CEO Jack Altman’s email to Lattice employees
lattice.com
lattice.com
What's happening in tech and the economy in general might new for some of you, or the first time in your working career that you're worried about your job because, for the past 15 years or so, tech has been largely insulated from other small cycles which have happened. Economies have downturns and cycles, and in your lifetime you'll see it many times.
My parents struggled so much in the 80s to put me through school. My dad had to take a job in a different state and live away for 6 months just so we could keep our house and the lights on. I will never forget that time. Or 2001 when so many dot coms busted, as did my first job. Or in 2008 when half my colleagues in finance were walked out the door. Or 2011's mini recession.
It gets better, and this all will pass. To me, it certainly makes a difference how people treat each other when times are tough, and I can find no fault of this CEO or company. Nor of Zuckerburg when I read and listened to his message and felt, to me, genuine sadness in having to make such a decision.
It's tough times - let's all avoid cynicism and see if we can help anyone we know impacted by a job loss by our networks. Go write up a referral for someone on LinkedIn. Call a friend who's struggling and just listen to them. That's all you can really do.
I'm really curious how this specific press release is different than the Coinbase one [0] (or most of the others on the homepage this week), where the HN crowd was demanding that the CEO "take accountability" and resign, or reduce CEO pay, etc etc
To be honest, this press release reads basically the same as 10+ other tech layoff press releases I've read this week. Including nearly identical severance packages.
Lattice is in a more mainstream ("useful") industry and its CEO doesn't have a record of courting controversy, so it gets more sympathy. It doesn't come with the downsides of being a ubiquitous brand or association with a controversial sector. Plus it's a smaller company so it's more of an underdog. Also the startup funding offer is neat and intriguing.
lol, who the heck thinks that not getting into NFT market was a mistake? If anything, they did themselves a favor by not building many NFT capabilities.
NFTs might have a second chance in the future but currently is just a mass graveyard of scams.
https://www.usatoday.com/story/tech/2022/07/15/nft-marketpla...
I'm not a fan of big companies xeroxing each other's features, as it seems to be a dominant form of product "innovation" these days, but one could have assumed that Coinbase, being market leader in this space, would have done that for NFTs.
And on the note of it being an extremely short fad- it is interesting that on occasion, the big tech incumbents might actually beat the upstart errant. Clubhouse seems pretty stagnant now, but Twitter Spaces seems to have had more vitality, even if it's just leaning on that site's massive social network as well as some free publicity from the current CEO's public drama. Of course, the NFT market exists independently of what any one company.
This message did not make such obviously false claims of accountability. Is that enough of a difference to make up the entire difference in the entire tenor of the conversation? I don't know. But it is at least the reason for your specific example.
I believe this should be the standard for any CEO who wants to say they take accountability.
Just because someone is responsible for something doesn't mean they need to be punished.
E.g. if somebody is committed of a crime and says “I take full responsibility for my actions” to the judge just before being sentenced, then that is a very strong signal of character for me.
But if somebody says “I take full responsibility for my actions” just before jumping in an Uber to go to a luxury dinner with the board of directors, then that does not impress me and I perceive it as a cheap attempt to reap the social benefits of saying that phrase with none of the potential costs.
My initial instinct is that this line of argument is more like venting than it is any kind of real suggestion for behavior change.
It's basically making the layoff about themselves, rather than the poor sods who just lost their jobs. (There's some other common patterns in that vein too, e.g. "this is the hardest decision I've ever had to do".)
If you want to acknowledge being at fault, that's totally fine. Just write the facts. The over-hiring was a mistake, and you're the one who made that decision. Don't dress it up into a personal journey of failure and redemption.
The problem with that is, these transactions are now on an immutable ledger (which is the actual use case of block chains).
These transactions could have been made with any "thing" that enough people agree has some value.
"any" is going a lot of heavy lifting there.
Apart from people agreeing on value, that thing also has to be: 1. out of their governments' control (all the examples had governments gone bad), 2. easy to transfer/carry, 3. durable.
Can you please name a few alternatives if you think that's a simple problem?
Bitcoin fits the bill for those aspects. Can you name a few other "things"?
I do not disagree that blockchain tech has a good use case. It's just that it does one thing: a distributed ledger. That's it.
"Some places are so terrible that the only external financial systems unregulated enough to allow them to participate are these specific unregulated financial markets" is some net good being produced in end for the citizens of those regimes, and circumstantially the "block chain did that" I guess, but that still doesn't tell me why you needed a block chain to be involved to begin with.
No, most reasonable adults have a problem with crypto.
What's the advantage in burning the entire power consumption of Zaire for a month, just to pay for a tin of beans?
I'd say the saccharin sweet tone in this comment section is mostly born of personal feelings. If the Coinbase CEO was a more integral, well-liked part of the SV founder scene, the same exact letter would have been just fine for most of these people.
I'm saying it's because it's the literal individual "Jack Altman", outside of his capacity as a CEO, has personally rubbed elbows with the right crowd.
Lattice had 700+ employees working on a product that HN would normally lampoon for having even 100 working on, they were massively bloated and there is literally no chance the organization wasn't aware that they were hiring people who wouldn't add enough value to weather any sort of mild storm (and they all but say that in the letter).
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They did so because it shows growth, and they put company growth above even the slightest bit resiliency because that's the playbook. Show growth at all costs because you can just fire those people and write a cutesy letter and a severance package with... some of the money that showing growth let you raise!
It's a crappy thing founders often do, but again, if you sling tweets with the right crowd and hang with the right people, all is forgiven.
Essentially the CEO gets to behave badly, as long as the person is well liked. That's not how a meritocracy based on anything like "brand equity" should work.
https://news.ycombinator.com/item?id=33895773 https://news.ycombinator.com/item?id=34268762 https://news.ycombinator.com/item?id=33961410 https://news.ycombinator.com/item?id=33809631
Every single time it's the same template, every single time the CEO is the villain, until we got one that was part of the in crowd.
I think people forget how tight knit the SV crowd can be. A lot of these people are former class mates/team mates/etc. It's a softer version of nepotism where any failings are taken much softer because these are people who just might rub your back the right way down the line due to proximity.
The job of the C-suite is accurate forecasting which is why they make 400x what the line worker does in large companies. Obviously they don't have a crystal ball but if scaled up the company hugely during a black swan event like covid and assumed that was the new normal I'd be personally ashamed and would either resign or give back my salary for a year+ to keep most of those employees and find a function for them. Perhaps via retraining, perhaps with instituting optional pay cuts to let people work 4 days a week, etc.
This email is basically:
Oh dear we're in a tight spot, no idea how we got here, it's a mystery! I guess someone (definitely not me!) ran the business in a way that demonstrated an appalling understanding of our market, our customers, and the macro climate, and a fundamental carelessness with investor money and employee livelihoods. Don't worry though, that person was definitely not me, so I'm the right person to lead us out of this.
p.s. look shiny severance packages!!!
p.p.s. Once again, that person was not me, so there shouldn't be any consequences for me, other than a bunch of easily impressed tech workers giving me praise for the severance package.
I suspect the overall CEO compensation package for a company the size and structure of Lattice is trivial compared to other expenses.
I mean, are we certain of that? Maybe someone should try it first.
A VC backed CEO is usually paid a lower salary than the average software developer. Their biggest pay is by owning a lot of equity that's on a standard vesting schedule. Cutting their salary would be entirely performative. And clawing back equity is difficult and only matters is the company does well.
A public company CEO is usually not the founder. They're compensated with stock bonuses (that can be almost immediately liquidated) based on performance, as well as a large salary.
I think forgoing a bonus when you're the CEO and doing layoffs would be great. Unfortunately, that goes against the interest of the CEO and investors
"We have to lay 15% of you off, but don't worry, we can still find $100K's all over to speculatively invest in startups"...
[1] https://www.kron4.com/wp-content/uploads/sites/11/2022/11/tw...
"While our revenue has grown by five times since the start of the pandemic, our costs have grown by even more as we geared up for a continued rate of growth that now looks unlikely. Additionally, so much of our organization was built for a paradigm of rapid growth, in terms of the roles, ratios, and structures we’ve put in place."
...but nowhere does he talk about why these things happened.
He literally uses the passive voice top avoid taking responsibility ("our organization was built" not "I built").
You come away with the feeling this is a good letter in which he takes responsibility because he distracts you by spending the rest of the letter describing the details of the severance offer, which is completely orthogonal to the issue of root causes and responsibility.
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ECONOMIES require tech, regardless of industry, thus a growth in tech - even when there is a plateau in general economic growth....
They still need tech to advance, and adopting that advancement to remain competitive?
Or am I wrong?
I normally cringe at all the "I could build it in a weekend" posts here, but with Lattice I genuinely cannot understand what the 1000+ employees even do. Is there anything more to the company than the founder's last name and industry connections through his brother?
Also we stopped using it a few years ago, but for some reason over the past months, all our employees have been getting marketing spam from Lattice.
This is just so short sighted from Jack and other such CEOs.
The letter says that the takeaway at the executive level is a greater emphasis on building an all-weather business.
But frankly, investors often don't want an all-weather business. Lattice is a venture-backed startup. Having an all-weather business means being more risk-averse than you otherwise could be, which limits growth in the good times. Investors want a company that can quickly shed excess weight during a recession and then quickly grow again when conditions are favorable. That's how you get the high growth that attracts VCs.
Something tells me that most CEOs who commit to running an all-weather business during this period of contraction will conveniently forget about it when times are better.
In fact, they may use similar justification, that their hands are tied. During the downturn, it's "We had to lay these people off to make sure the larger organization can survive," and during a bull market, it's, "We had to grow rapidly to secure additional funding, which is necessary to make sure the larger organization can survive."
So many of these startup aren't build around a solid sustainable business model but around an exit. Fuck the employees, fuck the customers, all leadership cares about is making it to an exit so they can all cash out. They all saw an opportunity to accelerate that cash out during the free money, everyone is a unicorn years, unfortunately most of them were never going to cash out and now that no one is throwing free money at them to keep their pipe dreams afloat, the employees and customers take the brunt of their greed while they waltz off to their next boondoggle.
This may be true for some investors, but the largest hedge fund in the world Bridgewater) is famous for their all-weather fund.
That means that those investors do exist.
If you take that into account, that means that they chose investors who do not want an all-weather company, and thereby gambled not only with their own personal well-being, but with other people's career's and incomes on a risky bet -- as the top comment said, it was obvious that these rates wouldn't stay the same.
The dichotomy of "higher risk vs higher reward", however, isn't as real as people feel it is. There are low-risk & high rewards style investing (it's the base premise of value investing, whether focused or not). VCs do not want you to lose their money, and so doing something that is predictably bad is not what they want.
They do want you to go for moonshots... but again, this is predictably bad. I think you'll be harder pressed to find a company that has continued to do well by over-hiring through pandemic times.
First google'd item on the subject: https://www.yahoo.com/video/warren-buffett-huge-structural-a...
Bingo.
It will be very interesting when the interest rates climb back down, to see how many CEO's will actually be hiring conservatively. One nice thing: we now have public documentation of their apology letters, so it will be quite a PR exercise to go back on their words. But I'm sure the consultants they hire will come up with the right kind of spin.
As a perennial negative Nancy, I'm pretty skeptical of this over "irrational exuberance". Every five to ten years everyone thinks that they are at the start of a brand new normal, where everything will be up and to the right forever, and then, oops that wasn't right.
People were being a little silly about the pandemic boom, we should just say that and not give out passes for being a part of the crowd.
Raise large amounts of money Grow exponentially Have a sweet exit for the investors
Nothing that happened is surprising in this light. Even with a "nice" CEO and generous layoff terms, the simple issue is that the market for any given company can only ever be so big and the CEO doesn't get to choose "less growth" with investors breathing down their necks.
Investors in private and public businesses demand growth, so naturally executives will optimize for that. I'm currently at a Series B company that has a product, growing customer base, strong revenue, etc. and we're starting the Series C process. We've crafted a plan for responsible organic growth by investing in efficiency and growing lines of business with a lower cost to serve, but even in this environment, a significant number of investors are still looking for a "pump in the cash and grow fast" story.
This is a common part of the boom-bust cycle of many corporate firms. They use cheap money and labor to reposition / grow / etc., then when the work is done and wages start increasing, they cut back on staffing and reap the profits of their new position with a skeleton crew.
Was it fear of being left out of the free-money-on-the-table if they didn't keep telling everyone growth would last forever, thus justifying investing more money in them to capitalize on that growth? I always have to keep in mind that public statements companies make are at least equal parts fire-for-effect as declaration of truth; they are bound by law to make some true statements, but they also pepper statements heavily with words chosen to illicit the desired behavior in investors (current and potential) and competitors.
In particular, I would say its not malicious, but just how society works. If you see your peers (other CEO's), the people you respect and report to (VC, investors) all saying similar things and nudging you to go in a specific direction, its easier to think you're on the right direction, easier to ignore signals that might point to the fact that your decision making is flawed.
The unfortunate truth is that they have the "excuse" that everyone around them was caught by surprise, so its "not their fault" (i.e. they're still a good leader) and investors will buy it. The people that lose out are the affected employees; they just need to be nice and polite, apologize profusely and move on, while its the employees that lose the most.
I suppose activist investors who pushed for aggressive growth strategies because of the FOMO environment will be losing a lot of money, but that's little comfort to the people losing their jobs.
Right, and I see little in the news about investors taking responsibility for misreading the market and losing value, all the fault appears to rest with the CEO's for hiring aggressively and for employees not being productive enough.
In a certain sense, I think we need more journalists that cover tech, so that we can get deep dives and some real answers. What we currently have is "journalists" whose main source of news is going to events/parties, socializing with the elite and then parroting their perspectives. There is very little "hard" journalism happening here, its more "access" journalism.
"Money, it's a hit; Ah, don't give me that do-goody-good bullshit; I'm in the high-fidelity first class travelling set; And I think I need a Learjet"
There seem to be some resemblances to religion here: the downturn indicates that the gods are angry, and must be appeased through sacrifices. The CEO acts as high priest, carrying out the sacrifice, absorbing the blame generated by it. That may seem like a far-fetched analogy, but there's a certain liturgy to the whole process.
It illustrates the popularized image of CEO as fully-realized alpha male who answers to no one is naive at best. Almost everyone has to answer to someone. And that definitely impacts how they make decisions.
"Dick Tracey ... Prune Face ... Prune Tracey ...", and you are left to figure out the rest ;-)
Formerly Chuck’s.
Turns out no, this a a cloud based HR platform - which made me balk at the fact they had just over 700 employees.
(But maybe some math nerd had registered it even earlier.)
- 12 weeks pay, more for longer tenure
- /wrong info deleted/ 3 years to exercise (Corrected: Removal of vesting cliff, not full vesting)
- healthcare for 3 months
- get to keep laptop equipment
- up to 100k investment if the laid off employee does their own startup, using Lattice for HR purposes
They aren't accelerating vesting. They're just removing the cliff. So if they hired you 6 months ago, you'll be eligible to exercise 6 months worth of vested options (or 1/8 of the total option grant).
"We removed the vesting cliff for employees who were with Lattice for less than one year. Their equity will vest monthly during their employment term as if they had reached the cliff. Employees will have up to 3 years to exercise their options post-exit."
> The way it works is simple: if you’ve worked at Lattice for at least 3 years and part on amicable terms and if you start a new company within 12 months of leaving, Lattice will offer to invest up to $100,000 either at a $5 million valuation or at the terms of a seed round you are raising, whichever is higher. Lattice will look to support these companies through sharing advice, our network, and even partnership where applicable.
[1]: https://lattice.com/blog/lattice-announces-the-invest-in-you...
We ended up hiring 60% of the targeted headcount before interest rates started spiking and everyone else slowed hired before transitioning to layoffs. So now we're the only division in the company that has open lines and can replace attrition. Meanwhile two other divisions have layoff rumors floating around.
All these CEO "it's my fault" letters ring hollow with me. The responsible ones were the ones that didn't just hop on all hands and announce "We're gonna 3x headcount!" and instead kept their hiring rational, managing their board and investors as needed. People are getting laid off now, because senior leadership wanted to have nice happy meetings where they pretended we could just 3x revenue every year for every and thus any kind of spend was justified on the grounds revenue would surpass it sooner or later.
Seeing a lot of people shitting on the product in this comment forum. Plenty of their products are gimmicks, sure, but their real product is that they have a cult-following from the HR community, and they are better positioned to iterate and compete with more mainstream HR tools if they play their cards right. Lord knows they have way too many sales people (AKA "surplus elites"), and need to focus more on their product if they want to have something HR teams don't just want, but need, especially in this new macroeconomic condition. Hopefully the company can move on from this quickly. I don't think Jack is the kind of person who will fuck this opportunity up.
Wish I could email my priest instead of having to go into the confession booth each time.
> Starting in the middle of 2020, the world moved in an unprecedented environment for many companies. As interest rates plummeted to 0% and monetary policy pushed lots of money into the economy, companies had easy access to capital, and demand for products and services surged. Organizations hired aggressively to meet market demand and the war for talent reached a fever pitch. The result, for Lattice, was that growth skyrocketed. [We either ignorantly assumed it would be like this forever, or knowingly took the risk that we'd have to lay people off when the economic picture meaningfully changed.]
> Fast forward a couple of years to 2023, and the economic picture has meaningfully changed.
(Aside, anyone else annoyed that so many companies have adopted the term "impacted" as the verb to refer to people who were laid off? The company is experiencing a layoff, an event as a noun, through which coworkers are impacted. Maybe I've only noticed this recently. It rubs me the wrong way, as we're avoiding saying what happened out loud, like the company is absolved from their responsibility as the subject performing the act of firing on the object. That said, the severance here is fairly generous so this isn't a knock on Lattice so much as pervasive SV culture.)
Maybe Lattice did the right thing, given the circumstances, but surely not all of the other headcount-exploding companies did. It seems like a copout to blame it all on ZIRP going away and not actual corporate leadership.
And yes I understand fiscal environments might compel said leadership to pursue that path, either as a game theory thing or because boards and investors agitate for it. But it still seems wrong to blame it all on the Fed and not bear any responsibility.
15% which is 100 people in their case isn't even that much, they could have implemented a hiring stop and trimmed low performers over the next 6-12 months ending up with the same headcount.
Wild guess 2: Since they are letting go so few people, they'll do another round in the future.
The most successful companies/investors seem to be the ones which kept assuming ZIRP would continue when it shouldn't. What we should take away from that is probably worth an entire separate conversation, but it was the general sentiment. You couldn't really explain the size of VC deals any other way than "invested somewhere is better than invested no where".
Edit: Re another comment of band wagoning - It could simply be easier to do because others are already doing it, sure, but there are plenty of HN posts explaining the huge risk you're taking by laying people off to losing your best people.
A rare demonstration of ownership, and it helps anyone laid off demonstrate the kind of culture they can bring with them to their new roles. Anyone who worked in the culture that produces that level of ownership will be a valuable asset wherever they go.
Pay: Separation packages offered to affected employees include a minimum of 12 weeks of pay, and more for those with longer tenure.
Equity: We removed the vesting cliff for employees who were with Lattice for less than one year. Their equity will vest monthly during their employment term as if they had reached the cliff. Employees will have up to 3 years to exercise their options post-exit.
Healthcare & Mental Wellness: We’re covering the cost of healthcare benefit continuation for employees, as well as extending mental health support through Spring Health, for 3 months.
Financial Advising: Origin financial wellness support will be available for 3 months to provide Certified Financial Planning and other tools.
Career support: We will be providing transitional support services to affected employees, with the costs covered by Lattice. The support includes career coaching, resume and LinkedIn updating, interview coaching, among other personalized services.
Laptops: All impacted Latticians may keep their laptops. We recognize that a career transition is not a good time to be without a capable machine.
Invest in Your People Fund: The option to have Lattice invest in a new startup will remain available to departing Latticians. If they decide to launch a startup that aligns with Lattice’s investment criteria, they will be eligible for up to a $100K investment from Lattice. Details here.
Imagine writing that sentence!
> While our revenue has grown by five times since the start of the pandemic, our costs have grown by even more as we geared up for a continued rate of growth that now looks unlikely. Additionally, so much of our organization was built for a paradigm of rapid growth, in terms of the roles, ratios, and structures we’ve put in place.
Soo.... shouldnt mgmt have some culpability here, for poor forcasting and they should be impacted...
who was doing their forcasting/finances, how much was the CFO paid - he should be fired first?
as a dir of ops for many companies, the CFO is the most remotely connected with the tech ops dev ops reqs required... and I have personally trained several CFOs on their BS...
I hold CFOs accountable to their mistakes, yet they suffer zero consequences.
If YC wants to brag about their companies - I'd say that holding CFOs accountable would be the most important change they can make. STOP hiring CFOs that dont know shit about tech as it translates to the actual teams who produce.
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If I am wrong, then educate me AND the industry in what to expect from a CFO who doesnt understand 'cloud-finance'
Get FinOPs to be a bit more salient
You join the Googlers, Xooglers, Nooglers, Metamates, Amazonians, Stripes, Tweeps, Peeps, Veeps, Rackers, Krakenites and Plaids.
I AM NOT A RESOURCE to be tracked and measured in the same way as a machine/robot. I dont need dashboards of my performance....
The last company that I was at that employed such measures kept telling my my monthly bonus was $27,000
Then they came back and paid me $2,000 -- and blamed it on the client not paying (even though I made them MILLIONS) (SF) ... yeah ;;
Trying to tie an employees to their 'productivity' dashboard, vs value of contribution is BS.
The idea of tracking the KPIs and metrics they have make me puke.
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If I had a startup currently, it feeds into the metastasizing of HR into companies...
Be a human. Never trust HR.
Not a robotic company, because if you are ;; you are nothing more than a 'Company Store' and we all know how well those workers did.
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This is nothing about Lattice itself: its about how generally emps are treated regardless (driven by POS companies like McKinsy et al...)
Protip: Have your own laptop for your own stuff – it'll save you from all kinds of headache down the line, and shield you from all kinds of potential risk
As someone that went through a similar 'just keep it' event. My personal laptop was already better, but my sister's sure as shit wasn't.
https://techcrunch.com/2022/01/19/lattice-raises-175m-more-a...
This is the same marketcap as Asana now, which I would guess has much higher revenue figures than Lattice
0. Numerologist may also chime in
That’s pretty remarkable, actually
Did you receive, or do you refute nepotistic investments/hires - irrespective of the success/failure of your company?
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Reddit has become a site that I will only ever lurk - after having an account for 16 YEARS... I will never create another account...
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Do you see these changes in Reddits favor? Or do you feel that Reddit has lost its vision, vs. supporting the path they are on?
As interest rates plummeted to 0% and monetary policy pushed lots of money into the economy, companies had easy access to capital, and demand for products and services surged. Organizations hired aggressively to meet market demand and the war for talent reached a fever pitch. The result, for Lattice, was that growth skyrocketed.
Which is a reasonable thing to do, it probably takes 6 months to a year to get many employees up to full potential. So over hiring during growth makes sense, if you under hire, you’ll never catch up.
Board should automatically reduce CEO pay to $1.00 for the current and the next year every time a CEO "takes responsibility".