5 ms·

> 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 enou

> 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.
- StillBored 4y ago
  I was at a startup during the .com bust. I survived 3 rounds of layoffs over the space of ~18 months. I like everyone remaining at the company, could see the writing on the wall and I was spamming resume's to anyone who looked like they were hiring. Zero responses, pretty much no one was hiring except when it was an emergency. The big/profitable companies were bolting down the hatches, and everyone else was cutting to stay afloat. I was genuinely scared when my time came, and it took another 4 months, but I consider myself lucky but am uncomfortable with the fact that a previous manager of mine at one of those large/profitable companies which had one of those fishing job postings, saw my resume and swapped me for one of his under performers (aka someone got laid off at the end of the fiscal year, and I got hired). And I took a ~40% pay cut for the privilege. Literally the only people who were getting hired in my area where situations like that. Never assume you will get hired during a downturn unless you have a really solid network of people who will risk their own positions for you and/or work at companies that treat people like cogs to be replaced if they can get a cheaper/more effective cog. I was at another stable but small company during the 2008 downturn, and I sadly had to turn away a lot of people I would have loved to work with again, but we were on a hard hiring freeze (the ones where upper mgmt breaths a sigh every-time someone leaves of their own volition because it gives them a bit more breathing room). So these times hurt no matter which end of the table your on. So, don't assume the job market will remain the way it is today.
  - hef19898 4y ago
    Which raises the question of when to jump ship, doesn't it? If your current employer is looking like lay offs and bad times are a head, and the market is really good, do you stay and wait or do you start looking now? You defenitley shouldn't wait to be last one to tirn of the lights, because at the very least your gonna compete with your former co-workers.
    - BryanBeshore 4y ago
      If you plan to move in the next 6-12 months, you are probably better off moving now.
corrral 4y ago
I'd just assume the company's already dead and someone's trying to suck some remaining value out of it or make a hail-mary acquisition deal to bail out their investor pals (at no return to employee stock holders, I'm sure) if that happened. I'd be working on my résumé on the "work" day when that's announced, for sure.
- cwilkes 4y ago
  > suck some remaining life out of it It’s almost as if the blog poster would have a vested interested in seeing a massive cut.
- CalChris 4y ago
  The CEO should be able to spreadsheet an argument at the all hands meeting to the remaining employees that they are now profitable and/or have 48 months of runway. Of course, employees are always unrestricted free agents. They can weigh this with the prevailing economic outlook and make their own decisions. Remember, YC's letter is to founders and not employees. I believe Ben Horowitz made a similar decision and a similar pitch to his employees that he recounted in The Hard Thing About Hard Things. I don't remember Horowitz getting into the depth of the cut but I remember survivability being a stressed point.
  - lumost 4y ago
    If your talking to employees who care at all about the supposed equity they were given, then you need to be prepared to reset the employee equity pool to be meaningful. In particular, many of the employees will have options that are obviously underwater. Any belief they had in dreams of billion dollar valuations will be gone.
imperialdrive 4y ago
I mean, if there is some transparency and the numbers add up, and 70% cut appears to do the trick, then it would be pretty awesome being in the 30% with a real chance to shine. I imagine there would be a big increase in stock and pay to put things in motion too. Sounds great! Now if the plan is going to end in flames anyway, it still seems like a great reason to stick around and absorb the knowledge and experience. I'm a fix-it person and would love the opportunity to turn a company around - it's like the ultimate challenge.
- tshaddox 4y ago
  If the numbers add up to justify the layoff, then doesn't that mean that in the time leading up to the layoffs the numbers didn't even come close to adding up? I'm not sure the transparency and fiscal competence the company demonstrated to justify its layoffs would dazzle me enough to make me miss the fact that they had overhired by 3x or more.
- mdoms 4y ago
- endymi0n 4y ago
  Here‘s the deal: The mere mortal „stock package“ got pretty much worthless the day the „bridge financing“ (which actually was a down-round) got announced. Recovering from a 70% layoff only happens once in a blue moon, and usually only when a founder led company that has already reached revenue and product-market fit makes a well executed hard cut that does an exceptional job at keeping and supporting the core team amd managing emotions. In any other more chaotic situation, the product/emotion/revenue death spiral ensuing is usually impossible to stop.
- mcguire 4y ago
  In increase in pay? During a layoff where they're trying to save money? And then there's the 3x increase in workload.
matwood 4y ago
You're too focused on the 70% used for effect. The point is to make a single cut that puts the company profitable, so there is a chance to survive. And even then it's going to be hard, but gives the company a chance. No person should have assumed stability in a company that was not yet turning a profit. I'm not saying they are bad companies to take a gamble on, but understand they were/are a gamble. VC money suddenly drying up was part of the that gamble.
- tharne 4y ago
  Even a 20% cut tells you that management is incompetent. If you're a CEO and you can cut 20% of your staff without destroying the business, why on earth did you hire all those extra people and add all that expense in the first place? Put another way, if you couldn't staff right in the good times, why would remaining employees trust that your "one big cut" will work now? Hint: they won't
  - matwood 4y ago
    Cuts are done because the business has changed. Some part of the business was destroyed by external factors, and now the company needs to adjust to the new reality. It could be that VC money dries up or that customers stop spending. It doesn't mean that 20% wasn't required in the past, only that they are not required now. This is also why a company should cut a little more than needed, so they have some cushion for things to get worse before getting better again.
    - tharne 4y ago
      I think what you're saying is true in the best run businesses, but that's not what we're seeing right now. We're seeing cuts from business that were hiring like crazy a few weeks ago.

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.

StillBored 4y ago
I was at a startup during the .com bust. I survived 3 rounds of layoffs over the space of ~18 months. I like everyone remaining at the company, could see the writing on the wall and I was spamming resume's to anyone who looked like they were hiring. Zero responses, pretty much no one was hiring except when it was an emergency. The big/profitable companies were bolting down the hatches, and everyone else was cutting to stay afloat. I was genuinely scared when my time came, and it took another 4 months, but I consider myself lucky but am uncomfortable with the fact that a previous manager of mine at one of those large/profitable companies which had one of those fishing job postings, saw my resume and swapped me for one of his under performers (aka someone got laid off at the end of the fiscal year, and I got hired). And I took a ~40% pay cut for the privilege. Literally the only people who were getting hired in my area where situations like that. Never assume you will get hired during a downturn unless you have a really solid network of people who will risk their own positions for you and/or work at companies that treat people like cogs to be replaced if they can get a cheaper/more effective cog. I was at another stable but small company during the 2008 downturn, and I sadly had to turn away a lot of people I would have loved to work with again, but we were on a hard hiring freeze (the ones where upper mgmt breaths a sigh every-time someone leaves of their own volition because it gives them a bit more breathing room). So these times hurt no matter which end of the table your on. So, don't assume the job market will remain the way it is today.
- hef19898 4y ago
  Which raises the question of when to jump ship, doesn't it? If your current employer is looking like lay offs and bad times are a head, and the market is really good, do you stay and wait or do you start looking now? You defenitley shouldn't wait to be last one to tirn of the lights, because at the very least your gonna compete with your former co-workers.
  - BryanBeshore 4y ago
    If you plan to move in the next 6-12 months, you are probably better off moving now.

corrral 4y ago

I'd just assume the company's already dead and someone's trying to suck some remaining value out of it or make a hail-mary acquisition deal to bail out their investor pals (at no return to employee stock holders, I'm sure) if that happened. I'd be working on my résumé on the "work" day when that's announced, for sure.

cwilkes 4y ago
> suck some remaining life out of it It’s almost as if the blog poster would have a vested interested in seeing a massive cut.
CalChris 4y ago
The CEO should be able to spreadsheet an argument at the all hands meeting to the remaining employees that they are now profitable and/or have 48 months of runway. Of course, employees are always unrestricted free agents. They can weigh this with the prevailing economic outlook and make their own decisions. Remember, YC's letter is to founders and not employees. I believe Ben Horowitz made a similar decision and a similar pitch to his employees that he recounted in The Hard Thing About Hard Things. I don't remember Horowitz getting into the depth of the cut but I remember survivability being a stressed point.
- lumost 4y ago
  If your talking to employees who care at all about the supposed equity they were given, then you need to be prepared to reset the employee equity pool to be meaningful. In particular, many of the employees will have options that are obviously underwater. Any belief they had in dreams of billion dollar valuations will be gone.

imperialdrive 4y ago

I mean, if there is some transparency and the numbers add up, and 70% cut appears to do the trick, then it would be pretty awesome being in the 30% with a real chance to shine. I imagine there would be a big increase in stock and pay to put things in motion too. Sounds great! Now if the plan is going to end in flames anyway, it still seems like a great reason to stick around and absorb the knowledge and experience. I'm a fix-it person and would love the opportunity to turn a company around - it's like the ultimate challenge.

tshaddox 4y ago
If the numbers add up to justify the layoff, then doesn't that mean that in the time leading up to the layoffs the numbers didn't even come close to adding up? I'm not sure the transparency and fiscal competence the company demonstrated to justify its layoffs would dazzle me enough to make me miss the fact that they had overhired by 3x or more.
mdoms 4y ago
endymi0n 4y ago
Here‘s the deal: The mere mortal „stock package“ got pretty much worthless the day the „bridge financing“ (which actually was a down-round) got announced. Recovering from a 70% layoff only happens once in a blue moon, and usually only when a founder led company that has already reached revenue and product-market fit makes a well executed hard cut that does an exceptional job at keeping and supporting the core team amd managing emotions. In any other more chaotic situation, the product/emotion/revenue death spiral ensuing is usually impossible to stop.
mcguire 4y ago
In increase in pay? During a layoff where they're trying to save money? And then there's the 3x increase in workload.

matwood 4y ago

You're too focused on the 70% used for effect. The point is to make a single cut that puts the company profitable, so there is a chance to survive. And even then it's going to be hard, but gives the company a chance. No person should have assumed stability in a company that was not yet turning a profit. I'm not saying they are bad companies to take a gamble on, but understand they were/are a gamble. VC money suddenly drying up was part of the that gamble.

tharne 4y ago
Even a 20% cut tells you that management is incompetent. If you're a CEO and you can cut 20% of your staff without destroying the business, why on earth did you hire all those extra people and add all that expense in the first place? Put another way, if you couldn't staff right in the good times, why would remaining employees trust that your "one big cut" will work now? Hint: they won't
- matwood 4y ago
  Cuts are done because the business has changed. Some part of the business was destroyed by external factors, and now the company needs to adjust to the new reality. It could be that VC money dries up or that customers stop spending. It doesn't mean that 20% wasn't required in the past, only that they are not required now. This is also why a company should cut a little more than needed, so they have some cushion for things to get worse before getting better again.
  - tharne 4y ago
    I think what you're saying is true in the best run businesses, but that's not what we're seeing right now. We're seeing cuts from business that were hiring like crazy a few weeks ago.