“You’re Unlucky AND You’re Fired.” How Not To Run Your Company.
Don’t Listen To Me, But Please, Hear Me Out: # 42
Shaheeda Abdul Kader, December 17 2021
You’re Unlucky And You’re Fired
So, just as I was bragging about all the amazing Indian origin CEO’s leading phenomenal companies, Vishal Garg, CEO, Better.com made it all worse.
In a much maligned, viral video, Mr. Garg fired 15% of the company’s employees en masse via a zoom call.
I’ve been listening to podcast hosts, newspaper journalists and twitter generally dunking on Mr. Garg.
While I whole heartedly agree, the language, and the words used were rather cringeworthy and inappropriate in some cases, I don’t agree that all the vilification that Mr. Garg has received is entirely justified.
There are many lessons to learn here. Here are a few.
En Masse Firing
USA corporations have been engaged in mass layoffs for as long as corporations have existed and all too often, they do it all at once as in a firing squad.
I know, because I was once summarily dismissed along with 198 of my colleagues in such a firing squad many moons ago.
Cue nostalgia music.
It was wonderful day in spring in Houston. I was a manager at a tech startup. Our company was one of the first digital marketplaces for Oil and Gas (O&G) companies. O&G companies could bid their Engineering and Procurement (E&P) projects on our platform using many methods including reverse auctions.
The company had raised $100 Million in funding from 2 major Oil giants and a prominent VC firm.
It was a pleasant day in April, if I recall correctly, I was feeling especially smug and happy. You see, I had successfully led the first and well as it turned out, the only successful pilot program of our platform with a Latin American NOC (National Oil Company). I was basking in the glow of helping our company get an additional $10 Million from the NOC as a result of the pilot.
The CEO had called to specially congratulate me.
The company occupied the 8th and 9th floors of this building. Around 10 am, there was an anouncement saying that our CEO requests our presence on the 10th floor which was unoccupied at the time.
So, we all went up to the 10th floor high on expectation and curiosity.
Our CEO started out saying how hard we had all worked and thanked all of us. He called out my name especially and I was glowing with pride and embarrassment once again.
And then he dropped the bomb. He said unfortunately we no longer had any cash to grow the business and we were shutting down. This company with $100 Million in funding lasted about a year before shutting down.
Stunned and confused all 198 of us walked to our desks only to find security guards everywhere taking our laptops.
We were not allowed to go back to our desk or take anything. The security guards marched us off the premises rather unceremoniously.
We weren’t paid for the 3 weeks of that month we worked. There was no severance or unused vacation pay. There was no extension of healthcare benefits.
I had a colleague who had over $30,000 in credit card bills related to travel for the company that he couldn’t get reimbursed. So, in the US, most companies would get you a corporate card, but you are responsible for settling the card. You’re supposed to claim your expenses every two weeks as part of your Travel and Expense (T&E) reimbursement claim. My colleague had not submitted his T&E claim and so he was left holding the bag.
Could Vishal Gard have done better? 💯 yes. But was he entirely wrong to do what he did? Perhaps not?
“If you’re in this call you’re one of the unlucky ones.” Total cringe.
CEO Grade: F
It is rather cheeky of a CEO to layoff 15% of his staff and then have the temerity to call them unlucky. Luck is not something an individual can control for herself. Instead of taking responsibility for hiring too many, too fast and not executing like a successful CEO to meet the company goals, Mr. Garg shirks responsibility to mere fairy tale concept like the lack of “luck” of his hapless employees.
Mr. Garg needed to be a lot more empathetic and sensitive. This was not about him. No one cares how he feels and if he is going to cry or if he is going to be stronger. He needed to show that he cared that his employees would come out of this stronger and he could’ve laid a plan to help them land back on their feet.
What he should have said, “I want to thank you for your hard work and dedication. It is with a heavy heart that I admit that I have failed as your CEO to execute to the high standards we have set for our company. We have had to therefore make some extremely hard decisions. I am deeply sorry to say that unfortunately I have to layoff 15% of our employees. Since I take full responsibility for this decision, I want to be the one making this difficult announcement personally….”
The Timing: Communication
Better.com had just raised $750 M and the CFO had shared this news in a company wide email celebrating it just the day before. The optics on then to summarily fire 15% of the workforce a day later appears callous if not cruel. The C-Suite Management Team should’ve discussed this and coordinated better.
C-Suite Management Grade: F
They are a private company and such does not have disclosure requirements like a public company does. They could have easily held off on sharing the funding news for a week. Morale is lowest in a company after a major layoff.
A week later, the CFO could have sent the email saying , “Investors still believe in us and we now have the funding to right this ship. We will be more focused and build it together.”
The Timing: Holiday Season
Just before the holiday season is possibly the most brutal time to fire anyone, let alone 15% of your work force. Unfortunately, sometimes the management may not have the luxury of better planning difficult decisions. The company had several issues which culminated in this fiscao.
CEO Grade: C
We don’t know yet, but the $750 K funding may have been contingent on trimming 15% of the headcount. We don’t know what other conditions were negotiated.
A friend told me that Porsche once shut off a unit 3 weeks before Christmas. The CEO said he didn’t want to wait till after the holidays because he worried his employees may unwittingly spend more during the holidays creating additional financial burden. I’m not sure I agree with this “Big Brother” approach. CEO’s perhaps should manage better so that they aren’t forced to engage in mass layoffs during the holiday season?
Zoom Call to Announce Layoffs
I would not fault Mr. Garg for using Zoom to do this. It could be that better.com is mostly a remote first employer. According to many surveys and publications, most knowledge workers have been asking for Remote and flexible work.
It is inconceivable to ask the CEO to speak to 900 employees individually or in person. Could they have done it better? Perhaps he Line Managers could have had in person meetings with the employees and let them know they are forced to downsize? But honestly, I don’t believe ZOOM is what made it worse. It was the language, not the venue. In fact, I commend the CEO for not shirking off the unpleasant duty to his line managers.
CEO Grade: B
The follow-up apology from Mr. Garg unfortunately was not much better than his original zoom call firing. “we overhired and hired the wrong people.” Major cringe. It is the CEO’s role to EXECUTE. If he hired a lot of the “WRONG” people, then he should fire himself first. Either he did not lay out the right strategy, did not communicate or delegate well and/or did not hold his senior management accountable. In all cases, he cannot blame the people he hired as the WRONG people. He was the WRONG CEO or at the very least he took funding from the wrong VC.
But Mr Garg reportedly told his staff: “Today, we acknowledge that we overhired and hired the wrong people, and in doing that, we failed.
“I failed. I was not disciplined over the last 18 months.”BBC
Which brings us to SoftBank. Have we not seen this play far too often? Masayoshi Son, the billionaire VC with a penchant for lavishing his portfolio companies with massive funding, urging them to grow at break neck speed, has seen many of his favorite CEO’s falter just like Mr. Garg. We saw the cataclysmic fall of WeWork, Greensill, etc. Perhaps there is an important lesson for startups when they raise massive funds on how to set sustainable, profitable growth expectations.
CEO Grade: F
However, I believe everyone deserves a second chance. Mr. Garg needs a good Executive Coach who can help him communicate better and teach him about being an empathetic and successful leader.
Overall CEO Grade: D
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