Carta’s covid-19 layoff

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.

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:

1. First, include those people whose role or job function is being eliminated with the new growth projections.
2. 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.
3. 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.

What happens to those affected

For those of you who are leaving Carta today we have modified our Next Chapter program. And here is where we took the employee perspective.

First, we will give all departing employees our maximum Next Chapter pay of 3 months regardless of tenure. There is a difference between looking for a job in a normal economic environment and this one. People will need more time.

Second, we will pay your COBRA health insurance payments until the end of the year. We are in the early innings of a global health crisis. Everyone needs health care. If you are able to get on your spouse’s health insurance please do so. But if you don’t have that option, or our health insurance is better than your other options, stay on COBRA and we will pay your premiums until Dec 31st.

Third, if you have been with us for less than one year, we have removed your cliff and extended your PTE to 1 year from today. You joined Carta to create owners and to become one. Everyone affected today will be an owner of Carta.

Voluntary Departures

This one-time modification to Next Chapter is more generous than our standard version. One of the core principles of Next Chapter is that departure compensation be the same, and symmetric, whether the company initiates it or the employee does.

For that reason we will honor this modified Next Chapter program for employee initiated departures until tomorrow. That means, if you would like to leave Carta, and you let us know tomorrow morning, we will provide you the same package that all affected employees receive today. After tomorrow, the standard Next Chapter program resumes.

This was a difficult decision for me. My instinct was not to offer it. That a more generous package should only be available for employees who lost their job, a job they wanted, in the midst of a global crisis. But in the end we decided that honoring our commitment to fairness and symmetry between employees was the right thing to do.

Today we need to focus on processing all of our involuntary departures. If you are not leaving today, but want to leave tomorrow, let your HRBP know tomorrow morning before 9am Pacific and we will process your departure tomorrow.

It is sad to lose so many people today. I hope we don’t lose more tomorrow.

Carta alumni

One of my big regrets is that I did not create a Carta Alumni network. My first job out of college was at a company called Trilogy which had a strong culture and an even stronger alumni program. In fact, the next three jobs I got after Trilogy came through the Trilogy alumni network. I want to create the same network for us where Carta alumni can find each other and work together again.

I’ve created a slack channel that all of you will receive invitations to today. In this channel we will post open positions at Carta that Carta alumni can apply to. I hope that, as our business recovers, we will get to hire many of you back. I also hope former Carta employees at other companies will post roles where they work. I hope alumni will connect to start companies together that I can invest in. And I hope everyone will simply stay in touch.

I will be active in this channel as will our People team to help all of you go on to do great things. For those who remember eShares 101, the greatest thing Carta will ever produce is you. That has never been more true than now.

What’s next

After we get off this zoom, if you are affected, you will receive invitations for your departure meetings this morning. After your meetings, we will start turning off access to various systems but we will keep your slack account until the end of the day. It is important that you be able to say goodbye to your friends and colleagues. And it is important that they get to say goodbye to you. To that end, we’ve created the channel #goodbye where affected people can leave personal contact information and anything else you’d like to share.

For many of you, this is the last time I will get to speak to you in a company-wide all-hands. I’ve thought a lot about what I want my last words to be. I thought about how all of you would be feeling. About how you will remember today, weeks, months, even years from now. I thought about if there were things I could say to make today easier for you. And if I had any parting wisdom or advice to offer.

After many restless nights I realized I just wanted two say two things to all of you.

First, I am very sorry. I’m sorry that we are going through this as a company. And I am sorry that all of you are going through this as Carta employees, Americans, and human beings. It is a scary and sad time. I remember 2000 and 2008 and how much fear people felt. This is worse. I hope all of you connect with your friends, family, and support networks. This is not a time to self-isolate. This is a time to ask others for help.

Second, I want to say thank you. I am privileged to have worked with all of you. Thank you for having been a part of our company. Thank you for being a part of our lives. Thank you for coming to Carta. We are all better for it.

See you on the Carta Alumni network.