I'm probably looking to be combative due to this social isolation, but one of the last lines irked me:
> People are counting on you to do the right thing.
Only because he says this after talking about layoffs as a purely business decision. I have no moral qualms with doing layoffs, and as others discussed it might be better to do one for the moral of the employees than to be stuck with multiple rounds of layoffs.
But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical?
I think he's talking in absolute terms versus relative terms that founders are used to thinking in.
Imagine that you have $3 million in runway, but you are burning $500K a month. That only gives you 6 months of runway.
It takes perspective to zoom out to realise - "Hey, I actually have $3 million in the bank. That's a lot of money. If I can somehow reduce costs to $150K a month, I actually have 20 months of runway to figure things out."
Unfortunately, this means "cutting more than needed".
Exactly. That survival will be better for everyone, even those you have to lay off because you can build from there and likely hire some of them as things stabilize.
I think maybe a little. His point is that doing multiple small layoffs to avoid pain and failure ended up causing more pain and failure. He's not saying he should have cut more than needed, he's saying he needed to cut more, because fundraising wasn't going to happen and getting profitable was the only way to survive. But presumably he didn't admit that until it was too late.
The 'right thing' in this case means something like 'face reality clearly, instead of clinging to fantasy because things are too painful or scary'. If you read to the end where he says "People are counting on you to do the right thing", he's telling founders not to shy away from difficult decisions because they're afraid of what outsiders might say. The point is that if you know deep down what needs doing, you're not helping anyone by avoiding it.
Multiple lay offs creates constant fear. It destroys morale and team culture right when those are crucial for the fight for survival. But this really missed the point. The key insight Dalton offers (correct me if I am wrong Dalton) is: Get Profitable. It’s not about the cuts themselves. It’s about getting to a sustainable break even cost structure so that you survive.
> But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical?
My assumption is that "plenty of cash" is conditional on aggressive layoffs. He says "high burn" early on so I was assuming a scenario of "everyone loses their jobs within 6 months" vs "30% keep their jobs."
Having gone through several levels of the startup life and several economic swings myself, I can say this isn't mutually exclusive. Letting people go means economic hardship for them, but so does delaying a company's death and folding up the business for a larger number of people many months into the future.
A startup, by definition, is a group of people searching for a viable business model. It does not look like this in that hard moment where everyone looks at you and faults you for failing, but in the end surviving with a third of employees and potentially helping to rebuild the economy two years later is the ethically and economically preferable alternative imho.
He doesn’t say cut more than you need. He says it will feel like more than is necessary but that’s the heart of the contradiction. You can cut most to same some or you can go out of business and then cut all. This is existential. Make the right decision and you survive to have a platform to build from and help your customers, employees, community, vendors, investors, former employees. Or you can hesitate, fail, and help no one. Do the right thing. It’s hard but it’s right.
Back when pets.com had so much investor's cash and public good will to burn, that not only would they overnight ship you discount bulk dog food for free, but their puppet sued another puppet.
>[Triumph is a plaintiff,] a rubber dog, black and brown in color, that wears a gold bow tie, often smokes a cigar, and interacts with animals and with humans through rude and often vulgar comments, through physical actions and/or attacks.
>[The pets.com sock puppet] is an advocate of pets, the voice of pets, and often interacts and communicates directly with other animals or with humans in order to convey to pet owners how pets feel about various pet related issues.
>“Maybe they see a profit potential in the sock puppet, because they sure aren’t going to make much money overnight shipping dog food to America,” says Bob Garfield, media critic for the industry trade publication Advertising Age.
> People are counting on you to do the right thing.
Only because he says this after talking about layoffs as a purely business decision. I have no moral qualms with doing layoffs, and as others discussed it might be better to do one for the moral of the employees than to be stuck with multiple rounds of layoffs. But he talks about having plenty of cash, then cutting more than needed (which is people's livelihood)... then uses the same livelihood as motivation. Am I being overly cynical?