Letting Employees Go

One of the toughest things to do as a startup CEO is let employees go.  In many cases, some people that think they are cut out for the startup life aren’t.  They let themselves go.

In other cases, a founding team came together and worked on an idea.  The idea became a prototype and then a small company.   As they started to build the company, the team didn’t gel and one of the founders needs out.

Still in other cases, the firm grew, and now is re-arranging itself and has to cut employees to accomplish the change.  It’s pretty rare when a startup has someone on the inside intentionally damage the startup, but it happens.

In all cases, it falls on the CEO to let them go.  That’s probably one of the worst parts of the job. But, it certainly is going to happen.

I have seen all these instances above.  They are always difficult to navigate but there are some first principles.

  1.  Be honest, quick and transparent.  Once you have made the decision there is no turning back.  There is no switch.  Fred Wilson writes, “get the hard stuff out of the way first.”
  2. In the conversation, if you did some things wrong, admit them.  Sometimes it’s better to admit them early in the conversation rather than attack.  Being humble is a virtue.  It sounds like a trite break up line, “It’s not you, it’s me.”  But, no one is perfect and you might have misjudged, misspoke, or gave someone the wrong impression which helped lead to the break up.
  3. Inform your board of directors before you get rid of the person or people.  Get their support.  They might have been through this wringer before.  Solicit their opinion.
  4. Be realistic.  If your startup is growing, the CMO or CTO might only work out for 12-24 months.  They might not have the skill to take the company to the next level.  They might be able to grow into that position, but if they can’t, you will have to replace them.

There has been a lot written by others on this topic. When you have some spare moments, I’d read them. Brad Feld, Ben Horowitz, Mark Suster and Fred Wilson’s blogs are great places to start.