<aside> 🗣️ Today we announced layoffs at Carta of 161 people. Below is the announcement I made to the company at our all hands this morning. I’m sharing in the hope that it will help other ceos as they think about their layoff programs. If you are a ceo planning a layoff and would like help thinking through it, feel free to reach out to me.

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Over the last few weeks I’ve talked about the work we are doing around recession planning. I also said that layoffs were likely but I have been delaying any decisions around it for as long as possible. Today is the day I can’t delay any longer.

First, I want to apologize if I sound matter of fact or even robotic. It is my way of coping. I wrote a script and I am reading from it. There is a lot I need to say and I don’t want to forget anything. And I’m worried I may not get through it all without something to lean on.

The facts

Let me start with details. Today we are going to lay off 161 Carta employees which is 16% of our company. The headcount reduction is not uniform across the company and different teams will be affected differently.

If you are one of those affected with the layoff, after this meeting, you will receive an invitation for a meeting with your manager or Trifecta lead. If you do not receive a meeting invitation by 10:30am Pacific then you are unaffected. If you are contacted, you will meet with your notifier and they will talk you through the departure process.

The moral conflict

In town hall a couple of weeks ago I said that there were two perspectives when making decisions about layoffs. The first is the shareholder perspective where reducing costs and protecting cash are what matters most in a recession. The second is the employee perspective where nothing is more important than saving jobs and helping employees as the world heads into unemployment levels the world has not seen since the Great Depression.

In each of these two perspectives, shareholders and employees have clear visions that are both unambiguous and morally correct even while at the same time being diametrically opposed. That is the conundrum for ceos. Ceos sit between shareholders and employees and wish they could do both.

Every ceo who is planning a layoff has to address this moral conflict. I chose to manage my conflict by taking the shareholder perspective in deciding who (and how many) should leave and taking the employee perspective on how to help those who leave.

How we decided how many and who

Let me start with the shareholder perspective first. Once we modeled a slower growth rate in 2020, the first things we looked at reducing were non-headcount related expenses like non-essential software, AWS, travel, real-estate costs, and so on. After we took all the costs we could out of non-headcount expenses we started looking at headcount.

Different teams were impacted differently based on how a slower economy affects different parts of the business. If we believe we will acquire fewer customers than we previously believed, then many customer facing functions like sales, marketing, onboarding, and support need to be reduced. As those departments become smaller, many of the teams that support those departments like recruiting, HR, operations, and parts of R&D, have to downsize with them. Even though the analysis starts with customers, it quickly starts affecting all parts of the organization. This makes sense. We exist only because our customers exist and allow us to serve them. And when our customers suffer we suffer too.

After we figured out the headcount size of each department that our business could support, we had to create a list of who should be part of the layoff in those departments. The decision making framework I gave the department leads was the following:

First, include those people whose role or job function is being eliminated with the new growth projections.
Second, include those people who were in a performance improvement plan or at risk of being put on a performance improvement plan in the near future.
Third, if the above two groups does not reduce the headcount enough for our budget, then do the exercise of “If we had to let go of one more person, who would it be?” until we meet our headcount numbers.

The majority of people were in the first group. There are a handful in the second group and a little more than a handful in the third group.

Once the lists were created, they were sent to me for approval. It is important that all of you know I personally reviewed every list and every person. If you are one of those affected it is because I decided it. Your manager did not. For the majority of you it was quite the contrary. Your manager fought to keep you and I overrode them. They are blameless. If today is your last day, there is only one person to blame and it is me.