OK you all saw layoffs from the perspective of the employee or the spectator. Want to share from leadership side how things work. Ask me any questions, I can't disclose much about my personal exp so don't ask that. Every small to mid sized company maintains runway projections, pre-IPO keep track of funding rounds and post-IPO look at profitability vs growth. When "bad event" happens, a meeting gets called by the CFO and very few senior leaders (not even heads of eng/product usually) to discuss "profitability vs cost". First options are always growth costs i.e. reduce marketing spend, exit countries, shut down offices/real estate investments. If those aren't enough, the people/stock based comp discussion starts. Keep in mind, "bad event" isn't stock price drop! Bad event is the industry cooling and fear of recession which would mean less revenue because people generally are poorer and won't spend dollars with us. Now, finance/CFO creates waves of cost cuts. There is never a single wave, atleast 3. First one is usually superficial, "cut 5% cost by rescinding offers/firing interns college grads". For Second wave, they stack rank all the big projects based on ROI/Strategic need - and they set reduction goals for senior leaders who oversee the bottom projects, could be 5% reduction could be 90% or total shut down. If wave 2 scenario isn't enough or if the market worsens, wave 3 is about cutting across the board. How it works is, every VP+ gets asked to cut X% of their headcount. X% is again not the same, the stack ranked project list plays a critical role here. VPs will usually want to cut people that are easy to hire, junior people or people not from big brand companies or not with specialized knowledge are the first ones to go. They dump the names into a sheet HR owns. Based on how many names HR collects, they design exit packages and then start executing starting with wave #1. You know the rest because it gets publicized heavily. Edit: One note, execs will always tell you "at this moment we don't plan to do layoffs" this doesn't mean there is no plan to do layoffs. They simply can't prematurely say anything, think about it if they said "Yeah maybe we will do layoffs" half of the company will jump ship and the media will have a field day. Therefore, they would rather tell a lie and they justify it by letting HR do the actual planning so they have plausible deniability. If layoffs are needed, they will simply say "yes I take full responsibility" - what can you do then? Edit2: This has nothing to do with Doordash. I joined the company only a few months ago. Rest assured IMO Doordash is going strong, revenue is solid and growth is good. No such layoff plans though I suspect worse case we may do a hiring freeze. Key takeaways: 1. You being laid off or not, depend on the project you are working on and its value to the company. If the project has immediate revenue, you are good. If the project has revenue down the road but is critical to the company's survival (e.g. core innovation) you are safe. 2. While you may hear about 1 wave of layoff, know that the company has planned +2 waves. They may never execute on it because the market recovers but there is a list and your name is most probably on it. 3. Stock drop doesn't mean layoffs - revenue drop or fear of revenue drop due to recession does mean layoffs. 4. Companies that layoff are the companies you want to work for in the long term IF you want business success because you can be sure they have good business leaders albeit it is inhuman. 5. Companies that try to retain people during tough environments are the ones with a higher chance to crash land because its a symptom of the leaders not being able to make tough calls or cut costs. 6. Your Director or VP may act innocent and your CEO may take the blame - know it was your Director+ leader who identified you for layoff not the CEO. The CEO is unfortunately just trying to be a good leader.
What should be the mental model to switch jobs at this point? If you are offered TC that is 1.5x but it’s in industry that has higher chance of layoffs, how do you think through something like that?
1.5 is not enough in this market. The 0.5x may be lost to stock turbulence. If its close to 2x AND career growth wise you think it can be 3x to 5x, than take the risk - but only if you have an exit door like a boomerang, savings, etc. Secondly, there are some obvious companies that you just want to avoid. For example if a company has 10 million revenue and have a thousand people OR if the company went through a hiring spree where they 100% or more increased their headcount, you want to avoid those.
I think you know about it. Risk adjust. 1.5 with risk is it worth more than 1 with less risk. It’s investing, what’s your risk tolerance?
K
was it not helpful?
Blind needs downvotes for comments like this. Ignore this ass OP
Let's take coinbase for example. They spent millions of dollars on superbowl ad. Now 4 months later they are laying off 18%. How do you explain from an employer perspective? What's the math behind this? Is the runway for coinbase so short or is the burn so gigantic?
Coinbase is not deeply in trouble at all IMO. What I think happened was, they saw crypto growth and decided to jump on the chance to make some quick bucks. At some stage they panicked because of the sharp drop in the markets & crypto crash and decided the risk was too big to pull off and wanted to save costs. At the end they made the right call for the business by cutting fast and cutting early even though because of this major jump from "committing to growth" to "pulling back suddenly" caused them to execute pretty poorly on the separation.
No, I think what happened is the Board of Directors stepped in. Brian Armstrong was always very bullish. He was talking about continuing hiring after the big stock drop. Then he abruptly changed direction. You see similar echoes of this with the 18% layoff today. Brian Armstrong serves as CEO at the pleasure of the Board.
Conbase PR team is out of the woodwork.
Also - who knows if the ROI on the Super Bowl ad was profitable or not. It’s a one time cost. RND is a recurring cost. They show up differently on the balance sheet.
I feel like I sit in a grey area. On a revenue generating team, but in an operational role. Somewhat replaceable. I’ve been assured I’m not as risk of being laid off but I don’t trust employers, ever. I just want to know where I sit on that list from 1 to 300.
What is the usual timeline for execution since the moment the stack ranking is done?
Once the trigger is pulled it’s as fast as HR can do it as humanly as possible. There is a go no go between waves but within a single wave it’s a matter of days because they don’t want to risk leaks or people panicking and stealing or leaking sensitive data.
Thanks for the info, good to know! There’s been rumors that stack ranking is done, does it most probably mean it’ll be executed within next few weeks?
Tell us telltale signs to identify that such a scenario is happening wave meeting. Any cues to look out for in the activities of managers? How to know if one might end up on that list.
The tell tale is lack of signs - people who are invited to this meeting are usually people who have done this before and know how to have a poker face. You will almost never be able to tell except by looking at hard business metrics and market conditions.
From being through this a few times at different companies: 1) hiring freeze and/or rescinding offers, 2) discussion of cost cutting in general, and always always 3) Blind rumors of a layoff at least a week or two ahead of time. I’ve never been through a layoff wave that was actually kept fully secret.
Good points but #4 doesn't make sense. By that logic everyone should try to work at better .com
Exactly my thought
Better.con is now firing for alleged performance issues to avoid paying a severance, even though the employee was never issued a verbal or written notice, never placed on probation, etc, and had an excellent work history and stellar customer reviews.
Wow! Thanks for demystifying the process. I appreciate you taking the time.
+1!
++1