0:11

Hello,

0:11

and welcome back to Equity, a podcast

0:13

about the business of startups where we unpack

0:16

the numbers and nuance behind the headlines.

0:18

I'm Natasha Maskurinas, and this is our Wednesday

0:20

show, where we niche down to a single

0:22

person, think about their work, and unpack

0:24

the rest. Today, we're talking to Nolan

0:27

Church, the co founder and CEO of Continuum.

0:29

And before that, he was the head of talent at DoorDash

0:32

and the chief people officer at Carta.

0:34

He's one of my favorite sources because he's really spicy

0:36

to talk to. And he's bringing some Salt Lake

0:38

City representation to the FOD. So Nolan,

0:40

welcome, and how is it out there?

0:43

It's

0:43

great to be here in Natasha, and it's currently

0:45

snowing in Salt Lake City. We are having

0:47

a great early season, so everyone

0:49

listening, please do not come and leave the

0:51

slugs to be.

0:52

I have to say I feel like every VC

0:54

was, like, with pitching me on Salt Lake City

0:56

for the growing venture scene, but also as

0:59

a place to spend the winter season. So is it

1:01

I'm I'm guessing you're gonna start having a lot more networking

1:03

events coming up.

1:04

VCs love to do these like snow

1:07

cat and helliskeying tours.

1:10

And so would be lying if I'm

1:12

not trying to get involved in any of them. So

1:14

if any VCs are listening, please

1:16

email me, would love to join, and I'm

1:18

a spicy guest, as Natasha said.

1:19

This will be fun. I mean,

1:21

we're talking today about a

1:23

topic that's been in the headlines throughout twenty

1:26

twenty two, which is layoffs in

1:28

tech. And No one I've turned to

1:30

you for this topic both on the record

1:32

and off because you're building a surplus

1:34

all about fractional work and because

1:36

you've helped conduct a layoff when you were

1:38

the chief people officer at Carta. That

1:40

was in the beginning of the pandemic, if I'm

1:42

correct, and it was a very different time in tech.

1:45

That's correct.

1:45

Yep. I have run a layoff, unfortunately,

1:48

at Carta, which is probably one of the lowlights

1:50

of my career. And then at Continuum,

1:52

we've probably helped now about a dozen

1:55

companies over the course of the last six

1:57

or seven months

1:58

run my offs. Okay.

1:59

Got it. Well, that's good context and think

2:02

gives some helpful understanding to the listeners

2:04

as to why it's important to talk to you about it. But I wanna

2:06

start with wouldn't say a gift, but

2:08

a newshook. that is makes this

2:10

episode particularly important, which

2:12

is Twitter layoffs. Obviously,

2:15

we also the news that last week thousands

2:17

of Twitter employees were let go.

2:19

You know, I can run through the high level.

2:22

Basically, an internal memo went out on Thursday.

2:24

People received email with this subject line, your

2:26

role at Twitter. It was signed off just by

2:28

Twitter at large, and we just saw

2:30

live on Twitter through the hashtag love

2:32

where you worked. How people were losing access

2:35

to their email and Slack from key teams

2:37

and kind of abruptly as well.

2:39

Then this week, we learned from Bloomberg

2:41

and platformer that the company

2:43

has asked some folks to return as they were

2:45

laid off by quote, mistake. It's

2:48

it's been a mess and and no one as

2:51

someone who's an executive with employees of

2:53

their own, but also advising startups,

2:55

conducting layoffs of their own, how have you been

2:57

reading the Twitter situation?

2:58

I think that this is one of the most

3:01

unique situations that we've ever seen.

3:03

Obviously, Elon bought the company, and

3:05

the other news that came out was Twitter was burning

3:07

four million dollars a day. Yeah.

3:09

And in this interest rate environment,

3:11

that is untenable. And so I

3:13

do think something drastic had to

3:15

be done. There were other reports saying

3:17

that Twitter was already thinking about

3:19

cutting twenty to thirty percent of its staff.

3:22

So I do think he had to do something.

3:24

Now in general, how

3:27

they did it, I think, is the thing that we're

3:29

all talking about. Mhmm. And,

3:31

specifically, you know, the losing of access

3:33

piece Let's go through each of these. So the

3:35

losing of access piece, I actually think

3:37

makes sense because Elon

3:40

taking over Twitter, we already knew that a bunch

3:42

of employees were unhappy And

3:44

so you have to cut off access

3:47

to the large majority of the company

3:49

because Twitter is something that everyone

3:51

across the globe uses. That's how a

3:53

lot of us get our news information. And

3:56

if something happened from an employee,

3:58

it could hurt the credibility of the

3:59

company. So

4:00

that piece makes sense. The

4:02

piece around your role at Twitter and

4:04

that email and how they decided to send

4:07

that I think is incredibly

4:09

callous. I think is very

4:11

short sighted of Elon given that

4:13

ultimately if the company is six successful,

4:16

they will be hiring again. Sure. And

4:18

so I think those sorts of things, like,

4:20

people will remember how they

4:22

felt, and people will remember how

4:25

they saw this play out on Twitter

4:27

and on social media. For those that are

4:29

considering roles at Twitter or SpaceX,

4:32

or any of Elon's other endeavors.

4:34

Yeah. So my take is is something

4:36

had to be done clearly in

4:38

order to get costs under control but

4:41

how it was done was clearly

4:43

rushed, clearly not

4:45

Elon's best moments, but Elon

4:48

is the best marketer in the world.

4:50

he's the best organic marketer in the

4:52

world, and we are still talking about Elon,

4:54

and we are still talking about Twitter. So

4:56

ultimately, I think he's going to end up on

4:58

top of this.

4:59

When you say on top, what do you mean? Like, successful

5:01

in trying to get people to come back. I think

5:03

the pitch that

5:04

we saw happen of the fast that some

5:06

people are now being pitched to return. A lot of people

5:08

are saying no, but people who need to turn it to Twitter

5:10

for Visa situations are saying yes.

5:13

To me, that still feels like you've created a

5:15

workforce that's gonna take a long time to

5:17

build back trust. And I'm painting a broad

5:19

stroke as someone who's not working at Twitter. But I

5:21

just imagine that it didn't just impact the people who

5:23

were laid off, it impacted I think, and I saw

5:25

one news outlet. Cover it. I was like, the people who

5:27

are left over and are staying at Twitter.

5:28

Totally. I mean, look,

5:30

when I say Elon's gonna remain on top, I

5:32

mean, he tweeted today that Twitter

5:34

has the most daily active users that

5:36

it's ever had. And I think a lot of

5:38

that is, is because we're talking about him and we're

5:40

talking about the company and he stops. So that's what

5:42

I mean. as it relates to cutting

5:45

very deep and

5:46

then cutting potentially too deep

5:48

and asking some teams to come back,

5:50

I think it's a it's an easy sound bite in the

5:52

press to be like, oh, man. Like, this wasn't run

5:54

well. And and clearly, it could have been run

5:56

better. But that said, it's not the

5:58

first company. It's where this has

5:59

happened. I was

6:00

gonna ask you about that. Yeah. Like, how often do

6:02

we see people be asked to come back?

6:04

You know, very candidly, it happened

6:06

when I was at Carta. and we did a layoff.

6:08

And the the thinking from the executive

6:10

team was we wanted to cut incredibly

6:13

deep and cut once And

6:15

then for us, it was about a couple of months

6:17

later to where we saw the business rebound post

6:19

COVID. And we very quickly

6:21

realized that we actually needed a lot of those folks

6:23

back because the business was growing faster

6:25

than we had expected, which was a good problem.

6:28

At Twitter, you know, we're we're talking

6:30

about a number of days here. I don't think

6:32

anything's, like, quite changed to the

6:34

business fundamentals. And so clearly,

6:36

it was rushed with how they were growing

6:38

about their business. But

6:39

that said, it's not the first company to where

6:41

it's happened. And in fact, you know, we're seeing a

6:43

lot of companies now run multiple

6:45

layoffs And the one

6:47

thing I will commend you on on

6:49

is cutting deep the first time

6:52

because I'm seeing a lot of founders cut

6:54

very shallow the first time and then having

6:56

to come back for a second and third round of

6:58

laughs.

6:58

Right. I mean, in a way, I feel like Elon's

7:00

one extreme cut deep perhaps too

7:02

deep and then have to reverse within days. And

7:04

then the other extreme is only cutting

7:06

five percent, then cutting ten, and then fifteen.

7:08

Like, we saw, you know, on deck, for example,

7:10

go through multiple rounds of layoffs, and it's a

7:12

topic me and you have talked about at length because

7:14

it is a little bit like, do you want

7:16

people after that first day of who were

7:18

at the company to still feel like they're on their toes?

7:20

Probably not. You probably want some retention

7:22

strategies in place. So

7:25

not to give this anymore airtime before we get

7:27

to the broader topic. The idea that we're

7:29

talking about it it depends

7:31

on how you think about like, if is all press

7:33

good press or is all conversation helpful

7:35

to someone's image? And I I think

7:37

right now, the questions around

7:40

Elon's leadership, the way these leak are coming out

7:42

to me, feels problematic and

7:44

potentially, like, precarious for the

7:46

future of the platform. He doesn't have

7:48

this huge base of support internal

7:50

to Twitter just based on the amount of leaks coming out

7:52

there. And I do think that's part of the trust that's been

7:54

broken that he needs to build back before.

7:56

We start seeing people go head down and

7:58

build I don't

7:58

know. We'll see.

7:59

Right? Like, I mean, I have a different

8:02

take on this. And, you know, my take

8:04

is that Elon's management style

8:06

is very well known in the public eye.

8:08

how he's run SpaceX, how he's run Tesla.

8:10

I mean, Tesla basically does a ten

8:12

percent riff every year. Yeah.

8:14

And it's really a performance management thing,

8:16

but, like, you know, people internally are calling, oh,

8:18

the ten percent ripped thing is coming up again.

8:20

So the Twitter culture under

8:23

Jack and Parag is a much

8:25

different culture than Elon

8:28

runs. Tell that SpaceX and

8:30

Tesla. And so, you know, to

8:32

your point, around him earning back

8:34

trust, I would actually say,

8:36

he is completely revamping

8:38

the culture and he is putting his

8:40

stamp on it. and he is doing it

8:42

within a matter of weeks of

8:44

taking over the company. Now again,

8:46

like, how he's doing it? How he's

8:48

making people feel is where I would be

8:50

critical about him, but the fact that

8:52

he's doing it, I would have to say that

8:54

it takes a lot of brass to

8:56

make those kinds of moves. And I

8:58

think a lot of founders are going to look at

9:00

Elon and start to move a little bit more

9:02

decisively than what we've seen up to this point.

9:04

I'll

9:04

add that what he's doing beyond the

9:07

fifty percent layoff, but, you know, firing a lot of

9:09

the executives is pretty standard when

9:11

it comes to a takeover of

9:13

this size. And so

9:15

it's a good reminder for I think

9:17

media, Twitter, people in general

9:19

watching this play out that it's not crazy. to walk fired

9:21

and tire executive staff when you are looking

9:23

to kind of make the change that you're talking

9:25

about. Well, on that note, and I don't

9:27

know if these reports were confirmed, but

9:30

I did read reports that

9:32

Elon had fired the executive

9:34

staff for cause. And

9:36

that is uncommon. Yeah.

9:38

Because firing for cause means that these

9:40

executives will not receive

9:42

their windfall. They will not

9:44

receive their gigantic stock. grants that they

9:46

were supposed to get post the

9:48

acquisition. Yeah. And that is

9:50

something that I actually haven't like, I don't think we

9:52

know why yet. But

9:54

Elon had been sub tweeting some

9:56

things about lying about

9:58

bots and lying about other

9:59

information in the acquisition

10:02

docs. And so I'm very curious to see

10:04

where that goes because I think we're still at the

10:06

very beginning

10:06

of that. Yeah. I mean, he's he's one of the worst

10:09

influencers in the world. I will We all know what

10:11

we're talking about. Well, let's

10:13

generalize this. And I want you to walk me

10:15

through. You had a good thought about this recently.

10:17

On the best way to conduct a

10:19

thing which is a layoff. Twitter can give

10:21

us like I said an extreme example, but

10:23

let's say you are let's pick

10:25

a stage like a series d

10:27

company. Yep. What's the best way to kind of start

10:29

thinking about layoffs? because you do have more

10:31

people to cut and maybe have to choose

10:33

between do I cut ten, twenty, thirty,

10:35

fifty,

10:35

percent? Totally. So I was looking at

10:37

the stats this morning from layoffs

10:39

dot FYI. And in two

10:41

thousand twenty two, seven hundred and

10:43

fifty seven startups now conducted layoffs

10:45

and we're at more than a hundred thousand employees

10:47

being impacted. I personally

10:49

think that we will probably see

10:51

another thirty to forty

10:53

thousand employees being impacted by the

10:55

end of q one. And

10:57

the reason why is because

10:59

you have a lot of

11:01

companies who raised in the

11:03

fever, gold rush of

11:05

post COVID two thousand twenty, two

11:07

thousand twenty one, they're sitting on a lot

11:09

of cash and have been sitting on a lot

11:11

of cash. But now as we're seeing in the

11:13

markets I mean, I was looking at Cloudflare

11:15

yesterday. They had a massive quarter. They

11:17

were you know, they're not at a billion dollar run

11:19

rate. Matthew's saying that they're gonna be at five billion

11:21

dollar run rate in five years, and

11:23

they're trading at, like, a twelve billion

11:25

dollar valuation. Totally.

11:27

So the startups that

11:29

are at a billion dollar valuation and

11:31

in the single digit millions or

11:33

tens of millions of revenue category

11:35

they are going to get hit and reality is

11:38

going to hit them hard. So the steps

11:40

that I think about when running a a

11:42

layoff is the first thing is is like looking at

11:44

the model and being realistic with where

11:46

the world is today is the first thing.

11:48

And the world has changed and we started

11:50

to see happened in November of last year that's

11:52

obviously accelerated. And so now people should

11:54

have an understanding of the new

11:56

business reality and what it

11:58

will take to get to either profitability

12:00

or get to something tenable to

12:02

raise your next round. Mhmm. From

12:04

there, it's really important to cut non

12:06

headcount expenses first. Look, headcount

12:08

is going to be seventy to eighty percent

12:10

of a company's OpEx, unfortunately, so

12:12

we're gonna have to get there. But if you

12:14

can cut non headcount expenses, ultimately

12:16

you could potentially be saving jobs and saving

12:19

resources for you to get back on the

12:21

right track. My theory, the biggest

12:23

thing is to cut once and

12:25

to tuck in your top performers. And

12:27

so this is somewhat counterintuitive to

12:29

what I've been seeing with other companies

12:32

and startups specifically in space right now. Many

12:34

people are doing multiple cuts, which

12:36

just totally zaps

12:38

morale internally. It's a bad

12:40

reflection of leadership. It's a bad

12:42

election on our ability to plan. And

12:44

ultimately, I think the best employees in those

12:46

companies are wondering, like, what is actually

12:48

going on? And is this the right

12:50

place for me to stay at? Because

12:52

already you're you're doing these cuts, I think

12:54

it's critical to look at your top

12:56

performers and potentially to even give

12:58

them increases. in salary

13:00

and or equity because you

13:02

need them in order to survive and

13:04

to reach the next milestone.

13:05

And let me ask a quick follow-up there.

13:07

When I interview executives that are

13:09

conducting layouts, one of the first questions I'll ask them

13:12

is have you considered cutting executive

13:14

salaries as part of this? What do you think

13:16

about that tactic because I do think Macy's and

13:18

people do it just to show that

13:20

if the Seaspie wasn't impacted with their

13:22

entire job being lost, they are taking some sort of

13:24

a cut. Doesn't make the difference? It

13:25

really doesn't make a difference. I mean, if

13:27

you're talking about a series d company with

13:29

hundreds or potentially thousands of

13:31

employees, cutting pay, you know, executive

13:33

pay twenty percent, just run the math on that.

13:35

You're talking in the hundreds of thousands,

13:38

you know, maybe a million bucks. category

13:40

for the entire executive staff

13:42

that could save a couple of jobs

13:44

certainly, but the reality

13:46

is, is that you need your best people.

13:49

And so if you are making them take a

13:51

pay cut,

13:51

now you have created potentially, they are

13:54

now loose in the saddle. k. And

13:56

so if they leave, then you have a double

13:58

whammy of a problem, and that's why I don't

13:59

recommend it for startups because it

14:02

is symbolic. I do

14:04

not believe it actually impacts the ability

14:06

of the business to reach milestone. When

14:08

it

14:08

comes to actually communicating, you know,

14:10

hey, let's say you choose to cut deep. Are

14:12

you someone who would say it's always better to

14:14

kind of call one on one, or is it

14:16

a big zoom. I mean, I feel like we've seen so many

14:19

different versions and I'm not sure if there's

14:21

a best one or if it even differs based on

14:23

stage if you're a series a versus series

14:25

d

14:25

company. Yeah. I'll tell you what

14:27

we did at Carta. Yeah. And, again, just

14:29

reflecting back on on one of the worst

14:31

days of my professional career,

14:34

Henry ended up publishing the note -- Yeah.

14:36

-- that he actually spoke to the

14:38

company about, and that's how we let off

14:40

the day. which I think you're starting to see

14:42

now from some of the exemplary

14:44

companies, like Stripe specifically, I thought

14:46

did a fantastic job of this.

14:48

Yeah. And for context, like, strip

14:50

cut jobs. Last week, it was about thirteen

14:52

percent of staff. Fourteen percent of

14:54

staff. Correct. They posted a memo which will link in the

14:56

show notes as well as Cardas from twenty twenty.

14:58

Correct. So, you know, what we did at Carta was

15:01

and the outline for our day was

15:03

we had a company wide zoom in

15:05

which Henry read the memo that he

15:07

ultimately posted. Then what we

15:09

did is we had one on

15:11

ones all day long

15:13

for the employees that were impacted

15:15

with their manager and with an HR

15:17

representative. This was candidly very

15:19

hard to pull off, but we felt like it was

15:21

the right thing to do, which is

15:24

ultimately what we were optimizing for

15:26

when we ran the lay off the carta. what

15:28

we also decided to do was to

15:30

leave the slack of the

15:32

employees that were impacted on

15:34

-- Okay. -- for twenty four hours so

15:36

they could communicate with their friends, so

15:39

they could share their contact information.

15:41

And then we also created an alumni

15:43

group again similar to what you have been

15:45

seeing Stripe do and some of the other

15:47

exemplar companies do. But I will

15:49

tell you that at a massive scale,

15:51

Carter was about twelve hundred employees you

15:53

know, when we did it and we cut I believe thirteen

15:55

percent of our staff. So you're cutting, you know, that

15:57

was in the hundred, maybe a hundred and

15:59

fifty

15:59

employee number. It

16:00

was very hard to pull off

16:03

to do all of the one on ones. I

16:05

would

16:05

recommend it if you can,

16:07

but ultimately some of these companies

16:09

such a scale to where it is impossible to

16:11

have all of the conversations in one day.

16:13

Yeah.

16:13

I mean, it's amazing that you guys are able to

16:15

do one on one. And I wonder if, like, when you're

16:18

looking back, Was there anything you would have done

16:20

differently about the way that

16:22

day played out? You

16:24

know,

16:24

I've done a lot about this. Yeah.

16:27

I spent as I've seen, like, some of the other

16:29

layoffs take place with better dot com and

16:31

Twitter

16:31

and, you know, very candidly

16:33

no.

16:34

I thought that Henry took full

16:36

responsibility. Okay. I thought

16:38

that the package that we offered to

16:40

employees was incredibly generous.

16:43

I

16:43

thought that the one on ones was

16:45

the right

16:45

thing to do even though that it was a

16:48

huge tax on managers, you

16:50

know, ultimately, I think that we were

16:52

very thoughtful about it, and I think we laid on

16:54

a playbook for other founders to follow.

16:56

Yeah. I mean, we saw this like idea

16:58

of taking responsibility, I believe play out with Robinhood

17:00

as well when they conducted layoffs

17:02

earlier this year. And then bringing us back to

17:04

Twitter for one second. We saw a Jack Dorsey tweet a

17:07

few days after the layoff that he

17:09

ultimately owns responsibility for the fact that

17:11

Twitter over hired. And I think that delay

17:13

also created a lot of attention,

17:15

but I wonder if the bar is getting higher

17:17

from consumers, readers, and employees themselves

17:19

to wanting people to say, hey, it was my

17:21

fault over time.

17:22

So the way I think about this,

17:24

Natasha, is that over the last

17:26

twelve years, the pendulum between

17:28

who has power with employees and

17:31

employers has drastically swung towards

17:34

employees. Now we're in a

17:36

moment to where the pendulum is swinging

17:38

back, but, you know, if I predict where the next

17:40

five to ten years are going, The

17:42

best talent is ultimately

17:44

always going to be sought after, and I think

17:46

employees now will continue

17:48

to hold more power as they could

17:50

go forward. And they will remember how

17:52

companies handled this moment.

17:54

Yeah. And so, you know, it's your point

17:56

around Jack, very candidly,

17:58

I thought that was so

17:59

weak. He

18:00

waited to say anything. He

18:03

sent out, like, two sentences I

18:06

thought Jack like, and as somebody who has

18:08

followed Jack and has been a fan of

18:10

Jack's for a very long time, I thought

18:12

that this was the definition of weak

18:14

leadership and I would expected more from him. And

18:16

if I was an employee thinking about working

18:18

for Jack in the future, I would think twice about

18:20

it. When we compare

18:20

his statement with Elon's

18:22

statement, which was is unfortunate,

18:25

but Twitter was burning four million a

18:27

day. Again, I feel like it's these two extremes. There's

18:29

like the vague two lines and then there's like,

18:31

well, this was just a business decision and

18:33

that's it. and I wonder, we can't speak

18:35

for employees. All employees, but I I

18:37

do feel like it's probably a very confusing

18:39

time to be an ex Twitter employee

18:41

figuring out what to make sense of. It's

18:43

honestly, to go through that and not see someone take

18:45

either of these leaders take ownership. Well,

18:47

I mean, in Elon's

18:48

case, the only thing that he could own

18:50

is that he paid a really high price

18:52

for Twitter given current market question

18:55

and ultimately decided to act

18:57

swiftly to get their expenditures under

18:59

control. he did not

19:01

make the decisions to make Twitter

19:03

burn four million dollars a day. Sure.

19:05

And so, you know, could he have had

19:07

more empathy?

19:08

written Certainly. him

19:09

taking more responsibility? I don't know

19:11

if

19:11

that's his job. I think that that was Jack's job, and

19:13

I think Jack did a terrible job

19:16

at Okay. Interesting. I wanna run one more

19:18

theory by you before we get into twenty

19:20

twenty three. I was hearing a while ago this idea of

19:22

like, there's like a magic number that

19:26

VCs are torn startups to lay off, which is

19:28

twenty percent of staff. And we did see a lot of

19:30

companies fit that mold where it's like

19:32

all these laser companies had to cut exactly

19:34

twenty percent. And I'm wondering if that was just kind that

19:36

came about via Twitter and a trend that wasn't

19:38

actually there, or if you have found there to be a

19:40

magic number when cutting staff and when giving

19:42

advice to startups that

19:43

you work with continuum? Yeah. I mean, I

19:45

do not think that there is a magic

19:47

number that applies to all startups that

19:49

are in this moment right now.

19:51

And in fact, I think, like, if you're taking that sort

19:54

of advice, that that sounds like quite terrible

19:56

advice in my opinion. Because the

19:58

reality is, is that

19:59

Today, you likely need to

20:02

have two years of runway. That

20:04

is more of what I've been hearing from

20:06

investors, like somewhere between two and three years

20:08

of runway. to

20:08

survive through this moment and reach to

20:10

the next stage. Twenty percent, you

20:13

know, if you're at a hundred percent

20:15

company is much different than if you're at a thousand

20:17

person company. And quite frankly, I

20:19

think the North Star should be

20:21

revenue because we know what

20:23

it takes to raise at the next

20:25

round. Generally, there are good

20:27

benchmarks as it relates to revenue and

20:29

what your cash burn is. Yeah.

20:31

And so I I don't think twenty percent

20:33

is like a a good rule of thumb. I think in

20:35

general, you need to be thinking about two years of runway,

20:37

and you need to be thinking about hitting your

20:39

revenue and cost numbers for whatever the next round is.

20:41

I agree with

20:41

that. Like, I agree that generalizations in

20:43

general in tech even though they're really nice to

20:45

watch on to to try and understand something actually

20:47

can end up doing more a damn image.

20:49

And I feel the same way about the fact that, you know,

20:51

we constantly repeat a lot of the metrics

20:54

around how hard it is for historically overlooked

20:56

people to get fundraising. Yeah. Something that

20:58

necessarily makes it. easier or

21:00

amplify the stories. Anyways, one thing that

21:02

it complicates though, some of this

21:04

advice, is that I have noticed, like,

21:06

that all layouts are not created equally. Some say that they've really

21:09

overhired. Some are just kind of citing

21:11

this macroeconomic landscape

21:13

and are laying people off. I

21:15

think about even Brex which

21:17

laid off a percent of staff

21:19

but is also still doing pretty

21:21

huge marketing campaigns. not

21:23

sure if yachts are still included there, but I find it to

21:25

be like a lot of whiplash. And I'm not

21:27

sure if you have any hacks on how to differentiate between

21:29

those qualities of layoffs or really how

21:31

to make sense of them. because it does I tweeted this, which is like,

21:33

there's a layoffs that happened because a company

21:35

needed to. And then there's a layoffs that happened because

21:37

a company said that they need to and

21:39

you don't really know if they need it to, but they're taking

21:42

this as a chance to kind of cut while

21:44

everyone else is

21:44

cutting. I think that the two generalizations

21:47

that I can make is one drunk

21:49

on hiring for the last ten

21:51

to fifteen years. Like, just in general,

21:53

Teck was drunk on hiring. And

21:55

so

21:55

that is a hundred percent true

21:57

We've seen this at the big tech companies. We've seen

21:59

this at the hyperscale companies

22:02

that are pre IPO. And so there's

22:04

absolutely a reset there. The

22:06

second thing is is that even though some of these

22:08

companies may be doing

22:10

quite well, the

22:12

valuation reset has happened And

22:14

so they do need to survive

22:16

longer in order to either grow

22:18

into their valuation or hopefully even see

22:20

like an up round. we haven't

22:22

really seen any of this stuff play out yet, if

22:24

we're being honest, because the late

22:27

stage pre IPO market

22:29

has basically shut down. It's completely iced over. Right now,

22:31

we have not seen many of these deals get

22:33

done. Only for the best companies are they

22:35

getting done, and it's just in the handful.

22:38

And so I do think you do need to extend

22:40

runway. And I'll say actually one more

22:42

thing, which is not only do we get

22:44

drunk on hiring, we forgot

22:46

to manage performance. And so

22:48

in general, many of the CEOs that I am

22:51

talking to, yes, they are

22:53

categorizing it as a

22:55

layoff. But the

22:55

reality is is that they were

22:58

not managing performance of their

23:00

employees and a layoff is

23:02

a guy's for what is truly a

23:04

performance management risk at scale.

23:06

I like that a

23:06

lot. I hadn't thought of the idea of also being a

23:08

correction on the performance end. And it makes me

23:10

think about, well, you're building this company. It's

23:13

about connecting executives both

23:15

for fractional and full time opportunities to

23:17

start ups, and it kind of does answer some of the

23:19

questions that SARS will be going through about how do we

23:21

hire right now in a way that's sustainable and

23:23

maybe is vetted for a higher

23:25

performance. So talk to me a little bit about how

23:27

continuum came to be and

23:29

how it touch on some of the topics we've about today.

23:31

Totally.

23:31

So at DoorDash and Ricardo, I've

23:33

probably run about a hundred executive searches

23:35

now. And and here's the dirty secret

23:37

with executive search. It's a hundred to

23:39

a hundred and fifty thousand dollars per search. Oftentimes,

23:42

the search firms are asking for equity.

23:44

Oh, the average tenure -- Equity. -- even

23:46

executive. Yes. It's It's

23:48

insane. Right? I'll tell you some stuff offline.

23:50

But the average tenure of an executive

23:52

now is about eighteen months.

23:54

and it takes between six

23:56

and nine months to hire somebody. And

23:58

so if you think about, like, all of

24:00

that math, it just doesn't add up

24:02

in today's world. And look, executive recruiters

24:05

are good people, but a mediocre

24:07

recruiter is making about a million bucks a year. They

24:09

work thirty hours a week and they are

24:11

not incentivized do anything differently because

24:13

they've created a monopoly in the space.

24:15

Sure. And so our take on this is

24:17

that early stage companies are

24:19

a bellwether. And early stage

24:21

companies have been leaning into fractional

24:23

for the last two to four years, and we're

24:25

seeing that trend increase. So when we

24:27

started thinking about how can we dis rupt

24:29

executive search. What we thought about

24:31

was how can we create access to some of the

24:33

best executives in the world and give

24:35

that access in a way that isn't just in

24:37

this full time context, which is the

24:39

only way executive recruiters will work with

24:41

you. So at a high level, we connect

24:43

executives to companies for

24:45

consulting, advising and angel investing

24:48

opportunities. Primarily, we're working with

24:50

series a through about series d companies that

24:52

are all pre IPO tech. And

24:54

I am seeing more and more companies at

24:56

the top of our funnel. And I think the

24:58

reason why is because we're

25:00

faster, we're cheaper, and ultimately,

25:02

you can feel somebody out much better

25:04

when you begin to work with them versus

25:07

interviewing them where candidly

25:09

executives are pretty good talkers. And

25:11

we don't really learn a whole lot during the interview process

25:14

anyways. Stepping into

25:14

what you've said when you first were talking about

25:16

this, the idea that startups were

25:19

to fractional work over time, like, what

25:21

was one point o and where are we now? Because I'm

25:23

curious, like, what habit changed beyond

25:25

maybe a need and not as much

25:27

budget. as they had in twenty twenty one where

25:29

they could have hired someone full time and been

25:31

okay.

25:31

Yeah. What point of this and I think this has

25:34

been going on for a while, which is, like, the fractional

25:36

CFO, is somebody to come in and

25:38

manage the books. And I actually think

25:40

fractional CFO gives the fractional world

25:42

of bad name because typically it's not a CFO, typically

25:45

it's a glorified accountant who's running your

25:47

books. Mhmm. That was kind of one point o. But

25:49

what we're seeing now especially

25:51

with, like, seed through series b companies,

25:54

is this desire to tap into

25:56

somebody for, call it, ten to

25:58

thirty hours a week? to pay them a

26:00

fraction of what their salary and equity

26:02

package would be, and to

26:04

ultimately put them to the test in a

26:06

real work environment. versus

26:08

a theoretical environment, which is interviewing.

26:10

And so what we're seeing right now is, like,

26:12

with these early stage companies, they need

26:14

access to great talent. And oftentimes, they

26:17

cannot hire this talent because

26:19

they're tired. They, you know, don't wanna work full time

26:21

right now. They have family obligations. They have

26:23

a huge nest egg, and so they don't have to

26:26

or they can't afford them. Exactors

26:28

are expensive. And so I think

26:30

it's a great way for both sides

26:32

to test out what a relationship would would

26:34

look like before committing to a full

26:36

time relationship. Yeah. Exactly.

26:37

I mean, like, I think the positive that you mentioned

26:39

is is the biggest one in my eyes, which is,

26:42

like, idea of testing it out and of it being a more

26:44

affordable way to see if you even

26:46

need a CFO at this point in time.

26:48

The negative kind of goes back. I think doesn't

26:50

that we talked earlier, which is the power of people right now.

26:53

And by negative, I mean, it's more

26:55

that, how do you as a startup? Maybe

26:57

you understand that you want this

26:59

a fractional person, but you do eventually need them full time and you can't

27:01

afford to share them with anyone else.

27:03

Just starting off on a fractional note, make

27:05

it harder to go full time. Eventually, I feel like that to me is probably

27:07

the bigger challenge down the road. Here's what

27:09

I would say is that the smartest

27:12

companies that we're partnered with, they know

27:14

they will ultimately need somebody

27:16

full time, but they start fractional before

27:18

that actually is the case. That's the first

27:20

thing. And then the second thing is that they

27:22

leverage their fractional exec to either to help them

27:24

hire that person who will ultimately

27:26

join full time. Oh, that's just much cheaper --

27:28

Yeah. -- than an executive recruiter.

27:30

or two, they built such a

27:32

great relationship with them that they convinced them to

27:34

join full time. That second piece is a

27:36

lot harder and the joke that I always

27:39

tell companies that were partnered with because they

27:41

asked me every time, like, hey, can I hire this person? And I

27:43

was like, good luck. Like, I'm wishing you the

27:45

best. But using that

27:47

person and their network to

27:49

help you source and then

27:51

assess, I think is the smartest way to

27:53

hire executives. And I think that wave is

27:55

just beginning to start.

27:55

Yeah. Why not take advantage of having them on your

27:58

payroll for a certain point of time. If we

28:00

connect it back to the layoffs, do you

28:02

think we'll see, you know, the thousands, the

28:04

tens of thousands of employees who are

28:06

impacted by this wave, turn to something like

28:08

fractional work going forward. I know you're

28:10

starting with executives that continuum, but

28:12

I'm curious if you feel any changes on just

28:14

like the general employee front and

28:16

being open to it. To me, it seems like I

28:18

would struggle to go for something a little

28:20

unstable. I would want to just join a safe

28:22

boring job, but I'm curious if you're finding

28:24

more optimism from people.

28:25

Well, so let's go back to that pendulum comment

28:27

that we made earlier between employees

28:30

and employers. Right now, the

28:32

pendulum between employees and

28:34

employers is more towards employers.

28:36

And that's unfortunately the reality

28:38

for employees so I think employers right

28:40

now can command whatever relationship

28:42

they want with the general population.

28:44

That is not the case with executives.

28:47

executives

28:47

have always been in high demand. They

28:49

are still in high demand right now.

28:51

And so

28:51

executives, they still

28:54

have the power pendulum on their side, and they are the

28:56

ones dictating the terms of the

28:58

types of engagements that they want to work in.

29:00

And so that's the part of

29:02

the reason why we have on this group is because, candidly, you

29:05

have executive recruiters as the one

29:07

option and then you have on

29:09

one side And then on the other side, you have,

29:11

like, Upwork and Fiverr in which

29:13

executives are not going to associate their brand

29:15

there. And that's where we fit in really nice sleep where

29:17

we feel like as a challenger company, we're right where

29:19

we

29:19

wanna be. Okay. So you don't necessarily see,

29:21

like, yourself expanding anytime soon to trying

29:23

to help employees lay it off. Unfortunately,

29:25

no. I I would love to help. I

29:27

I am pointing people towards Dover, so

29:29

Dover has a layoff site where

29:31

they're collating all of the layoff lists. They're helping

29:33

some of these employees find jobs. I

29:35

know Max, the CEO, they're great people over

29:38

there. And so for those people that are impacted,

29:40

I would highly encourage you to check

29:42

out Dover because they are the ones that are really

29:44

trying to help these folks that are impacted by the next

29:46

role.

29:46

Yeah. Okay. Got it. And it's it's maybe a

29:48

follow-up episode, which is like how

29:50

much the spreadsheets have made an impact, and I

29:52

do think for a long time

29:54

that was the best we have. I've been seeing some

29:56

new programs pop up, but nothing that I

29:58

can write about yet. I'll end with what's structurally

30:01

changing about the way companies are

30:03

building after this huge stress test

30:05

that felt very public and

30:07

really showed Yeah, the power of

30:09

employers on employees. To me,

30:11

I'll answer it first, but to me, I imagine

30:13

that if you are a precede founder

30:15

right now, watching late stage

30:17

companies conduct layoffs. And

30:19

you think that you're untouched and can be heads

30:21

down right now. I imagine you are

30:23

making a big mistake and probably

30:25

should start thinking about a more creative

30:27

way to hire, not to completely agree with Continuum's pitch,

30:29

but I do think it's a really important time to

30:31

get comfortable with the idea a fractional work or at

30:33

least changing what you think a productive

30:36

staff needs to look like. Yeah. That's my

30:38

high level take. I'm curious what you

30:40

think. Look, I think you're spot on. I think the makeup

30:42

of companies is going to change.

30:44

Mike Naples has talked about, in

30:46

the future, it's not going to be employers

30:48

and employees. It's going to be employers

30:50

and contributors. Okay. And look, I I'm

30:52

not as radical as in in this idea.

30:54

Yeah. I think it's a I think it's an interesting thought

30:57

and, you know, maybe we get there in

30:59

twenty years. But my take is is

31:01

that, again, early stage companies

31:03

are bellwether. And

31:04

if you look at a seed or series a

31:06

company today, I would bet that

31:08

more than thirty percent of their staff is

31:11

contractors. And so just

31:12

like just watch this.

31:15

We're also seeing employers start to think

31:17

about wage arbitrage in other ways, which is

31:19

hiring in different locations. You've seen

31:22

the rise of deal on the and the rise of remote, and and

31:24

that's obviously happening as well.

31:26

I think

31:26

in general, late stage companies

31:28

are late to the party. right

31:30

now. And that's part of the reason why I'm

31:33

predicting thirty to forty thousand

31:35

more employees being impacted by

31:37

layoffs in q one. because they have not

31:39

cut deep yet. I just haven't

31:41

seen it at scale for the late stage

31:43

tech companies that are not going to be able

31:45

to grow into their valuations. And

31:47

I do believe fractional would give

31:49

them more opportunities to extend runway

31:51

while also being able to access the talent

31:53

that they really need. it's insane

31:55

to me that the worst of the worst.

31:57

It might be ahead of us

31:59

because I feel

31:59

like we've been surrounded by layoffs as a

32:02

reporter, but to your vantage point to a lot other

32:04

people I've been talking to. It sounds like there's

32:06

more to come, which is But

32:08

I wanna end with a lightning

32:11

round of questions, one word answers

32:13

or maybe one phrase answers as

32:15

possible. Alright. Alright. Cool. So number one,

32:17

which executive role do you think is most

32:19

ready to be disrupted?

32:21

marketing. Oh, I

32:21

wanna ask follow-up questions,

32:22

but I'm gonna try it out, pick it to them.

32:25

Okay. What do you need to see change in twenty

32:27

twenty three? Oh, that's

32:27

a good question. What do I need to see change in

32:30

twenty twenty three? Everything. I

32:32

would say cost cutting.

32:34

What is the worst advice you've ever gotten

32:37

about startups? The worst

32:38

advice I've gotten about startups

32:40

would be focus on one

32:42

thing. Saying, what

32:43

is one thing you've unlearned

32:46

recently?

32:46

I'll just say

32:49

very specifically, I have a lot more

32:51

empathy

32:51

now for my other CEOs that

32:53

I reported to.

32:54

Okay. Last question, if you

32:57

had to sum up twenty twenty two in a

32:59

headline, what would it be? And we're doing the

33:01

creative writing exercises

33:02

right now.

33:04

the

33:04

best time to buy tech

33:07

stocks. Thank you

33:07

so much, Nolan, for coming on the

33:09

podcast. It was a blast to have you, and you definitely

33:12

delivered on the hotcakes and made me even

33:14

rethink some of my own. So I appreciate

33:16

you. Tell people where to find you online

33:18

and where to

33:18

find continuum. Yeah. Check us out. Join continuum

33:21

dot com, and then you can always email me at nolan at join

33:24

continuum. Natasha, it's always great to hang with you. Thanks

33:26

for the time. Come back on equity

33:27

and each time and everyone else will

33:29

be back on Friday. See you then. Bye.

33:32

Equity

33:33

Wednesdays are hosted by myself TechCrunch's

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33:38

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33:58

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