Had a gut-wrenching conversation with a founder last week, who broke the news to me that they are having to lay off a key senior executive, likely cutting off some product lines, and then pretty deep layoffs. ##blog#
They missed last year, and it’s clear there are changes needed, but it’s just really tough. Good people are going to lose jobs, the founder is letting go of friends and colleagues.
I’ve gone through this 4x as a founder, and now an equal amount as an investor. I can’t help but feel some personal blame. Given I’ve seen these patterns before how could I have helped them make this call earlier? I did try, but it's a reminder I've got much room for improvement
But I feel proud of the founder. They made the tough call while there's money in the bank, momentum, and time to fix it. Too often these breakthroughs only happen when there are four months of cash left & it’s too late. It takes a lot of self-awareness & bravery to make it now.
What people probably don’t see is how often these things happen, and how often a startup emerges stronger because of it. I’m even struggling for what the term should be, “focusing”? “doubling down”?.
We have a term for the Pivot, which gives us common language to talk through best practices, but I can’t think of a simple phrase that captures when a team realizes what they need to really focus on, and painfully shed their a lot of the excess to get more velocity to that goal.
And yet I suspect, especially following the iffy IPO performances last year, that a ton of companies are going through this process now. Unsurprisingly, First Round had @samshank do a good piece on it. firstround.com/review/from-bu…
FWIW on my end I only offer one piece of advice. Remember that your team doesn’t need to be handed the answer, they need to go through a process.
The best way to make sure you don’t lose your team during a tough time is make sure they feel agency to help fix it. Most common mistake I see for CEOs is going insular and feeling like they owe the team full answers before talking about anything.
Don’t forget everyone needs to go through the process you went through even at an accelerated pace. Then, once the cuts are made and new direction is in place, make everything focused on the future. Consider doing this:
It will take months to really see full results of change, so don’t be afraid to also do the quick fixes too. New office layout, rewrite company values, institute new norms and rituals, as long as things are being shaken up invite the team to shake anything up. It's a rebirth.
Done right, it can feel like they just accepted a new job. Which, coincidentally, will keep them from going and getting one.
Shedding is a good term to use. I also refer to it as the awkward teenage years of a startup. Perhaps I should use the Messy Middle more often! cc @scottbelsky
