Are European startups avoiding the topic of downsizing?
We’ve already read about tons of startup layoffs. 1000 people at Yelp and another 1000 at Magic Leap, almost 1000 at Lyft, 45% of the workforce at Eventbrite, 30% at Bird. Layoffs Tracker has over 300 companies listed — including the likes of Houzz, Lending Club, MindBody, The Wing and more. Yet a majority of the companies mentioned are in the US, which is perhaps not surprising given that government support for furlough is not what it is in Europe.
In Europe, the perhaps most prominent startups to announce layoffs have been UK-based so far: Deliveroo, who cut staff by 15% this morning, or Monzo, who announced the closing of it’s 165-person office in Las Vegas, etc. That said, there are prominent startups in France (I’ll avoid mentioning names) that have had to downsize and yet there is absolutely no mention of it in the press. A few people mentioned a similar situation in other European countries (Germany and the Nordics, for example). So my question is: why?
Nothing to see here, folks.
Of course it probably sounds a bit odd that I, of all people, would be calling on startups to share their downsizing stories with the press. Or that I would encourage the press to dig into the topic. But I believe in having an honest attitude with respect to our ecosystem. I’ve seen startups that have gone out of their way to mention that they now organize online coffee and yoga sessions with their staff, yet no mention of the people they have had to let go. That is a bit odd.
Sure, it’s not an easy topic and clearly not in-line with startup “business-is-always-great” mythology (as pointed out above). But building a startup is more than the fancy fundraising and unicorn stories we’ve been reading in the press — far from it. And given all the emphasis that many startups put on company culture, transparency, team cohesion and the likes, it seems that honesty at a time like this would hardly be asking too much.
Wait, are we even allowed to downsize?
It’s easy to jump to conclusions and simply say that we are simply less comfortable with the topic because our ecosystem isn’t mature yet. At the same time it’s also necessary to remember that letting staff go is not exactly the same thing in every country — from both a legal and cultural perspective. And before I awake all the French labor law bashers, I think this situation actually reveals more about the cultural relationship with letting staff go rather than the legal complexity — which is more or less the same throughout Europe.
In France, the government has actively encouraged companies not to let go of their staff by supporting furloughed employees salaries. There has also been a certain degree of confusion about whether or not it is actually legal to let staff go during the crisis or confinement period — the Labor Ministry website specifies that resignations and trial-period ruptures are possible, without detailing the rest. With regards to other types of departures, they were not formally banned but the legal delays were made such that it was not really possible to enact — therefore making furlough a more attractive option. But yes, it is still possible to let people go.
But what will they say?
Now, there was also some feeling that the press may sensationalize such stories, leading the ecosystem to panic over short-term perspective. Always a possibility with any story — but why should that be the case? The press is already covering the topic in more mature ecosystems, and shedding light on practices for CEOs to adopt and avoid.
Plus, companies have the option of sharing the story themselves. I think a great example is that of Carta CEO Henry Ward who published the statement he made to the company on Medium. His honest and genuine text left little to criticize, despite the fact that he was letting go of 161 people (insert applause here). Another move that’s pretty difficult to criticize are the C-level salary cuts that accompanied the furlough and layoff announcements over at Monzo.
Meanwhile, in the US…
In the US, it seems that unicorns have accounted for a large portion of layoffs, including the likes of Knotel and Zume. Companies like Uber and WeWork are preparing to announce large numbers in an upcoming wave of layoffs. Though it’s important to mention that the layoffs at US-based companies are also impacting Europe-based staff. For example Casper cut 21% of its staff and is effectively pulling out of Europe. OnePlus, though not American, has announced similar plans. At the same time, European companies with a US footprint, may opt to go the same route as Monzo and cut US-based teams.
Once the party’s over.
Now, I’m expecting to to hear more and more rumors of downsizing and restructuring in French and European companies the weeks to come — it’s a natural part of the current economic climate and I don’t think it’s a topic that we need to shove under the rug. I encourage everyone (including the press) to be supportive, respectful and fair — with respect to all parties involved. It’s in the handling of crises that we often see true leadership.