Layoffs are never fun... sad :(
For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?
For the more biz-minded commenters out there: does laying off sales + recruiting signal a specific scenario (other than the obvious recent legal woes)? Rather than laying off engineers?
The recent problems will hit their sales hard, and leadership knows it. With the growth they've had, there's a chunk of their sales team that's not fully ramped (meaning not producing revenue). Laying off reps + recruiting says they think they can't grow as fast as they previously could.
Not laying off engineers is probably more about how hard it is to hire engineers today, and knowing that when they get past these problems, it'll be easier to re-hire reps than re-hire engineers.
The problem is that the market for salespeople is very efficient. So your 10x salesperson is nearly always already earning an outstanding amount of money working for an excellent company. They are already selling a product with a demonstrable value-add, and they are employed by a company with a good reputation.
Why would they want to come and work for a start-up that stumbled and then at some future date tried to turn itself around?
And of course be a company with a convincing path to success, which is as a rare an entity as those 10x salespeople.
Doesn't that just mean you need to offer a higher percent commission, more equity, or whatever it takes to sweeten the deal?
Your equity isn't magically worth more than the equity of the company that already employs them. And if you give them a tremendous chunk of every sale they make, your COS is through the roof and you aren't making any money.
You might go raise a ton of cash and spend it buying great salespeople so you can buy some MRR and ARR, but everyone else is playing the exact same game, so you don't automatically raise more money than anyone else to spend on better salespeople.
In the end, what I am saying is that there is an efficiency in that market for salespeople such that anything you might think of doing to bring them on board, their existing employer has already done. And possibly better than you ever could.
Or perhaps the issue is that, in sales, there isn't the same multiplier phenomenon you see in engineering from massive scale/market opportunity. And this nonlinear effort-to-output relationship is what enables the market inefficiencies (sometimes in favor of companies, and sometimes in favor of engineering employees).
a YP seed would get you 30 work days...
If you are limited by number of solid leads, putting great salespeople on the leads will get a greater amount of value than putting a larger number of weaker salespeople on it.
Great salespeople aren't just taking orders. They are finding and closing opportunities which others would miss, and making those opportunities far more valuable. You can have 10x the value on a single sale in enterprise by having the right team on the deal.
I don't think labor hoarding is a good theory for why they're keeping their product team. If they don't have work for them now and are winding down they would be getting rid of them.
Rather, I think they believe they don't have a product they can sell right now, but they believe they can change it to make it viable. You need engineers to change your product.
David Sacks's original letter was heavy on the need to change the culture at Zenefits, and there's usually some degree of culture change at a company whenever a new CEO takes over. It could be that this is a convenient way to fire the ringleaders of the party culture, the people having sex in the stairwell, the most egregious rulebreakers or those who're disgruntled about having to go through all the regulated training, all without needing to build the paper trail that safely firing for cause would require.