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Comment by MichaelZuo | Hacker News Reader

Stripe did seem to be somewhat overstaffed after the huge hiring spree in the last 2 years.

Though the bottom 14% is a pretty big amount to cut, almost certainly some decent performers in that group.

> Though the bottom 14% is a pretty big amount to cut, almost certainly some decent performers in that group.

I don't think you can only cut "poor performers" in any sort of bulk layoffs. You can avoid it in aggregate, but there will be enough mistakes, enough teams that need to cut a number but don't have enough poor performers, or even enough high performers who are just on teams that are deemed no longer necessary.

High performers on redundant teams would almost certainly be transferred, assuming there isn't some odd middle management infighting going on.

I'd hope so, but it's a lot harder to identify the high performers, figure out where to transfer them to, cut low performers from the teams they're moving to, etc. Unfortunately much easier to just cut teams as the company cuts scope.

It’s very easy to have people who are widely regarded as high performers. But transfers are often limited when layoffs are happening and, in practice, execs often don’t want to transfer headcount to other teams even if it’s probably the right thing to do from an overall company perspective.

Identifying high performers can be subjective, just look at Google's promotion practices. Productive engineers also tend to get paid more, making them an attractive target when reducing payroll spend.

Yep. You have someone who the mythical company “they” think is awesome but their team was disbanded, there’s no ideal and obvious role for them, transfers are mostly on hold anyway, etc. At some point a bunch of people are sorry they couldn’t find a way to keep the person but they can’t really do anything. And parking them somewhere they aren’t really a good fit isn’t ideal anyway.

That's a pretty big assumption :)

There's always management infighting, especially in lean times.

When the infighting gets serious enough to be obvious to an outside observer is my threshold.

If it's just some folks getting miffed because someone from another department stepped on their toes or made some unkind comments about their team, then that shouldn't be too serious.

I'm assuming it's mostly the latter at Stripe...

Transferring a high performer often implies laying off another person in the target team.

The time to do that would have been in a reorg (Stripe's philosophy for that is at https://stripe.com/guides/atlas/organizations-and-hypergrowt... ) prior to layoffs.

During a layoff, if you want to transfer to a different team, apply for a job on that team if they've still got some open headcount.

I've seen a company's culture effectively be killed overnight because one "low performer" was cut off. Not every impact an employee has is directly represented in their own bottom line.

The company in question was able to stomach this because it would go on to undergo significant structural changes anway but it basically had to start building a new company culture from scratch and doing it top-down is much harder than building on something you've developed organically via your early hires.

EDIT: Since I'm rate-limited right now, I'll elaborate here: it was a company with a number of employees in the low 2 digits at the time and the employee in question had been involved (indirectly via another venture in the same office space and later directly) since before the company even got off the ground. They were in a non-technical role at a tech company but on good terms with most employees and genuinely cheerful about company branding and everyone being "the company" rather than just working on cool tech that happened to be sold by that company. Basically they acted as social glue, both between other employees but also between those employees and the company. Some other (higher performing) employees left after them but I doubt most could point at what it was that pushed them to quit even though this employee's departure was likely a major contributing factor. I could go into more detail but I want to preserve the anonymity of everyone involved, especially those no longer working at the company.

Could you expand on that? I'm curious to know how one employee can single-handedly carry the company's culture.

I've seen individuals who are the primary connection between two important departments; say IT and sales, speaking both languages enough to translate. On paper, not much work done; in reality, critical for smooth operation.

"I have people skills!"

I get what you're saying and have worked with people like that. But I see that as a different management problem that also needs to be solved.

The management problem is not seeing the value these sorts of people generate for the organization, yes.

The dynamics of a low 2 digit employee company is very different from the dynamics of a company with many thousands.

In the latter case it's simply impossible for a single person, not in middle-management or exec level, to be in a critical 'social glue' position.

Dunbar's number, etc.,

That is true at a company level but if you want to have an authentic company culture, you need more glue, not less. Managers can fulfill that function to some degree but the key difference is that managers are in a position of power towards the rest of the team, which changes the social dynamics and makes it harder for them to create cohesion within the team the same way someone at the team's level can. This is also extremely difficult to hire for.

So what you usually end up at 3 or 4 digit companies is astroturf and mandatory fun days. The adhesion to the company will be fueled by sales and marketing, the cohesion within teams will be imposed by team building techniques. It's all very artificial and superficial because you can't grow social bonds top-down.

It can be profitable and when you've grown this large employee churn will likely be less of a problem (see Meta) but it's a much less pleasant environment to exist in as a human being.

Why didn't Stripe SPAC or IPO during the boom?

I imagine they could've went for 10-20x their current value like most IPOs during that time...

IIUC - Stripe actually has good financials.

As a comparison - Twitter had ~7500 employees. Stripe had ~8000.

So I wouldn't be surprised if they have room to cut ~14%. Though, I'm interested why now.

Are they planning to IPO soon or something? It just doesn't seem like a good time for that...

Very good question. As I said before, the time to IPO was in 2019 [0] and Stripe should have hastened and IPO'ed then and now it had it's valuation slashed [1] and instead had to postpone and wait, just like the rest of the other startups who were too late. [2]

So, not really a surprise that this happened to Stripe.

[0] https://news.ycombinator.com/item?id=20993919

[1] https://news.ycombinator.com/item?id=32566652

[2] https://news.ycombinator.com/item?id=31062227

> after the huge hiring spree in the last 2 years.

Would be useful to see some charts of all those "hiring sprees" that happened during the last 2 years at the big US tech companies, and how the curves on those charts would compare to "normalized" charts had the pandemic/hiring sprees not existed (i.e. if the headcount in 2020-2021 would have increased following the same hiring trends of 2019, 2018 etc).

Collison's email says this layoff returns Stripe to it's February (presumably 2022) headcount.

Seems like everyone was in a hiring spree in 2020 and 2021.

This is my take on it. Everyone went crazy on hiring. Nothing is crashing, it's just the market returning to normal. Well, except for Meta. They're having a bad time lol.

Even that is mostly self inflicted

You should see the financials from some Indian unicorns that raised hundreds of millions in 2020-22. $5-6M in revenue, $50M in expenses. No money anywhere.

VCs were way too exuberant and founders were more than happy to mop up the capital.

And here I was, working with a startup that had difficulty landing $500K. It was my first foray into being a founder, but I learned that I do not understand the investing landscape at all.

Matt Levine of Bloomberg has a quote about Adam Neumann that is just... amazing. It's about selling in a sellers market and basically about how he sold We Work shares to Softbank (and taking money out of it).

I see stocks as fundamentally two things. A statistical thing (something that tracks the underlying fundamentals of a business, and a probability (a belief in that company). Yes, this alludes to classical frequentist statistics vs Bayesian statistics interpretations.

It's impossible to cut 14% and making sure those are only bottom performers. You'd have to reorg the whole company if that were the case because some 8 person teams might have 1 bottom performer (and thus become 7), others might have 2 or 3 and thus become (5 or 6 people. They'd then want to add more people to be a big enough team again etc etc, so those would have to come from other teams that then get merged)

> somewhat overstaffed

somewhat? It has 8 THOUSAND employees to run a payment processor.

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