- On a recent podcast, Affirm’s CEO highlighted the importance of empathy during layoffs.
- Max Levchin said he learned from the past that direct interaction during layoffs helped everyone.
- Good company culture can soften the impact of layoffs, the serial entrepreneur said.
Affirm’s CEO said one piece of advice has helped him conduct layoffs empathetically: Get on the ground floor with employees.
Max Levchin, the PayPal cofounder who now leads buy-now, pay-later company Affirm, said he wanted to “run and hide” the first time he orchestrated layoffs.
“I didn’t know what I was doing and I was terrified of owning the responsibility that I screwed up,” he said on an episode of The Twenty Minute VC podcast uploaded on Wednesday.
Levchin said he learned that helping people pack their boxes and being with departing employees was cathartic and beneficial for both parties.
A friend at the company told him: “You can play this from the comfort of your office — or in the middle of the floor that’s crying. Go be with the people. You’ll feel better in the end and they’ll feel better in the end.”
Affirm cut 16% of its workforce, or 485 people, in 2023, and about 140 jobs in February last year. The company was founded in 2012 and went public in 2021.
Levchin, a serial entrepreneur, said that company culture also plays a big role in how layoffs affect morale. He said that employees who were let go told him they understood why the dismissals needed to happen and they hoped to come back.
“If the culture of the company is great, the blow is much softer,” he said. “People understand that you tried with every possible strategic or tactical idea to not have to go through this.”
Some business leaders have been praised for how they handled layoffs.
Brian Chesky, the CEO of Airbnb, said that he called the heads of other companies to help some of the 1,900 employees who were laid off in 2020 get rehired.
“We created an alumni directory where if you were laid off, you could opt into a public directory, we publish your information, and we point recruiters to your information,” he said in 2023 about the 2020 cut. “We ended up getting hundreds of thousands of recruiters and people visiting those profiles, and a lot of those people got rehired.”
Poorly-handled retrenchments have also made headlines, especially since the post-pandemic tech exodus.
In 2021, Vishal Garg, the CEO of online mortgage startup Better, was villainized for his handling of a mass layoff. Garg fired 900 people in a three-minute Zoom call, sparking outrage internally and externally. Company insiders said that the CEO’s leadership style was profane and unorthodox, Business Insider previously reported.
In an apology letter sent to employees a week after, Garg said that he had failed to show “respect and appreciation” in the call, and said he “blundered the execution.”
