Matt Mochary: prediction

Transcript context

…To close a loop on the firing piece, something I was thinking about while you were talking is there's a lot of layoffs happening right now. When you're letting go of like a thousand people, you can't really be their agent unless you've seen that happen. Do you have any advice for just like there's a large layoff how you could do this? Absolutely you can be their agent, not you personally, but they each have a manager and the manager usually has 12 reports and they're rarely letting go more than 50% at a time. That means six people that they've got to be the agent of maximum. Yes, each manager can be the agent for six people. My companies have done a lot of layoffs and here's why. Back in March of 2020, there was a chance that the world economy was imploding. Now of course, by April and May we realized that wasn't the case, that the tech world kept going, in fact, it was even flourishing. But in March of 2020, we didn't know that. And so you needed, if you were being fiscally responsible, you needed to prepare for that eventuality, so you needed pare costs. 80% of costs in any tech company is payroll, is humans. If you're going to pare costs, you actually have to let go of humans. Almost every one of my companies did. Some on the low side of 5%, some on the high side. One company that is a hotel company let go of 40% because it looked like their business was about to get obliterated and the results were crazy. Within 60 days of each layoff, the CEO reported back to me: It's insane. I don't know how this happened, but the company's now operating better. I'm not talking on a relative scale, I'm talking on an absolute scale. We're putting out more features, more code. Our NPS is up, whatever it is, whatever department is performing better. The only answer for it was we've got less people, so this coordination issue is reduced. Then now in May, June of this year, we had this huge reset of valuations where growth tech stocks dropped by 50 to 90% value and all of a sudden, which we're still in and we don't know how long this can last, it's all based on interest rates so it's likely that growth stocks will be at these valuations until interest rates come back down again, which could be two to three years. These companies now they can go raise money, but it's going to be at a big down round and down rounds are very painful. So now these companies have to make sure that they don't need to raise money in the next three years. They've got to conserve cash once again. Here we are, we're in the land of layoffs again, but this time it's different. This time these CEOs know that the company actually gets better. And the CEOs that have never done this before, I simply connect them with the CEOs who have done this before and then they get convinced like, oh man, my company will be better. And now this time, people have been even more aggressive. We've had companies that have laid off 50% of the company and the results have been frankly, phenomenal. But the key to doing it well is there has to be a humane delivery. The biggest marker that I've seen between a botched layoff and a successful layoff is at the moment someone hears that they no longer have a job, did they hear it from their manager in a one-on-one? If that's when they heard it, it'll be okay. botched layoff and a successful layoff is at the moment someone hears that they no longer have a job, did they hear it from their manager in a one-on-one? If that's when they heard it, it'll be okay. But if they heard it in an email, in a group chat, in any kind of thing where they were sitting next to or they're hearing it along with other people, it wasn't personalized, it wasn't one-on-one, that is terrible. That's when people get really angry and that's when they start going on Twitter and going to newspapers and et cetera because it feels dehumanizing. It feels like you didn't give a shit about me. You didn't even have the courtesy to tell me to my face. Of course, there's no way to allow that person to express their emotions because they're in a group. That's the most important thing. The second thing is then later, so tactically, this is how it happens. You have an inner circle. I think that inner circle should include all managers in the company and you say, this is how much we need to let go. Here's how much each of you needs to let go. First of all, you don't say to each department head or team leader, manager, tell me who you can let go because they'll all say nobody. You actually have to give them numbers. You have to let this dollar amount go or this many people go, dollar amount is better because if you say people, then they'll just let go of the cheapest people, the most junior, and often the most junior are the ones that are actually doing the most work. You want it to be dollars because that's actually really what you're trying to save. You're trying to save dollars. So, you say you have to save this many dollars, come up with a number, they quickly come back with a number. You don't want to have department heads choose for managers because if you have a team lead and all of a sudden they're told to let go these three people, the team lead will go, that was crazy. Those are my three best people. So you want to let each manager choose and that doesn't need to take long. That could take 48 hours. Then you move to implementation. At implementation, you spend the morning and have each manager reach out to people and just Slack them say, "Hey, can I talk to you for 15 minutes?" And then they have these meetings back-to-back-to-back or as close as they can and they deliver the news, the difficult conversation that we talked about before. "It's going to be a difficult conversation. I'm letting you go. I imagine this feels crappy or feels like worse than that. This is horrible. If you're willing to share your feelings and I want to be your agent now. I don't have time to do it now, but I'd like to schedule with you another hour tomorrow, the next day whenever, so that we can go and dig in and I can help be your agent." Then, that takes the morning. By the afternoon, you've scheduled an all hands for the stay team. With the stay team, you'd tell them what had just occurred and you answer their questions. The questions are almost always around fear. Like, "Holy shit, is this going to happen to me? Did these people even get feedback that they weren't performing?…

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