Do startup help employees after failure?

[vaibhav228]

When startup fails and shutdowns, do those startups help employees for job reference or recommendation letters or job expo ?

If yes, how do they do that?, if not, is there any reason for it?

[davismwfl]

Good ones always help employees regardless of reason for the transition.

If the company has wound down cleanly the team will have been looking for jobs for 1-2 months before there is no more money and so the founders and executive team will have helped as many of them find soft landings as possible. Generally founders will use their networks, and investors networks to help people get through the door at other companies. They generally provide references and try and do everything reasonable and ethical to get people placed. This includes letting people use company computers to send resumes, use printers, internet access etc.

When companies don't wind down gracefully and fail fast and loud of course most of this doesn't happen. But in those cases where the founders are good people but just made mistakes they will still do all of the above with whatever resources they can.

The team usually also looks out for each other and like the saying goes A players want to work with A players so once one is placed they'll work to help others too.

IMO there is never a reason not to help people in the case of the company winding down. Even if a person was someone who wasn't a top performer you have a responsibility to that person as another human to help them as much as possible.

Why I have seen this go sideways sometimes is when employees start thinking the company owes them all this and a lot more. The reality is the company owes treating you like a human being and trying to do the right thing. But they don't owe you more than is possible or reasonable.

[vaibhav228]

Thanks. I just read the interview from Slack CEO today and he was stressing on the point of helping employees, if your startup fails.

So wanted to check, if all other companies also do the same for their employees.

[davismwfl]

You're welcome. I have had to wind a couple of companies down that weren't successful and both times we did everything possible to help the employees and even the couple of contractors we had. I learned this ironically at GE when I worked there early in my career. We had layoffs of staff, both professionals and non-professionals and the level of effort and resources GE had us put into helping those people left a huge impression on me.

One thing I have seen in the startup community over the last 20+ years is generally people do their best to help the employees. Although there are some pretty infamous examples of the opposite, those seem to be the minority.

Also in terms of references, caymanjim is right when it comes to enterprises, but small businesses and startups I find are usually a little more reference friendly to a degree. Personally when hiring people though, I generally skip any reference checks for the exact reason he listed, as they are a waste of time. However, for a critical position I do generally call around to people I know and see if I can learn anything that might affect my decision, but for the average position I wouldn't bother.

[vaibhav228]

Thanks davismwfl. This very good information.

I am working on this side project idea where failing or shutting down startups who want their employees to get job somewhere can create a job board with information about there employees and can share that job board with their networks, VC group companies etc.

[caymanjim]

Smart companies don't provide references because they can get into legal trouble for it. Even when a company does provide a reference, it's going to be impersonal and worthless.

Good references come from individuals. Some companies might prohibit their employees from providing references, out of the same legal concerns, but many have no policy. And when you're talking about a failed startup, there may no longer be any entity that's concerned. Either way, just get references from specific people you've worked with.

No one at a "job expo" gives a damn about references.

It sounds like you may be early in your career, and are putting too much weight on references. Your average employer never even asks for references, much less checks them. If your resume is one failed startup, you might want to put it on there and try to explain the situation, but if you've got other credentials and professional experience, you can just leave the position off entirely unless it's worth listing due to the duration of employment.

[vaibhav228]

What legal trouble might there be for providing references?

[caymanjim]

Saying anything negative can easily lead to a lawsuit (regardless of merit). This creates a reluctance to do anything more than confirm title and dates of employment.

[vaibhav228]

understood.

[suramya_tomar]

Good ones do help their staff anyway they can, this includes letters of recommendation, industry connects etc.

There are a few that don't bother and in my opinion the fact that they don't care enough about their employees to give them a decent recommendation explains why their startup failed in the first place.

Here's an example talking about the same thing from a startup's perspective that had to layoff employee's: https://medium.com/@vinit/layoffs-suck-be-less-of-an-asshole...

- Suramya