Layoffs from the founder’s perspective
This isn’t a post about the layoffs in Epic Games this week, there’s been plenty written about that and I’m incredibly sympathetic to those affected (there are some amazing people so if you’re hiring, go and chat to them). Instead I wanted to write about the layoffs we did in SuperAwesome a few years back and reflections from the perspective of the founder.
In 2017 due to a combination of an investment re-trade and a bank whose credit committee had suddenly realised they had a venture debt business, we ended up with a perfect storm of having a huge amount of market momentum while almost zero liquid1 cash. We laid off 20% of the team and cut salaries for everyone who remained. It was brutal but nonetheless provided some learnings and observations.
An important pre-reading note: If you haven’t been in the seat, all this will read like ‘won’t someone pity the poor founders etc.’ but, with the greatest respect and compassion (if you’ve been recently laid off), this is isn’t for you.
Firstly, it’s always shocking how many people get through their professional career without having fired anyone. There’s no non-callous way to describe this but going through this process will make you a better manager.
Secondly, attuning the company’s culture to resource constraints drives prioritization and an awareness of opportunity cost like nothing else. It helps create an anti-fragility and I fundamentally believe that many companies which have gone through these events are inherently stronger organisations.
Thirdly, the investor stigma of ‘having to lay people off’ has always baffled me. Companies which cut resources are by definition better resource allocators than companies which go out of business. Those that cut will have a higher probability of reaching their vision. At the time we had some investors panicking that this was the end, they couldn’t have been more wrong.
Four. For your professional management team, this will be one of the worst days of their careers. It’s not just the layers of secrecy and professional lying that’s required, it’s the sense of indictment of their career choice (this will pass).
As a founder, your job is to push and push to reach that end goal. As much as investors (or me in this case) might talk about resource allocation, building a new company just isn’t that simple. Experimentation and innovation don’t always come from acts of precision. The founder’s job is to ensure survival and success and sometimes (often) that looks like a pendulum.
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It was around about this moment that my interest in invoice financing was born.
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