Column: Advice to CEOs on Their Upcoming Layoffs – From Someone Who Has Done it Before

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Column: Advice to CEOs on Their Upcoming Layoffs – From Someone Who Has Done it Before

The second week of October in 2008 was one of the most painful and emotional times of my career. We ushered 50 Zillow employees into an off-site conference room. I was COO then, and we were about to lay them off -- one-quarter of our staff. The Great Recession had hit, and the management team was following our gut and also the advice of our investors at Benchmark Capital and TCV: cut early and cut deep. Extend the runway. Conserve cash. Survive. I knew we had to make a hard decision to ensure Zillow would continue to thrive.

It's a scenario CEOs around the world dread but one that is becoming more real as the economic toll from coronavirus spreads. Venture capital firms are again warning their companies to prepare for an extended recessionary period. Leadership teams at companies large and small across the globe are meeting to determine their next moves.

I've led companies through two major recessions. The first was Hotwire after 9/11 in 2001. The second was Zillow in 2008 after the Global Financial Crisis. No matter the cause of the recession, the fundamentals of preparing a business for an extended economic downturn are the same — as are the fundamentals of compassionately handling layoffs.

I expect many companies will lay off between 10-20% of their staff in the coming weeks or months. Some furloughs have already been announced, but the real layoffs are still coming. Companies have been on hiring binges for the past 10 years, and many companies can manage to lay off 10% of employees without a significant impact. But that doesn't mean these companies should lose sight of the very human toll reductions take, and handle layoffs sensitively and with care.

Here is some advice from someone who, unfortunately, has some battle scars on this topic:

  1. Reduce headcount once. There is tremendous damage in cutting headcount little by little -- the steady drip-drip of bad news demoralizes a company beyond saving. Get to your target employment count the first time so that you won't have to do it again. This was what we did at both Zillow and Hotwire. It helped our remaining employees feel secure in their jobs and build camaraderie moving forward. At Zillow, we even had some of the laid off employees return once we started hiring again.
  2. Treat those you're letting go as generously as your business can afford to. I don't just mean with severance, although that's important. But also important is the honesty and dignity with which you treat them. If you can, provide outplacement support, or at a minimum gather a list of the affected employees' Linkedin profiles and send them to your VC firms, asking them to circulate. I've also seen some companies do a good job of posting information about employees they have had to let go (with the employees' permission, of course).
  3. Extend the exercise periods on stock options for affected employees. This is possibly the most significant move you can make for those employees. Most standard stock option plans require an employee to exercise their options 30-90 days after leaving a job. But when the employee does that, they have to pay taxes right away. At Hotwire and Zillow, we extended the period to two years. The laid off employees will appreciate this immensely; but also be sure to tell the remaining employees that you made this concession, as it will win them over too.
  4. Have the "are you in or are you out" conversation, ideally before final layoff decisions have been made. The last thing you want is to lose people who want to be there, and keep people who don't. So while making preparations for layoffs, or immediately after, it makes sense to give people the ability to choose to be laid off. They can get severance, and there is less stigma if they leave during a round of layoffs. At both Zillow and Hotwire, some people opted into the layoffs.
  5. Once the layoffs have been announced, use that first all-hands meeting to lock arms with the remaining employees. Acknowledge how hard and uncertain this time is, and that it's terrible to say goodbye to friends and colleagues. But tell them the truth: That the difficult decision has been made and now together, you will all do the best work of their careers during this period. That someday you will all look back on this as a defining moment in your careers. That eventually this, too, will pass.

Downturns are not all bad news. Great companies can be built during these times, too. Both Zillow and Hotwire thrived due to some of the shifts that happened during and after the last recessions. That's because during periods of great disruption, patterns and behaviors change, allowing disruptors and new entrants to thrive -- and new categories to emerge. This unprecedented time in our history will shift business momentum in different directions. It's hard, uncertain and scary, but there is enormous opportunity.

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Genies Wants To Help Creators Build ‘Avatar Ecosystems’

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Genies Wants To Help Creators Build ‘Avatar Ecosystems’

When avatar startup Genies raised $150 million in April, the company released an unusual message to the public: “Farewell.”

The Marina del Rey-based unicorn, which makes cartoon-like avatars for celebrities and aims to “build an avatar for every single person on Earth,” didn’t go under. Rather, Genies announced it would stay quiet for a while to focus on building avatar-creation products.

Genies representatives told dot.LA that the firm is now seeking more creators to try its creation tools for 3D avatars, digital fashion items and virtual experiences. On Thursday, the startup launched a three-week program called DIY Collective, which will mentor and financially support up-and-coming creatives.

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Here's What To Expect At LA Tech Week

Christian Hetrick

Christian Hetrick is dot.LA's Entertainment Tech Reporter. He was formerly a business reporter for the Philadelphia Inquirer and reported on New Jersey politics for the Observer and the Press of Atlantic City.

Here's What To Expect At LA Tech Week

LA Tech Week—a weeklong showcase of the region’s growing startup ecosystem—is coming this August.

The seven-day series of events, from Aug. 15 through Aug. 21, is a chance for the Los Angeles startup community to network, share insights and pitch themselves to investors. It comes a year after hundreds of people gathered for a similar event that allowed the L.A. tech community—often in the shadow of Silicon Valley—to flex its muscles.

From fireside chats with prominent founders to a panel on aerospace, here are some highlights from the roughly 30 events happening during LA Tech Week, including one hosted by dot.LA.

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PCH Driven: Director Jason Wise Talks Wine, Documentaries, and His New Indie Streaming Service SOMMTV

Jamie Williams
­Jamie Williams is the host of the “PCH Driven” podcast, a show about Southern California entrepreneurs, innovators and its driven leaders on their road to success. The series celebrates and reveals the wonders of the human spirit and explores the motivations behind what drives us.
Jason Wise holding wine glass
Image courtesy of Jason Wise

Jason Wise may still consider himself a little kid, but the 33-year-old filmmaker is building an IMDB page that rivals colleagues twice his age.

As the director behind SOMM, SOMM2, SOMM3, and the upcoming SOMM4, Wise has made a career producing award-winning documentary films that peer deep into the wine industry in Southern California and around the world.

On this episode of the PCH Driven podcast, he talks about life growing up in Cleveland as a horrible student, filmmaking, Los Angeles and his latest entrepreneurial endeavor: A streaming service called SOMMTV that features–what else?–documentaries about wine.

The conversation covers some serious ground, but the themes of wine and film work to anchor the discussion, and Wise dispenses bits of sage filmmaking advice.

“With a documentary you can just start filming right now,” he says. “That’s how SOMM came about. I got tossed into that world during the frustration of trying to make a different film, and I just started filming it, because no one could stop me because I was paying for it myself. That’s the thing with docs,” or “The good thing about SOMM is that you can explain it in one sentence: ‘The hardest test in the world is about wine, and you’ve never heard about it.’”

…Or at least maybe you hadn’t before he made his first film. Now with three SOMM documentaries under his belt, Wise is nearing completion of “SOMM4: Cup of Salvation,” which examines the history of wine’s relationship with religion. Wise says it’s “a wild film,” that spans multiple countries, the Vatican and even an active warzone. As he puts it, the idea is to show that “wine is about every subject,” rather than “every subject is about wine.”

For Wise, the transition to launching his own streaming service came out of his frustration with existing platforms holding too much power over the value of the content he produces.

“Do we want Netflix to tell us what our projects are worth or do we want the audience to do that?” he asks.

But unlike giants in the space, SOMMTV has adopted a gradual approach of just adding small bits of content as they develop. Without the need to license 500 or 1,000 hours of programming, Wise has been able to basically bootstrap SOMMTV and provide short form content and other more experimental offerings that typically get passed over by the Hulus and Disneys of the world.

So far, he says, the experiment is working, and now Wise is looking to raise some serious capital to keep up with the voracious appetites of his subscribers.

“Send those VCs my way,” Wise jokes.

Subscribe to PCH Driven on Apple, Stitcher, Spotify, iHeart, Google or wherever you get your podcasts.

dot.LA reporter David Shultz contributed to this report.