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> The cloud communications software builder has been striving for profitability in 2023, and the restructuring plan aims to improve operating margins, create a

> The cloud communications software builder has been striving for profitability in 2023, and the restructuring plan aims to improve operating margins, create a better selling capacity and reduce operating costs. If you look at all the layoffs we had this year, the vast majority are by companies that are VC funded and unprofitable. It would be a scary time to work for a VC backed company, because you're one missed funding round away from getting kicked to the curb, and VC's seem to be clutching the funds in this economy.

automatic6131 4y ago
Oh no, imagine having to provide value to the world instead of being in the business of selling a dollar for 95c. So hard ;*(
- SV_BubbleTime 4y ago
  Next you are going to tell me that a company is going to need to make a product going forward and can’t just expect to be supplied with literally endless free money forever.
time_to_smile 4y ago
You can't just broadly look at all companies for patterns in layoffs. It's important to divide startups from IPO'd companies. A common pattern for all of these is the inability to generate profit, but this is business-as-usual for a startup. Even in normal times it's okay for startups to lose money. Startups typically perform layoffs because they are running out of runway and need to extend the life of the company. Their entire reason for existing is the liquidity event that is either acquisition or IPO, and it is essential for investors that they survive long enough to see such an event. For publicly traded companies, which we've seen a lot of layoffs in recently (which in the last 30 days includes: Twilio, Rent the Runway, Uber, Shopify, Snap, Wayfair, New Relic). The common theme for almost all of this is negative net earnings and B2C. This is what makes Twilio interesting, they're the first B2B IPO with major layoffs. One thing that I keep hearing at my IPO'd startup is that "we won't have layoffs since we have a long runway", but runway matters way less for IPO'd companies. The key aim for IPO'd companies is to please your investors, and if you're shares keep taking a hit because interest rates go up and your net earnings remains steeply negative, then layoffs are coming. If this continues it will start to impact profitable companies, but not before doing much more damage to the non-profitable ones. This feels like a slow motion re-enactment of the dot com burst.
dangus 4y ago
The real problem in my mind is that it's difficult for employees to judge whether a company is making disciplined hires in the first place. The ballpark method I've been using has been to ask for the ARR and divide that number by the employee count. I don't know that this is a real business indicator, but it seems to me that the closer that number is to a workable salary, the better. Maybe all tech startups are all using VC funds, but they're not all created equal in terms of management quality. There are a handful of startups that boast never holding a formal layoff.
- pc86 4y ago
  Startups are by definition young companies growing extremely fast. Never having had formal layoffs for young companies experiencing high growth should not be something particularly surprising.
pierrefermat1 4y ago
I think this has been true regardless of the economy climate, but actually the climate has just resulted in more companies missing that funding round.
nonameiguess 4y ago
Sounds more like you're one missed funding round away from having a 10% chance of being kicked to the curb, where "kicked to the curb" often means a fairly generous severance that covers more than the period you're likely to remain unemployed (12 weeks in this case). While I'm sure there are some legitimately bad outcomes, it seems like the median outcome is keeping your job, and the median outcome for those who don't is a several month paid vacation.
duxup 4y ago
>you're one missed funding round away from getting kicked to the curb Isn't that always the case?
sulam 4y ago
While you’re not directly stating that Twilio is VC-funded, that implication can easily be drawn by the adjacency in these two statements. Twilio was VC funded, but they’re a public company now and have been for some time. These layoffs have nothing to do with missing a funding round.
bearjaws 4y ago
How much did Twilio grow from 2020-2022? Over 200%: from 2,800 staff to 8,510 ... This means this 11% reduction leaves them at... 292% growth since 2020, while its not amazing news, this is a small reduction given the growth they've had. These layoffs were inevitable IMO, everyone doubled their team (or more!) and then asked where the money was going to come from.
- tmpz22 4y ago
  How the **CK are these companies training and onboarding and managing all these new hires in such short a time frames?
  - porker 4y ago
    By hiring additional 'resources' to train and onboard and manage all these new hires It's *CKing crazy. Reminds me of government
  - ucm_edge 4y ago
    That is why we see layoffs like these. You just layoff the people that didn’t successfully self onboard and/or are unqualified but slipped through your screening.
    - bombcar 4y ago
      This is almost all of it. Anyone (even incompetent managers) can identify productive employees after working with them for a few months/year. And all the interview processes in the world aren't entirely effective in finding them before. So if you're flush with cash just wildly overhire and then let go those you couldn't find a place for. And that won't even necessarily be all the "bad hires" because most people can do some job well, you just need to transfer them to it. (Otherwise you have to admit that there are people not fit for working at all, and they must starve in the street or something.)
    - Seattle3503 4y ago
      I thought you couldn't lay someone off for performance reasons.
Hamuko 4y ago
>It would be a scary time to work for a VC backed company, because you're one missed funding round away from getting kicked to the curb, and VC's seem to be clutching the funds in this economy. VC-backed companies that aren't profitable are risky places to work for anyways. At least in these layoffs, the whole company doesn't go bust. But if you work at a VC-backed company, and you don't feel essential, then maybe keep your resume updated.

automatic6131 4y ago

Oh no, imagine having to provide value to the world instead of being in the business of selling a dollar for 95c. So hard ;*(

SV_BubbleTime 4y ago
Next you are going to tell me that a company is going to need to make a product going forward and can’t just expect to be supplied with literally endless free money forever.

time_to_smile 4y ago

You can't just broadly look at all companies for patterns in layoffs. It's important to divide startups from IPO'd companies. A common pattern for all of these is the inability to generate profit, but this is business-as-usual for a startup. Even in normal times it's okay for startups to lose money. Startups typically perform layoffs because they are running out of runway and need to extend the life of the company. Their entire reason for existing is the liquidity event that is either acquisition or IPO, and it is essential for investors that they survive long enough to see such an event. For publicly traded companies, which we've seen a lot of layoffs in recently (which in the last 30 days includes: Twilio, Rent the Runway, Uber, Shopify, Snap, Wayfair, New Relic). The common theme for almost all of this is negative net earnings and B2C. This is what makes Twilio interesting, they're the first B2B IPO with major layoffs. One thing that I keep hearing at my IPO'd startup is that "we won't have layoffs since we have a long runway", but runway matters way less for IPO'd companies. The key aim for IPO'd companies is to please your investors, and if you're shares keep taking a hit because interest rates go up and your net earnings remains steeply negative, then layoffs are coming. If this continues it will start to impact profitable companies, but not before doing much more damage to the non-profitable ones. This feels like a slow motion re-enactment of the dot com burst.

dangus 4y ago

The real problem in my mind is that it's difficult for employees to judge whether a company is making disciplined hires in the first place. The ballpark method I've been using has been to ask for the ARR and divide that number by the employee count. I don't know that this is a real business indicator, but it seems to me that the closer that number is to a workable salary, the better. Maybe all tech startups are all using VC funds, but they're not all created equal in terms of management quality. There are a handful of startups that boast never holding a formal layoff.

pc86 4y ago
Startups are by definition young companies growing extremely fast. Never having had formal layoffs for young companies experiencing high growth should not be something particularly surprising.

pierrefermat1 4y ago

I think this has been true regardless of the economy climate, but actually the climate has just resulted in more companies missing that funding round.

nonameiguess 4y ago

Sounds more like you're one missed funding round away from having a 10% chance of being kicked to the curb, where "kicked to the curb" often means a fairly generous severance that covers more than the period you're likely to remain unemployed (12 weeks in this case). While I'm sure there are some legitimately bad outcomes, it seems like the median outcome is keeping your job, and the median outcome for those who don't is a several month paid vacation.

duxup 4y ago

>you're one missed funding round away from getting kicked to the curb Isn't that always the case?

sulam 4y ago

While you’re not directly stating that Twilio is VC-funded, that implication can easily be drawn by the adjacency in these two statements. Twilio was VC funded, but they’re a public company now and have been for some time. These layoffs have nothing to do with missing a funding round.

bearjaws 4y ago

How much did Twilio grow from 2020-2022? Over 200%: from 2,800 staff to 8,510 ... This means this 11% reduction leaves them at... 292% growth since 2020, while its not amazing news, this is a small reduction given the growth they've had. These layoffs were inevitable IMO, everyone doubled their team (or more!) and then asked where the money was going to come from.

tmpz22 4y ago
How the **CK are these companies training and onboarding and managing all these new hires in such short a time frames?
- porker 4y ago
  By hiring additional 'resources' to train and onboard and manage all these new hires It's *CKing crazy. Reminds me of government
- ucm_edge 4y ago
  That is why we see layoffs like these. You just layoff the people that didn’t successfully self onboard and/or are unqualified but slipped through your screening.
  - bombcar 4y ago
    This is almost all of it. Anyone (even incompetent managers) can identify productive employees after working with them for a few months/year. And all the interview processes in the world aren't entirely effective in finding them before. So if you're flush with cash just wildly overhire and then let go those you couldn't find a place for. And that won't even necessarily be all the "bad hires" because most people can do some job well, you just need to transfer them to it. (Otherwise you have to admit that there are people not fit for working at all, and they must starve in the street or something.)
  - Seattle3503 4y ago
    I thought you couldn't lay someone off for performance reasons.

Hamuko 4y ago

>It would be a scary time to work for a VC backed company, because you're one missed funding round away from getting kicked to the curb, and VC's seem to be clutching the funds in this economy. VC-backed companies that aren't profitable are risky places to work for anyways. At least in these layoffs, the whole company doesn't go bust. But if you work at a VC-backed company, and you don't feel essential, then maybe keep your resume updated.