I don't know Riccitiello but honeslty I've done this myself (not a CEO). Bascially I beleive I (we) can do something and stated so and within 2 weeks my info / situation changed and I we can no longer do that something.
To put it another way, the CEO or founder is often the most optimistic person. Imagine a single founder, they want to believe they'll pull through, get that funding, find the customers, whatever it is that keeps things going up. People will claim a CEO has to be different but I personally think it's human nature for most people to hope/wish/desire/see the best outcome.
Unless there is some smoking gun email that says "I'm going to tell them we'll be fine but actually I'm going to layoff a bunch in 2 weeks", my gut says the CEO beleived what he said when he said it.
If the bar for asking a CEO to quit is "you did not correctly predict the future" then we're going to have to ask most CEOs to quit at some point. And most employees for that matter.
The issue I have is with broad strokes generalizations that layoffs indicate a failure of a CEO. They don't necessarily mean that. Any more than shipping a bug to production indicates a failure of an engineer who should now be fired. Similarly, not laying people off is not an indicator of success. Nor is not shipping a bug to production.
The question is not "can we predict the future," but rather "did we do the right things to capture the right data to make the best decision" and if the answer to that question is yes - then any other reasonable person in the same position would likely have made a similar (if not the same) choice, and it's not clear what firing anyone does besides being punitive. Again, same for any employee that makes a mistake. This is not me giving a free pass to CEOs.
If the company makes bucketlots of money, the board isn't going to change the CEO, even if he would be a total arse in board meetings. I think it has to be repeated that investors want returns for their investments. Also, if the company happens to make money despite of lousy CEO, the board will highly probably keep the lousy CEO.
All these founder-centric stories makes it looks like board will fire the CEO just for fun, or just because they happen to get the idea out of the blue. Actually it is a lot of pain and work for the board to try to find a new (better) CEO and they probably realize that they will fail (statistically speaking). So, the board will fire the CEO only in a situation where they genuinely believe that average replacement from the market will do a better job running the company. They don't fire on a whim.
Nobody wants to layoff 90% of staff as CEO, so it is understandable to put it off for as long as possible. It's hard to admit things are that bad. If they did the layoffs early enough to have enough cash to pay severance, then this story would have come out months ago. Instead, the CEO held out hope that a deal would come through to make it no longer his problem. The deal fell through, and now they've burned through the cash that could have been used for severance. So instead of severance, they kept their jobs that much longer which is essentially what severance is meant to cover.
I'm not excusing CEO's behavior. It was 100% poorly managed. However, it is a learnable lesson for others that could be in this position. This is a forum full of startups or hopefuls. Not all startups will succeed. There are tough decisions to be made. Nobody will be happy about potential loss of their job. There's always the decision to keep people informed with the potential of panic ship jumping vs going all in on a bet of selling the company.
As a CEO who had to do some lay-offs, I would terminate loyal workers who care about the company the last, even if I had to change their focus.
At a certain size when you know all people in the company, a CEO always know which 15 % of people will be let go first and which 15 % will the company keep even if the business is losing money every month.
Perhaps, but scanning the conversation thread here again, I see most people wanting to punish the CEO for steering the ship for a new reality in a way that includes layoffs.
But think in terms of the goal you want to achieve. If your goal is to stop layoffs and convince the CEO to act in a different way that shareholders will not like, the CEO will be replaced. And you will not achieve the goal.
Again, the CEO is accountable to law and shareholders. Either you convince shareholders to change their mind or you change the law. That's it. Changing the mind o CEO makes no difference.
I read hopeful and idealistic (I’ve the same wish and hope, by the way) comments on HN and contrast it by thinking of CEOs and CTOs not even giving this news another second; laughing at it would mean it affected them in unimaginable ways.
Most of these “leaders”, especially in “startups”, have very short term goals - exit, acquisition, insane funding and valuations etc.
It’s not that they don’t think about employees burning out or lack of their well-being. They count on it. They know exactly what’s happening and they know that that 2<x> year old burning out (literally falling ill mentally and physically) after 7 month of hell, but wrote y number of functioning APIs, was a great success!
Presumably so, as down-thread, he states that they were overconfident in their growth. (Most of the time) the CEO knows that if the business can't deliver, it will be their head on the chopping block.
Sure, but when you look at the history of comments around this theme (CEO, layoffs), it seems pretty clear that people want a CEO to take responsibility in some other way that laying off staff.
Well, if you have that attitude, you won't be CEO for long. Shareholders want return, and get to replace the CEO. So for public companies this doesn't work.
I can't comment on the situation, but I think throwing the towel as a CEO is the wrong decision. Just because you don't have an upcoming round, your duty as a CEO is to the company in any condition that it's in, come hell or or high water. I would even argue that a CEO is almost married to the company.
Throwing in the towel when the going gets tough seems like a spineless move.
Being CEO means making difficult decisions, and it isn't realistic to expect a CEO to only serve during good times. That said, I think it would go a long way towards appeasement if the messaging was more along the lines of "I will be withholding payment to myself until such time as we're in the black again" or something similar showing personal consequences beyond "mea culpa!" nonsense PR messaging.
Maybe it's reasonable to expect a CEO to resign when layoffs happen during a market upswing but... during a market downturn like this it's kind of inevitable to see layoffs in a services-based company when services are the some of the easiest things for consumers to scale back on when belt-tightening occurs. A change in leadership would only further hurt the people staying in the company, IMO.
Bizarre. People expect either (a) company management to be completely clairvoyant about what the future will hold, or (b) when their best estimates about the future change, I guess folks expect management just continue charging ahead until their company goes bankrupt.
I also totally disagree with this statement, if you're implying that you think good CEOs should layoff as few people as possible: "I always felt that good CEOs (from a culture perspective) make it clear that in times of trouble, the first priority is not the business, but everyone working there."
If anything, I think good CEOs are clear about making tough, painful decisions, and they make them quickly and move on as fast as possible. There is nothing worse than everyone seeing the writing on the wall (e.g. lots of people with not enough work to do), but feeling that management is paralyzed by fear to change it.
What's going on is really not that complex. Companies (and MANY companies, certainly not just Klarna), planned for number of employees based on estimates about the future state of the world, and that future state of the world turned out to be drastically impacted by all the events mentioned in that letter.
It's not an existential question for the companies, but it could be for the people making the decisions. If shareholders aren't happy with the company's performance, the CEO might find themselves getting replaced.
In fairness, asking the CEO of the company if they'll fire someone and let you replace someone two managerial steps above yourself is rarely if ever going to work. ;)
To put it another way, the CEO or founder is often the most optimistic person. Imagine a single founder, they want to believe they'll pull through, get that funding, find the customers, whatever it is that keeps things going up. People will claim a CEO has to be different but I personally think it's human nature for most people to hope/wish/desire/see the best outcome.
Unless there is some smoking gun email that says "I'm going to tell them we'll be fine but actually I'm going to layoff a bunch in 2 weeks", my gut says the CEO beleived what he said when he said it.
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