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Startup Layoffs: Lessons from Founders, Stayers, and Leavers

A read for founders, their teams and those involved.

1. Have a plan

Use it to your advantage that you as the decision maker can prepare and make a plan.

  • Get into analytical mode: Prepare a (very) realistic forecast by looking at what the company absolutely needs to succeed.
  • Create different scenarios from a budget perspective to understand the impact it will have on the company.
  • Get creative around cutting everything but headcount, and if it comes to that, consider other options (hours, salary, bonus, etc.).
  • Make sure your leadership team is onboard and understands the necessity and implications. They know the organization best and can help you navigate communication, decisions, and the aftermath.
  • Create a support group of 4–5 experts (e.g. founders who have been there, mentors, investors) and have them support you on a weekly basis.
  • Get a coach or trusted external person to share emotions and be yourself.
  • Avoid incrementally cutting but instead plan very conservatively.“Better to cut hard and deep than needing to cut again” Founder
  • Focus on meeting your physical basic needs from food intake to sleep (even if difficult).
  • Take 5 minutes and do breathing exercises and meditation if you get stressed (check othership, headspace, calm).
  • Go for a run or take an ice cold shower. This will increase endorphins (feel good hormones) and make you feel less anxious and depressed.

2. Communicate clearly & assume responsibility

Everyone we spoke to expressed that the most important thing to get right is communication. Clear and compassionate communication will benefit both leavers and stayers. Remember to align with your company’s values because “how we do one thing is how we do everything”.

  • Everyone needs to know why it’s happening (transparency)
  • The leavers need to know you value them and their circumstances (compassion)
  • The stayers know they stand on firm ground (trust)
  • There needs to be conviction that the company will succeed (conviction)
  • Why are we in that situation: Spent too much? Market? Sales forecast wrong? Fundraising conditions much harder? Product/market fit?
  • We looked at the whole case
  • What have we addressed for cost savings
  • This is the reason why we have to let go of certain roles
  • The approach should be fast and caring to reduce guesswork and anxiety.
  • start with a central approach followed by 1:1s (stayers/leavers),
  • or first 1:1s (stayers/leavers) and then central communication
  • or simultaneous communication with 2 groups (stayers/leavers)
  • 1:1s (:2) are show sincerity and care that is never possible in the group setting
  • It also allows stayers/leavers to ask their most urgent questions and have their own space to process the news.
  • Get all paperwork and legalities in place
  • Book a meeting (always better early in the day, face to face)
  • Lead with the news: ‘This will be difficult and there is no easy way to say this’ (empathy)
  • Give room for questions
  • What’s expected between last day and now? Handover?
  • What should I communicate to outside stakeholders etc?
  • List of things that need to be handed back to company/when?
  • Last salary/bonus and timeline?
  • Shares/ Vesting/ Purchase Options/How to expect instructions?
  • Information on unemployment
  • LinkedIn Cover Letter
  • Network
  • Introductions
  • Sourcing (if you can)
  • Reference
  • Opt in share of candidates: layoffs.com
  • Share with your investors they might have talent partners who can match some of the profiles to hiring companies
  • To everyone who is leaving
  • To everyone is staying

3. Rebuilt trust and conviction

Be present and keep communicating:



Early-stage VC fund with roots in CEE, investing in intrepid founders across Europe since 2010

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