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> If you even think about doing 70% layoffs you clearly over hired and are not making good leadership decisions leading up to the layoff.

100% agree with this part.

Going default alive was not the cause of whatever this company was dying. At best, it would slow or kill your growth, not your company. It sounds like it was mismanaged and prioritized something else over fixing their product. It is not bad for a company to focus on profitability.

More employees also does not mean faster product development, every developer knows this is often the complete opposite.

> More employees also does not mean faster product development, every developer knows this is often the complete opposite.

This is only true up to a point. Otherwise, every startup would be a one man show.

That's true, but the intrinsic bias of...well, pretty much everyone...is to overhire, so that's what you need to fight. I don't think I've met anyone who was suffering from under-hiring, unless it was a situation forced upon them by lack of resources.

People feel important and "arrived" when they lead a big organization, and also, it can feel like you're doing the right thing, because it alleviates some stress. Even if you're otherwise allergic to large teams, you're so busy as a founder that any help feels like good help.

> I don't think I've met anyone who was suffering from under-hiring,

I've definitely run into this a handful of times, mostly due to runway concerns and "keeping options open".

What were the clear symptoms of under-hiring?

I think I've only worked at companies that under-hired. At small start-ups it that they were worried about runway and so made everyone wear many hats and overwork / crunch on things. At large orgs its just difficult to hire and very competitive, so you always have a hard time hitting your goals even though the roles are very much needed.

I can't think of one org I've ever worked at that hit a sweet spot where you were able to hire exactly as many engineers as you needed while keeping up with growth and attrition.

More employees means faster (or at least higher throughout) product development if and only if the organization has competent managers who know how to design an effective organizational structure, set clear priorities, hire the right people, and implement good processes. Unfortunately, competent management is rare in early-stage startups led by founders who lack management experience in larger organizations. (Yes I am aware that there are also many incompetent managers in larger organizations.)

> More employees also does not mean faster product development, every developer knows this is often the complete opposite.

Maybe teams are more productive when their membership is stable. Either adding or removing developers mid-project could disrupt development.

> Funny thing is I’ve seen this exact advice destroy a company. In March 2020 they did deep layoffs and cited the need to be “default alive.” Then their main market surprisingly quickly grew in the rest of 2020

I recognize that later in your comment you say "Of course if 2020 had gotten worse maybe they would look smart" but I think it's worthwhile to compare/contrast the pure macroeconomics of early pandemic versus now. To the Fed the pandemic was an exogenous shock and they unleashed all their tools to keep the economy going. Now they are dealing with the backlash of unleashing all their tools (inflation) and are making it very clear that their priority is to bring down inflation and they are very aware that they do that by bringing down employment. So encouraging startups to go default alive is very much what the Fed wants right now. Big difference in policy direction. Exogenous shock versus endogenous course correction.

Are they just trying to reduce the amount of capital the working class has? Are there no other ways to reduce inflation right now than to curb demand? Wouldn’t a concerted effort to resolve supply issues have a similar effect?

When all you have is a hammer...

Part of the problem is that Congress is largely broken and can't adequately address issues like this. That pushes most of the responsibility onto The Fed and they have a much smaller bag of tools than Congress.

I think the technical term is "policy levers" and secondly, your dialectic there is over-simplified, reduced to talking points. Real money supply goes somewhere through some mechanisms with some costs .. not a fan of the Fed and, this is not sufficiently detailed to be representative IMHO

Its not an inaccurate summary of the fed's actions. Bringing down employment whenever wages rise certainly stops inflation, but it does so while preserving capitol holders margins. Individuals only have bargaining power when the labor market is tight.

The fed is effectively cutting off the labor side of the business cycle.

> is effectively cutting off the labor side of the business cycle

yeah - overly simplistic conclusion.. for example, you do not recognize classes of business activity at all, yet some classes of employer are affected differently or even in the opposite direction; misleading.

> overly simplistic conclusion

Dominant first order and second order effects often have simple sounding narratives. Inflation, interest rates, and growth are complex relationships. The Fed's actions on the market are however simple instruments.

The above comment points out that since the Fed started using modern monetary theory to regulate the economy. Wages and Productivity have decoupled, while one may not cause the other - it's reasonable to hypothesize a relationship based on bargaining power.

When COVID first hit, we were forced to go default alive. We didn't let anyone go but implemented a hiring freeze for 6 months and we managed to grow revenues to become cash flow positive. Default alive doesn't necessarily mean having to let go of employees.

Getting laid off is not a good feeling, but if I can rank order who I should reserve my sympathy, especially during an economic downturn, a laid off tech worker in a startup is the one I’d sympathize with the last. It has never been hard even during downturns to find work in tech. At least comparatively.

Were you around for the dot coms? I know of CS PhDs that were applying to Circuit City.

Yeah, the bubble bursting was pretty bad for a couple years. The few companies hiring had the pick of the litter. That said, a lot of us at least had savings. Most Americans do not.

I didn’t say they didn’t have it easy, only that they’d still be quite better than many, many others in other fields (including minimum wage jobs) who’re typically worse off.

Most companies don’t need “PhDs”. They are usually less in demand than BS degrees even in good times and get paid less. Yes, I was around, had been working for four years abs had no trouble finding jobs at none tech, profitable companies.

... doesn't everyone who has a PhD in CS also have at least a bachelor (and probably also a master) in CS? Why should they get paid less? :D

At the same age, you have 4 to 8 less years of professional experience than someone with only a BS. I'm assuming the GP isn't trying to compare salary for people that are 10 years different in age.

In addition, the quality of PhD programs is highly variable.

Ah, fair, that's true!

A good friend of mine and a very competent developer who is now very successful but graduated right into the tail end of the dotcom bust (circa 2002) spent his first two years out of college gluing soles in a shoe factory.

> Funny thing is I’ve seen this exact advice destroy a company. In March 2020 they did deep layoffs and cited the need to be “default alive.” Then their main market surprisingly quickly grew in the rest of 2020 , they wanted to capitalize on that, but they had laid off too many engineers who knew their infra and had enough outages and slow product development that they lost to their competitors and are now way underwater on their valuation.

It sounds like it was an unhealthy company and just didn't realize it till the tide went out. Seems doubtful that a quarter or two of fewer engineers slinging code was the root of its inability to attract & retain customers in a growing market.

The hiring market for software engineers went absolutely bonkers during COVID. Salaries shot up. Nearly everyone was hiring.

This "70%" advice was getting thrown around by every two-bit "thought leader" back at the start of COVID. I could totally see how following that advice would result in your competitors scooping up all of your former employees. And then you would be stuck in long and expensive rebuilding process just to get back to where you were, but now you would be stuck with more junior employees making higher salaries to boot. Oh and let's not forget that the 30% of the employees that you so graciously let stick around all probably dusted off their resumes, resulting at least a handful of defections. Accounting for those circumstances, I could absolutely see how a deep layoff in early 2020 would sink a company. COVID was a once in a generation opportunity for certain businesses as the entire world moved from IRL to online. Even some of the biggest tech companies struggled to keep up with the sudden demand.

Realistically engineering and product impacts just play out over a much longer period of time & the outcomes were already baked in for the next few quarters of 2020, even at a small startup. Engineering Layoffs in March aren't why they didn't catch the Covid boom in April. They were never positioned to ride that wave.

That's just bad software engineering. In general, I would expect software to scale well as far as traffic is concerned esp in today's environment where scaling infra is not really a big deal. Coping with feature requests on a shoestring staff is a different story.

Maybe it’s bad software engineering but it’s a reality that most companies have “bad engineering”, there’s always piles of tech debt and even stuff out of your control.

For example, one outage related to Google Ads API changing their parameters. This led to ads not being run which directly cost revenue since those ads were profitable. The outage went on for much longer than it needed to since people with expertise on the marketing pipelines were gone.

Id say the “bad engineering” here is mostly Google ads who should version their API changes. But if Google can’t do good engineering, I’m not counting on too many other companies to do so. This idea that infra is a “set and forget” operation because autoscaling exists is a fantasy for conference talks, not reality.

Aren't you kinda just saying "no matter how many engineers you currently have maintaining your infrastructure, your infrastructure should be just fine with fewer engineers"?

reducto-ad-absurdium: any system can be maintained by a part-timer who doesn't understand it :)

As long as you have self documenting code and tests /s

> One thing it obviously does not address is the human element of who you cut and whether they will be “default alive” unemployed in a recession.

An individual's personal financial circumstance is not a factor though. There are many people that have fixed their personal finance issue adequately. And for those who really don't have easy choice of employers or personal runway, then they're fucked. Did that really need to be said? That's what is going to happen.

It’s not a bad decision for a founder to protect the company above all, it’s their job. However, at the same time - cutting people who took a bet on you should be difficult.

When you cut 70%, it’ll make future hiring difficult, it’ll make existing employees recognize where they stand (no where). Getting laid off is one of the worst events that can happen to a person, and you really have no way of knowing what the impact on them is.

Which is to say, If a founder decided to cut exactly 70% of their staff based solely on an email from YC - I’d be very certain to dissuade anyone in my network from working with them in any capacity.