[vogt]

>CEO said there'll be no severance or healthcare.

Classy. Learning a lot about how certain people treat their employees during these last couple of admittedly insane years. Good for future reference, I guess - though not much solace now. I feel for the employees.

Edit: Wow, more responses than I thought! I admit that the tone of my comment was too reactionary, but my opinion stands. I won't modify the original comment but instead will add this quote from Dalton Caldwell, YC Partner:

"So what happens if you have less than three months of cash? It's important to face the issue head on and account for your liabilities and the scenario of shutting down your company.

In many cases, <2 months is the point of no return. If you are in this state it is immediately necessary to lay off your employees and give them severance, pay down your obligations, and use your remaining cash for shutdown costs. If you don't do this and instead end up with zero cash and outstanding payroll, tax or other obligations, things will get Very Bad." [1]

Convoy raised $1.1b including a $260mm Series E almost exactly a year ago.

[1] https://www.ycombinator.com/library/3Z-advice-for-companies-...

[benced]

Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.

[bart_spoon]

If things are dire enough to close up shop now, they probably were dire enough to close up shop 2 months ago, and you can use the cash to give your employees some runway for finding new employment.

[itsoktocry]

>If things are dire enough to close up shop now, they probably were dire enough to close up shop 2 months ago, and you can use the cash to give your employees some runway for finding new employment.

This might be true, but personally I'd rather the company try to remain a going concern.

[sangnoir]

> This might be true, but personally I'd rather the company try to remain a going concern.

You could refuse the severance as an employee if you wish to go down swinging.

Edit: Knowing the company is doomed in a month or 2 and not employees offering severance is not a good thing yo do, in my book.

[JumpCrisscross]

> Knowing the company is doomed in a month or 2 and not alerting employees is not a good thing yo do, in my book

Has anyone at Convoy claimed this?

[sangnoir]

Not just alerting, but offering severance. No one at Convoy was offered severance - now or in the past month. I edited my earlier comment to reflect my meaning.

[quickthrower2]

In the limit this means go insolvent/bankrupt and not pay out to creditors such as lease, caterers, cloud services. Finish with unpaid taxes and wages.

[pc86]

I'd always rather see employees get payouts on shutdown compared to companies, especially things like billion/trillion-dollar cloud companies and commercial real estate.

That being said if you're burning $30M+ every month in the current financial market I really hope you cancelled all your catering contracts a long time ago.

[quickthrower2]

Depends: food can dupe people into working extra hours for free. They think they are having a lunch break as they talk shop while chewing on their ciabatta.

[adastra22]

A startup will never survive long enough to close the next round with that logic.

[bart_spoon]

Of course they will. What is the magic that separates success from failure that apparently only magically appears within the last 4 weeks with operating capital in the bank? Move your time tables up by 4-8 weeks, including funding raises and closing operations, and none of this is an issue.

[adastra22]

According to what’s been said, they were chasing opportunities that they thought would finalize within that timeframe. 4-6 weeks ago they had good leads for closing a deal in 4-6 weeks. None of those happened to pan out this time, but every startup has been at a point like this where runway is coming up short. This is normal and expected operating conditions.

[sroussey]

No, when you are in the fog of war/fundraising, it can be very difficult to decide between 100% let everyone go, verse some other percent where everyone keeps their jobs. Very much depends on the circumstances.

If no one was picking up their calls and it was obvious, then sure.

Not much is really that clear though.

In my tiny case a while back, I wiped my liquid savings to get me employees some time. Can't do that with over a thousand employees though!

[michaelt]

> What is the magic that separates success from failure that apparently only magically appears within the last 4 weeks with operating capital in the bank?

I've heard it said that every boss of a failed company will tell you that they almost got a last minute investment, or almost made a big sale, or almost got acquired, if they'd only had an extra week or two it'd have all been different.

Of course that could be wishful thinking - or a sign that in the final days they were offering fire sale prices.

[avalys]

If you can still operate the business for another 8 weeks, there's a chance that things will still work out, and it's pretty pessimistic to preemptively shut it down because you assume you're going to fail. Pessimists don't generally find themselves in the role of founder/CEO of a startup in the first place.

[arrosenberg]

Actually good founders and CEOs do tend to be realists. They know when to hold and when to fold, and they place a high value the well being of the people especially when things go poorly.

Manic founders who insist that a rescue will come right up until the last second often leave people feeling burned and don't get as many second chances when things don't go well.

[ska]

> there's a chance that things will still work out,

There is a big difference between a less than 1% chance and an 80% chance here. Part of the job is knowing that difference, and how to handle/communicate it.

[pc86]

Especially when you're only doing it so you can pay your employees 8 weeks' severance when the alternative is 6 or 8 weeks' pay while working.

[mhandley]

Exactly that magic happened with our startup last year.

[rvba]

There are those (rare?) cases of bootstrapping

[pc86]

What about 2 months before that? 2 months earlier still? Another 6? They raised $260M a year ago and it sounds like an extraordinarily capital-intensive business.

It's pretty easy to say "oh you should have done this differently" with almost zero actual knowledge of the situation or experience.

[andrewmutz]

Probably they used those two months to try to find a buyer for the company

[tejohnso]

Tesla wouldn't exist if Elon had shut down at the 2 month dire point. At least, I recall him saying they were at one point about 2 days away from bankruptcy.

Not surprising though, that Elon would be in the same camp as this Convoy CEO, not likely to shed too many tears over worker concerns.

[FireBeyond]

> At least, I recall him saying they were at one point about 2 days away from bankruptcy.

Elon has said several variations of this have happened on several occasions.

And yet this fragility never really made it into IR reports or SEC filings or annual reports.

So either he exaggerates (shocking concept from a man whose company has on multiple occasions had to follow him around and say "his claims of Tesla doing X, or doing it by Y date, are visionary, and not statements of fact"), or there's some hinky accounting going on.

[paulddraper]

I suspect this was pre-IPO.

[beambot]

I know of two companies with >$1B exits that were running on fumes when they turned it around. One had 3 days of runway remaining; one had 16 hours to get a wire in to make payroll. Today these companies employ thousands.

FedEx famously (allegedly) came down to a hand of blackjack in Vegas to make payroll & avoid bankruptcy.

[shafyy]

And Elon hasn't been known to exaggerate greatly or lie, so this must be true.

[signatoremo]

Who knows if it was two days away from bankruptcy, but Tesla and SpaceX were very close to running out of money in 2008:

https://www.businesstoday.in/amp/technology/news/story/elon-...

Also where were you during 2017, 2018 period when the doomsayers (aka TESLAQ) predicted the same so often? So much so that this tweet became famous?

https://x.com/elonmusk/status/980566116614291456?s=46&t=yN2X...

[shafyy]

I don't dispute that they were close to running out of money, but what does "2 days" even mean in that context? It probably means that soon they would have needed to decide when to start the bankrucpty procedues or something.

[sokoloff]

He said that before he said he had "funding secured" to sell the company at $420/share and after he laid out the planned 35 minute Hyperloop from LA to San Francisco, right?

(I'm just trying to nail down the timeline of full truths/no cap from Elon.)

[MourYother]

Everyone at Tesla would be better without the manchild.

[jahewson]

No a company cannot begin winding up without reaching an agreement with its creditors - the winding up process is a de-facto admission of insolvency and the company needs to declare bankruptcy and the creditors get first dibs on the assets.

It’s nothing like a layoff. For example, imagine that you are a supplier to company A and now your contract is both unpaid and cancelled and you’re going to have to lay off some of your own staff. Do you recover the contract money from company A, to give your staff severance? Or can company A stiff you and use it to give their own staff severance? (No, they can’t.)

[v1l]

Entitlement is more prevalent than we think.

[jonkho]

Yep people talk like they are owed something. They are not. Outstanding obligations are met with each paycheck.

[WisNorCan]

It is interesting to see that employees of Convoy aren't saying bad things about the CEO. But people on the outside who don't know the CEO are saying bad things.

Usually it is the reverse.

[ziddoap]

>It is interesting to see that employees of Convoy aren't saying bad things about the CEO

A whole two people who claim to be ex-convoy employees have chimed in from what I have seen. Hardly representative of what the average ex-employee thinks. Certainly not enough to form a conclusion either way.

[sangnoir]

Selection bias - Convoy employees who didn't like the CEOs approach didn't stay employees for long.

[signatoremo]

OTOH who stayed until the end for nothing is often more bitter

[FireBeyond]

Is it your serious contention that because insufficient numbers of (now ex-) employees of this company haven't posted on Hacker News within three hours of learning about their unemployment, that it's a non-issue?

[laserlight]

Stockholm syndrome is a thing:

https://en.wikipedia.org/wiki/Stockholm_syndrome

[neaden]

To be clear, it actually isn't a recognized psychological phenomenon as you can see at your own link. It was invented by a police psychiatrist who did a bad job being a hostage negotiator and came up with it to explain why the hostages were mad at him.

[mrnaught]

do we know if the commenters claiming to be ex-employee, real ex-employees ?

[Ensorceled]

I've been part of several failed startups ... they ALL provided severance during shutdown. Where is the "obviously" coming from here? You only can't pay severance if you are shutting down because you "ran out the clock" on a clearly failing venture and deliberately screwed your employees.

[jkubicek]

I've only worked at one company that shut down, and we were notified a month in advance, giving us all time to find a new job while still getting a paycheck and healthcare.

If the CEO wanted to continue operations for another month to allow folks to find new work, they could have.

[alex_lav]

> Ex-Convoy employee here: if a company is shutting down, it obviously can't provide severance. It's not a matter of class or not.

A statement that's just verifiably untrue. Companies that shut down provide severance all the time. It's just a matter of priority.

[dudul]

Once you've reached 1 month of runway I think time is up. Let everyone go with a few weeks of severance and let them find a new job.

[mikeryan]

They had two months of salary and healthcare two months ago. That’s the time to cut bait.

[shermozle]

In Australia this is called insolvent trading. Is that not also a crime that Directors go to jail for in America?

[itsmeacupoftea]

To be clear, in Australia, this would not be trading whilst insolvent. If the director was not negligent, and they had a legitimate reason to believe they would be able to pay their debt when it fell due, whether via new revenue, new debt or restructure of existing debt, then it wasn't trading whilst insolvent.

The directors had reduced expenses, had been seeking further investment, to increase revenue, and finally to sell the assets of the business, before voluntarily ceasing to trade. They executed their power and duties in good faith, with the care and diligence a reasonable person in their situation would have. It's not a crime to have a business fail.

[dboreham]

> if a company is shutting down, it obviously can't provide severance

Not really true. The company is owned by its shareholders, and they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance, or they may divide the funds among themselves. If there are no funds, they can choose to invest more to pay severance. Obviously they're unlikely to want to do that, but it's not a case of "can't" but rather "won't".

[JumpCrisscross]

> they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance

If they can do this, they can pay salaries another month. Making a go/no go call at the edge is difficult. It sounds like Convoy thought it was getting a loan that didn’t come through.

Put another way: if the CEO shut down the company while loan negotiations were in place, it would have zeroed out the common stock while giving preferred investors a pay-out (in addition to everyone some severance).

[sangnoir]

> If they can do this, they can pay salaries another month

If leadership decides to use the remaining funds on salaries rather than severance - then they should be judged on that! What good is buying one extra month for a doomed company? That month is more valuable to individual employees who can use it to look for new jobs

[JumpCrisscross]

> What good is buying one extra month for a doomed company?

You don't know it's doomed. Plenty of companies have turned around while running on fumes. This is fundamental to start-ups.

> month is more valuable to individual employees who can use it to look for new jobs

Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion should be around improving this benefit for everyone?

[sangnoir]

> You don't know it's doomed.

It's swell when people gamble with employees well-being on the miniscule odds of a miracle. And even better idea is to offer severance, and those employees with the same appetite for risk can get additional options from the folks who leave. That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings.

> Everyone who lost their jobs at Convoy is eligible for unemployment

Unemployment benefits don't come anywhere close to tech salaries! They take time to process.

> Perhaps the discussion should be around improving this benefit for everyone?

We can multitask. What is in my power to control is to avoid working with anyone associated with this decision and encourage everyone else to do the same - board-members and the entire C-Suite. We have a - let's call it poor culture fit

[eru]

> Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion should be around improving this benefit for everyone?

I think you can take out private unemployment insurance, if you are worried about that? (Or just have savings.)

[webdood90]

> Perhaps the discussion should be around improving this benefit for everyone?

Red herring

You're participating in mental gymnastics to validate what is essentially poor leadership. Why?

[vidarh]

The problem is you don't always know it's doomed. A company I co-founded got to within 5 days of insolvency before we secured the next $5m round. The company never got a big exit, but it did sell a few years later, and the product still exists 22 years after.

I think the big question is how well communicated the risks are. In our case I believe everyone knew, and there'd have been no hard feelings if people had chosen to look for new jobs once funds got tight.

[rdl]

FedEx famously got to within days of running out of money early on, and there is a story Fred Smith made payroll by taking the remaining cash to Las Vegas and gambling.

[addicted]

Weren’t they trying to get a cash infusion through an acquisition? Seems like they failed and ran out of money.

[stuaxo]

This is why you need laws.

In other countries they would have to pay the salaries.

[yellow_postit]

We have laws. There’s a trade off between more vibrant economies (easier to start, fail, start again) and more stagnant ones (harder to start but more safety nets).

There’s no perfect set point and the trade offs will always have downsides.

Given the risks of working for a company in the stage Convoy was in I’m not exactly sure this is a bad outcome.

[mrcwinn]

>choose to invest more to pay severance

Deploying capital into something that literally has no return just doesn't make sense. You're also ignoring the reality that most capital comes in at the start. It doesn't come in at the end. That's an irrational investment. Would you buy a house that's burning down in the interest of the current homeowners?

Could a company receive funds at the end? Legally, sure, maybe (maybe not given fiduciary duties to LPs).

Investors would have to say to their limited partners: we're going to take your money, and hand it over to employees, and those employees will do no work for us and the company is shutting down anyway. That's a very ineffective use of capital and those types of decisions are worse in the end for the economy, I would argue, which does impact everyone.

Startups are risky for investors. They're risky for employees too. I think a better solution might be to bolster unemployment insurance. After all, investors often have downside protection (usually in the form of preferred shares or preferences). Employees need downside protection too. But let's not perverse how capital should work.

[clutchdude]

> That's a very ineffective use of capital and those types of decisions are worse in the end for the economy

Disagree - it frees those employees to begin working for more productive companies sooner rather than drag them through "you are fired with no provisions for healthcare. Good luck and don't get sick during the donut period."

- yes, it's an special qualifying trigger for the exchanges but you are asking someone navigate this in short order(likely end of the month or less than two weeks)

[datadrivenangel]

Disagree to disagree - employees are free to begin working for more productive companies when they're fired with no provisions for healthcare.

In spirit though, I agree. Social healthcare not tied to employer would allow for more labor mobility. These transitions should not abrupt or catastrophic ideally.

[clutchdude]

> Disagree to disagree - employees are free to begin working for more productive companies when they're fired with no provisions for healthcare.

But that's a bad thing - because once your employment tied healthcare abruptly ends, you scramble to get something to restore it.

This may include settling or taking less optimal jobs or accepting a lower paying job.

[cheriot]

Employee claims supersede equity and debt holders. The question is whether the company shuts down with money in the bank or keeps running until it's out.

People should remember the board and CEO for screwing over employees.

[somic]

My understanding is that in the US, earned wages (while employees were employed) are indeed employee claims. Not paying these is what YC guidance above says will lead to "very bad things."

After people are let go, severance and continuation of healthcare beyond some term mandated by law (maybe state, maybe federal, maybe varies by state, don't know) are not considered employee claims in this sense.

CEO and the board didn't follow the YC guidance mentioned above, and it's on them.

[_jal]

>People should remember the board and CEO for screwing over employees.

This is important if you're staying in more or less the same field - many specialties are smaller worlds than you may think.

I am somewhat bad with names, so I've learned to take notes. I have a list of people I'd love to work with again, and another of people whose presence will stop me from accepting an offer.

[stickfigure]

> choose to invest more to pay severance

This is not a thing that happens in reality.

[thisisbrians]

No; the fiduciary duty of the CEO/board is to the shareholders. If there is a chance to salvage continuity of operations and preserve the value of equity, that is what they will do, even if it means operating until cash runs out. It is a matter of basic incentives. As much as we'd love to do the "right thing" and pay weeks/months of severance for no work (I am a founder myself and would love to, in a perfect world), startup employees should know the risks of working at a high-risk venture and plan accordingly. The middle road here is to do a significant layoff with severance, but this isn't possible in every case. Additionally, a company-saving customer contract or funding round can fall apart at any moment. This is, unfortunately, just the nature of the business.

[paulddraper]

Technically true, but no one is going to make a zero ROI investment.

Severance for companies with an ROI are one thing. Severance for a failed company is quite another.

[balderdash]

Ehh, talk to a lawyer, but at certain point, often before technical bankruptcy/insolvency, mgmt/board actually have an obligation to the creditors, not shareholders (as they are no longer the beneficiaries)

[gosub100]

I've been laid-off from a startup and got 2-3 weeks severance

[golergka]

Small (under 10 people) startup I worked at shut down this June, and I got 2 months severance I wasn't even owed, pure good will of the CEO.

It's a choice.

[clutchdude]

At some point, during a monthly accounting reconciliation, someone should have piped up and said "Unless $<x> revenue comes in the next <y> months, we will be unable to fund personnel/payroll in <y> months." .

[the_gipsy]

You sound very gullible. As if execs don't know nor pick when to shut down.

[don_neufeld]

It sure is!

I shut down a VC backed startup over a decade ago and yes we did provide severance.

[seattle_spring]

That completely depends on if the founders or investors are walking away with anything.

[cyanydeez]

You think they couldn't forecast this months in advance?

Parent is basically saying they gambled you sift landing and lost, as most psychopaths would.

[wutwutwat]

I wonder what golden parachute (severance) your ex-ceo took home

[__loam]

There's no money left to provide lol

[busterarm]

Startups are not established businesses. They are inherently risky ventures.

If you want to be coddled and showered with benefits, go join a Fortune 500. Startups are not for you.

[conjecTech]

This is the worst take I have ever seen. This company just raised $250 million. That is more money than 99% of companies will ever have in the bank. Being a "startup" does not given you license to wantonly play with your employees' lives and wellbeing. As the quote from Dalton above shows, there are norms around these things which companies 1/100 this size regularly abide by.

This is not normal behavior for any company, and you should run away from anyone trying to convince you otherwise. The people responsible should be treated like pariahs.

[busterarm]

They raised $260 million and had at their peak 1500 employees.

Think for a moment how far $260 million gets you when you have 1500 tech employee salaries in Seattle to pay. Plus operating expenses. Don't forget to add 15.3% for payroll tax. Median software engineer compensation in Seattle is 219k. Infrastructure and office space isn't free either. Seattle office space averages $43/sqft and the average employee space is 150-175 sqft.

That. Money. Is. Long. Gone. It's not a bad take, you just won't do basic math.

Raising $260M doesn't mean you're rich. The investors expect you to spend that money and otherwise why are you raising that much?

They spent 4 months looking for a buyer and had already shed 1000 employees before shutting down operations. It's not like current employees were clueless about what was going on.

Functionally there's little difference between operating up until now or giving 500 "chosen, lucky" people severance 3 months ago.

[conjecTech]

None of those factors are unique to this business. Somehow adults at thousands of other companies are able to handle this situation reasonably despite also having to pay rent and taxes.

I'm sure very few of the people whose continued work they were depending on for a sale would have stayed this long if they realized they were going to be treated like this.

Actions and comments like this are how you kill an ecosystem.

[busterarm]

If your company is multiple funding rounds in and lays off two thirds of its employees in a day, you should be putting your applications out before the close of business day if you're in a situation where you need to make ends meet.

Just because you remained does not mean that your job is secure. This is strictly common sense.

Also I've had a pretty long career and I don't know of any company in this situation who paid 500 employees severance after ceasing operations.

[teachrdan]

I don't doubt that you've had "a pretty long career," but I wish you had spent a moment Googling before posting this take. I immediately found an example of a 250-person company paying employees severance after deciding to shut down operations. If it's possible at 250 employees, it's possible at 500.

https://www.hollywoodreporter.com/business/digital/inside-qu...

[JacobThreeThree]

Well said.

As if a month or two of severance, which I'd wager your average critic in this thread would promote as laudable, would do much of anything in the grand scheme of job security.

Given the upside of a company surviving, or even ultimately succeeding, as an employee, I'd rather try to help a good/fair company ride it out and survive than folding early to pay out a few months.

[paulddraper]

> Somehow adults at thousands of other companies are able to handle this situation reasonably despite also having to pay rent and taxes.

Are these thousands of successful companies? Or failed companies?

> Actions and comments like this are how you kill an ecosystem.

Sorry.

[sushid]

I didn't realize wanting healthcare while getting let go from a company I worked for was desiring to be "coddled."

[Fordec]

This is why dissolution isn't some whopsey-doodle word. When there's nothing left, there's nothing left. If that is a risk, including in that is your private healthcare provision, leave this stuff up to the 20 year olds that don't have the health concerns. Coddled might be too diminutive of a phrase, but if it's a risk you can't live with by your life expectations, don't get involved. Pick another job on the market.

Now healthcare shouldn't be tied to employment, and it's not in my country. But this is the political choices of Americans in America. Not the fault of the individual companies who are subject to the system.

[asdff]

The whole issue with this premise is that someone has to bear the risk. There are no 20 year olds who know with certainty that they don't or will not soon have health concerns that require insurance. Anyone could be get hit with a car walking across the street or get a photon to break some DNA in their skin and cause a melanoma. 20 year olds are not invincible or always in perfect working order.

[Fordec]

And yet, statistically, the vast majority will be healthy. And the ones with chronic issues should know where they need to be on how to manage it. It's down to you if how you want to live your life. Plenty of tech companies that aren't startups. Plenty of countries that pay less and have higher taxes that have the safety net. Pick your lifestyle and live with your decision. I did, took the risks, it didn't pay off, but I would do it again.

[asdff]

I don't think you understand how much money is in the bananastand here in the US. Even with a european tier safety net, its not like a huge tradeoff will be made. You could easily pay people the same and give them solid benefits to boot with just a little bit more taxation at the top end of the economy. People act like taxing rich people will scare them off, yet there are probably more rich people in California than in Texas or some other red state where they'd be taxed less presumably.

[dboreham]

Quick note that this wasn't a bankruptcy. Company just ceased operations. It still exists.

[dymk]

Take it up with your elected representative, healthcare should not depend on your employer. Convoy literally does not have money. That's why they're shutting down.

[oh_sigh]

You can buy healthcare on the free market.

And you aren't being "let go" - the entire company is going under. If you are laid off and the company stays healthy, it makes sense to have some concessions. But if the entire business ceases to exist. I don't know why would you expect anything from it.

[Apocryphon]

Wonder if it might make sense for the social safety net to include such a provision for workers of businesses that go under. If we're not going to have universal public coverage, might as well add provision for such an extenuating circumstance as that.

[camhart]

Unemployment benefits should already apply wouldn't they?

[Apocryphon]

Should provide something better than COBRA

[oh_sigh]

I think it makes perfect sense - in fact, divorcing healthcare entirely from employment.

[v1l]

Is that part of the contract that if the business is shutting down or laying people off that they need to continue to pay for things for you? I don't see why there's any obligation.

[omginternets]

The series A startup I work for just laid off 30% of its staff. They got 3 months severance, 6 months healthcare and outplacement support.

So you could work for Bezos, or you could work for these guys. I've made my choice.

[busterarm]

Your series A startup continues to operate and offers a severance that isn't even required for the purposes of reputation management.

They want to be able to hire good people tomorrow so they pay you severance today.

The company in question here is dead. There is no more money coming in and no business to operate.

[omginternets]

I understand what you're saying, but I think you may be missing my point, which is: Jeff Bezos's reputation is damaged by this. I will not work for anything he touches because I don't think he's behaving decently.

[busterarm]

So he already put up and risked his personal money to even start this venture and it failed and you're saying he should continue to lose money on a failed investment even though these people will receive unemployment insurance that his business already paid tax into to fund?

Startups are risky and even though you work at one, I don't think they're for you. There's plenty of other union labor jobs with pensions out there that seem to be more your speed. Your position isn't a reasonable one.

You want to have your cake and eat it to. All the rewards of being an early stage startup employee without any of the risk or skin in the game.

[Larrikin]

Why is it a requirement to have "skin in the game"? What does that even mean?

The risk to an employee at a company that got $250 million should only be accepting options that could be worthless in lieu of a portion of salary. There absolutely does not need to be any risk of losing healthcare, lacking severance, or any other loss of benefits. Founders want you to believe this but it doesn't have to be true.

[omginternets]

>Startups are risky and even though you work at one, I don't think they're for you.

Fortunately, there are many startups whose leadership is prosocial enough to try to offset some of the risk to its employees.

Since you seem like a Chicago School kinda guy, I'll put it in terms I think you can understand: employment is a market, and I am fortunate enough to have a optionality. It's bizarre that you fail to recognize that; it's pretty critical to your own analysis.

[umeshunni]

What does Jeff Bezos have to do with Convoy?

[sokoloff]

He's an investor in it. So basically, not much.

[asdff]

You could easily rewrite this comment to be about child labor in coal mines and textile mills. At the end of the day people are starting to expect certain basics from businesses considering places like In n Out are now offering benefits packages, and its about time we also enforce certain standards. If that raises the cost of doing business, so be it. I expect the business would be even more lucrative if you didn't have to pay your employees at all but that's not a good argument for exploiting the worker.

[netbioserror]

Boilerplate vapid moralizing nonsense. Are you assuming there's some magic stockpile of millions upon millions hiding somewhere that could be used to sever all of these people? You've already been told this is fantastically unrealistic for a startup bankruptcy. Unless you can suggest where to find the funds, you need a reality check.

[asdff]

Well, back in the old days, they did just that and called it a pension plan. Takes a little foresight and is too little too late for convoy of course, but these things can be planned for too but clearly the worker is not prioritized in these ventures.

[lelandbatey]

There's been some pretty clear suggestions up thread on where to find the funds, namely "several months ago in the past". To be more clear:

The business (Convoy) should have shut down in e.g. August of 2023 when it was clear that they still had enough cash to pay out severance and still cover the expenses of winding down the business. They did not take this option, choosing to instead risk it all that they could bring in an infusion of cash without firing folks.

This is not "boilerplate vapid moralizing nonsense"; to take such a risk when you have a company of 500+ employees is a poor business choice.

[otteromkram]

If you can find out where it says companies are obligated to pay severance or other benefits to employees in the US, I'll eat my hat.

Smart business choices rarely align with choices that I benefit employees.

[busterarm]

Everyone knew the writing was on the wall 4 months ago when they were shopping for buyers and laid off 1000 people.

The fact that they continued to operate for 4 months with no new investment is the same as if they had shut things down then and offered severance.

There was no gamble here like your comment implies.

[rozap]

I'd hardly call "Series E" a startup. Just a company that was bleeding money.

[busterarm]

Everything's a startup until its business model is self-sustaining/provable.

A lot of even large companies never leave the startup phase.

[surgical_fire]

How dare you people don't want to be treated like a subhuman to make some early investors insanely rich?

[dymk]

What investor got rich off of Convoy?

[TedDoesntTalk]

Isn’t this standard for startups that shutdown?

[eli]

It’s common but that’s no excuse

[jes5199]

total shutdowns are rare, though. Usually someone wants the IP

[boringg]

It is. I think the commenter is confused on the difference between layoffs and shutdowns.

[brianwawok]

Yes, OP is either from Europe or very entitled or both.

[nebulousthree]

When you get on a plane do you think they fuel it to run out exactly at the moment the plane stops at its final destination, and not a drop more? Don't you think that they reserve fuel for emergencies?

Why shouldn't a business consider itself at 0 operating dollars but still have a full account for healthcare or equivalent severance?

[pxx]

It sounds like you shouldn't join a startup then. The very concept here is that you're taking some of this risk.

[drjasonharrison]

There is risk of not working for another twelve years, of being laid off, or the C-level getting paid out and no one else.

But a startup that raises a billion dollars and fails to set a cut-off that gets everyone out the door with their last paycheques is one that people will jump out of earlier.

[camhart]

Planes prepare for basically 0 chance of failure.

Most startups fail. And everyone involved should know that going into it.

To operate a startup protecting against all risk will likely guarantee failure in almost all cases.

[mrguyorama]

>Planes prepare for basically 0 chance of failure.

NO, the entire point of plane safety is that you are prepared for the VAST MAJORITY OF FAILURES, through extensive planning, testing, regulations that force certain choices, redundancy, backups, etc.

Maybe companies should stop trying to play check kiting as SOP for business operation, and be willing to admit that they sucked at business, burned a billion dollars, and didn't even keep any of it to help any of the people who did the work survive for the next few months as they adjust.

[camhart]

You misunderstood my meaning. Planes prepare for, I guess what I'd call individual component type failures, so the flight as a whole doesn't fail. They do not accept a 1% chance of failure. The plane stays grounded and doesn't leave the gate.

Startups on the other hand, (normally) must accept some risk of failure in order to have any chance of success.

[otteromkram]

Using all capitalized characters doesn't make your argument any better, bud.

[brianwawok]

Do you run a business? How much reserve are you saving for if you go bankrupt? Can I see a screenshot of it?

[lawlessone]

When did not wanting to be shafted become entitlement?

[jonkho]

No one is being shafted. With each paycheck, the obligations of the company are met.

[brianwawok]

You are not “owed” X amount of pay after you lose your job. Maybe you will get it. Maybe you can negotiate it in your employment agreement. But getting paid your agreed rate for hours work isn’t “shafted”

[jrockway]

Severance is basically marketing for future hires. You hope, as a company, you will be around in a few years and will be hiring again. If all the employees laid off during tough times get severance, then the company can say "even if we hit tough times, we have a track record of doing the right thing", which is attractive to future employees they are attempting to attract. Since the company is dead, their reputation doesn't matter.

[jghn]

In the 2001 DotCom downturn a friend worked at a company where they were informed that the paycheck they had received the prior month was the last payment they'd get. So not only no severance, etc but they also worked a few weeks gratis.

[bhelkey]

Unpaid wages pierce the corporate veil.

I am not a lawyer but I believe that in this case the owner can be found personally liable to the employees.

[MaxHoppersGhost]

Ah yes, won't someone think of the software engineers who are making 3x-6x the median household income of Americans.

[nilram]

My favorite start up, with regard to cashflow, was where the CEO would tell us at every company meeting how many months of cash we had in the bank at our current burn. They pissed me off in other ways, though, and I never heard how they treated people when they finally shut their doors.

[actionablefiber]

What’s the “Very Bad” scenario? Limited liability stops being limited?

[climatekid]

Wonder how big of secondaries the founders took

[dicriseg]

How did they burn that much cash in a year?

[cellis]

Can you add this as a top-level comment? It is a glaring and obvious question.