
The email Zenefits CEO David Sacks sent employees as it lays off 9% - rock57
http://www.businessinsider.com/zenefits-is-laying-off-1006-more-people-heres-the-email-david-sacks-sent-employees-2016-6
======
mathattack
Wow. This isn't a 9% layoff. It's 9% plus an offer for everyone else to step
out. It will be interesting to see what the final # is. 20%? 30%?

I'm not a fan of testosterone talk like everyone has to be "All In" when a
company is more mature. The only way this helps is if engagement is a real
problem, and you need to sort out who is on the bus and who is off of it.

I will say that 3 months of severance for folks who involuntarily leave, and 2
months for folks who voluntarily leave is very generous for a company that is
in trouble. It's very close to industry leaders like Netflix and Zappos, and
much more than they would need to do.

~~~
Tloewald
Right -- it seemed fine until "The Offer" showed up. You know who takes offers
like that? The people who can find new jobs really easily. It's a recipe for
losing good people.

~~~
zupa-hu
Maybe you are statistically right, maybe I'm just the outliar, but I'd
actually love getting this letter. I'd rather work late at a company fighting
for its life, with a team that holds together, in a place where it actually
matters if you get something done, than at a stable company that has no
pressure and has tons of time getting things done. Get out of my way and let
me get shit done. I'd definitely stay, let's rock! :D

(I have zero connections to Zenefits.)

~~~
fishtoaster
I can definitely understand that sentiment. That's the main reason I like
working at super-early-stage startups. Zenefits, though, sounds like you'd
have all the rough parts of that experience (eg long hours) but little of the
upside. And, because of both their size and their recent trouble with
regulation, there's probably very little of the "get out of my way".

~~~
zupa-hu
indeed I had my best "get out of my way" experience when working at a startup

------
kafkaesq
It must suck to have to write these emails. But please, the last thing you
should do is bury the bad news behind a bunch of gobbledygook about ARR, SMB,
"reseting relationships with key stakeholders" and whatnot.

Better to cut to the chase with the blood and gore -- being careful to take
the time to acknowledge that this decision is painful for others, not just
"painful to make" \-- and then rebound with the potential upside.

~~~
maxxxxx
Reading these corporate E-mails always makes me feel numb. "We have a great
future, we will realign priorities to make things even greater. You are fired.
We wish you all the best for your bright future, wherever it is as long as
it's not here."

Reminds me of another E-mail from a while ago. "Thank your for your great work
on this project. We will have a great thank you dinner in a great restaurant.
(3 more paragraphs of the same). For cost saving reasons only directors and
higher are invited, not you. It will be a fantastic dinner with a lot of fun".

Are they all psychopaths who don't understand what they are writing?

~~~
kafkaesq
Pyscho- or sociopaths, no. However I've come to theorize that it's a common
defensive reaction in many people to go slightly (or majorly) "numb" when they
find themselves involved in actions in which others are also likely to be hurt
in some significant way -- even if their role is entirely passive, and/or the
action is necessary and basically unavoidable.

Which would explain a lot of the vapid e-mail announcements about layoffs /
firings, as well as the tone of most rejection letters these days ("We think
you suck, basically, and/or we didn't really bother to read your resume before
contacting you and gobbling up all your time with our dorky interview process.
Or if we did read your resume, we didn't really think about what we read or
whether you'd fit the position. But either way, we hope you have a great
weekend!")

------
rizwan
I think the way they framed The Offer is a good one. He makes it clear that he
wants you to stay if you want to stay, and is giving you a way out if you're
not passionate or happy in your job anymore.

Many years ago they did that at AOL (a voluntary severance package), and IIRC
I don't think it came across as that sincere.

------
kogepathic
Sacks has opened the first envelope. [1]

Let's see when the second one is opened. My guess is if Z2 doesn't hit their
goals, sometime next spring.

[1]
[http://www.design.caltech.edu/erik/Misc/Prepare_3_Envelopes....](http://www.design.caltech.edu/erik/Misc/Prepare_3_Envelopes.html)

~~~
tarr11
This is the second envelope. He blamed his predecessor on "Day One" a few
months ago.

Great link, though.

------
rboyd
Has anyone ever published a study of the results after one of these offers?
Seems like a good way to invite a lot of talented folks with healthy
alternatives to leave.

~~~
Eridrus
I would also be really interested in the actual results since I can see it
going both ways; this could incentivize a lot of talented folks to leave, or
if you were incentivizing your people properly, this will just get those who
were coasting to move on and leave those who were actually having an impact.

E.g. you're not going to take this offer if you expect your end of year bonus
to be 40% already.

------
p4wnc6
3 months of severance, 6 months of COBRA, and "transition assistance" is not
remotely "generous" as far as severance goes. Even when I was just coming out
of a bachelor's program and had no work experience, I was able to negotiate 6
months of salary (grossed up) and a full year of continued full benefits as
severance, just by asking. I have friends who have gotten significantly more
severance than this even, again, just by asking. And if a firm reacts badly if
you ask about severance benefits, they're just giving you free info about
their dysfunction, allowing you to confidently walk away knowing you're
dodging a huge bullet.

Many people complain about the language in these trite, lawyer-approved kinds
of emails, and yes, it is sad that it evolves in such an anti-human direction.

But for me, the real take away is that top to bottom, investors and executives
at Zenefits should be absolutely and unequivocally ashamed of themselves for
offering such poor severance benefits and having the audacity to turn around
and act like it's an act of generosity. The voluntary package with 2 months of
severance and 4 months of COBRA defies moral comprehension.

I remember the line from the movie _The Big Short_ where Mark Baum says "Short
everything that guy has ever touched" or something to that effect, out of
disgust.

I think the same feeling is warranted with Zenefits' investors and executives.
What a stain.

~~~
curtis
Three months seems like an unusually large severance to me. And I've never
heard of an employer paying for COBRA at all.

~~~
p4wnc6
It surprises me that you haven't heard of employers paying for extended
benefits, since that is so commonly part of negotiated severance packages.

Many employees never negotiate these things, sadly, because organizations try
to create a taboo about talking about what would happen if your tenure with
them ever comes to an end. As a result, a lot of people are made to accept no
severance at all, or extremely poor severance, like 3 months of salary, if
any.

~~~
ivl
I've always liked the idea of a month of severance per year worked, starting
at three months after the first year. Then again, that sort of deal doesn't
always work, or fit the business.

~~~
p4wnc6
I wouldn't consider working for a company that offered only 3 months of
severance when I first join them. I don't mind if severance increases by about
1 month of salary per year thereafter, but the initial amount has to be enough
to actually sustain your life over the course of an average-case next job
search, which includes possibly being forced to relocate, incur travel costs
for interviewing, etc., and a need to not have to worry about how your
insurance will be provided.

I'd say the minimum I would consider reasonable would be 6 months, maybe more
in higher cost of living areas. That's just the cost of doing business.

~~~
jwhitlark
That seems strange to me. Were I hiring someone, I'd expect to negotiate
salary, and provide 1-3 months severance. Heavy negotiating about how much
I'll pay them if they're NOT working for me would set off alarm bells.

~~~
p4wnc6
This would set off alarm bells for me about working for you, because in many
areas and situations a flat rate of 3 months severance is not reasonable.
You'd effectively be asking me to take a large risk, unwilling to negotiate
about it, and trying to impart negative intentions or "fishiness" onto me even
just for asking. That's a lot of red flags.

~~~
jwhitlark
I don't understand what the risk is. Are you talking about relocation?

~~~
p4wnc6
Many companies, especially start-ups, do erratic things, like hire someone and
then lay them off weeks or months later even if they are doing a good job,
because of restructuring, funding failures, etc. I've seen it happen many
times.

If you relocate for a job, or give up a stable current job, or a number of
other things, you're just essentially trusting the new company not to do this
to you, and often it's completely blind trust and you have no way to know in
advance if your trust is well-placed.

If they are willing to compensate you for a situation where they unexpectedly
(not due to any cause by you, like poor performance or insubordination or
something) throw you into unemployment, possibly in a new location where you
lack a professional network to find the next job, or where you would not
choose to stay apart for the job you took, it shows a willingness on their
part to _earn_ your trust.

It's extremely bizarre to me to hear someone characterize taking a new job by
saying "I don't understand what the risk is." It's a huge, huge risk every
time that the new place is going to treat you badly and that you could not
have seen it ahead of time because they didn't emit red flags during the
hiring process. And many ways of them erratically treating you badly results
in you suddenly having no income or insurance and needing to figure out what
to do -- a situation that should absolutely never be financed out of your
personal savings (though, often it is because people rarely negotiate adequate
severance).

Perhaps you've been very lucky with working for good companies and just
haven't experienced how prevalent this is.

------
citrusx
I'll be another data point for "I'd totally leave if after reading this email,
even if I wanted to stay before I read it."

As a point of reference, a (long-established) company gave me over $50k (cash)
in severance after 4+ years of service. That was what I'd consider "generous".

------
aphextron
I went through a couple rounds of interviews with them a few months back. It
was a really odd and disjointed experience in general, and the staff seemed
completely checked out. I had to politely decline.

------
davesque
"We want you staying late to help out on a project. We want you busting ass on
Z2. The next few months are going to be an exciting time at Zenefits and we
want everyone participating in that.

But if you can't get excited about that, then frankly we need you to make
space for someone who will."

Seems like a strange way of lifting moral during tough times.

------
phamilton
The voluntary layoff says nothing about stock. Are there still employees being
held hostage by golden handcuffs?

------
gravity13
I think my favorite part of all this is that Sacks has dubbed his start at
Zenefits as "Day One" and is dubbing this Tony Hsieh move "The Offer".

I imagine that after today he will go home to The Woman and sit in The Chair
and pat David The Dog on his scruffy head while feeling well accomplished.

~~~
mgiannopoulos
I would quit just by reading this kind of terminology. "Day One", "The Offer",
is this a company or a cult?

~~~
mdorazio
"is this a company or a cult?"

That's a good question to ask of a large number of startups, in my experience.
There's a fine line between "strong culture" that everyone seems to be pushing
for, and "this is crazy."

------
univalent
"The Offer" \- brought to you by the LeBron James school of self-marketing and
endearing yourself to people.

------
zelos144
By tech standards, this is an extremely generous severance. And, in the Bay
Area, 3 months would be more than enough time for a young (under 30) person to
find a job. Unfortunately, it may not be that way in Arizona, but that's not
the CEO's fault.

I have to give the CEO credit. He's probably had to fight his CFO and board
tooth and nail to get that package. I view it the same way that I view Obama's
work on health care. Is it perfect? No. But it's better to compromise and get
something done than to get nothing accomplished at all. What do you expect
Sacks to do, stand up to his board, get fired, and then have everyone get
nothing?

Most tech companies, when they lay people off, don't offer severance or even
announce a layoff. They hide it as a "performance" based layoff or put in a
stack-ranking system. Sacks is trying to do the most honorable thing that he
can.

This is also a way for CEO Sacks to distance himself from the Y Combinator way
of doing things. YC would advise him to do the standard sleazy startup thing.
He's not doing that.

~~~
p4wnc6
> By tech standards, this is an extremely generous severance. And, in the Bay
> Area, 3 months would be more than enough time for a young (under 30) person
> to find a job.

Wrong on both accounts. They say to factor about 1 months of job searching for
every $10k of salary you seek, and I have found this to be highly accurate
when searching in New York and in Boston -- certainly also true in SF. Keep in
mind that most SF start-up jobs are ludicrous start-up bullshit -- yes maybe
you can easily hop to these jobs, but they don't actually provide enough
compensation to support living there. Being able to hop to these jobs isn't a
reasonable backup plan, despite how many deluded folks try this for a while
before moving away.

> I have to give the CEO credit. He's probably had to fight his CFO and board
> tooth and nail to get that package.

This is not how companies work. The CEO isn't some champion for the people.
This was a careful decision with forethought by all parties, planning ahead
for how it would be perceived in media, what impact it might have for future
recruiting. If you think of the CEO as some kind of chivalrous champion of the
common man, you have a very naive understanding of how companies work, and how
bureaucracy in general works.

> Most tech companies, when they lay people off, don't offer severance or even
> announce a layoff.

In part this happens because of the taboo created to make it "bad" to talk
about failure modes, like someone's tenure ending. Most people are too scared
to negotiate this because they are afraid it will make them look like they're
already thinking about how to leave or something, which is silly.

But in general, this is just false. My experience, at least, and the
experience of many tech colleagues I've had, contradicts your claim.

> This is also a way for CEO Sacks to distance himself from the Y Combinator
> way of doing things. YC would advise him to do the standard sleazy startup
> thing. He's not doing that.

This is a bizarre comment. While I agree that Y Combinator is sleazy, I think
it's clear that Zenefits is awfully sleazy too, and that this severance
arrangement is pure sleaze by Zenefits.

~~~
rco8786
> They say to factor about 1 months of job searching for every $10k of salary
> you seek

This comment in no way applies to tech jobs in SV.

It's unfortunate that a lot of these losses will happen in AZ though.

~~~
brianwawok
That is the most insane rule I have ever heard. Salary is not related to
search time, demand is.

I know if programmers making 100k find a new job in a week, and factory
workers making 30k take 2 years to find a job. I don't have enough data to
back up the exact "rule of thumb", but I would eat my shoe if it looked
anywhere close to 1 month per 10k of salary.

~~~
p4wnc6
> I know if programmers making 100k find a new job in a week, and factory
> workers making 30k take 2 years to find a job.

Yes, unrepresentative outliers exist. I don't see your point.

This is a frequently cited rule of thumb by professional recruiters and those
who work as specialists to help candidates improve their job search and find a
job. It's been around for a while and applied to many industries, though
certainly some are different. I'm not claiming it always holds, or even that
things will always be the way they are now, just that it's a good rule on
average for most jobs, and it's definitely a good rule of thumb for software
jobs, even in the middle of SV.

The reason it takes a long time is that you're assessing goodness of fit. The
case when you're just looking to immediately jump ship and you have
essentially no standards besides compensation (this happens a lot in SV) is
not being considered and is irrelevant in a discussion about severance anyway.

You're also speaking from the perspective of someone looking solely in a
confined geographic region -- meaning you're not considering the vast amount
of job searching that involves considering relocation, in which case just up
and leaving your old life behind on a whim after finding a job in one week's
time is a ludicrous outlier. What about people with families? You're thinking
about this from only a single, narrow perspective that is an outlier in terms
of the total volume of jobs. The volume of jobs in SV for which people apply
who have low search standards and who are in life positions to just accept
possibly relocating or significantly changing their commute on a whim is a
tiny fraction of the total volume of jobs, so again I just do not see the
relevance of these anecdotes.

> Salary is not related to search time, demand is.

This is very naive. Salary is loosely a measure of how irreplaceable your
labor would be, and is also an expression of demand, both of which affect
search time. Salary is definitely causally related to demand, so it's at least
a proxy.

Again, no one is claiming there is some hard theory to propose an economic law
relating search time to salary. It's just a heuristic, most likely _because_
salary is a proxy for demand -- one of the most ubiquitous ones.

You seem to just glibly deny this but don't even pause to consider that salary
is in part a proxy for demand.

The bigger thing is that after you begin earning a salary that you're happy
with, you know what you're worth and you know the rough salary range you'll be
seeking, and you'll spend some time interviewing at places that can't come
near it, but eventually you'll figure out how to target the right places.

When you do, then it's not about salary -- it's about work/life balance,
flexibility, whether you'll do the kinds of projects you want to do, commute,
relocation, whether you like the area you'll move to, how bad are the company
politics, etc.

This is a massive and difficult combinatorial optimization problem and even
conditioning on finding places that offer in your desired salary range, if you
take these other life factors at all seriously, it takes a long time to find
an acceptable fit.

Given that increasing salary is generally related to increasing seniority
(thus age, and thus also more complex life situations with spouse and children
or family elders in need of care, etc.) and to increasing responsibility (thus
politics and subtle factors will greatly affect your experience in the new
job, much more than compared with lower salaried workers in general) it's very
reasonable to propose that as salary increases, search complexity increases,
and so search time to find an acceptable role also increases.

Again, outliers exist. Deluded folks who just want to maintain a certain kind
of status lifestyle in an urban center may just jump to _any_ job that
sustains that lifestyle -- that's a super uncommon way to search for a job in
the market overall, even if it's not uncommon in a market like SV. It's just
not useful for general heuristics.

I mean, an even more obvious outlier example would be getting hired due to a
professional connection. You might spend _zero_ time looking for a job and
have it just offered to you. But we don't go around making general heuristics
based on extreme outlier experiences like that -- and people living in those
outlier experiences know that they don't need to use the heuristic.

~~~
brianwawok
Sorry I don't agree with any of this.

Yes a CEO finding a new job will take longer than a Fast food worker. But no,
there is no linear relationship between salary and time to find a job.

~~~
p4wnc6
It's fine to disagree, but you're not making any points or arguments, only
asserting the opposite with no supporting information apart from that you just
happen to think the opposite.

That's fine, but you've got to agree that no one should find that convincing.
Since my experience, the experience of my peers, the advice of many career
counselors and recruiters, and the rough arguments I sketched all do support
what I'm saying, I'm still going to believe it, and believe that your choice
not to engage with it is not a reasonable take on it, much like your focus on
very small outlier experiences, like quick job hopping in SV, is not a
reasonable thing to base any of this on.

~~~
reality_czech
Maybe you're just not that desirable of a job candidate, or you're living in
an area without that many jobs. It's never taken me more than 2 months to find
another job, and all my jobs have paid more than 20k (except the unpaid
internship I took in college).

~~~
p4wnc6
Your anecdotal experience isn't very important though. I've gotten jobs with
search times of 3 months, 1 month, 16 months, and my current search is 14
months. The salary weighted average would put it close to, but slightly less
than, 10 months, and the average salary is a bit higher.

No one's claiming it's a perfect rule. Only that it's useful on average.

I do live in an area without many jobs for the current search, but I am not
searching for jobs in this area, only in other areas with many jobs. In
previous searches I was living in large urban centers with well-known tech
companies, large start-up communities, famous universities, etc. etc. and it
did not materially make the search time shorter on average.

Overall though, I don't care as much about your anecdata vs. my anecdata. I
more believe the heuristic because _so many_ people describe it as accurate
and it has been around a long time and vetted by people who work in recruiting
professionally.

------
zelos144
David Sacks

* takes responsibility for the situation.

* admits that he's laying people off, rather than disguising it as performance-based firing.

* offers a severance that is generous by tech standards, and

* allows people whose roles have changed to escape with severance and their reputation intact.

This is very much not the Y Combinator way of doing things. Are we sure that
Zenefits was once YC?

~~~
dang
We've banned this account for repeated abuse using sockpuppets. I explained
this at
[https://news.ycombinator.com/item?id=11904067](https://news.ycombinator.com/item?id=11904067),
but want to add here that this (seemingly in-passing, but really the point)
smear of Y Combinator could not be more of a lie. Telling such lies in a
persuasive-sounding way, while never substantiating them, is this troll's
specialty.

We go out of our way to moderate Hacker News less, not more, when people
criticize YC. But that doesn't mean anything goes, and in this case the abuse
crossed the line a long time ago.

------
planetjones
My favourite part was 'we have reset our relationships with our key
stakeholders'. This kind of implies there is a button he can press and
everything is ok. Personally I wouldn't send mails with such unsubstantiated
nonsense, but there you go.

