What’s The Right Way To Perform Layoffs?

brett fox
5 min readMar 4, 2022

There’s a great story in Ben Horowitz’s book, “The Hard Thing About Hard Things”, that I can really relate to. In the book, Horowitz’s company, Opsware, was going to IPO. At the same time, they were going to perform a layoff.

Picture: Depositphotos

Horowitz was planning on being in New York for the IPO until one of Opsware’s board members, the legendary Bill Campbell, had a chat with him. Campbell told him his responsibility was to be with the employees he was laying off.

Horowitz realized Campbell was right, and he stayed in California to talk with any employee that wanted to talk. That’s how it should be. After all…

It’s your fault that your employees are being let go.

When I read the Horowitz Opsware layoff story, I mumbled to myself, “I had to do the same thing.”

As part of our Series B funding, I had no choice but to perform a layoff. “Raul”, one of our investors was happy I was doing this, and he said, “That is sacrosanct.”

I, on the other hand, was bummed. These were really good people that I was going to let go. Their lives would be changed forever, not because they had done anything wrong, but because I had failed them.

Nothing sucks more than laying people off or firing people except if you’re the person being let go.

You should start letting people go at the top of your organization, not the bottom.

My first step was sitting down with Tina, our controller, and figuring out exactly how much money we needed to cut to get to our number. It’s a simple answer, but it’s not a straightforward answer, because you need to factor in the overhead associated with each employee.

After I had the amount of salary we needed to cut, I met with my direct reports as a group. I told them that we needed to cut $1 million/year in salary in order for our new funding to last us at least 18 months.

I didn’t want to make the layoff decisions in a silo kind of way. I’d been through that earlier in my career at Micrel.

During the Micrel layoffs, each manager was told they needed to cut at least 15% of their workforce. It didn’t…

brett fox

I work with startup CEOs to help them grow their businesses . I built several businesses from $0 to >$100M. Learn more at https://www.brettjfox.com

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