[K0balt]

It’s because, and I say this as a person who has made these calls, some leaders do feel a genuine responsibility for the people that work for them. Perhaps too, the ones that don’t, want people to think that they do. But as a founder and CEO by far the most emotionally taxing thing I have ever had to do is cut staff for the good of the company. You want to treat people the way you would want to be treated if you were in their shoes, but it doesn’t change the realities of the operation.

This case is clearly AI enabled “right sizing”, and it is inevitable for companies that aren’t seeing explosive growth. It seems like they are handing it well, better than most. Good for them.

[codegeek]

I am a founder/CEO myself (a very small company so I don't have experience of mass layoffs for full disclosure). However, I don't get this explanation. If you feel genuine responsibility for the people, then figure out a way to NOT fire them. Or be honest and admit that the company needs to make more money/cut costs. Trust me, no one wants to hear "we love you so much but we have to fire you and I feel so bad". It just doesn't land. Be honest, be open and be willing to provide a good severance.

[ryandrake]

It reminds me of that meme template. “I feel responsible for this layoff.” “Responsible enough to mitigate it or lay yourself off?” “Well, no, not that responsible…”

[stronglikedan]

What an illogical and unrealistic meme template that is...

[scottLobster]

It's not illogical, it's called leading by example. You consider it unrealistic because most corporate leadership, especially in America, never feels like doing it.

Samsung executives by contrast have a tradition of taking serious pay cuts during bad years. Which is still largely performative given their existing wealth and status, but is at least is a measurable material sacrifice.

[linkjuice4all]

Yes, much like the “we’re all family but we’re reducing headcount by…”

Treat people like professionals: admit that you did a bad job but that you’d rather protect yourself and not give up any of your salary/benefits and instead you are going to layoff your “family”.

[ponector]

We are all family!

They just forgot to mention it is a pretty dysfunctional one.

[zer00eyz]

I have been through the process of cutting staff in a few different roles (director, outside consultant), more times than I care to count.

> If you feel genuine responsibility for the people, then figure out a way to NOT fire them.

I have never seen that end well. One deep, clean cut, is far better than many little ones.

If you have to do back to back cuts because the first wasn't deep enough people start to panic. If you cut back the niceties, you're telling folks there is trouble and you're likely putting off that inevitability (and making the eventual cut deeper, with smaller pay outs for everyone).

The moment you sense the issue, look at the numbers. Figure out what the worst case scenario is, and look at that. Does a deep cut get the people going severance, and the "lets save everyone" approach mean your locking the front door and handing out last paychecks?

> Or be honest and admit that the company needs to make more money/cut costs.

This isn't the convo you have with the people who are leaving, this is the conversation you have to have with the people you didn't let go. Your choices are A) look like an asshole for cutting too many people or B) look like you did not cut deep enough and people panic or see that it isnt the last round. There is NO in between. The only thing that spares you in scenario A is that you gave people enough runway in their exit - 16 weeks (from the article) is a great starting point, but a week per year is an insult.

[keiferski]

This is a good idea in theory, and in a lot of situations it's definitely under-used. But I don't think it's realistic to expect companies to never have to lay off employees.

[dylan604]

> then figure out a way to NOT fire them

like reduce the salary of the c-suite staff by 50% so they are only making 300% more than the average workers. or reduce c-suite salary to the lowest wage while allowing them to live off of their stock and other benefits like company cars, expense accounts, etc. granted, that's for the larger companies, but the bigger companies never do anything like that

[fourseventy]

1.) The c-suite is like 6 people, reducing their salary isn't going to make much of a dent.

2.) The c-suite are compensated at market rate the same as anyone else. If the CTO at Patreon is making 400k/yr you can't just cut his salary to 200k, he will leave and take a job somewhere else.

[KellyCriterion]

Ah, no, for sure you can just cut the salary by 50%?

And believe me, most people in well-managed company would accept it to keep the company alive. And y CTO with 400k wont "just find a new job with same payment" next day, thats an illusion. Especially nowdays in these times.

If I would be asked: "reduce your salary by 50% or get fired", for sure I would stay if there is a perspective that the situation may recover in the future. If the company has no perspective future, then you would leave anyway (either implicitly or explicitly by them)

[nickv]

How does adding $200k back to payroll help pay for 96 employee salaries (plus benefits which tend to be an invisible 25-30% on top of salaries)?

[brianwawok]

There is a reason he hasn’t made it to management yet ^_^

[dylan604]

If the CEO is only making $400k, that's not a very big company

[okdood64]

> for sure I would stay if there is a perspective that the situation may recover in the future

And if you could support your family on that 50% for an undefined period of time.

[Gud]

Many of the C suite are just nepo babies.

[nickv]

citation needed

[surgical_fire]

> The c-suite is like 6 people, reducing their salary isn't going to make much of a dent.

Depends on how much those 6 people make.

Have you seem C-level compensation in comparison to worker's salaries?

[AbsurdCensor]

Certainly have. Patreon’s CEO isnt taking a salary and his comp package is estimated to be $250k. That’s sure going to save the salary of the almost 100 people, as long as they are making $2000 a year.

Yes, there are outlier companies, but not C-Suite isn’t just taking a massive check home, it’s a compensation of a inflated salary and comp package, which it most companies never would cover the amount of people let go. That’s often the case at every company.

[miltonlost]

The corollary to 2 is: reduce all CEO pay across the board because of how disproportionate it is.

[buellerbueller]

>1.) The c-suite is like 6 people, reducing their salary isn't going to make much of a dent.

It makes much more than a dent to the ~20 people not laid off, and a likely morale boost to everyone remaining.

Edit: who are the sociopaths who downvote this? You don't think that someone not being laid off isn't going to have a much better outcome than had the been laid off? At least make an argument to the contrary...

[john_strinlai]

>Edit: who are the sociopaths who downvote this?

there are some people on this venture capital company forum that are venture capitalists. layoffs to boost profits is just another monday

[surgical_fire]

> Edit: who are the sociopaths who downvote this?

There's a large contingent of HN users that are all too happy to brown nose their corporate overlords.

Also, this is still a ycombinator forum, it wouldn't be surprising if some people around are the ones that lay people off. You know, the sociopaths themselves.

[dewey]

> Like reduce the salary of the c-suite staff by 50%

Perfect way to lose your staff to your competitor.

[UmYeahNo]

Let 'em have em. They already messed up this company, let them go mess up the competition now. Sounds like a plan. Encourage the lowest performers to go.

[dewey]

There's perfectly fine reasons for a company to fail that are not the fault of anyone working there. Small startups relying on revenue from a bigger client at the beginning that shifts their spend, market changing quickly etc.

[UmYeahNo]

Which I think are all in the domain of the C-Suite to anticipate and handle, aren't they? If they aren't preparing for those situations then maybe they aren't the right folks for the job.

[vanuatu]

if a company is doing poorly enough to lay off people the c suite has already taken drastic pay cuts from their stock compensation

[autoexec]

it's not as if stocks can't go up in value following a layoff. https://www.cnbc.com/2024/01/26/tech-layoffs-jump-in-january...

[red-iron-pine]

nor is it unheard of to lay off people even after highly profitable years

[roenxi]

The paradox can be resolved by assuming they are fallible and limited human beings - they're laying a bunch of people off, they understand at some level that this is evidence that their poor hiring and management decisions have caused some amount of unnecessary suffering, so they feel bad.

But they aren't foresighted enough to have handled the situation appropriately in advance. Or they might have run into the limits of their ability to empathise and only understand that they feel bad but not that the fired people probably feel worse. I'd bet more on the former.

In many ways it is a triumph of modern society how ordinary the people are who head these large and complicated world-spanning corporate entities.

[scottLobster]

Is it? Another is that modern society has created a system where advancing to the top ranks of corporate and political leadership requires mediocrity, and excellence is actively discouraged past a certain level of authority.

The mediocre have just enough capability to do something right, but little enough that they're constantly surpassed by their more talented peers and never feel safe. So they go into "soft skills" that their more talented peers aren't interested in, and sandbag themselves with authority once they get it. For an extreme example, nobody is ever firing Mark Zuckerberg no matter how many obviously stupid bets he makes, and even if they did his family would have enough wealth for the next 10 generations at least.

This problem is hardly new or exclusive to tech, but we've endured enough decades of Silicon Valley navel-gazing TED talks without now trying to whitewash them as "well they're just ordinary people". Yeah, and I wouldn't trust an ordinary person to fly a plane, why should we feel good about them running companies?

[roenxi]

> So they go into "soft skills" that their more talented peers aren't interested in, and sandbag themselves with authority once they get it.

Maybe their more talented peers should learn some of these soft skills and take an interest in authority positions instead of acting like losers? Is there some smart-person conspiracy to put idiots in charge that nobody has clued me in to?

I don't want to be going too far in telling my talented peers their business, but if capable people aren't interested in doing anything to take a leadership position then the leadership is going to be incapable by definition.

[scottLobster]

In my experience, when someone (not being euphemistic, I've witnessed it many times) too mission-focused tries to get beyond program-level leadership they inevitably get sidelined and either coast to retirement or demote themselves back down. At a certain level making good products on time and on budget is no longer the game, and feeling an obligation to do so is looked down upon as naive. Additionally, failure is not punished in any material sense.

Boeing's leadership doesn't care about their aircraft quality beyond legal liability, Meta hasn't cared about the quality of the facebook newsfeed in over a decade, Elon Musk doesn't care about making cars or colonizing Mars anymore, and rest assured Pateron's leadership will be just fine in every material sense, the worst they have to worry about is reputational loss that will likely be short-lived.

Put it all together and you get an incentive structure where outside of small companies/divisions, and the rare exceptional leader, the people who care about the products the least are the ones that make it into leadership, and good luck convincing that club to change their priorities.

[buellerbueller]

>In many ways it is a triumph of modern society how ordinary the people are who head these large and complicated world-spanning corporate entities.

But I was told that CEOs were descended from Mount Olympus itself! Billionaires too!

[ponector]

And trillionaires are directly shipped from Mars!

[stronglikedan]

That's a whole lot easier to do in a small company, but not very realistic beyond that.

[K0balt]

That’s not always an option, and with the reckless exceptions aside, that’s usually been thoroughly explored. Any company would rather grow revenue and employ more people that shrink to accommodate changing markets.

Needing to make more money is a given, and they’ve probably explored that as thoroughly as possible. Cutting costs assumes that they have been so wasteful that the costs they can cut for meaningful savings doesn’t include employees that are no longer fuelling growth or revenue. Because if they were, they wouldn’t be letting them go.

[dosisking]

It's like that scene in Moneyball where they have to tell the player that they've been traded/cut

[wisty]

> If you feel genuine responsibility for the people, then figure out a way to NOT fire them.

That kind of sounds like saying "if you're poor, make more money". It's not bad advice but odds are, they tried.

If a company can take a hit to its bottom line by being bloated and inefficient but saves jobs, is that the right thing to do?

Edit: I can see good arguments either way. The neoliberal idea that all waste should be eliminated seems almost communist / soviet IMO. The USSR grew like crazy by putting people into factories and working them as hard as possible, removing all waste. But with no slack they couldn't innovate and productivity growth stalled. Our productivity growth has also stalled. We outsource or privatise so much that everything is just a race to the bottom with no space to grow, and finding looopholes in metrics or rules is the way to get ahead (like soviet factories finding out that they can churn out crappier products that no one wants but it helps hit a quota).

OTOH boated orgs kinda suck.

[TitaRusell]

Employees are a disposable product. Need to ramp up fast? Hire some bodies. Don't worry you can ditch them in 3 months just in time to make shareholders happy.

Ofcourse the corporate class starts complaining nobody has loyalty and passion anymore.

[Grombobulous]

I think what you’re describing is only a fraction of leaders and possibly a small minority of them.

This concept is especially not applicable to profitable companies who have layoffs anyway.

Hyper-optimization and AI adoption isn’t actually a business requirement if your business is making a profit. Plenty of businesses refuse to play that game and still make themselves a good living.

Founders who want to claim emotional connection to their employees should think about things like converting the company to full employee ownership rather than thinking of themselves as a paternal benevolent dictator.

[vladms]

The profit by itself does not tell the whole story. There are loan repayments, investments and possibly other financial deals.

> Founders who want to claim emotional connection to their employees should think about things like converting the company to full employee ownership

In a previous (very small) company I worked we have tried something similar that and, guess what, some people refused. They just preferred market level salary, freedom and no ownership worries, rather than take some risks. They were good employees so we just continued with them. But I learned that not everybody has the same views and wishes, and life is quite complex (I was a founder and was always interested by ownership, so was quite surprised about their reaction).

[SoftTalker]

Just as most organizations beyond a certain size will have a few people who reach a plateau where they are content and do not want any more responsibilities or pay. They don't want a new title, they don't want more prestige, they don't even want a raise. They just want to do what they do.

[SetTheorist]

The "realities" being that increasing profits for a few people is more important than the lives of the people doing the actual work?

[SetTheorist]

The "realities" being that increasing profits for a few people is more important than the lives of the people doing the actual work?

[ltbarcly3]

They feel a genuine responsibility to avoid the buzzing sound in their head that results from trying to believe and make other people believe they feel a genuine responsibility for people while taking actions that are the polar opposite of anything that you do to someone you feel responsible for purely to increase your own and your investors wealth.

It's fine to fire people, and the severance here is very generous. Business leaders who need to feel like they are a generous parent or 'different' are weak and lying to themselves.

Finally while the severance is generous and to be applauded, all of the phrasing under the guise of caring about people was very transparently just an excuse to say over and over "we are making money and we aren't doing this because we have to" to his investors, which just rubs it in the face of the people being fired over and over. One final insult I guess.

[rendaw]

Why is AI enabled right sizing inevitable for companies that are profitable but not seeing explosive growth?

[ecocentrik]

Even founders that don't naturally empathize with employees they need to cut encounter a process that is emotionally taxing. It's just not an easy thing to do. If you handle layoffs badly it can impact your earnings potential, your social image and your psychological health.

[whatever1]

Why a company has to survive but not its people?

For example when it comes to the IRS bill, the company will literally cease operations and sell all of its assets to pay IRS.

Why the employees do not deserve this?

[scott_w]

> Why a company has to survive but not its people?

If the company collapses, those people lose their jobs anyway?

> Why the employees do not deserve this?

It's not about what employees "deserve," it's about the simple fact that the law allows the tax authorities to wind up a business to cover the tax bill. See the UK, where HMRC wound up Rangers FC (https://en.wikipedia.org/wiki/Administration_and_liquidation...).

[whatever1]

Exactly. With stroke of a pen a company is less important than its ability to pay taxes.

So we can put people above companies. With a stroke of a pen.

[scott_w]

Did you miss this part?

> If the company collapses, those people lose their jobs anyway?

We can do what you suggest but the result is the same for the people being laid off.

[999900000999]

As someone who has been laid off or fired a few times. Just tell me when my last day is and cut my check.

At this point I assume every employer wants to screw me in one way or another.

My first salaried job replaced me behind my back since I went remote to look after a dying family member.

Corporations by definition are sociopathic entities. They can not ‘care’ about anything aside from maximizing profits.

Once I was on a call receiving the bad news and I immediately texted another job opportunity right then and there.

We’re not family , and we’re definitely not friends.

[nightski]

These posts seem more like emotional therapy for the founder, helping them cope. It's not about the people being let go at all.

[ecocentrik]

You should really look into who Jack Conte is and why he created Patreon. He's a smart guy who relies heavily on maintaining a positive social image and is more emotionally aware and stable than most tech founders. I imagine from his perspective the decision, severance and post were all just the smart thing to do.

[ghostly_s]

His name is Jack, and I would describe him as a deeply weird narcissist. You got the "relies heavily on maintaining a positive social image" part right.

[ecocentrik]

That was a typo... thanks. I wasn't suggesting that he or anyone else is 100% altruistic but he seems like he genuinely thrives on collaboration.