Running Through Walls: Surviving a Slump
Whether a company is struggling against failure or enjoying its successes, one constant is people and how they’re treated by leadership, says Bruce Cozadd, chairman and CEO of Jazz Pharmaceuticals. As he tells Venrock partner Camille Samuels, the key to entrepreneurial success — and weathering painful business setbacks — is valuing the team that sticks around for the ups and downs. His first mentor in this key skill was the late Alejandro Zaffaroni, the biotech entrepreneur who founded Alza, among many other companies.
“He called me one night when I was in grad school getting my business degree at Stanford,” Cozadd recalls. “I ended up spending four days interviewing with him. It was clear he wanted to get to know me as a person.” Cozadd joined Alza, rising to executive vice president and COO. “Watching Alex and the way he went about creating companies [went] far beyond the scientific vision,” Cozadd says. “It was how he put people together, how he treated people, how he approached difficult problems — it profoundly influenced how I think about business.”
Cozadd went on to co-found Jazz Pharmaceuticals in 2003, bringing along several colleagues from Alza. During the financial crisis of 2008, when capital dried up and many biotech firms took a beating, Jazz teetered on the edge of failing.
“We were coming through 2008 with a high burn,” Cozadd says. “We had a robust R&D pipeline, but premised on the assumption that we’d have continued access to capital. We had a product launch that was not going well, and we were at real risk of bankruptcy.”
With Jazz’s stock price dwindling to a low of 53 cents a share (it’s now in the $140 range), the company had to make sacrifices. Mindful of the lessons he learned from Zaffaroni and other Alza leaders, Cozadd knew the process of downsizing had to be handled with respect for employees.
“How you treat people in those circumstances is everything,” Cozadd says. He and Jazz’s leadership had to lay off half the company’s employees. After notifying the affected workers, he asked everyone — including the employees staying with the business — to assemble in a conference room. The laid-off employees, he told everyone, were “just as talented as they were last week, and they shouldn’t be treated differently.” Speaking directly to the affected employees, he said, “You’re talented, there is a spot for you [in another company], and I’m happy to help.”
Delivering bad news with empathy has the immediate effect of aiding employee morale — but it also helps the company down the road, “and reinforces the culture,” Cozadd believes. “Much in the same way companies can spiral down, they can spiral back up again,” he explains. When Jazz slowly and steadily improved its performance, some of the laid-off employees returned to the company. “If people who’ve been involuntarily separated want to come back again, you must be doing something right,” he says. “Those ‘boomerang-ers,’ as we call them, are a real source of pride for me.”