I wrote about how I hire in “How to hire good people instead of nice people.”
But what I didn’t know then was how to lay off those good people I’d hired once our business had run its course.
Now I know.
By the end of last year we’d been running a quantitative trading desk for 18 years. We’d managed to survive the Asian Debt Crisis, the Russian Default, Long-Term Capital Management, the Dot-Com Bubble, Enron, the Quant Crisis of 2007, the Near-Collapse of Western Capitalism in 2008, and the US Government Debt Downgrade in 2011.
And yet, although we’d gone years without a major hiccup, by the end of last year our performance was beginning to fade. It wasn’t clear why we were not doing as well; perhaps the environment had changed in a fundamental way, or perhaps high-frequency traders were picking us off. Whatever the reason, we had gone a few years without a crisis and it was clear everyone was happy with their work and that made me unhappy. We’d become too complacent and something had to change.
I took everyone away for a weekend and wrote about it in “Why I forced my staff to attend Startup Weekend instead of watching the Super Bowl.” This gave everyone a taste of what kind of energy and creativity we’d need to muster if we were going to be stellar at our old business. (BTW, as it turned out the event ended well before the game was broadcast.)
Ten days later I decided to shut down the business a hair off an all-time high. It was traumatic for all concerned, especially me. After all, I’d worked on building it for two years before coming to my employer, and I’d been there 18 years.
I shut it down on principle—and the principle at work involved what economists call “opportunity cost.” Being average just wasn’t good enough and I had a strong suspicion we were all destined for better things. Now I am happy to report that the evidence is bearing that out.
Al, our head trader, landed a job with another department at the same firm. The rest of us became involved in the entrepreneurship world in one way or another. Orlando, who I hired right out of college in 2004, had grown into our lead programmer and he landed a job at a much bigger albeit younger competitor that has more of a high-energy environment than I was able to maintain. I hired David as my executive assistant only a year earlier and he’s been working with a number of startups as he chooses which basket to put all his eggs into. Soon after hiring Steve in 2000, he stepped into what I call the “adult supervision” role (he inspired this story) and now he’s planning on buying a business of his own. And some friends and I have launched Staffup Weekend, which is like Startup Weekend except with employers looking for talent instead of venture capitalists looking for ideas to fund. We’re doing our first work-first-interview-later event in San Francisco on November 1-2.
But the most impressive story is of Melissa, a programmer I first introduced to programming in October 2011. In just a few months of self-study she become so good I hired her onto our team. She came in first place at the Startup Weekend with Vidcode, a business that helps young girls discover their inner geek; something that hadn’t happened for her until much later when she answered our job ad. The business has gotten great coverage in the press (see: in Forbes, Fast Company, and Teen Vogue) and severance and renting space on AirBnB have covered her cash flow between when she left and when their Kickstarter campaign was funded.
I am confident everyone is onto bigger, better, and more meaningful endeavors. And now that I’ve had time to reflect, I’d like to offer the following advice to managers who have to cut back staff:
- Well-run businesses insulate their employees from worrying about the job market so they can concentrate on doing their work. But when it is time to let people go, don’t just give them a copy of The Startup of You and shuffle them out the door. Instead go with them to events like Startup Weekend or the many evening and weekend workshops hosted by co-working spaces. Not only will you ease them back into a the marketplace, you’ll learn things you can use too.
- Don’t wait for your business to dive off a cliff to shut it down or scale back but try to do it at the top. It is much kinder to put people on the market during good times rather than when everyone else is pruning staff too.
- Prepare employees for the day they are on the market by helping them learn while they are still there. For example, Orlando, the programmer we hired in 2004, got his Master’s and Financial Engineering, passed all the CFA exams, and his securities registrations. All that was worth more on the market than to us, but compensation isn’t just about money; it is about growth too.
- Read books. When one assistant balked at going to graduate school we spent her education budget buying books, not just for her but for all six of us in the group. In a two year period we studies nearly 100 popular non-fiction books, and although each of us was responsible for presenting a book only every 6 weeks, we each got a copy for all the books. That way we all built an impressive reference library and it cost less than if we had sent that woman to just two graduate classes.
To summarize for my fellow geeks:
There is life after X for all X except where X=Death.
So keep excited and carry on.