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No matter where you look, the technology industry — from stalwarts to startups — is going through a reset. And that has led many companies to lay off people, cut costs and pare back their ambitions.
For so many of our startup founders, this is a new experience — a whole generation of entrepreneurs hasn’t experienced a bear market. And as a result, they don’t have frameworks to deal with this new reality. It is not as if they don’t want to deal with the situation. It is just that most founders are biased towards optimism (as they should) and have a hard time optimizing for the realities of tough times.
One of the toughest tasks for founders is figuring out how to tighten their belts. It is hard to decide how many people to cut from the company payrolls. People make incremental cuts to their teams — and these cuts don’t have a real impact and lead to more cuts.
Bill Gurley, a partner at Benchmark Capital, is a venture investor who has been through a few ups and downs. He recently tweeted:
The tweet, while succinct, didn’t really do justice to Bill’s thinking. I remember recording an interview with him in which he talked about downturns, layoffs, and surviving downturns. It is some of the best advice you can get in 15 minutes.
August 10, 2022. San Francisco.