The email Zenefits CEO David Sacks sent employees as it lays off 9%
businessinsider.com
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I'm not a fan of testosterone talk like everyone has to be "All In" when a company is more mature. The only way this helps is if engagement is a real problem, and you need to sort out who is on the bus and who is off of it.
I will say that 3 months of severance for folks who involuntarily leave, and 2 months for folks who voluntarily leave is very generous for a company that is in trouble. It's very close to industry leaders like Netflix and Zappos, and much more than they would need to do.
Not really. This type of layoff (more than 50 people, and an entire location) would seem to qualify under the WARN Act (60 day minimum notice.) So two months full pay in lieu of notice would be the minimum.
As for the voluntary leaving...well, why would anyone leave voluntarily unless there was a sweetener?
It's interesting to me in that in most companies, if you're not happy, they counsel you out (or start documenting performance) and then you get nothing. If this were a deliberate "We need to get to 20% reduction" then they would have just picked another 11% to go.
[0] https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...
A skilled lawyer might be able to make the case that being a total garbage fire of a company falls under one of the first two.
My experience has been that severance generally gets less generous over time.
BTDT. I'd be out by the end of the day if I got that email.
(I have zero connections to Zenefits.)
And, no, no connections to Zenefits either, but it's not the first time I've seen this one play out. (Working with one right now, actually!)
Better to cut to the chase with the blood and gore -- being careful to take the time to acknowledge that this decision is painful for others, not just "painful to make" -- and then rebound with the potential upside.
Relationships are reset, all our work is about to pay off, customers are sticking with us, revenue is as predicted, and oh, by the way, 10% of you won't get to see it. As for the rest of you, please purge your self as desired.
Seems like the company should be handing out shares, instead.
Reminds me of another E-mail from a while ago. "Thank your for your great work on this project. We will have a great thank you dinner in a great restaurant. (3 more paragraphs of the same). For cost saving reasons only directors and higher are invited, not you. It will be a fantastic dinner with a lot of fun".
Are they all psychopaths who don't understand what they are writing?
Which would explain a lot of the vapid e-mail announcements about layoffs / firings, as well as the tone of most rejection letters these days ("We think you suck, basically, and/or we didn't really bother to read your resume before contacting you and gobbling up all your time with our dorky interview process. Or if we did read your resume, we didn't really think about what we read or whether you'd fit the position. But either way, we hope you have a great weekend!")
Many years ago they did that at AOL (a voluntary severance package), and IIRC I don't think it came across as that sincere.
Let's see when the second one is opened. My guess is if Z2 doesn't hit their goals, sometime next spring.
[1] http://www.design.caltech.edu/erik/Misc/Prepare_3_Envelopes....
Great link, though.
E.g. you're not going to take this offer if you expect your end of year bonus to be 40% already.
Many people complain about the language in these trite, lawyer-approved kinds of emails, and yes, it is sad that it evolves in such an anti-human direction.
But for me, the real take away is that top to bottom, investors and executives at Zenefits should be absolutely and unequivocally ashamed of themselves for offering such poor severance benefits and having the audacity to turn around and act like it's an act of generosity. The voluntary package with 2 months of severance and 4 months of COBRA defies moral comprehension.
I remember the line from the movie The Big Short where Mark Baum says "Short everything that guy has ever touched" or something to that effect, out of disgust.
I think the same feeling is warranted with Zenefits' investors and executives. What a stain.
Many employees never negotiate these things, sadly, because organizations try to create a taboo about talking about what would happen if your tenure with them ever comes to an end. As a result, a lot of people are made to accept no severance at all, or extremely poor severance, like 3 months of salary, if any.
In all cases, severance was never offered, but was immediately agreed to when I countered the original offer and asked. Support for on-going insurance has varied, and the specific amounts have varied, but I can say for sure I would reject a company immediately if they were unwilling to offer more than 3 months of severance pay in addition to extended support for, at the very least, on-going health insurance.
From my personal experience, I just try to be very direct and straightforward with my understanding of the risks involved in taking a new position.
If a position requires me to relocate, then what happens if the company simply decides to let me go for an arbitrary reason shortly after I have moved? I am now stuck in a place without a job, and may have to incur costs to relocate to wherever I was prior to taking that job. This actually happened to a friend of mine who left a job in London and told his landlord he was leaving -- he moved to San Francisco (on a pretty low relocation benefit) to join a start-up and literally the week that he arrived they said they were restructuring, no longer had the budget for his position, and didn't want to sponsor his visa for other positions that he wasn't directly qualified for. He suddenly had to get out of his lease in SF and figure out whether he wanted to scramble to find a visa-sponsor and stay or go back to London. He ended up going back to London, and ended up on net losing money on the overall experience by having to ship things back to himself and pay a new fee to a realtor to help him find a new apartment. Severance is a mechanism by which you say that if the company wants to hire you (they may or may not) then they have to prevent that kind of outcome by guaranteeing they'll compensate you if they put you in a position to scramble.
That's an extreme case, but the idea is the basis for asking for severance. You simply say that in order to feel comfortable relocating / leaving the old position / joining a risky company / joining a crowded industry or market where other companies have recently had layoffs / etc., then what it takes is for you to see a gesture of commitment from the hiring company in the form of a severance benefit.
I try to offer to be flexible about the terms and also tell them that terms which offer a continuation of health insurance are the most valuable for me.
I typically try to delay talking about severance until all of the other properties of the job offer are agreed upon, because it's a very different issue than salary, bonus, equity, vacation, or perks like remote working. If those things aren't mutually satisfactory, then there's no point in even bringing up severance at all.
I also try to delay talking about relocation until the latter stages too, for similar reasons, and I find that talking about severance in unison with relocation, and explaining the link between the risk of relocating and possibly being stuck scrambling if there is a lay-off and the need for severance is generally well-received.
You should be prepared with what kind of severance package you feel is reasonable, and possibly some examples of other companies that have provided it. It should be a written part of your offer letter, including specifics about insurance continuation, and you should be given the chance to review those details before giving a definitive yes or no answer. Be confident when you ask for what you're worth, and in the case of severance just remember that 6 months of salary, even for a highly-paid employee, is not a significant extra hiring expense for most companies. What you're asking for is not some outrageous or greedy amount -- it certainly won't shower you with riches or materially change your life, especially if you actually do fall on hard times and have to search for the next job for a long time. It's merely a reasonable amount of money to protect you from a risk. The hiring company does not have to offer that protection, but if you value yourself (and you should) then you likewise don't have to work for any company that would choose not to do it.
I'd say the minimum I would consider reasonable would be 6 months, maybe more in higher cost of living areas. That's just the cost of doing business.
If you relocate for a job, or give up a stable current job, or a number of other things, you're just essentially trusting the new company not to do this to you, and often it's completely blind trust and you have no way to know in advance if your trust is well-placed.
If they are willing to compensate you for a situation where they unexpectedly (not due to any cause by you, like poor performance or insubordination or something) throw you into unemployment, possibly in a new location where you lack a professional network to find the next job, or where you would not choose to stay apart for the job you took, it shows a willingness on their part to earn your trust.
It's extremely bizarre to me to hear someone characterize taking a new job by saying "I don't understand what the risk is." It's a huge, huge risk every time that the new place is going to treat you badly and that you could not have seen it ahead of time because they didn't emit red flags during the hiring process. And many ways of them erratically treating you badly results in you suddenly having no income or insurance and needing to figure out what to do -- a situation that should absolutely never be financed out of your personal savings (though, often it is because people rarely negotiate adequate severance).
Perhaps you've been very lucky with working for good companies and just haven't experienced how prevalent this is.
As a point of reference, a (long-established) company gave me over $50k (cash) in severance after 4+ years of service. That was what I'd consider "generous".
But if you can't get excited about that, then frankly we need you to make space for someone who will."
Seems like a strange way of lifting moral during tough times.
I imagine that after today he will go home to The Woman and sit in The Chair and pat David The Dog on his scruffy head while feeling well accomplished.
That's a good question to ask of a large number of startups, in my experience. There's a fine line between "strong culture" that everyone seems to be pushing for, and "this is crazy."
I have to give the CEO credit. He's probably had to fight his CFO and board tooth and nail to get that package. I view it the same way that I view Obama's work on health care. Is it perfect? No. But it's better to compromise and get something done than to get nothing accomplished at all. What do you expect Sacks to do, stand up to his board, get fired, and then have everyone get nothing?
Most tech companies, when they lay people off, don't offer severance or even announce a layoff. They hide it as a "performance" based layoff or put in a stack-ranking system. Sacks is trying to do the most honorable thing that he can.
This is also a way for CEO Sacks to distance himself from the Y Combinator way of doing things. YC would advise him to do the standard sleazy startup thing. He's not doing that.
Wrong on both accounts. They say to factor about 1 months of job searching for every $10k of salary you seek, and I have found this to be highly accurate when searching in New York and in Boston -- certainly also true in SF. Keep in mind that most SF start-up jobs are ludicrous start-up bullshit -- yes maybe you can easily hop to these jobs, but they don't actually provide enough compensation to support living there. Being able to hop to these jobs isn't a reasonable backup plan, despite how many deluded folks try this for a while before moving away.
> I have to give the CEO credit. He's probably had to fight his CFO and board tooth and nail to get that package.
This is not how companies work. The CEO isn't some champion for the people. This was a careful decision with forethought by all parties, planning ahead for how it would be perceived in media, what impact it might have for future recruiting. If you think of the CEO as some kind of chivalrous champion of the common man, you have a very naive understanding of how companies work, and how bureaucracy in general works.
> Most tech companies, when they lay people off, don't offer severance or even announce a layoff.
In part this happens because of the taboo created to make it "bad" to talk about failure modes, like someone's tenure ending. Most people are too scared to negotiate this because they are afraid it will make them look like they're already thinking about how to leave or something, which is silly.
But in general, this is just false. My experience, at least, and the experience of many tech colleagues I've had, contradicts your claim.
> This is also a way for CEO Sacks to distance himself from the Y Combinator way of doing things. YC would advise him to do the standard sleazy startup thing. He's not doing that.
This is a bizarre comment. While I agree that Y Combinator is sleazy, I think it's clear that Zenefits is awfully sleazy too, and that this severance arrangement is pure sleaze by Zenefits.
What position are you talking about? I have had the opposite experience; in the past decade job hunting in the valley has never taken more than 3 months, and even in the 3 month case it's been because I wanted to slow down the process - the employers wanted to move even faster.
> But in general, this is just false. My experience, at least, and the experience of many tech colleagues I've had, contradicts your claim.
I have had the opposite experience in the bay area. What positions are you looking at? This doesn't sound like the typical experience for any engineers that I'm aware of. Maybe things are very different on the east coast.
This comment in no way applies to tech jobs in SV.
It's unfortunate that a lot of these losses will happen in AZ though.
I know if programmers making 100k find a new job in a week, and factory workers making 30k take 2 years to find a job. I don't have enough data to back up the exact "rule of thumb", but I would eat my shoe if it looked anywhere close to 1 month per 10k of salary.
Yes, unrepresentative outliers exist. I don't see your point.
This is a frequently cited rule of thumb by professional recruiters and those who work as specialists to help candidates improve their job search and find a job. It's been around for a while and applied to many industries, though certainly some are different. I'm not claiming it always holds, or even that things will always be the way they are now, just that it's a good rule on average for most jobs, and it's definitely a good rule of thumb for software jobs, even in the middle of SV.
The reason it takes a long time is that you're assessing goodness of fit. The case when you're just looking to immediately jump ship and you have essentially no standards besides compensation (this happens a lot in SV) is not being considered and is irrelevant in a discussion about severance anyway.
You're also speaking from the perspective of someone looking solely in a confined geographic region -- meaning you're not considering the vast amount of job searching that involves considering relocation, in which case just up and leaving your old life behind on a whim after finding a job in one week's time is a ludicrous outlier. What about people with families? You're thinking about this from only a single, narrow perspective that is an outlier in terms of the total volume of jobs. The volume of jobs in SV for which people apply who have low search standards and who are in life positions to just accept possibly relocating or significantly changing their commute on a whim is a tiny fraction of the total volume of jobs, so again I just do not see the relevance of these anecdotes.
> Salary is not related to search time, demand is.
This is very naive. Salary is loosely a measure of how irreplaceable your labor would be, and is also an expression of demand, both of which affect search time. Salary is definitely causally related to demand, so it's at least a proxy.
Again, no one is claiming there is some hard theory to propose an economic law relating search time to salary. It's just a heuristic, most likely because salary is a proxy for demand -- one of the most ubiquitous ones.
You seem to just glibly deny this but don't even pause to consider that salary is in part a proxy for demand.
The bigger thing is that after you begin earning a salary that you're happy with, you know what you're worth and you know the rough salary range you'll be seeking, and you'll spend some time interviewing at places that can't come near it, but eventually you'll figure out how to target the right places.
When you do, then it's not about salary -- it's about work/life balance, flexibility, whether you'll do the kinds of projects you want to do, commute, relocation, whether you like the area you'll move to, how bad are the company politics, etc.
This is a massive and difficult combinatorial optimization problem and even conditioning on finding places that offer in your desired salary range, if you take these other life factors at all seriously, it takes a long time to find an acceptable fit.
Given that increasing salary is generally related to increasing seniority (thus age, and thus also more complex life situations with spouse and children or family elders in need of care, etc.) and to increasing responsibility (thus politics and subtle factors will greatly affect your experience in the new job, much more than compared with lower salaried workers in general) it's very reasonable to propose that as salary increases, search complexity increases, and so search time to find an acceptable role also increases.
Again, outliers exist. Deluded folks who just want to maintain a certain kind of status lifestyle in an urban center may just jump to any job that sustains that lifestyle -- that's a super uncommon way to search for a job in the market overall, even if it's not uncommon in a market like SV. It's just not useful for general heuristics.
I mean, an even more obvious outlier example would be getting hired due to a professional connection. You might spend zero time looking for a job and have it just offered to you. But we don't go around making general heuristics based on extreme outlier experiences like that -- and people living in those outlier experiences know that they don't need to use the heuristic.
Yes a CEO finding a new job will take longer than a Fast food worker. But no, there is no linear relationship between salary and time to find a job.
That's fine, but you've got to agree that no one should find that convincing. Since my experience, the experience of my peers, the advice of many career counselors and recruiters, and the rough arguments I sketched all do support what I'm saying, I'm still going to believe it, and believe that your choice not to engage with it is not a reasonable take on it, much like your focus on very small outlier experiences, like quick job hopping in SV, is not a reasonable thing to base any of this on.
No one's claiming it's a perfect rule. Only that it's useful on average.
I do live in an area without many jobs for the current search, but I am not searching for jobs in this area, only in other areas with many jobs. In previous searches I was living in large urban centers with well-known tech companies, large start-up communities, famous universities, etc. etc. and it did not materially make the search time shorter on average.
Overall though, I don't care as much about your anecdata vs. my anecdata. I more believe the heuristic because so many people describe it as accurate and it has been around a long time and vetted by people who work in recruiting professionally.
When we ban someone from Hacker News for egregious repeated abuses, we ban their subsequent accounts as well.
We detached this subthread from https://news.ycombinator.com/item?id=11903531 and marked it off-topic.
Not deleting this reflects the maturity of YC and by definition refutes the very accusation laid against it. Kudos
* takes responsibility for the situation.
* admits that he's laying people off, rather than disguising it as performance-based firing.
* offers a severance that is generous by tech standards, and
* allows people whose roles have changed to escape with severance and their reputation intact.
This is very much not the Y Combinator way of doing things. Are we sure that Zenefits was once YC?
Could Sacks have executed this strategy without the macro having been created and run?
Bold statements require actual data. Or is this just a "feeling" you get from reading news?
We go out of our way to moderate Hacker News less, not more, when people criticize YC. But that doesn't mean anything goes, and in this case the abuse crossed the line a long time ago.