is hard and buying a large functional team is some times attractive. But yes, this is bad advice as it likely won’t materialize. In fact the best posture in an acquisition is to not need one rather than hope that is your way out. Buyers will capitalize on desperation.
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nostromo 7y ago
In the 2008 recession US GDP went down by only about 3%. During the Great Depression it went down 10%. I don’t think we’re prepared for the kind of declines we’re going to see if quarantine goes on for more than a few weeks.
- nv-vn 7y ago
  Agree. The scary thing here is that we're talking about completely pausing the world economy for one quarter? Or two quarters? Or a year? There's really no way of knowing what the effects will be and the longer this gets stretched the more drastic the economic effects will be. I don't know what perspective your comment comes from but I think it's important to open a discussion on the long term effects of this type of quarantine. For example, if this leads to an unprecedented level of recession it's very possible that more people end up dead due to the quarantine.
  - nostromo 7y ago
    I agree. The thing about economic deaths is they are silent and nebulous. See the opioid crisis as an example, or crime rates in areas with poverty and economic uncertainty. Or look at illnesses in impoverished regions, such as obesity and diabetes. Look at unemployed people without access to healthcare. Even suicides jumped after 2008. [1] 1. https://www.cbsnews.com/news/recession-linked-to-more-than-10000-suicides-in-north-america-europe/ https://www.cbsnews.com/news/recession-linked-to-more-than-1...
  - notabee 7y ago
    You actually can't assume that will be the case, based on longevity data from the Great Depression[1]. If Covid runs rampant and collapses the medical system the U.S. is facing anywhere between 500,000 to 10 million dead based on current understanding of the numbers[2]. 1. https://www.history.com/news/great-depression-economy-life-expectancy https://www.history.com/news/great-depression-economy-life-e... 2. https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56 https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-th...
    - 7y ago
thomk 7y ago
Can you talk about the copyright infringement lawsuit and how you guys navigated that?
- thomk 7y ago
  This was a genuine question although I see how it can read like I was poking at the guy.
digitaltrees 7y ago
Dalton is a sage. Listen to him.
nexuist 7y ago
> For example, startups today can renegotiate their AWS costs by ~50% if they push. How does one begin to do this? I don't think I can just open a support ticket titled "hey, can I pay less?" Or is this meant to be for startups that have existing contracts with Amazon?
- DonHopkins 7y ago
  tedivm kinda summed it all up and shared the link to AWS Activate where you can apply for grants (I know people who got $5k aws credit grants right away): https://news.ycombinator.com/item?id=21784311 https://news.ycombinator.com/item?id=21784311 tedivm 3 months ago | parent | favorite | on: Why Nukemap Isn't on Google Maps Anymore I've worked in a lot of startups and have never had to pay that whole price until we had decent revenue. The AWS Activate program [1] has been pretty solid for my current company. There's a big joke going around that AWS is basically a VC that invests in startups with free services and then makes their money back on revenue once they've grown. 1. https://aws.amazon.com/activate/ https://aws.amazon.com/activate/ >AWS Activate is a free program specifically designed for startups and early stage entrepreneurs that offers the resources needed to get started on AWS
- yellow_lead 7y ago
  I have heard there are also "AWS Middlemen" that can offer you a better deal on AWS services than AWS themselves.
aty268 7y ago
"don’t take too drastic of measures to get profitable because then you won’t be able to sell the company" Could somebody explain the logic behind this? I see Dalton disagrees, but why would anyoneone believe this in the first place?
- H8crilA 7y ago
  When the market makes no sense by keeping non-economic entities that pretend to be companies - you "have to" make no sense along with it. It's the ages old false dichotomy between "growth" and "value". As if growth companies didn't have stable cash flows (they do!).
weitingliu 7y ago
Question: for companies that actually acted decisively and cut their workforce significantly in 2008, did any of them end up having a great outcome? Any examples come to mind?
- wilde 7y ago
  Meraki got bought by Cisco? https://techcrunch.com/2008/10/24/19683-tech-layoffs-and-counting/ https://techcrunch.com/2008/10/24/19683-tech-layoffs-and-cou...
nkkollaw 7y ago
> Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. I hope people don't actually think like you (or follow your advice). In a time like this, it would make more sense to write about people are not a number, and you should keep your employees because there are more important things than money in life.

311 points by baxtr 7y ago

czep 7y ago

> Do one layoff, but much much deeper than seems correct. Is this what "leadership" is all about: just transfer all the pain you're having onto the employees who have been doing all the hard work to build your vanity company?

tardo99 7y ago
lol
throwawaypa123 7y ago
What's the alternative you propose?
- AnIdiotOnTheNet 7y ago
  I feel fortunate to work at a company that hasn't had any debt since the 80s and keeps a good stockpile of funds. Consequently they didn't have to lay off anyone in 2008 and even the current crisis didn't delay our plans to build an addition to the office.
  - arkh 7y ago
    > since the 80s So not a startup.
  - thanatropism 7y ago
    There’s a lot of survivorship bias to stories like this — and a lot of unobservable opportunity costs. Could the company have grown faster if it had invested its resources to the max and leaned on external funding? Could it have become king ape in a related winner takes it all market?
ahuth 7y ago
I'm not familiar with the author, but doing one layoff seems much kinder to everyone than multiple over time. And the company not surviving doesn't help anyone. Being laid off is horrible, but if I'm one of the lucky ones that remain, I'd much rather know that the company is now sound financially (which the author pointed out).
- texasbigdata 7y ago
  I agree with you but here's the counterpoint: if you were on the bubble and the CEO decided to cut into the bone and perhaps you didn't need to be let go, how would you feel?
  - ahuth 7y ago
    That would be terrible. I'm definitely presuming that the author definitely needed to make the cuts. If that's not the case, and I got laid off, I'd be pissed.
  - nordsieck 7y ago
    > if you were on the bubble and the CEO decided to cut into the bone and perhaps you didn't need to be let go, how would you feel? Your question has the same problem as the modified (blocking the rail with a person) trolly problem. It's a hypothetical so you get to state what's true. In the real world, people have much more limited knowledge. You get to know whether you're cut or not. You get to know whether another cut was needed or not. You get to know whether the company survived or not. No one ever gets to know if someone was cut but didn't need to be. Not even in retrospect. Especially if they're "on the bubble".
    - texasbigdata 7y ago
      No real problem that happened this week. Business had precipitous revenue decrease. Could get better, could not. Had to cut employees. Do you cut 35% or 40% of corporate? Do you cut more just to hedge the economy won't recover? I appreciate the philosophy 101 lesson but your premise is completely not true. If you cut the Sr. Manager of XYZ and hire another one 120 days later...you probably didn't need to cut the one you did.
zomglings 7y ago
Running a small company is about keeping that company alive long enough to capitalize on its opportunities for success. I don't know why you called his company a vanity company, but don't see that you have grounds for that. If a company cannot sustain itself on revenue alone, and if fundraising is going to be difficult, it is absolutely the right choice (and kindest to everyone in the long run) to lay off those not critical to its survival. That does not mean that the choice is easy.
dang 7y ago
"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith." https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
Foober223 7y ago
Do you even leadership bro?
Tade0 7y ago
Sometimes there is no other option. In 2008 I was employed at a company which did technical support for petrol stations. Initially we didn't feel the hit, but a year later our line manager called a meeting and said that during the previous month not a single new petrol station from the companies we serviced had been opened and therefore the company hadn't had any money from its largest source of revenue, so they had to lay off 80% of the non-permanent staff(which included me). They went bust after a few years, but it was still a better alternative than closing down immediately.
goatherders 7y ago
ANd those employees were compensated for the work they did. As long as their final paychecks cleared than the agreement was filled in full. It's filled in full in most every case of employee termination. Your employer owes you what you earned. You owe your employer what you have agreed to provide in exchange for payment. Expecting anything above and beyond that...well THAT is "vanity."
digitaltrees 7y ago
Yes. Leadership is about making hard choices to survive in a time of crisis. Good leaders care about their team and their well being.
hinkley 7y ago
Have you ever been at a company with multiple rounds of layoffs that affected your division? I have, and Rip the Bandaid Off is absolutely the correct strategy. With multiple rounds everyone starts to develop neuroses. Productivity tanks, people have conversations about when the next round will be, whether they will be in it, whether essential team member that management doesn't care for will be next, and what sort of a clusterfuck you'll have to deal with when they aren't keeping the wheels on? Plus by the second or third round, you're probably getting zero severance at all. After this experience I had a theory that I wanted to be in the first round of layoffs (especially if the company looked like they would do multiples). I got to test that a few years back and it was awesome. None of those people's problems were my problems anymore. No survivor's guilt, no deathmarch. I sat around on my butt for two weeks doing absolutely nothing, and still had severance money left over when my first check cleared at the new job. If you are the only company doing layoffs, your employees will be fine. If lots of people are doing layoffs, what is more humane? Laying them off before the market is saturated with people, or waiting until the last possible moment when their prospects are at the absolute minimum?

dalton 7y ago

Hi, I am the author of this post. As I said at the top my intent was not initially to publish it widely, but here we are. If anyone has questions about what I wrote I'm happy to answer them here.

raywu 7y ago
Thanks for sharing with the world OP!
Tade0 7y ago
Perhaps a naive question, but I'm not in this business: How does renegotiating a contract look like? I'm picturing a meeting where people haggle over the new price, but that doesn't sound right.
- dalton 7y ago
  For large dollar value contracts you usually have an account rep/point of contact you can get on the phone. You can explain to your rep what you are dealing with, what your budget is, and make a concrete ask. I get the sense that the larger of a customer you are for someone, the more willing they are to work with you.
  - digitaltrees 7y ago
    I second the concrete ask. Be specific about what you need and ask how to get there. Explaining why helps the rep feel empathy and also be creative. Ultimately they want to preserve revenue too.
- hayksaakian 7y ago
  It doesn't sound right, but that's how it is most of the time.
- digitaltrees 7y ago
  Pick up the phone or send an email. State clearly that you need to cut the costs to a specific target. Ask if there is any specific path they can assist you with such as removing features or moving to an alternate plan. Say that you are doing this now with all vendors. Don’t threaten to leave, try to be collaborative and explain that you are doing this to be able to maintain the service in the short term and long term. If they push back hard ask what they want in order to make concessions. The truth is many of your vendors will be fielding these types of requests while at the same time seeing a ton of cancellations and customers going out of business. They may view it as better to cut your bill and thereby preserve the revenue they collect that watch your account go to $0.

deleted 7y ago

[deleted]

benjohnson 7y ago

Can I possibly expand. 2008 happened and I cut drastically and laid off 60% of my employees - that was good and smart. But it shocked me so much that we spent the next four years hunkered down when we should have been marketing and growing. My advice is to cut like that author is saying, but move on from the cut as if nothing happened.

sg_gabriel 7y ago
This is an interesting counter-point. Can you elaborate?
- benjohnson 7y ago
  Sure! The 2008 recession clobbered my IT company - most of our customers were in the construction field and many of them went bankrupt. We did the right thing - we cut deep into the workforce to protect what we could and that was the right thing to do. The remaining employees were able to confidently work knowing that their job was secure. But the act of cutting deeply, and laying off people I liked and admired cause me to want to act like a turtle and to not want to venture out. In hindsight, I should have marketed and reached out to new potential customers because other IT support companies were going out of business left and right. I estimate that my timidity after the traumatic cuts cause my company four years of growth. If I have to do it again, I will. But afterwards I'll act like it never happened - I'll keep growing the company.
  - mjthrowaway1 7y ago
    I’ve been telling my sales staff at every meeting that now is the time to push when others are panicked. Demonstrate your reliability and professionalism. It’s working..
  - turbinerneiter 7y ago
    In Germany, and other European countries, there is a tool called "Kurzarbeit". It allows a company to reduce the workforces hours and temporarily cut pay. The state supports it with tax breaks. The result is that a worker only works i.e. 60%, income drops to 80% (bc of the tax breaks) and the company saves a lot of money. The key point: people keep their jobs AND companies keep their trained staff. So when the crisis is over, they are ready to ramp up again. Also, since people keep their jobs, consumption does not drop that low. This helped the Germany economy massively to recover from the 2008 crisis. Not sure if it would work the same way for all parts of the economy, but it definitively works for the manufacturing industry.

ttul 7y ago

This downturn is vastly sharper and more unexpected than 2008. Time to roll out the Plan B budget and cash flow model where you lose that big customer and everyone else delays their repayment. Oh, also forget adding new logos for six months. Large companies are in a state of paralysis while they try to figure out what to do and when this will all end. You should be too.

my_usernam3 7y ago

I'm probably looking to be combative due to this social isolation, but one of the last lines irked me: > People are counting on you to do the right thing. Only because he says this after talking about layoffs as a purely business decision. I have no moral qualms with doing layoffs, and as others discussed it might be better to do one for the moral of the employees than to be stuck with multiple rounds of layoffs. But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical?

majormajor 7y ago
> But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical? My assumption is that "plenty of cash" is conditional on aggressive layoffs. He says "high burn" early on so I was assuming a scenario of "everyone loses their jobs within 6 months" vs "30% keep their jobs."
nickysielicki 7y ago
Yeah you are. It's not an after school club where people go to have fun. It's gotta make value.
- icedchai 7y ago
  I'm guessing you weren't around during the DotCom boom.
  - deleted 7y ago
    [deleted]
  - DonHopkins 7y ago
    Back when pets.com had so much investor's cash and public good will to burn, that not only would they overnight ship you discount bulk dog food for free, but their puppet sued another puppet. https://www.youtube.com/watch?v=bi-Z5uCe7xs https://www.youtube.com/watch?v=bi-Z5uCe7xs >[Triumph is a plaintiff,] a rubber dog, black and brown in color, that wears a gold bow tie, often smokes a cigar, and interacts with animals and with humans through rude and often vulgar comments, through physical actions and/or attacks. >[The pets.com sock puppet] is an advocate of pets, the voice of pets, and often interacts and communicates directly with other animals or with humans in order to convey to pet owners how pets feel about various pet related issues. https://www.youtube.com/watch?v=qgtn7iAXSgc https://www.youtube.com/watch?v=qgtn7iAXSgc https://www.latimes.com/archives/la-xpm-2000-may-04-mn-26524-story.html https://www.latimes.com/archives/la-xpm-2000-may-04-mn-26524... >“Maybe they see a profit potential in the sock puppet, because they sure aren’t going to make much money overnight shipping dog food to America,” says Bob Garfield, media critic for the industry trade publication Advertising Age.

echelon 7y ago

Dalton, Lack of health care during a worldwide medical emergency could outright destroy the lives of those you lay off should they or their families get sick and require medical intervention. Are you trying to give guidance to startups to lay off? Why not advocate for pay cuts instead, that way they can keep their healthcare? I think most would be understanding. Lives are worth immeasurably more than the businesses at risk.

DoreenMichele 7y ago
If the company dies, everyone is out of work. That's not an improvement. I posted an article earlier today about expanded unemployment benefits in the US. It's not a founder's job to provide a nanny state (so to speak). It's the job of government to look out for the people in that way.
dalton 7y ago
That's a fair point, and there are a number of situation dependent factors. I wrote this letter to myself because I know what I would do differently 12 years ago and I have the benefit of hindsight now. Obviously the crisis is different today, we didn't have a pandemic in 2008, there is definitely no one-size-fits-all advice, and every company needs to be figuring out the right thing to do right now. But keep in mind what ended up happening 12 years ago is that everyone lost their jobs. The letter is my thoughts about what could have prevented that outcome back then, at least partly.
- echelon 7y ago
  Thanks for the explanation. > I wrote this letter to myself because I know what I would do differently 12 years ago and I have the benefit of hindsight now. > keep in mind what ended up happening 12 years ago is that everyone lost their jobs That's my fear for this pandemic, too. It's a really awful situation. Stay safe.
- taurath 7y ago
  I have to say, it’s sad to me that your lesson to your past self was to act in a more ruthless and uncaring manner.

gumby 7y ago

> “don’t take too drastic of measures to get profitable because then you won’t be able to sell the company”. Definitely ignore those people and this garbage advice. In what universe/conditions would such advice make sense? I’ve never heard such a thing.

amflare 7y ago
I imagine a lot of actions you would have to take to make a small company profitable would make it be unappealing to a company with more money. Better to burn the cash and lay a giant foundation rather than just build a tiny house. Then you can sell the foundation by saying "Look how big of a house could be here!"
- gumby 7y ago
  Having done a few aquisitions (on both sides of the transaction) over the years it's really easy to dictate terms when the company being bought lacks room to maneuver.
digitaltrees 7y ago
Many acquisitions are merely to hire the team. Recruiting is hard and buying a large functional team is some times attractive. But yes, this is bad advice as it likely won’t materialize. In fact the best posture in an acquisition is to not need one rather than hope that is your way out. Buyers will capitalize on desperation.

jeadfa 7y ago

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nostromo 7y ago

In the 2008 recession US GDP went down by only about 3%. During the Great Depression it went down 10%. I don’t think we’re prepared for the kind of declines we’re going to see if quarantine goes on for more than a few weeks.

nv-vn 7y ago
Agree. The scary thing here is that we're talking about completely pausing the world economy for one quarter? Or two quarters? Or a year? There's really no way of knowing what the effects will be and the longer this gets stretched the more drastic the economic effects will be. I don't know what perspective your comment comes from but I think it's important to open a discussion on the long term effects of this type of quarantine. For example, if this leads to an unprecedented level of recession it's very possible that more people end up dead due to the quarantine.
- nostromo 7y ago
  I agree. The thing about economic deaths is they are silent and nebulous. See the opioid crisis as an example, or crime rates in areas with poverty and economic uncertainty. Or look at illnesses in impoverished regions, such as obesity and diabetes. Look at unemployed people without access to healthcare. Even suicides jumped after 2008. [1] 1. https://www.cbsnews.com/news/recession-linked-to-more-than-10000-suicides-in-north-america-europe/ https://www.cbsnews.com/news/recession-linked-to-more-than-1...
- notabee 7y ago
  You actually can't assume that will be the case, based on longevity data from the Great Depression[1]. If Covid runs rampant and collapses the medical system the U.S. is facing anywhere between 500,000 to 10 million dead based on current understanding of the numbers[2]. 1. https://www.history.com/news/great-depression-economy-life-expectancy https://www.history.com/news/great-depression-economy-life-e... 2. https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-the-dance-be9337092b56 https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-th...
  - 7y ago

thomk 7y ago

Can you talk about the copyright infringement lawsuit and how you guys navigated that?

thomk 7y ago
This was a genuine question although I see how it can read like I was poking at the guy.

digitaltrees 7y ago

Dalton is a sage. Listen to him.

nexuist 7y ago

> For example, startups today can renegotiate their AWS costs by ~50% if they push. How does one begin to do this? I don't think I can just open a support ticket titled "hey, can I pay less?" Or is this meant to be for startups that have existing contracts with Amazon?

DonHopkins 7y ago
tedivm kinda summed it all up and shared the link to AWS Activate where you can apply for grants (I know people who got $5k aws credit grants right away): https://news.ycombinator.com/item?id=21784311 https://news.ycombinator.com/item?id=21784311 tedivm 3 months ago | parent | favorite | on: Why Nukemap Isn't on Google Maps Anymore I've worked in a lot of startups and have never had to pay that whole price until we had decent revenue. The AWS Activate program [1] has been pretty solid for my current company. There's a big joke going around that AWS is basically a VC that invests in startups with free services and then makes their money back on revenue once they've grown. 1. https://aws.amazon.com/activate/ https://aws.amazon.com/activate/ >AWS Activate is a free program specifically designed for startups and early stage entrepreneurs that offers the resources needed to get started on AWS
yellow_lead 7y ago
I have heard there are also "AWS Middlemen" that can offer you a better deal on AWS services than AWS themselves.

aty268 7y ago

"don’t take too drastic of measures to get profitable because then you won’t be able to sell the company" Could somebody explain the logic behind this? I see Dalton disagrees, but why would anyoneone believe this in the first place?

H8crilA 7y ago
When the market makes no sense by keeping non-economic entities that pretend to be companies - you "have to" make no sense along with it. It's the ages old false dichotomy between "growth" and "value". As if growth companies didn't have stable cash flows (they do!).

weitingliu 7y ago

Question: for companies that actually acted decisively and cut their workforce significantly in 2008, did any of them end up having a great outcome? Any examples come to mind?

wilde 7y ago
Meraki got bought by Cisco? https://techcrunch.com/2008/10/24/19683-tech-layoffs-and-counting/ https://techcrunch.com/2008/10/24/19683-tech-layoffs-and-cou...

nkkollaw 7y ago

> Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. I hope people don't actually think like you (or follow your advice). In a time like this, it would make more sense to write about people are not a number, and you should keep your employees because there are more important things than money in life.