- The coronavirus crisis forced startups to scramble for ways to cut costs, including drastic headcount reductions.
- But some startup CEOs and founders have opted to make layoffs a last option as they try to survive the crash. Some have even vowed not to cut anyone. We talked to 6 CEOs and founders who have made protecting their employees' jobs a priority in navigating the downturn.
- Emil Mikhailov, CEO of XIX, a San Francisco visual AI startup, told his employees: "Think about the pay cut you can comfortably take without compromising the needs of your families. There are no right or wrong numbers - whatever decision you'll take is the right one."
- Gleb Budman, CEO of Backblaze, also told his employees that "things are fine" and that there will be no layoffs. A key reason, he said, is that the data storage startup strived to be a "cockroach," a resilient, financial robust startup. "It doesn't sound as flattering as a unicorn, but it survives a nuclear war," he told Business Insider.
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As the coronavirus crisis escalated in March, Emil Mikhailov, CEO of the AI startup XIX, sent an email to his employees, warning them to prepare for a recession when their top priority will be to "to survive the storm."
"It's not clear what is going to happen," he wrote.
Then he made a vow: "We as a team will not lose anyone. We will sacrifice short-term to make sure everyone is OK."
The downturn has upended the world of startups, many of which are scrambling for ways to cut expenses, including layoffs. But some startups are stressing the need to protect their employees' jobs as they figured out ways to survive the downturn.
Some CEOs and founders, like Mikhailov, have even promised not to cut anyone.
Cutting headcount to survive this crisis has become a controversial subject in the startup world. Sequoia Capital, one of the most prominent venture capital firms in the world, drew criticism for its "Black Swan letter," which cited headcount as one of the areas that startups could "evaluate critically whether you can do more with less and raise productivity."
One startup CEO argued that the letter created a "herd mentality" that prompted some startups to prioritize job cuts in responding to the crisis.
Another VC firm, Sapphire Ventues, shared its tips in "Considerations For When Letting People Go" which encouraged startups to consider other cost-cutting strategies "before taking the unpleasant step of letting people go," such as company wide pay cuts and reducing the salaries of CEOs and top executives.
These 6 startup CEOs shared their strategies for avoiding laying people off as they navigate the downturn:
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