Getting Laid Off Is Not a Scarlet Letter
When WeWork collapsed last October, it was seen as the first loud pop of a bubble about to burst. Of IPO valuations run amok. Of the reckless character of venture capitalism. Coupled with the IPO woes of companies like Uber and Peloton and layoffs from mattress startup Casper to fellow Softback-banked budget hotelier Oyo, WeWork was painted as the harbinger of doom — especially for employees, who were laid off by the thousands. I beg to differ.
As founder and CEO of a company that helps people to find new jobs, and one that’s working with many of those ex-WeWorkers, I've helped venture-backed companies swiftly hire to scale for the past decade. I've seen these cycles time and again, and what laid-off employees need isn’t a shoulder to cry on, but a few short, helpful tips.
Layoffs are embedded in the very nature of the tech ecosystem, where the rush to market calls for an equal rush of hyper-growth. It often works, which is why venture firms poured a record $136 billion in U.S. companies last year. But occasionally, that growth oversteps reality.
WeWork laid off nearly 20 percent of its 12,500 employees, with thousands more outsourced or shed from subsidiaries. Such implosions make for compelling headlines, e.g. a giant venture fund betting boldly and badly. A self-dealing CEO who bailed with a $1.7 billion parachute, while workers received a mere four-month severance. Yet WeWork was more anomaly than standard-bearer, and certainly nothing new. These blowouts, through malfeasance or basic market attrition, have been happening for decades.
Three years ago, I had a front-row seat to a similar implosion at HR-software maker Zenefits, which at one point was valued at $4.5 billion. As its prospects soared, my company was brought in to help with the hiring of over 100 people. Then it fell short of sales goals and got caught cheating. Its employee ranks in San Francisco and Tempe, Arizona, went down from 1,600 to 500. My company then returned to the scene to help many of those who were laid off. Still, the market keeps chugging along, for America suffers no shortage of invention or entrepreneurial spirit.
What we've learned from this incident and others is that being laid off en masse is not the scarlet letter most assume. Here are three tips to surviving the storm.
1. Move quickly
There was a day when those fired in volume were often rehired in volume, as other companies plucked entire teams from the rosters of the dying. But this also meant importing cultures that may or may not have been the best fit. Today, companies aren't simply looking for ethnic or gender diversity. They're also after distinction in work and personal experience.
So while it was once considered an in if a company had already hired six of your colleagues, that's no longer the case. Now it may well mean that the company has hit its quota of hires with your work experience. But if you're not the first in the door, or a new job doesn't come about quickly....
2. Don't fret
When a flood of similarly skilled people hit the market, there's a natural absorption rate that can only move so fast, but a lack of immediate success only presents you with a unique window. Use your severance to travel, have fun, catch up on those doctor and dental appointments you've been putting off and, most important, recharge.
Polish your skills, attend that seminar or class you never had time to take, and network, network, network. Because within months....
3. The market will open again
Employers are smart. They realize the fault behind downed companies usually resides well above most employees's pay grades or were the result of market forces unforeseen. They also understand that a flood of skilled workers suddenly entering the market is a bonanza, not an encounter with the scarlet-lettered.
What we've found in cases like Zenefits and others is that there's a three-to-six month latency period after the initial round of hires. That's when conditions change, employers reexamine their needs and new rounds are about to commence. If you have a strong history of performance, there's little need to worry. For every headline-grabbing case like WeWork, there are hundreds, if not thousands, of other companies on the prowl for new hires — just as there were following downsizing at Tesla two years ago or Etsy the year before that, or after any number of layoffs at companies that today are stronger and hiring once again.
Yes, the immediate future may be rocky as investors demand swifter routes to profitability and, ultimately, an exit. But this is also a good thing. Wise executives will read the tales of Uber and WeWork as cautionary, forcing them to take a smarter approach to the gallop to market.
America has a two-century track record of ingenuity. That's not about to be sidetracked by a few unicorns failing to live up to high expectations. While there will always be unfortunate crashes, there will also always be a need for good people to help bring America's inventiveness to market.