Buffer Layoffs
open.buffer.com
open.buffer.com
"With our culture of bringing our whole selves to work and seeing team as family, with shared values we live by,..."
In the American business world, you are an employee until you aren't. Confusing being an employee with being "family" is a mistake, both for the company and the employee.
When times get bad, companies do what it takes to survive, including throwing employees overboard. That's just a fact.
Buffer may have thought it was different, but that flow-chart of how they decided who to layoff was entirely about how an employee can help the company, not how the layoff would affect the employee. That's not how normal families make decisions.
I have no problem with any of that, but anyone who thinks that way has another thing coming.
All of this isn't to say that Buffer was thoughtless or callous in how they handled it. From the outside, it looks like one of the better handled layoffs I've seen.
But still. Don't confuse your job with your family. It's a business relationship that is only maintained as long as it is in both side's interest to do so.
But what would you have done if one of those friends had stopped coming to the office. Or just did bad work. Would you have let them stay on forever or would you eventually have fired them? That's the difference between family and a team.
> The key concept is summed up in the 23rd slide. “We’re a team, not a family,” it reads. “Netflix leaders hire, develop and cut smartly, so we have stars in every position.”
Your last sentence here is really important. If that's the mindset a person is in, when a business-centric action happens they won't feel as betrayed. Trust me, feeling betrayed while also fully logically knowing you shouldn't feel betrayed because it's a corporation in a capitalist ecoystem is such a bad feeling.
I actually think this is important. Working with an asshole is a big problem, and I fully admire leaders who know when it's time to let someone go because the situation cannot improve. It certainly beats working in a caustic environment because people are afraid to fire someone.
Their whole motto is "we're a professional sports team" so if you can't play ball (or there's no longer a ball for you to play with) then you're cut from the team. This was different from the family viewpoint where a company takes an employee and tries to grow them or find new work for them.
They're not really referring to "culture" fit, team compatibility, or even cutting assholes, just whether or not you can provide value to Netflix at that moment.
One usually must spend a decent amount of time/energy tracking and making the case for their own productivity, which of course, lowers their actual productivity.
But in my own experience, I've worked at one specific place that was very very good about identifying people who plainly didn't help and letting them go. It helped immensely over time: the culture was really good (people were really invested in their job, and loved working as a team) and the retention rate was about 6x higher than most places in the same field.
They didn't use bogus metrics or anything, it was always a "feeling" kind of thing. If several people said someone was not helping, they were most likely right. It was arbitrary I admit, but rarely wrong.
There's books about it (e.g. https://www.amazon.com/Asshole-Rule-Civilized-Workplace-Surv...) but personally haven't read them yet.
Some happy medium between family and performance oriented needs to be found.
Even in a cut-throat industry like sports, athletes aren't cut or traded the instant they enter a slump (if they still have future potential).
And I can guarantee that the average minor league player out there makes far less than your average software engineer.
The original claim is that Netflix runs more like a professional sports team in terms of demanding performance. The argument against was that they don't pay like one.
My argument is that they pay somewhere between a minor and major league team, both of which have a "perform or get out" mentality.
If your sport isn't one of the few that can command massive advertising dollars, then there may be no pay at all. The value chain is very clear: all high athlete salaries are ultimately funded by advertisers wanting access to consumer eyeballs.
Overlay all this with the very short effective career, the near-absence of post-athletic marketable skills, and the devastating effect of injuries, and you'll find athletes are statistically underpaid over their lifetimes.
There probably aren't any $10MM/year sailors, but we can infer that $1-2MM/year should be possible for a few.
"In English sport, there’s no draft; there’s no salary cap; there’s no revenue sharing, no parity. In the Premier League, it’s every team for themselves." [1]
They also don't fire you at 30 for being washed up and leave you with brain injuries and zero transferable skills.
* Because performance vary with time (personal issues, motivation, etc.) so today's low performer may be tomorrow high performer
* Because your metrics might not be good enough to actually discriminate low performers from high performers
* Because such a policy encourages rivalry between employees instead of cooperation (not in the benefit of the company)
And probably other reasons.
So I have no problem with:
* Letting go people because the company has to reduce man count, and choices have to be made
* Letting go people because their behaviour is hurting the company
However I'm dubious about the idea that you should keep churning employees perceived as "low performers" to hire new ones who may or may not later reveal to be better.
This is basic Deming management wisdom: most of the overall performance of your company comes from the system and environment surrounding individuals, including the individuals themselves. Optimize the whole, not the parts; focusing on individual performance is just a distraction that drives overall performance down the drain.
I think this is very true. For many complex roles you land-up with all sorts of indirection to create 'metrics' which are often some input with a lot of opinion. I've seen lots of situations where you look through performance review data to see employee ratings bouncing all over the place as they (or whole teams) shift from manager to manager. That's not to imply that managers are negligent, it's just that in many roles it's perfectly possible to have a different view of performance (and everything else).
> * Because such a policy encourages rivalry between employees instead of cooperation (not in the benefit of the company)
See stack ranking!
The other issue is that an organisation can develop a reputation for being too fast to pull the trigger which can impact retaining talent and hiring new people. Given that metrics aren't clear, every 'low performer' situation involves friends and colleagues who don't think that the individual was a low performer. Plus the person leaving is unlikely to be positive about the organisation whatever the compensation is.
That may be fine from a management philosophy perspective, some people think it's good as "only poor or average performers will worry".
Here are some problems with that: A lack of loyalty to your employees can have a corrosive effect on morale. Employees can end up having very short term goals, or manage their careers in ways that they try to keep themselves in advantageous positions rather than the ones that serve the company. Why should a star take on a risky project, if failure results in termination? Firing can also be a lazy way to deal with a variety of management problems.
Five years later, McCord, her mentor, left. When I asked her why, she visibly flinched. She wouldn’t explain, but I learned later that Hastings had let her go.
McCord being the manager who instituted the aggressive cutting of employees that weren't good current fits for a position, which makes this somewhat ironic. Having an employee flinch when a prior employee's name is brought up seems like a major red flag to me. One of the negatives of aggressively removing people from positions like they do might be that many existing employees stress about their employment, possibly to an unhealthy degree. It sounds like sometimes there is little or no feedback as to performance before these removals.
The Internet, and systems we are building, contributed to the unbounding.
Now the employees...they have a right to feel whatever they want about all this. They are the ones experiencing this, as you so well point out.
I have a pretty good idea of what both sides feel like.
Both sides suck. Really bad. It hurts like hell. Probably worse to be layed off than do the laying off.
In other words, every relationship is a trading relationship, and the currency of the realm isn't always, or even often, monetary in nature.
My point is this: Children have a certain nature; part of being a child is development of the ability to regulate one's emotions. Loving, thoughtful parents will (hopefully) learn about such things, such as Dr. Porges "Polyvagal Theory" and then be able to help their children with this process.
I am not suggesting that people should abandon important relationships on a whim. I apologize if I was unclear on this.
Adoption is the better choice for both parties.
I think you perhaps missed the broader point though.
If you're raising children as servants to take care of you when you're old, then yes, self-interest is a good reason to keep them around. They will also likely act in their own self-interest and ditch you.
Otherwise, raising a child requires a great deal of self-sacrifice with absolutely no guarantee that you'll even get the satisfaction of a job well done. It's a total crap shoot and even the emotional return on your investment is likely to be poor.
Acting only in your own self-interest is a good way to stay single and childless though. At least you'd have plenty of time to read Ayn Rand.
I suggest you read GP a bit closer and/or work on when and how to apply your sarcasm :-)
For starters you conveniently leave out both religious as well as purely selfish evolutionary motives.
I don't think raising my children to take care of me when I'm old (should be any day now) would be acting in my self-interest. In fact, I think it would be acting against my self-interest.
A better model, I think, is for me to do all that I can to be self-sufficient, and not predatory in nature, in terms of expecting other people to care for me.
As long as I can find pleasure in life and activities that interest me, like hacking in Lisp, or re-learning how to weld, or reading about philosophy, I'd like to go on living.
When there are no longer reasonable things for me to pursue, then it's time to go. I certainly don't expect my children to do anything more for me than they freely wish to do.
Children are not born to be servants to their parents, as you observe. That's why I think it's incumbent on parents to treat their children as best as they possibly can, since children come into a family without being able to consent, and since children are essentially powerless to leave a family that treats them poorly, until they reach some age where they can be self-sufficient.
The model where Children take care of elderly is coming back, unless the Fed and the ECB stop acting like we're in the midst of a deep recession.
> Children are not born to be servants to their parents, as you observe. That's why I think it's incumbent on parents to treat their children as best as they possibly can, since children come into a family without being able to consent,
And if the alternative is to starve to death a year or two after you no longer have the ability to work ? What if the alternative is merely to live in poverty when you stop working ? Do people have the right to not live in complete poverty ? I'd say yes. What if there is no choice but to "use" children to accomplish that, like we did for 90%+ of history ?
That second one seems to be happening to plenty of elderly today, and they had far, far better circumstances to avoid it than you or I do today.
I'm not even saying that this is moral, or that it is what you have to do. I'm saying it's what's going to happen if present circumstances remain.
[1] https://next.ft.com/content/c9966bea-fcd8-11e5-b5f5-070dca6d...
[2] http://money.cnn.com/2016/05/20/retirement/central-states-pe... http://www.pionline.com/article/20160502/PRINT/305029995/kro...
Interesting. Although there is self-sacrifice, for myself, I see it more as a privileged to bring up another human being. As much sacrifice as I've given, I've gotten back. Being a parent has made me really consider my own actions - do I act in accordance with my moral code? do I actually present the example I want to set or am I hypocritical? How can I create safe boundaries for the child so they can explore and become themselves? There are so many things being a parent can teach you. The questions that children come up with out of curiosity.....sometimes just floor me completely. Then there's the cuddles and hugs which just melt your heart :)
I don't know about self-interest - I think here it really is down to what you think self-interest is. Which I think starts to touch on what each person believes their life is for. Anyway, just some random thoughts.
I recommend an episode of RadioLab called "The Good Show"[1].
I've liked some of the work by Sam Harris, as well.
To answer your question... kick him out this week by getting a relative to take care of him for a night and catch up on sleep.
As parents, we tend to believe that we will always love our kids in a way that allows us to maintain healthy functioning relationship with them no matter what happens.
But when you see what can go wrong in families and how 1 member's behaviours can have a massive detrimental impact on the other members, you realise that there are limits to that.
While I will always love my kids, I know, objectively, that there are circumstances that could force me to fundamentally alter the terms of my relationship with them. I pray that never happens, but I know it's possible.
Similarly, I know plenty of people who no longer have any relationship with one or both of their parents due to the way they were treated as kids. Society (rightly) tends to be more accepting of a child who decides to sever their relationship with an unloving parent than the reverse.
My wife is a former welfare case worker. The scenario I painted is quite real, but if it is so far removed from your reality that it seems ludicrous then that says good things about your family life.
But not a particularly useful observation, just as the concept that "giving to charity is an act of selfishness, since people only only do it to feel better about themselves" might be true but is not useful.
In the same way, if someone in your life never shows curiosity or empathy towards you, you should probably leave the relationship.
Also many families have that "one uncle" (or whatever) who is somewhat estranged and isn't invited to stuff.
All without a "super rational techy" view of the world.
That would include not creating children if you and your partner are not certain that you want them and will do what is required to raise them in a peaceful, loving and rational home.
You may have an epiphany about the 50th time you yell "watch out for that car". I swear she _wants_ me to have a heart attack.
With respect, I think our different views may be the result of a different understanding of what it means to truly be self-interested. In my view, it's nothing like being a greedy bastard who only cares about sacrificing other people to himself, being a manipulator, being miserly, etc.
I do not want my children to love me because I'm their father, or because I took care of them (along with their mother) when they were growing up.
I see it as my job, if I want a relationship with my children, to be bringing value to them in the here and now.
Sure, we have good memories of the past, but good memories are not (in my view) a sufficient basis for an ongoing relationship.
Even worse would be a sense of obligation on the part of my children towards me, simply because I'm their father.
You summarized it well: "I hope my children will hold me accountable for my actions, and vice-versa."
And how can you be "loving" and "rational" at the same time?
So, I think children should be disturbing the peace, and perhaps frequently. I see children as being engaged in absolutely critical work, which is trying to build up a set of abstractions, or concepts, that will allow them to succeed in the world as adults.
To do this, I think they have to do lots and lots of experiments. It may look like horsing around to us, but I don't think it is.
As regards being loving, I'd say a couple of things. First, I think children have a natural sense for justice. A child that is treated justly will, over time, learn to treat others justly. Too often, though, I'm not sure that the parents have an entirely firm grip on what justice is, though, and so they might act unjustly towards their children, and then be angry when the child doesn't act in a loving manner towards them.
As regards being irrational, I'd say that that is also sort of the expected-state for someone who is still developing. I don't think all parts of the brain (e.g., the pre-frontal cortex) is fully developed until about age 24 or so. I would also say, again, that one would want to look at what the parents are doing. Maybe they are treating the child in an irrational way, which I think is going to cause them to receive a response that, in their different frame of reference, seems "irrational."
I'm not sure I understand the dichotomy between being loving and rational at the same time. In my view, a rational person is a loving person, rather than an emotionless character like Mr. Spock from Star Trek.
Hope this helps.
Sometimes what the family gets out of it is a sense of moral correctness, and self assurance that what they are doing is correct. People use cost benefit analyses for everything, it's just that we often don't take into account some aspects (such as how we feel about an action,or how it affects our self image) when trying to rationally weigh those costs and benefits mentally.
If cutting off ties with your child makes you feel extremely guilty or like a horrible person, to the degree where you can't stand it, then obviously you weren't correctly weighing the impact that action would have on you.
Note, in the case of children, it's a bit more complicated, because IMO you've essentially contractually obligated yourself to your child for at least 18 years, but generally for much longer. By bringing that person into the world, you bear some of the responsibility for their outcome. Often this doesn't feel much like responsibility because our strong emotional connection and need to protect and help subsumes it, but if those are removed, responsibility does remain.
I actually agree with you. In a relationship we trade constantly, something for something else: love for love, company for company, or any combination. They are like constant bi-directional streams.
As long as both parties are happy with what they receive and give, they will maintain the relationship; when that's not the case, well, that's when we get divorces, friendships destroyed, etc.
Yes, blood relationships are somewhat special, but if for instance you permanently severe the relationship with your kids, even though you can still claim they are your kids, I don't think is any different than not having kids at all.
However, if you factor in the fact that humans are emotional and highly unpredictable by nature, you'll quickly realize that constantly applying strategies from the business world to your personal relationships will quickly blow up in your face.
Flexibility and balance in how you approach things are key.
I don't know if I see much of a difference between strategies that work in business, as against strategies that lead to successful, long-term relationships.
If you're in a job where your manager ignores you, rebuffs your efforts for honesty in your communications, and generally treats you poorly, should you maintain that relationship, or break it off?
Is it any different outside of work? If you have a partner who cheats on you, or is sarcastic all the time, or is indifferent to you, I'd say that's another relationship that should be broken off, if it's clear that it cannot be saved.
I agree with flexibility and balance. I also believe in gently confronting people who treat others poorly, trying to correct the situation if possible, and if it cannot, then disengaging.
At 56 years of age, I've come to realize that I do not have infinite time to waste on less-than-strong relationships.
Thanks again for an interesting comment.
I was not arguing against applying such strategies, I was merely suggesting we shouldn't always use them – to make room for flexibility – as I was trying to avoid claiming complete equivalence between the business and personal sides.
However, there are circumstances when rationale breaks, like when member of your family develops a terminal decease. A purely rational decision would be to cut emotional and financial losses and abandon them, wouldn't it? Yet, luckily, we don't see that happen.
The length to which we go to keep family relationships is irrational, yet I suspect it's a huge component of how we managed to ensure reliance of a system and develop huge societies.
is it lucky? especially in the west, we'll fight a terminal disease long past the inevitable, at the expense of the patients well being. at some point the humane thing to do IS to "abandon" them.
My view is a little different.
I don't think abandoning someone who has been a great value to me because they have developed a terminal disease would be consistent with acting in my self-interest. To do such a thing would be to betray the virtues that I hold dear, such as honesty, integrity, justice, pride, etc.
For example, consider honesty. If this person was a great value to me, we would have some kind of understanding that we don't just toss each other overboard in tough times. If they get sick and I do toss them overboard, I would be a liar, and that brings a ton of other negatives with it, such as undercutting my personal integrity.
There's also the issue of justice. If this person has treated me well, if we have fallen in love, would it be just to abandon them when they are in the fight of their life? That sounds like injustice to me, unless there was some kind of (weird) agreement covering this situation.
This reply is getting a bit long, so I'll stop here.
If I haven't explained this very well, please say so and I'll try to be clearer.
http://stockoptioncounsel.com/blog/standards-ownership-canth...
I never saw anything like this when I worked at an early stage startup, and it's obviously something an employee who reads their employment agreement would ask to be taken out. I'd never work at a company with that clause.
On the other hand, this can lead to disaffected employees who are only staying with the job because they are waiting for their options to mature.
Would anyone join that company going forward? Would they be able to raise money from investors? Would their attorney drop them?
By and large, options are just a symbolic gesture. I'm sure there are some people who've reaped a bounty from them... but it's exceeding rare, and even if everything goes right they still require a liquidity event that isn't guaranteed to include you.
The first couple of times I got stock options, I exercised them... and ended up using them as a tax write-off later when they became worthless. Now, I sit on them like an old comic book that might become valuable someday... and wouldn't think twice about letting them disappear if I change jobs.
I definitely agree with your attitude on them, I really wish startup culture didn't frown upon electing to receive higher salary and no equity.
I read that chart differently, they are retaining their longest tenure staff in each area without regard for ability. Seems a lot more "family" like to me.
The term you're looking for is "buddies".
Reminds me of this terrific article from David Brady. https://heartmindcode.com/2013/08/16/loyalty-and-layoffs/
>> (our VP) specifically named you because your piece is finished.
But as it turns out, that was two weeks of severance plus the bonus he had already earned implemented as four weeks of extra severance.
Ridiculous, indeed.
This include earned vacation.
There is very little overlap between a family (or even a friendship) and a business (unless the business is mandated by law to provide benefits similar to what a family does - which it usually isn't)
The last 10 years US inflation was 3.2,2.9,3.8,-0.4 1.6,3.2,2.1,1.5,1.6,0.1 according to the world bank[2]. Giving the US an average inflation rate of just 1.96%.
[1]:http://www.usinflationcalculator.com/inflation/current-infla... [2]:http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG (Have to search down the page for it)
This is total BS that employers might say to employees but either people will be foolish to believe so.
In India I worked for a large company that indeed operated like family. The company avoided layoffs by cutting salary of high performing employees to retain non-performers. Promotions were based only on number of years of service and not ability etc. But that is why I left for USA.
Employers should not feel ashamed to lay off people. It is not the case that people cant find other jobs. In fact being honest and transparent about it can help people find other better jobs. Similarly employees must leave the company at the first sight of the distress and go for greener pastures.
On the contrary, they absolutely should. It means they failed. Management should be punished for letting it get to that point, not rewarded for doing it as they often are.
The Buffer guys clearly feel remorse, and wish they had better sense about warning. They regret that the layoffs are necessary.
But they are still doing it--which they should--its the people (including themselves) who deceived themselves about the relationship they have with the company that are in trouble.
And businesses are cutthroat capitalists when it benefits them.
All that family nonsense is just to talk employees out of looking after their own interests.
Your relationship with your employer is inherently antagonistic, and anyone who tells you otherwise is selling you some BS. That doesn't mean you can't work well together, but sometimes your interests align with the company, and sometimes they don't.
You can compare this to big game companies, which have no problem hiring a bunch of people and then laying them off when the project is done. All the disadvantages of being an employee (IP assignment for side projects, low pay) with all the disadvantages of being a contractor (no income stability).
Companies do what they need to in order to survive, but that doesn't mean that the people running the companies are always 100% soul-less
Your employer will not take care of you. It is your job as an employee to make sure they meet you halfway.
In the beginning the rewards from the human elements are far greater than the performance of the company. It could even be all you've got. You could have no profits, be in stealth, just prototyping, etc. Here the company could just be a promise written on a napkin or a handshake between founders. It could dissolve any minute.
Eventually though, once the company grows to the point where it hires people and makes money and pays taxes, the value of the company begins to far outweigh that of any individual member, or of any organic human elements that tends to adjust themselves anyway. This is when the company you founded might turn around and fire you. But congratulations, that's also when you know you've (sort of) made it...
The takeaways is to know your function. So long as you do, you should be able to predict if you belong. And if you know you don't, you should expect to be let off, knowing only that the people running the company are doing their job correctly.
Job relationships ("voluntary, subject to termination by you or company at will, for any reason or none, with or without notice, at any time") are not even close to family relationships.
Until we get job-divorce judges like we have family court judges, with the power to divide assets, the idea that a workplace is a family is wishful thinking, at best.
It's moronic drivel, isn't it. Apart from being nonsensical (how can you bring less than your whole self to work, unless you've had some sort of psychotic breakdown) and the poor English ("seeing team as family") it just reads like corporate babble. It's not a family. I care about my family. I don't care about my job, its stakeholders, its values, its products or its customers. It's just a job. I'm a wage slave so I do it for the money and for no other reason at all. Whenever I see a company stating their values I immediately lose any respect I might have had for them. It's as if they've been on a fact finding trip to north Korea.
I guess that's what a decade of bad management and shitty start-up/big-corp work does to you. Personally, I'm happy that some people have an optimistic enough view of "the work" to want to change that reality, and make it a positive and good experience when enough money is involved to do so. If you read more into Buffer you will see that it is indeed not your typical company.
Even with unabashed cynicism there's no denying that structuring a company like a cult has a huge advantage in terms of retention, dedication, salary requirements, etc. This dovetails perfectly with SV's youth worship because young people are more likely to buy into this crap, and they are also more likely to be willing to conflate their work and social circles.
Somewhat more charitably, not all companies are the same. Given the choice I would prefer to work for Apple than for Facebook because I think the former is generally doing better things for the world than the latter. On a more extreme level, I would definitely consider taking a lower salary from a company or non-profit I felt was doing really good things in the world. The point is, while "we are a family" is straight bullshit, the values of a company should matter. If I were to treat my employment as a purely mercenary transaction with no regards to anything but the transaction then I would be complicit in furthering the global corporate hegemony which unbridled capitalism is leading us toward.
^ why I downvoted you.
> how can you bring less than your whole self to work
This means basically wanting to be somewhere else rather than at work. i.e., their culture is one of being dedicated to work when you're at work; at least that's how I understand it.
> poor English
This is not uncommon colloquial English. “Team” and “family” here act roughly like “mind” does in the term “theory of mind”—basically nonspecific nouns.
> I don't care about my job…
Sounds like you are a poor fit for the culture they are trying to build. Presumably you would not enjoy working there. That does not make their concept of how to manage their company moronic, nor an explanation of it drivel, however.
Your comment is blazingly condescending toward a post that is clearly very well thought-out and considered, based solely on your disagreement with Buffer's approach to organizing their team and company. That seems wholly unnecessary, particularly since you present zero actual evidence of Buffer's approach being objectively worse, just your opinion that it is.
I don't need to know anything about a companies culture to know what they're saying is patently specious nonsense. You might be impressed by it, who knows. Do you read a company's mission statement when considering a job and say "company a say they're honest and driven by a desire to put both their employees and their customers first, but company b claims integrity and a desire to raise the standard of customer service to a new level.....oh I just can't decide!"?
Or by offering employees the same class of stock as the founders with the same voting rights etc...?
I do however think taking zero pay is a signal which, under the right circumstances, is worthy of inspiring loyalty greater than the average company.
You actually want your founders to have these voting rights typically. Most activist shareholders tend to say things like "your business would be a lot more profitable without this expensive engineering team. You don't need A players to maintain the technology you've already built, you should fire most of your team and outsource them." Suddenly preserving founder control sounds a lot better, eh?
I would say this is just a common philosophy for successful businesses. A happy family is a wonderful unit, but that happiness depends on giving preferential treatment to the least rational people. Which is a bad business philosophy.
The reality is that it's still business and decisions are made with the numbers in mind, especially when things get rough.
When a company is small--less than 10 or 20 people--it really can feel like a 'family' in that everyone would rather see the company fail than break apart. "Layoffs" aren't realistic in such an environment; the company is either working or it isn't.
As a company grows, these rules necessarily change. It's just a fact of having more people, as the momentum of the company becomes bigger than any individual. It's part of how a company grows. I've watched it happen; it's a strange thing and it feels like something has been lost, no matter how necessary it is.
The change from a tight-knit team, battling for success against all odds, to a sizable company with growth curves, finances, lawyers, outlooks, audits and EBITDA can sneak up on you. I think it would especially surprise early employees and founders, who remember the days when it didn't feel like a company at all.
Employment is never quite 'family'. But there's reasons to be empathetic to these founders' mistakes and choice of words, rather than a blanket "anyone who thinks that way has another thing coming."
To be fair, this is not quite correct. The flow chart shows they fired the most recent people in redundant roles. Not the "worst" performing (what I guess Netflix would have done) or highest salaried. Giving seniority the benefit of the doubt, instead of only using unemotional cost/benefits analysis, is rewarding loyalty and is protecting "the tribe".
Working for a company is a transaction, plain and simple, unless of course it's your company. That obviously changes things, because you'll inevitably be more invested in it - including emotionally.
Learned the hard way by a man with powerful emotions.
However, I would have really appreciated this level of detail and transparency when I was laid off. I think the first thing the person who called me to lay me off said over the phone was "So you probably know why I'm calling."
Uh, no, yes? Is this supposed to be a guessing game?
>Reflecting on it now, I see a lot of ego and pride reflected in that team size number.
> In many areas, we grew the team more than was truly necessary for the time, more than was clearly validated.
I feel like we all experience this pull by vanity metrics, ego, etc. The level of honestly we've seen in this post will hopefully serve as a reality check for many of us.
>Both Leo and I have taken a salary cut of 40% until at least the end of the year. Savings: $94,000.
>Leo and I are committing $100k each in the form of a loan at the lowest possible interest rate, with repayment only when Buffer reaches a healthy financial position. Savings: $200,000.
This is an attitude and decision I saw made by the C-level during the financial crisis at a company with hundreds of employees. The C level took home $0 in pay and the staff took at 40% until they made it back to profitability, in order to avoid laying anyone off (this is Japan where reemployment would be incredibly difficult).
It shows maturity and commitment to the organization (i.e. your people) that is rarely seen these days in startup land. Much respect.
Here's hoping that the wisdom on display will serve this company well.
1) They planned to spend 1/3 of their remaining cash on flying people around the world to meet f2f. Whoah! They need a CFO with some real power, because that is absurd.
2) Speaking of needing a CFO, one of the first things a CFO will probably point out to them is that their cash target is off by 100%. They're targeting hitting 50% of today's ARR sometime next year, yet they plan to grow ARR in 12-18 months by double. If they truly want 50% ARR on hand, they need to target $10M, not $4-5M.
I also have some questions about the graph -- I'm sure it's well-meaning but it looks fishy. The slope of the curve is noticeably better in the go-forward plan vs the status-quo plan, but there's no logic to support that in the post. I imagine there's a breakdown that makes this make sense, but it's not at all obvious, and the naive conclusion is that these people who were fired were actually slowing down sales somehow. Secondly, every time I see a graph where the next month is negative and then ... magic... and the slope goes positive, my spidey sense tingles pretty damn hard. That said, there are some obvious reasons this might happen, including the cost of the layoff being recognized next month, so that's less of an obvious red flag.
https://docs.google.com/spreadsheets/d/1l3bXAv8JE5RB9siMq36-...
edit: Adding links to their blog posts:
https://open.buffer.com/transparent-salaries/
https://open.buffer.com/introducing-open-salaries-at-buffer-...
They've got blog posts about it.
https://open.buffer.com/introducing-open-salaries-at-buffer-...
There are potential downsides such as increased politics or income inequality pressures, but it seems like a viable policy at least. I'm curious how someone like Google's Laszlo Bock would respond to this approach in comparison to their "pay unfairly"[1] mentality.
[1] http://www.businessinsider.com/google-policy-to-pay-unfairly...
In my (admittedly limited) experience, mandating salary transparency tends to increase the salaries of low performers and reduce the salaries of high performers. It usually eliminates the potential for negotiating raises and poses difficult questions about paying some employees more than others in the same band.
Case in point: according to Buffer's salary calculator[1], a "master" (their highest rank) backend developer living in San Francisco and optimizing for salary over equity would earn about $155,000/year. I can't think of any definition of "master" developer that could be competitive for. Friends of mine at AmaGooBookSoft and even other startups have earned nearly double that for being merely "senior" (L5).
I think our expectations are skewed by the crippling cost of living in SF, New York, London, etc.
Around here, $50k entry and $90k 10y+ senior for developers is fairly standard.
Check out AngelList's salary tool: https://angel.co/salaries . Median salary for 'Developer' is about $120k. More for a backend developer.
GlassDoor gives an average salary of $120k for the same area: https://www.glassdoor.com/Salaries/san-francisco-engineer-sa...
Why make 50% of your potential?
Not as a base salary. No way. They earn that, but ~50% comes from equity.
And I have to commute to work. Lose-lose.
I'm not entirely surprised though, the non-profit I work for pays poorly even compared to other non-profits. Compensation is the same for everyone on a similar level regardless of what the responsibilities of the role are. I have a much more specialized and technical role than everyone else, so there is no way that my compensation is commensurate with my experience or responsibility.
I'm not bitter about it, a huge part of why I'm under compensated is because I've been allowed to make the role my own and take on a lot of additional responsibility. In a sense I've grown out of my title. I'm just shocked by how much less I'm actually making.
The worst thing ever is finding out that you're in the top 2% of salaries for your role in the industry, and then knowing there's nowhere to go but down from there.
It also doesn't make sense - there is plenty of room to move up even if you're in the top 1% of salaries. The curve doesn't abruptly end at the top, there is a long tail of increasing salaries at the 1%, 0.5%, 0.1%, etc marks.
Finding out you're in the bottom 25% is also just learning something that already is; but in this case, it's empowering information.
Note that we're talking about somebody who just learned about something that already is.
That's a good point. I feel somewhat fiscally irresponsible since I have student loans and such. On the other hand, part of the reason I'd like to make more money is because a lot of my close friends became engineers, etc, and make a lot more money. It's not very fun to always be the guy who is like "Uh, guys, can we plan something a little cheaper?"
I'm contributing to my 401k and I'm saving money on top of that though, so I don't really have much to complain about. It's just little things.
Looked at from the other side, it's a competitive process between employers and there's no reason why other companies wouldn't pay top dollar for a top developer. If Buffer didn't pay it, the developer would find another employer who would.
In a world where business failures are rarely documented, people ought to celebrate the fact that these guys are giving the world a recorded history of the lifecycle of their company, their thoughts when making business decisions etc. There is immense value to be gained for anyone in this industry
Compared to all their other costs that one stood out the most. 500k savings laying off 10% of your workforce compared to 400k for a team retreat in Berlin.
Is this typical?
Anyone think their salaries are absurdly high for some locations and positions?
They've got Adnan working as an "Advanced Backend/Frontend Developer" in Sri Lanka, making only $65,104. This actually makes sense to me because Sri Lanka's cost of living is pretty low.
But they've got an Advanced "Happiness Hero" which I presume is an email support role making $77,397 in Kentucky. Last time I checked, $77,000 is an extraordinarily high salary in KY, especially for someone doing email support.
$77k is not "extraordinarily" high for Kentucky without any context, but it would be very surprising for an email support role. In fact, I would expect $70k to be a very upper bound for technical support in NYC.
That said, there might be a very technical component of the job role that we do not have any insight on.
To answer your question, obviously I am not from the valley, i run my own business, it is quite profitable, i don't do retreats, and i fly quite a bit, always coach. So if i ever organised a retreat, i would expect everyone to fly coach. Hence my question.
Their policy is business class for international flights over 8 hours.
Given that, I think it would be seen as common/acceptable to mimic.
Above comment about business class / direct for long trips, and at least direct/convenient economy for ~startups (not 2 guys & a laptop) sounds right.
I know we didn't send our guys over to Iraq and Afghanistan in business class. It's shameful that a rando in USAID or something would be afforded better accommodations for a conference in Tokyo.
If I worked for a big public company, I'd expect them to put me up in business for anything longer than 6h. For a young small startup, I'd expect them to put me in a reasonably convenient economy ticket (e.g. not flying out of OAK instead of SFO, and not forcing me to take long connections, or really ultra-low-cost carriers like WOW Air).
I am very overweight, and I never have an issue flying coach on transatlantic flights.
I've found most flights from US to Europe typically have more legroom, than domestic counterparts. Typically I will pay for the 1st class upgrade for domestic flights, but fly coach.
I would never pay 307% of that price for an extra 3 inches of leg room and a free plate of salt and BHT.
1. https://www.google.com/flights/#search;f=SFO;t=VIE,XWW;d=201... *priced at less than $2,000 at the time of this posting
2. http://www.airfrance.us/US/en/common/guidevoyageur/classeetc...
In general, I'm always perplexed at the costs of flights, so was surprised to hear about such a relatively cheap international flight. Disappointing upon further inspection.
Do you think an office for 100 people would cost less than $400K/year? (I know it wouldn't in NYC.)
See my notes on this here:
http://pixelmonkey.org/pub/distributed-teams/notes/#mixing-d...
Anecdotal of course! I'd love to have more data on this to find out what that tipping point is.
I'd assume a few people will leave for better offers in the next few weeks, but this seems to prove that the founders are dedicated to the company and can learn from mistakes - hardly the prompt for a mass exodus.
There's a lot of laudable humility and self-accountability in this post and the actions they've taken.
If they practiced what they preached they would have laid it all out early. Some people may have had other opportunities and left, others might have said that they would take a paycut for the greater good, etc.
What this may mean, is that some staff members think that the company isn't actually what it says it is, isn't genuine in its approach, and that they can't trust it to live up to it's values when the going does get tough.
In my book, Buffer's doing it "more correctly" than many start ups.
If you must do bad things, do them all at once. Then create a steady stream of better than expected events. People will get over the shock of the bad, and will remember the good.
By contrast if you try to hold back some of the bad, it will drip out bit by bit. Then people will get scared about where the real bottom is.
I've seen his tactics play our over and over again during my working lifetime.
My take is that the advice in those books is great advice for those seeking to gain and hold power in organizations. All else being equal, you should want the person running your organization to have mastered those ideas and be able to apply them productively for your organization.
That said, having an organization full of people who want to gain and hold power is a very, very bad thing. While you want the people at the top to do so, you don't want every Tom, Dick and Harry with a big ego doing so. So you are going to see an anti-pattern where a bunch of people who have no business trying to play Machiavellian games, attempt to do so. And part of the the reason why they should not do so is that they are not suited by temperament or competence.
We aren't going to see it, we already see it every day. The books are poison.
That's not to say that there may not be better approaches, in some aspects. In my mind I organise Getting to Yes and How to Win Friends as books that are complementary, yet approach the problem from a co-operative perspective.
But we haven't totally vanquished that part of ourselves that the Art of War and the Prince were written to deal with. Even if you banned these books, people would independently derive their principles.
For example who among us wants to believe that once we come to power we should distrust those who got us there, and look for our best allies among those who had opposed us? Yet again and again in actual organizations those who think they are owed will try to take advantage of the situation, while those who have reason to fear that they never can be trusted will overcompensate for that.
The Prince is relevant in any organization where a strict hierarchy needs to be maintained. Which is why it was relevant here to the question of how a CEO who needs to implement a painful decision (in this case big financial cuts including laying people off) should go about it.
i wouldn't be worried about an employee exodus as they get loads of applications as is. and everyone is replaceable IMO.
the company fascinates me with their high salaries for customer service and relative low salaries for engineering. from that post, they've way more applications for customer service than engineering. why not save money by paying way less?
...could anyone explain to this naive commenter how it takes 90 (80 for that matter) people to run essentially a 'cronjob as a service' business?
2) Have you ever used Buffer? Chrome extension, in-app experience, cross-posting to multiple sites, drag-and-drop re-ordering, ...? It's not a single feature, it's "organize my social media posting".
The product is fairly simple technologically yes, but the value is provided by making it easy to use so the customer saves time (= money). To do that you need a few UX people plus some developers (especially with web and mobile apps), call that 15 engineers/designers total, plus another 5 for ops. Now you need a sales team since your real money will be in selling to enterprises - call that 15 people. And on top of that you need customer support, and call that another 20 people. Now that we're up to 55 people, we need another 10 people worth of HR and 5 bean counters, that takes us to 70. Now cap it off with 10 managers/executives and we're up to 80, and I'm sure there's some things I was off about or forgot.
It's easy to forget about all the non-engineering resources you need for a medium-sized business.
They have nobody doing what you'd classify as a "sales." They have some marketing people, people doing whatever "customer research" is, a number of people working in "community" and a bunch working in customer success.
1 HR person per 5.5 employees? This is insanely high. A company that size need 2-3, tops.
This is one of the worse diseases I see in the tech world. I have friends who, when asked how their company is doing, respond with something like "great! We just hired a dozen more engineers."
I'm pretty sure a better answer is "great! We just got X customers," or "great! We're profitable now!". Not how big your fief is. (But, mentioning fiefs, I'm struck by the notion that a startup is just a business unit of a loosely-organized corporation and CxOs thereof just middle managers for an investor-class executive group.)
Human organizations always scale to accommodate available resources, not required functionality.
I think it's conceivable the reason you don't see much innovation from Twitter for years now, is that they have the organizational equivalent of traffic gridlock. It's simply impossible to get anything done with that many stakeholders.
Our solutions are sometimes a bit clunky but our infrastructure is audited yearly by an outside firm and certified to carry banking data through the wireless device we designed and through our network. There is another 15-20 people doing financials, payroll, hr, tech support, sales, marketing, assembly, hardware testing, shipping etc..
We maintain multiple backend interfaces to a bunch of (sometimes old and archaic) bank networks and to our wireless devices as well as multiple front end portals for our users.
It's hard to imagine ever being able to make use of 57000 bodies, but I suppose that's a totally different context. We could use a few more.
Alternatively, a quantitative measure of effectiveness is the company's revenue or net income per employee. For 2015, that's $1.2M / Googler or $264K / Googler, respectively.
If you simplify a company enough, every company is "just" "simply" "basic".
examples: * Walmart is the largest employer, but stocking shelves w/ automated checkout is pretty basic.
* USPS, FedEx, UPS DHL basically just deliver packages from one place to another.
In reality a large sales team helps you grow, a large customer support team keeps churn low, a development team creates new products, and a marketing team turns those into sales.
Crunchbase tells me they have had almost 4M in investment since 2011 and Baremetrics puts them at 45M in lifetime revenues. So, call it a round $50M in capital.
50M/90 employees all in is around $135k/employee each year for the last two years. Subtract all the perks and those numbers get hard fast.
Just goes to show that, even with a lot of cash, a lot of people cost a lot. It ends up doing a disservice to each existing employee, with each new person your company brings on, if you can't scale revenue with the pace of hiring.
What on earth does 'fully leaned in' mean? It's not the greatest of metaphors, I pictured someone falling on their face.
But they got up and seem to be dusting themselves off. So kudos for showing transparency when they mess up (which is when commitment to transparency actually means something).
This guy lays off 10: heart felt apologies and deep moment of reflection
Criticize away HN, while he still has his humanity.
I'm guessing the main benefit of the open-ness is marketing. I doubt it helps the company much beyond that.
Sometimes just vocalizing things came lead to new insight. I like their approach, minus the salary transparancy.
Looks like they're still hiring: https://buffer.com/journey/full-stack-developer
Yeah that's what I was going to say, there's a link to the we're hiring page on the new salary formula spreadsheet:
https://docs.google.com/spreadsheets/d/1l3bXAv8JE5RB9siMq36-...
My company is writing an entire smartwatch OS, including companion apps for iOS and Android, and we're less than 10 people. Buffer needs 100 people just to write one multiplatform app? What is going on here?
It also all seems a bit maudlin — being laid off is a terrible thing, but mistakes happen and employees are aware of risks going in (although as others have noted, this type of situation underscores how inappropriate the whole "we're a big family" idea is). It would seem more respectful to the laid-off employees not to go on and on in this manner.
I don't know whether to be impressed or offended.
Source of financials: http://i.imgur.com/i3W5KC7.png
Two questions: Why are the two loans necessary? And, how does a loan get counted as savings?
> Leo and I are committing $100k each in the form of a loan at the lowest possible interest rate, with repayment only when Buffer reaches a healthy financial position. Savings: $200,000.
It's "savings" in the penny-saved, penny-earned sense.
Kudos to Buffer for their approach to transparency. I think it will actually serve them well here.
But still, every company and employee needs to recognize that your coworkers and company are not your family - this only leads to misplaced expectations.
One of things that makes America so competitive, is the concept of at will employment - the company can fire or lay you off anytime and you can leave at any time too. This is a reality we must accept for capitalism to work at optimum efficiency. I realize this may seem heartless and cruel, but that's why you need to have work/life balance. Ideally work should not account for more than 10 to 20 hours of your life per week. Sadly, for most of us it's 40+ hours. It is outside of "work", where you can form relationships that mirror a family like structure - in volunteer groups (unpaid), friendship circles, hobby groups, book clubs, etc. More of our lives should be dedicated to such organizations for us to remain better balanced.
Is this an opinion or is there some kind of rationale behind this? I don't mean to sound antagonistic, I'm just genuinely asking a question.
To be transparent is quite a difficult thing. You expose yourself to so much scrutiny.
Godspeed Joel as you and your team bounce back from this slight setback. We all fall. how we get up is what matters.
Why do startups do these huge management experiments? My company did the flat thing too and they spent a few months trying to get people to understand it. Probably burning up 5hr/wk for each person. Until they almost ran out of money. By then people were really confused. I think it almost killed the company due to the politics and red tape it created (strange, it was supposed to eliminate it).
My opinion is that it's hard enough to run a startup, let alone trying to invent a new management methodology. Best to go with what people already know. It may not be perfect, but at least there's some prior experience with it.
Just like how most would advise using the programming language and platform you know to build your initial product, rather than trying to to learn something that you think might be better.
https://www.socialchamp.io/ for example is one that is growing rapidly.
I can only imagine that it may become a commodotized space w/ little differentiation.
So it seemed quite absurd they'd spend so much on things like retreats when they have so much risk.
> i think @dfjjosh's rule of 50% of ARR to operate and invest without $$$ stress is a really good one. use debt to hack it.
What's the point of taking on debt just to have more cash on hand? Is this a startup-y "growth über alles" type of mentality or is it found in the larger business world as well? I don't see how increasing your burn rate just to have more cash in the bank is a good business decision, especially when you'll pay a premium to have that cash in the form of interest or loan origination.
Correct. Headcount is a figure that represents a company's means. If you're tracking it as an end result, you end up having to make hard decisions or someone makes them for you.
The transparency is commendable. A couple other observations:
- Affected employees had an average salary of $58.5k (assuming your metrics is net of benefits and payroll tax). If this is annualized, it appears you let go of non-engineers. Set goals and performance expectations for those who remain, especially those who build your product.
- Stop publicly promising salary increases altogether. Promote people based on their ability, not an artificial loyalty policy. Some people deserve 10%+ raises, some you'll find are overpaid. Use a basic job ladder and put the burden on managers to justify comp changes.
- If the policy of granting vacation bonuses was for recruiting purposes, you've successfully attracted people who want to be paid not to work. Again, implement a corporate bonus program and set goals for staff.
Best of luck.
A guarantee of annual salary increases is problematic for three reasons:
a. An increase of 3-5% is going to increase salary costs rapidly as it compounds. He mentions that salary is 80% of cost, so it means that costs are going up for doing the _same thing_ by 3-5% every year. Employees aren't a fixed unit of production (particularly in a tech firm) but there's not unlimited new productivity either. It's fine if your prices are also growing at those rates ... but I don't think many people are in those situations at the moment.
b. It takes away the meritocracy Salaries have to keep up with inflation, but beyond should be a mark of performance.
c. It's going to suck when they have to change it Things happen, this is an example, and employee morale is a sensitive matter.
I don't blame them for doing housekeeping in that way - if you need to reduce headcount, start with people who don't fit the culture and business needs - but they shouldn't pretend that it's perfectly unbiased.
I really couldn't care less about my salary being made public to the world, all I care about is working on something I believe in.
Extreme transparency has nothing to do with their business growth and it will probably come back to haunt them later, I don't know why they're going so far as to do all this.
Doing business is extremely hard on its own, why complicate matters and expose private details to the public, which can and probably will at some point be used against you? I mean even on this thread people nitpick and gossip about every single details. And it would be a lie to say they care 0% about these things. If they do care, it just means less time worrying about their core business.
"This has some implications on the true growth rate we can expect, yet it has significant benefits we feel in terms of the freedom we have to experiment not only with innovation in products but also in the way we work."
I think this reflects an important, often over looked point. Many people want to start a business because they prefer to not have a boss, and be able to make their own decisions.
In many ways, raising capital from outsiders can just replace one boss with another. Now you have to make your investors happy, even when it leads to different decisions than what you might make otherwise.
Anyway, despite being a tough time for them; it's good to know they live in reality and not in a "unicorn-themed-chase-party".
Oops. This isn't savings. It's high-priority debt. Investors really want to invest in the future of the company, not the past. If these guys want to serve their company, they'll
(a) write this off their personal books, considering it an unrecoverable cost.
(b) convert it from debt to some kind of warrant giving them the right to recover it from profits at some point in the future.
Who's advising these guys?
Should have tried pay cut across the board and see if folks jumped ship. A good test to see if that culture held up.
(Just a thought. I know it is more nuanced)
I understand why it can happen for sure, but still sucks.
"The best way to drive traffic, increase fan engagement and save time on social media."
They let companies and individuals manage & schedule social media posts across a few of the main platforms (At the risk of doing them a disservice in my explanation, but also saving whoever reads this a click).
I just hope they made the cut deep enough. A common mistake is to cut enough to just get back to break even, when what you really need in that situation is to get back to a decent level of profitability. The number of times I've seen a second round of layoffs because people got that wrong...
From the looks of their projections, they've done the right thing, back to profitability and growth.
[0] https://docs.google.com/spreadsheets/d/1l3bXAv8JE5RB9siMq36-...
And here the layoffs. The upper management were banking 250,000 the last time I read their details.
so these people cost the company $58,500 apiece (this is incl. their benefits, insurance, etc). Meaning their salaries were, what? $40k?
wow?
I'm sure thousands of people have been thrilled with Buffer growing and thriving and see it as a breath of fresh air in a climate filled with bean counter CEOs who think anything and everything boils down to a number that can be turned like a set of knobs to change outcomes (and of course, most of them fail and jump to another job with a nice golden parachute). I personally think the executive compensation disparities that traditional CEOs bring in and how they deal with things are very damaging to all the humans who work with them. As a society, it doesn't forebode well at all to continue with the traditional model.
Regardless of how Buffer ends up faring in the next year or so, it will always be remembered for being different and doing things differently than most other companies. I feel bad for all the Buffer employees that they had to face this - letting go of a significant percentage of the workforce in a small company (or even a small division in a large company) can be really upsetting for everyone involved. The best that they can do, which they seem to be doing, is making sure that these people who're laid off get a decent enough job elsewhere. One can't really hope for that in many other companies.
Admire the transparency.