[HN Gopher] Letter to Myself in Late 2008
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Letter to Myself in Late 2008
Author : baxtr
Score : 130 points
Date : 2020-03-25 18:35 UTC (4 hours ago)
(HTM) web link (dalton.substack.com)
(TXT) w3m dump (dalton.substack.com)
| my_usernam3 wrote:
| 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?
| majormajor wrote:
| > 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."
| blast wrote:
| 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.
| digitaltrees wrote:
| 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.
| my_usernam3 wrote:
| Yeah I think you're right. I still think that line should
| just be left out of the otherwise good post.
| nickysielicki wrote:
| Yeah you are. It's not an after school club where people go to
| have fun. It's gotta make value.
| endymi0n wrote:
| 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.
| sg_gabriel wrote:
| >"But he talks about having plenty of cash"
|
| 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".
| digitaltrees wrote:
| 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.
| digitaltrees wrote:
| 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.
| benjohnson wrote:
| Can I _possibly_ expand. 2008 happened and I cut drastically and
| laid off 60% of my employees - that was good and smart.
|
| But it shocked me so much that we spent the next four years
| hunkered down when we should have been marketing and growing.
|
| My advice is to cut like that author is saying, but move on from
| the cut as if nothing happened.
| sg_gabriel wrote:
| This is an interesting counter-point. Can you elaborate?
| benjohnson wrote:
| Sure!
|
| The 2008 recession clobbered my IT company - most of our
| customers were in the construction field and many of them
| went bankrupt.
|
| We did the right thing - we cut deep into the workforce to
| protect what we could and that was the right thing to do. The
| remaining employees were able to confidently work knowing
| that their job was secure.
|
| But the act of cutting deeply, and laying off people I liked
| and admired cause me to want to act like a turtle and to not
| want to venture out.
|
| In hindsight, I should have marketed and reached out to new
| potential customers because other IT support companies were
| going out of business left and right. I estimate that my
| timidity after the traumatic cuts cause my company four years
| of growth.
|
| If I have to do it again, I will. But afterwards I'll act
| like it never happened - I'll keep growing the company.
| czep wrote:
| > Do one layoff, but much much deeper than seems correct.
|
| Is this what "leadership" is all about: just transfer all the
| pain you're having onto the employees who have been doing all the
| hard work to build your vanity company?
| dang wrote:
| " _Please respond to the strongest plausible interpretation of
| what someone says, not a weaker one that 's easier to
| criticize. Assume good faith._"
|
| https://news.ycombinator.com/newsguidelines.html
| Foober223 wrote:
| Do you even leadership bro?
| tardo99 wrote:
| lol
| goatherders wrote:
| ANd those employees were compensated for the work they did. As
| long as their final paychecks cleared than the agreement was
| filled in full. It's filled in full in most every case of
| employee termination.
|
| Your employer owes you what you earned. You owe your employer
| what you have agreed to provide in exchange for payment.
|
| Expecting anything above and beyond that...well THAT is
| "vanity."
| throwawaypa123 wrote:
| What's the alternative you propose?
| AnIdiotOnTheNet wrote:
| I feel fortunate to work at a company that hasn't had any
| debt since the 80s and keeps a good stockpile of funds.
| Consequently they didn't have to lay off anyone in 2008 and
| even the current crisis didn't delay our plans to build an
| addition to the office.
| arkh wrote:
| > since the 80s
|
| So not a startup.
| ahuth wrote:
| I'm not familiar with the author, but doing one layoff seems
| much kinder to everyone than multiple over time. And the
| company not surviving doesn't help anyone.
|
| Being laid off is horrible, but if I'm one of the lucky ones
| that remain, I'd much rather know that the company is now sound
| financially (which the author pointed out).
| texasbigdata wrote:
| I agree with you but here's the counterpoint: if you were on
| the bubble and the CEO decided to cut into the bone and
| perhaps you didn't need to be let go, how would you feel?
| ahuth wrote:
| That would be terrible. I'm definitely presuming that the
| author definitely needed to make the cuts. If that's not
| the case, and I got laid off, I'd be pissed.
| nordsieck wrote:
| > if you were on the bubble and the CEO decided to cut into
| the bone and perhaps you didn't need to be let go, how
| would you feel?
|
| Your question has the same problem as the modified
| (blocking the rail with a person) trolly problem. It's a
| hypothetical so you get to state what's true. In the real
| world, people have much more limited knowledge.
|
| You get to know whether you're cut or not. You get to know
| whether another cut was needed or not. You get to know
| whether the company survived or not.
|
| No one ever gets to know if someone was cut but didn't need
| to be. Not even in retrospect. Especially if they're "on
| the bubble".
| digitaltrees wrote:
| Yes. Leadership is about making hard choices to survive in a
| time of crisis. Good leaders care about their team and their
| well being.
| Tade0 wrote:
| Sometimes there is no other option.
|
| In 2008 I was employed at a company which did technical support
| for petrol stations. Initially we didn't feel the hit, but a
| year later our line manager called a meeting and said that
| during the previous month not a single new petrol station from
| the companies we serviced had been opened and therefore the
| company hadn't had any money from its largest source of
| revenue, so they had to lay off 80% of the non-permanent
| staff(which included me).
|
| They went bust after a few years, but it was still a better
| alternative than closing down immediately.
| zomglings wrote:
| Running a small company is about keeping that company alive
| long enough to capitalize on its opportunities for success.
|
| I don't know why you called his company a vanity company, but
| don't see that you have grounds for that.
|
| If a company cannot sustain itself on revenue alone, and if
| fundraising is going to be difficult, it is absolutely the
| right choice (and kindest to everyone in the long run) to lay
| off those not critical to its survival. That does not mean that
| the choice is easy.
| ttul wrote:
| This downturn is vastly sharper and more unexpected than 2008.
| Time to roll out the Plan B budget and cash flow model where you
| lose that big customer and everyone else delays their repayment.
| Oh, also forget adding new logos for six months. Large companies
| are in a state of paralysis while they try to figure out what to
| do and when this will all end. You should be too.
| echelon wrote:
| Dalton,
|
| Lack of health care during a worldwide medical emergency could
| outright destroy the lives of those you lay off should they or
| their families get sick and require medical intervention.
|
| Are you trying to give guidance to startups to lay off? Why not
| advocate for pay cuts instead, that way they can keep their
| healthcare? I think most would be understanding.
|
| Lives are worth immeasurably more than the businesses at risk.
| dalton wrote:
| That's a fair point, and there are a number of situation
| dependent factors. I wrote this letter to myself because I know
| what I would do differently 12 years ago and I have the benefit
| of hindsight now. Obviously the crisis is different today, we
| didn't have a pandemic in 2008, there is definitely no one-
| size-fits-all advice, and every company needs to be figuring
| out the right thing to do right now. But keep in mind what
| ended up happening 12 years ago is that everyone lost their
| jobs. The letter is my thoughts about what could have prevented
| that outcome back then, at least partly.
| echelon wrote:
| Thanks for the explanation.
|
| > I wrote this letter to myself because I know what I would
| do differently 12 years ago and I have the benefit of
| hindsight now.
|
| > keep in mind what ended up happening 12 years ago is that
| everyone lost their jobs
|
| That's my fear for this pandemic, too. It's a really awful
| situation.
|
| Stay safe.
| digitaltrees wrote:
| The goal has to be first survival so that at least some of the
| team can be provided for. Otherwise, everyone will lose health
| care. But I agree, leaders have an obligation to balance this
| with the wellbeing of the team. If 70% of payroll costs have to
| to be cut for survival, pay cuts won't suffice. Perhaps leaders
| should do an analysis of which team members have health care
| through other sources, or ensure that COBRA is paid in full.
| Lots of difficult choices ahead. Let's take care of each other.
| DoreenMichele wrote:
| If the company dies, everyone is out of work. That's not an
| improvement.
|
| I posted an article earlier today about expanded unemployment
| benefits in the US. It's not a founder's job to provide a nanny
| state (so to speak). It's the job of government to look out for
| the people in that way.
| gumby wrote:
| > "don't take too drastic of measures to get profitable because
| then you won't be able to sell the company". Definitely ignore
| those people and this garbage advice.
|
| In what universe/conditions _would_ such advice make sense? I've
| never heard such a thing.
| amflare wrote:
| I imagine a lot of actions you would have to take to make a
| small company profitable would make it be unappealing to a
| company with more money. Better to burn the cash and lay a
| giant foundation rather than just build a tiny house.
|
| Then you can sell the foundation by saying "Look how big of a
| house could be here!"
| gumby wrote:
| Having done a few aquisitions (on both sides of the
| transaction) over the years it's really easy to dictate terms
| when the company being bought lacks room to maneuver.
| digitaltrees wrote:
| Many acquisitions are merely to hire the team. Recruiting is
| hard and buying a large functional team is some times
| attractive. But yes, this is bad advice as it likely won't
| materialize. In fact the best posture in an acquisition is to
| not need one rather than hope that is your way out. Buyers will
| capitalize on desperation.
| jeadfa wrote:
| Getting Your Travel Information , Travel Guides, Discover, Plan,
| Destination information if you Love Travel . Inspiration from
| TheTravelersTalk.Com https://thetravelerstalk.com/
| dalton wrote:
| Hi, I am the author of this post. As I said at the top my intent
| was not initially to publish it widely, but here we are. If
| anyone has questions about what I wrote I'm happy to answer them
| here.
| Tade0 wrote:
| Perhaps a naive question, but I'm not in this business:
|
| How does renegotiating a contract look like? I'm picturing a
| meeting where people haggle over the new price, but that
| doesn't sound right.
| hayksaakian wrote:
| It doesn't sound right, but that's how it is most of the
| time.
| dalton wrote:
| For large dollar value contracts you usually have an account
| rep/point of contact you can get on the phone.
|
| You can explain to your rep what you are dealing with, what
| your budget is, and make a concrete ask. I get the sense that
| the larger of a customer you are for someone, the more
| willing they are to work with you.
| digitaltrees wrote:
| I second the concrete ask. Be specific about what you need
| and ask how to get there. Explaining why helps the rep feel
| empathy and also be creative. Ultimately they want to
| preserve revenue too.
| digitaltrees wrote:
| Pick up the phone or send an email. State clearly that you
| need to cut the costs to a specific target. Ask if there is
| any specific path they can assist you with such as removing
| features or moving to an alternate plan. Say that you are
| doing this now with all vendors. Don't threaten to leave, try
| to be collaborative and explain that you are doing this to be
| able to maintain the service in the short term and long term.
| If they push back hard ask what they want in order to make
| concessions. The truth is many of your vendors will be
| fielding these types of requests while at the same time
| seeing a ton of cancellations and customers going out of
| business. They may view it as better to cut your bill and
| thereby preserve the revenue they collect that watch your
| account go to $0.
| raywu wrote:
| Thanks for sharing with the world OP!
| thomk wrote:
| Can you talk about the copyright infringement lawsuit and how you
| guys navigated that?
| digitaltrees wrote:
| Dalton is a sage. Listen to him.
| [deleted]
| nostromo wrote:
| In the 2008 recession US GDP went down by only about 3%. During
| the Great Depression it went down 10%.
|
| I don't think we're prepared for the kind of declines we're going
| to see if quarantine goes on for more than a few weeks.
| nv-vn wrote:
| Agree. The scary thing here is that we're talking about
| completely pausing the world economy for one quarter? Or two
| quarters? Or a year? There's really no way of knowing what the
| effects will be and the longer this gets stretched the more
| drastic the economic effects will be. I don't know what
| perspective your comment comes from but I think it's important
| to open a discussion on the long term effects of this type of
| quarantine. For example, if this leads to an unprecedented
| level of recession it's very possible that more people end up
| dead due to the quarantine.
| nostromo wrote:
| I agree. The thing about economic deaths is they are silent
| and nebulous. See the opioid crisis as an example, or crime
| rates in areas with poverty and economic uncertainty. Or look
| at illnesses in impoverished regions, such as obesity and
| diabetes. Look at unemployed people without access to
| healthcare. Even suicides jumped after 2008. [1]
|
| 1. https://www.cbsnews.com/news/recession-linked-to-more-
| than-1...
| notabee wrote:
| You actually can't assume that will be the case, based on
| longevity data from the Great Depression[1]. If Covid runs
| rampant and collapses the medical system the U.S. is facing
| anywhere between 500,000 to 10 million dead based on current
| understanding of the numbers[2].
|
| 1. https://www.history.com/news/great-depression-economy-
| life-e...
|
| 2. https://medium.com/@tomaspueyo/coronavirus-the-hammer-and-
| th...
| nostromo wrote:
| ... according to a social media marketer.
|
| There are lots of good original sources we could be using
| instead.
| wwweston wrote:
| This.
|
| Thousands/millions out of work _may_ (or may not)
| experience morbid effects. They will have a harder time
| participating in the buy side of the economy and driving
| demand, and also represent missing productivity. That 's
| nothing to sneeze at.
|
| But thousands/millions _dead_ are _guaranteed_ morbid
| effects. And dead people are even harder to get back into
| the demand side of the economy (or productivity) than
| jobless people.
|
| Also near the peak of an unconstrained pandemic... what
| should we think people's improvised reactions will look
| like? Business as usual, no economic impact?
|
| The best way to not have an economic impact was not to have
| an uncontained epidemic we weren't prepared for. We kinda
| missed that step. Why would we have a choice _not_ to have
| serious economic impacts at this point?
| nv-vn wrote:
| The scary thing is that many of the deaths are more or
| less guaranteed even if we try to treat them, until the
| point a cure or vaccine is developed.
|
| >Why would we have a choice not to have serious economic
| impacts at this point?
|
| That's not really a choice at this point, but we do have
| two paths with unknown outcomes. We can choose to focus
| on limiting the spread at all costs (and hitting the
| economy harder) or we can focus on limiting the economic
| effects but give up on containing the virus. Neither is a
| good choice in any capacity, but it could turn out that
| either one minimizes death in the long-term.
| nv-vn wrote:
| Sure, I'm not asserting that the economic effects will lead
| to more deaths. I think this is something that needs to be
| researched and discussed publicly though, because it's
| really not something we have a good answer to. I imagine
| that whatever the final outcome of this situation is will
| directly determine our responses to future threats of
| disease.
|
| In terms of the first article, it seems to only analyze the
| effects on longevity in the short-term, whereas I think
| most of the effects observed as a result of recessions take
| a few decades to really show up. No idea if that's really
| the case though.
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