7 ms·

Dagnabit. Here we go again - this is a fantastic, pragmatic amendment to those notes -> https://dalton.substack.com/p/letter-to-myself-in-late-2008?s=r https:/

Dagnabit. Here we go again - this is a fantastic, pragmatic amendment to those notes -> https://dalton.substack.com/p/letter-to-myself-in-late-2008?s=r https://dalton.substack.com/p/letter-to-myself-in-late-2008?... For a taste: "Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. Do it decisively. Do it so that you get profitable. In your case that is something like a 70% cut, not a 5-10% cut. Yes you read that right: a 70% cut. Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable and won’t need to do it again. Doing a layoff and remaining unprofitable and counting on fundraising to save you is a stupid plan."

barkingcat 4y ago
what if they try repeated 70% cuts?
hn_throwaway_99 4y ago
The thing that's interesting to me, is that this guy's company was imeem, https://en.m.wikipedia.org/wiki/Imeem https://en.m.wikipedia.org/wiki/Imeem, which was sold to MySpace for reportedly less than $1 million in 2009. I know nothing about the company, but they seemed to have a decent go at it, founded in 2003. At the end of the day, though, I just can't imagine their business model succeeding, Great Recession or not. Sure, perhaps they could have pivoted into basically something completely different, but at that point, if they were a 5-year old company, how much value would they really have been able to salvage? Given he talks about high burn rate and one of his bullet points is "Renegotiate all of your contracts with the music industry.", my guess is that their model was just fundamentally unprofitable given how much they were paying for licenses. You'll hear lots of stories and theories about what companies could have done to save themselves, but recessions also serve a very important function of really sussing out who was selling dollars for 90 cents, and honestly that's what it sounded like his company was doing.
gadders 4y ago
I called it: https://news.ycombinator.com/item?id=31422495 https://news.ycombinator.com/item?id=31422495
bachmeier 4y ago
> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.
- scarface74 4y ago
  I took the opposite approach around 2010. I was one of the survivors of the mass layoff and I didn’t think about looking for another job. I did build up my savings, actively engage my network “just in case” and updated my resume. Once the final hammer hit and we got acquired for our customer list and everyone got laid off. We went to lunch, hung out in the office after our layoffs and from looking at LinkedIn, everyone had a job within a month. At each round of layoffs, people reached out to their network and had jobs quickly. I met a recruiter for lunch that following Monday and had an offer Thursday. No matter how your company is doing, you should always “keep your running shoes around your neck”.
- heartbreak 4y ago
  It doesn’t take much research to verify the writer’s complete lack of business acumen.
- benjaminjosephw 4y ago
  It's a sign that you intend the company to survive.
- sirius87 4y ago
  As someone who has witnessed such a deep layoff and was left in the 30%, I began job hunting and moved on soon after. When I eventually quit, senior management then explained how I was part of their grand comeback plans and offered a salary bump, and in my mind, all I could think of was how they were trying to balance a cost equation. People far more talented than me had landed pink slips, presumably because of how "expensive" they were for their "output". That may be the right call for longevity of the business, but I could easily be the one being disposed after my valuable output is put to use and my expense-output is reconsidered.
fzeroracer 4y ago
A 70% cut is a great way to kill your company once the remaining 30% start jumping ship. Either because of the destroyed morale or because they're doing a lot more work in a higher stress environment.
- rufus_foreman 4y ago
  Have you not been through one of these cycles before? When things get bad, there is nowhere to jump ship to, for quite some time. Hopefully we're not heading there, but as the message says, "things don't look good".
  - fzeroracer 4y ago
    I've been through multiple of these cycles, thank you. I don't need someone to try and explain what I've experienced. There's almost always better opportunities for an experienced dev because there are plenty of industries better suited to weathering out a recession.
- foobarian 4y ago
  I mean, losing money is a great way to kill your company. What's better: cut 10%, lose money, people leave, cut 10% more, still losing money, more people leaving, cut 10% more, still losing money, more people leaving. Likely at 50% now with no pivot and bad morale. Compare to cut 70% + some people leave, but now you can hopefully do a major pivot and do better?
  - mcguire 4y ago
    Could anyone give, say, 3 examples of that happening?
    - danrocks 4y ago
      I don't know what "that" refers to, but I was at Nokia for a long time while they did 5,10,15% layoffs and it did destroy the morale, people started running for the hills as soon as they could. AirBNB did a 25% one-off layoff and is now doing fine. I don't know of any 70% layoffs but I tend to agree that cutting once and hard is the best approach, given what I experienced with paper-cut layoffs.
itsoktocry 4y ago
>Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable and won’t need to do it again. Famous last words. I'm pretty sure that companies always believe this (or at least tell their staff such), whether cutting 5%, 25% or 75%.
VirusNewbie 4y ago
I cannot imagine a way I would interpret a 70% layoff as anything other than the CEO/management team being incompetent. I mean, if you can actually execute with 70% less, why did they hire in the first place? The only way this might work is if a company was expanding into a completely new market and pivots away from that (ie, software startup gets a hardware division going, etc)
- mason55 4y ago
  > I mean, if you can actually execute with 70% less, why did they hire in the first place? Hiring and onboarding takes awhile. VC-funded companies are intended to grow quickly. Those two things put together means you need to hire for where you want to be in a year or two and not where you are right now. The actual goals & constraints have changed. When you hired those people your goal was scaling up as quickly as possible and your constraint was having enough people (in this scenario, money is not one of your constraints). In the new world, the goal is "stay alive" and the gating constraint is runway. So, no, the fact that you can survive after large staff cuts doesn't mean the CEO was incompetent. It might, but it might also just be a function of the goals/constraints/execution strategy/environment having all changed.
  - supersync 4y ago
    A very good example of how easy it is to assume incompetence when you don’t understand the constraints.
blueboo 4y ago
“Race, don’t chase.” Find a way to profitable — default alive — and grow from there. Don’t lie bleeding and default dead. Sounds like Dalton could’ve used this podcast at the time… https://www.manager-tools.com/2008/10/race-don’t-chase-part-1# https://www.manager-tools.com/2008/10/race-don’t-chase-part-...

barkingcat 4y ago

what if they try repeated 70% cuts?

hn_throwaway_99 4y ago

The thing that's interesting to me, is that this guy's company was imeem, https://en.m.wikipedia.org/wiki/Imeem https://en.m.wikipedia.org/wiki/Imeem, which was sold to MySpace for reportedly less than $1 million in 2009. I know nothing about the company, but they seemed to have a decent go at it, founded in 2003. At the end of the day, though, I just can't imagine their business model succeeding, Great Recession or not. Sure, perhaps they could have pivoted into basically something completely different, but at that point, if they were a 5-year old company, how much value would they really have been able to salvage? Given he talks about high burn rate and one of his bullet points is "Renegotiate all of your contracts with the music industry.", my guess is that their model was just fundamentally unprofitable given how much they were paying for licenses. You'll hear lots of stories and theories about what companies could have done to save themselves, but recessions also serve a very important function of really sussing out who was selling dollars for 90 cents, and honestly that's what it sounded like his company was doing.

gadders 4y ago

I called it: https://news.ycombinator.com/item?id=31422495 https://news.ycombinator.com/item?id=31422495

bachmeier 4y ago

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

scarface74 4y ago
I took the opposite approach around 2010. I was one of the survivors of the mass layoff and I didn’t think about looking for another job. I did build up my savings, actively engage my network “just in case” and updated my resume. Once the final hammer hit and we got acquired for our customer list and everyone got laid off. We went to lunch, hung out in the office after our layoffs and from looking at LinkedIn, everyone had a job within a month. At each round of layoffs, people reached out to their network and had jobs quickly. I met a recruiter for lunch that following Monday and had an offer Thursday. No matter how your company is doing, you should always “keep your running shoes around your neck”.
heartbreak 4y ago
It doesn’t take much research to verify the writer’s complete lack of business acumen.
benjaminjosephw 4y ago
It's a sign that you intend the company to survive.
sirius87 4y ago
As someone who has witnessed such a deep layoff and was left in the 30%, I began job hunting and moved on soon after. When I eventually quit, senior management then explained how I was part of their grand comeback plans and offered a salary bump, and in my mind, all I could think of was how they were trying to balance a cost equation. People far more talented than me had landed pink slips, presumably because of how "expensive" they were for their "output". That may be the right call for longevity of the business, but I could easily be the one being disposed after my valuable output is put to use and my expense-output is reconsidered.

fzeroracer 4y ago

A 70% cut is a great way to kill your company once the remaining 30% start jumping ship. Either because of the destroyed morale or because they're doing a lot more work in a higher stress environment.

rufus_foreman 4y ago
Have you not been through one of these cycles before? When things get bad, there is nowhere to jump ship to, for quite some time. Hopefully we're not heading there, but as the message says, "things don't look good".
- fzeroracer 4y ago
  I've been through multiple of these cycles, thank you. I don't need someone to try and explain what I've experienced. There's almost always better opportunities for an experienced dev because there are plenty of industries better suited to weathering out a recession.
foobarian 4y ago
I mean, losing money is a great way to kill your company. What's better: cut 10%, lose money, people leave, cut 10% more, still losing money, more people leaving, cut 10% more, still losing money, more people leaving. Likely at 50% now with no pivot and bad morale. Compare to cut 70% + some people leave, but now you can hopefully do a major pivot and do better?
- mcguire 4y ago
  Could anyone give, say, 3 examples of that happening?
  - danrocks 4y ago
    I don't know what "that" refers to, but I was at Nokia for a long time while they did 5,10,15% layoffs and it did destroy the morale, people started running for the hills as soon as they could. AirBNB did a 25% one-off layoff and is now doing fine. I don't know of any 70% layoffs but I tend to agree that cutting once and hard is the best approach, given what I experienced with paper-cut layoffs.

itsoktocry 4y ago

>Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable and won’t need to do it again. Famous last words. I'm pretty sure that companies always believe this (or at least tell their staff such), whether cutting 5%, 25% or 75%.

VirusNewbie 4y ago

I cannot imagine a way I would interpret a 70% layoff as anything other than the CEO/management team being incompetent. I mean, if you can actually execute with 70% less, why did they hire in the first place? The only way this might work is if a company was expanding into a completely new market and pivots away from that (ie, software startup gets a hardware division going, etc)

mason55 4y ago
> I mean, if you can actually execute with 70% less, why did they hire in the first place? Hiring and onboarding takes awhile. VC-funded companies are intended to grow quickly. Those two things put together means you need to hire for where you want to be in a year or two and not where you are right now. The actual goals & constraints have changed. When you hired those people your goal was scaling up as quickly as possible and your constraint was having enough people (in this scenario, money is not one of your constraints). In the new world, the goal is "stay alive" and the gating constraint is runway. So, no, the fact that you can survive after large staff cuts doesn't mean the CEO was incompetent. It might, but it might also just be a function of the goals/constraints/execution strategy/environment having all changed.
- supersync 4y ago
  A very good example of how easy it is to assume incompetence when you don’t understand the constraints.

blueboo 4y ago

“Race, don’t chase.” Find a way to profitable — default alive — and grow from there. Don’t lie bleeding and default dead. Sounds like Dalton could’ve used this podcast at the time… https://www.manager-tools.com/2008/10/race-don’t-chase-part-1# https://www.manager-tools.com/2008/10/race-don’t-chase-part-...