Episode 59 : Leadership in Lay-offs – Twitter Vs Stripe
Today’s episode is being recorded deep from the heart of our headquarter building at Flow Group in Temple Bar, Dublin. So if there are some colourful or more colourful than usual sounds in the background, it is only and simply because of the change of location in service of trying to rush this episode to you, given the context and the live nature of how events have transpired.
In the almost 30 years of practicing the craft. I’ve witnessed three major global economic reversals, and they’ve roughly come at intervals of 10 years. First that I experienced first-hand was the.com crash roundabout the turn of the century into the early two thousands. Then we had the financial crash roughly a decade later, and then more recently, a decade later, again, we had the outbreak of the Covid pandemic.
What characterized each of these was the global repercussions and more than that, from a leadership perspective, cuz that’s the focus here, they all provided a Waterloo type scenario for the leaders at the helm. What each of these major global unanticipated disruptions had in common was that they bred uncertainty, uncertainty, Causes people to trigger and hijack and puts them on limbic war footing. And whilst the origin and the nature of each of these Waterloo scenarios for leaders was different in and of itself, it produced exactly the same impact where I was able to witness firsthand the best of leadership, and at the same time, accompanied by the worst of leadership.
And not surprising, because it provides leaders with an unorthodox set of conditions that they have to manage. And as Warren Buffet once put it in a different context, it’s only really when the tide goes out that you see who’s been swimming in the nude. Last week, the tech sector, which has been for the last 20 years, the poster child for economic growth began to unravel with the announcement globally amongst some of its biggest names of mass redundancies, and for those at the helm of these huge monolithic companies, their leadership reputation or their legacy is not going to be judged on how they’ve shown up so far in the 95% moments or in the good times.
But they’re going to be judged by how they show up in the 5% moments, because these are the moments that matter most. And how you show up in the moments that matter most for other people is going to determine how you’ll be viewed by history.
The standout event, and the focus and purpose of this whole podcast episode. Is the coincidental release of a memo by both Twitter and Stripe at almost exactly the same time to announce the fact that they were making redundancies amongst their workforce. The contrast between the two memos is almost risible in it’s extreme.
And before I get to that. I just wanna recap on one of the episodes we covered earlier, which was around what actually leadership is and viewing leadership as a contribution. The leadership contribution is made up of two things. The first thing is the leader needs to set the direction for where things are going, because if the leader doesn’t do it, then nobody does it.
And in doing that, the leader needs to make tough decisions and tough calls very often with incomplete information and uncertain surrounding conditions. So they need to set the direction, they need to call the shot, and they need to make a decision. And the one thing that’s common to both memos is that both leaders did exactly that.
They called a shot, they made the decision, and they made an announcement.
But the second, an equally critical part of the leadership contribution is that as well as taking the action and calling the shot, you need to get people to buy in and bring people along with that decision. And here is exactly where the memos from Stripe and Twitter diverge. The first clue is ironically at the very end of each memo in the signature. The stripe signature is signed, Patrick and John, meaning the two Collison brothers who co-founded the business while the Twitter memo is simply signed
The Twitter memo is terse, limp and impersonal, and frankly, any basic AI program would’ve done a better job.
The memo itself was dispatched to the private email addresses of the employees because many of the employees had had their system access denied to their work emails and their Slack accounts. The Twitter memo was also accompanied by a void of communication causing one Twitter employee to PO who still had access to his company Slack account, to post a picture of a skeleton with a caption, me waiting for an update from leadership, which was inevitably going to take a while given the executive team had been totally cleared out in the previous days.
Another employee anonymously quoted in the Washington Post, described it as all working for the Trump White House. Alluding to the chaos and uncertainty in the present environment, it has led to many employees resorting to Blind. Which is an anonymous workplace gossip site used by many in Silicon Valley as the only or the best place to find out what’s actually going on in the company.
So in summary, Elon Musk pays 44 billion for the company, decides to let go of 50% of the workforce, and this is how it’s managed and executed.
Now having been through this, as I mentioned at the top of the program many times, particularly during the Waterloo events that have happened over the last 30 years, this is a really challenging and trying time for leaders. So this isn’t easy to get right, but if you contrast the Twitter approach, and Musk’s approach with how Patrick Collison particularly, And the memo that was released by Stripe at roughly the same time and how they handled it.
You’ll see that there are so many things that were done by Stripe. There are at least seven things that Patrick Ellison managed to do in the Stripe memo that helped with getting the buy in and making it more palatable for people to accept. And go along with the tough and harsh decision that leadership had to make.
First thing is that he got straight to the message. He said, Today we’re announcing the hardest change we have ever had to make. At Stripe, we’re reducing the size of our team by around 14%. They’re the opening two sentences. The second thing, was immediate and decisive action. A notification Email will be sent within 15 minutes of receiving this memo, and within one day there will be a live one-to-one conversation with your manager.
The third thing is he took full responsibility for the decision. John and I, his brother, are fully responsible for the decisions leading up to this. No fudging, no deflecting, no passing the buck, no blaming external circumstances. We are taking accountability for this decision. Those first three items are all condensed into the very first paragraph of the memo.
He then goes on to paint the picture of the context that is led up to and why this decision is necessary and what’s led to it. He follows that by explaining the terms of severance and what to expect from that, the terms of which are extremely generous relative to what would’ve been either statutory or mandatory?
In the penultimate paragraph of the memo, he puts his hands up and says that leaders, the leaders got it wrong. We made misjudgements. We made miscalculations, and he took full blame for the decisions that led to the situation, which has led to the need for the layoffs
In the final paragraph. He closes by saying that the priority at this very moment is for those who are leaving, but not to neglect those who are staying, and that the remainers, the attention will go and the focus will go onto them next week so that they’re included and not left out in the cold. [00:11:00] Now look at the situation through the lens of the employee.
The employee is scared, Is limbically triggered? Is desperately looking for information and answers to understand what’s happening now and what’s happening next. That’s their situation. And now reflect on the memo itself. Do they want people pussy footing around or do they want the message straight? Are they going to thank you for taking immediate and decisive action?
Are they going to respect the fact that you’re taking full accountability and that you are owning the decision? Are they going to appreciate that you are providing context and rationale for why this is important and why it’s happening? Are they gonna wanna know what happens next and what is going to be their deal from now on? Are they going to feel some comfort in the fact that you are human and that you made decisions that at the time seem logical, but in the fullness of time have turned out not to be so? And are they going to grant grace for the fact that you’re going to deal with the people who are most affected now, meaning those who are losing their jobs, and that in a very short amount of time, You’re going to be able to give more information as to what it means for those who are staying, but that that’s the next step. As a leader in really difficult times, in Waterloo moments, in 5% moments, it is easy to take the hard decisions, although not all leaders take them.
The harder part is in bringing people along with. And the lessons built into these two memos is [00:13:00] that you, first of all, gotta put yourself in the other person’s shoes. Those who are affected and those who are impacted, look at it from their position and try to anticipate what they’re gonna need, what they’re gonna look for, and fill that gap.
That’s how we get the buy in and bring people with us. But in order to do that, you got to care. You know, it’s in these 5% moments. The Waterloo events, the moments that really matter where leadership’s reputations are minted. The fact that it’s Elon Musk, the richest man in the world that is CEO, or chief Twitt at Twitter is probably material in this case.
Maybe he doesn’t need to care because he’s unaccountable in a way to governments, to laws to other people. But most of the leaders that I know and that I work with like yourselves, don’t have the luxury of going to another planet on a rocket ship. They’re stuck in this world and in this world, your leadership is judged by the impact you have and your ability to bring other people with you.
As opposed to alienate them.
One of Musks favorite t-shirts is a black T-shirt with the words Occupy Mars written on the front. Maybe leadership is judged differently there.
Until next time, stay safe, Stay sane, stay connected.