The email Zenefits CEO David Sacks sent employees as it lays off 9%

Wow. This isn&#x27;t a 9% layoff. It&#x27;s 9% plus an offer for everyone else to step out. It will be interesting to see what the final # is. 20%? 30%?<p>I&#x27;m not a fan of testosterone talk like everyone has to be &quot;All In&quot; when a company is more mature. The only way this helps is if engagement is a real problem, and you need to sort out who is on the bus and who is off of it.<p>I will say that 3 months of severance for folks who involuntarily leave, and 2 months for folks who voluntarily leave is very generous for a company that is in trouble. It&#x27;s very close to industry leaders like Netflix and Zappos, and much more than they would need to do.

It must suck to have to write these emails. But please, the last thing you should do is bury the bad news behind a bunch of gobbledygook about ARR, SMB, &quot;reseting relationships with key stakeholders&quot; and whatnot.<p>Better to cut to the chase with the blood and gore -- being careful to take the time to acknowledge that this decision is painful for others, not just &quot;painful to make&quot; -- and then rebound with the potential upside.

I think the way they framed The Offer is a good one. He makes it clear that he wants you to stay if you want to stay, and is giving you a way out if you&#x27;re not passionate or happy in your job anymore.<p>Many years ago they did that at AOL (a voluntary severance package), and IIRC I don&#x27;t think it came across as that sincere.

Sacks has opened the first envelope. [1]<p>Let&#x27;s see when the second one is opened. My guess is if Z2 doesn&#x27;t hit their goals, sometime next spring.<p>[1] <a href="http:&#x2F;&#x2F;www.design.caltech.edu&#x2F;erik&#x2F;Misc&#x2F;Prepare_3_Envelopes.html" rel="nofollow">http:&#x2F;&#x2F;www.design.caltech.edu&#x2F;erik&#x2F;Misc&#x2F;Prepare_3_Envelopes....</a>

Has anyone ever published a study of the results after one of these offers? Seems like a good way to invite a lot of talented folks with healthy alternatives to leave.

3 months of severance, 6 months of COBRA, and &quot;transition assistance&quot; is not remotely &quot;generous&quot; as far as severance goes. Even when I was just coming out of a bachelor&#x27;s program and had no work experience, I was able to negotiate 6 months of salary (grossed up) and a full year of continued full benefits as severance, just by asking. I have friends who have gotten significantly more severance than this even, again, just by asking. And if a firm reacts badly if you ask about severance benefits, they&#x27;re just giving you free info about their dysfunction, allowing you to confidently walk away knowing you&#x27;re dodging a huge bullet.<p>Many people complain about the language in these trite, lawyer-approved kinds of emails, and yes, it is sad that it evolves in such an anti-human direction.<p>But for me, the real take away is that top to bottom, investors and executives at Zenefits should be absolutely and unequivocally ashamed of themselves for offering such poor severance benefits and having the audacity to turn around and act like it&#x27;s an act of generosity. The voluntary package with 2 months of severance and 4 months of COBRA defies moral comprehension.<p>I remember the line from the movie <i>The Big Short</i> where Mark Baum says &quot;Short everything that guy has ever touched&quot; or something to that effect, out of disgust.<p>I think the same feeling is warranted with Zenefits&#x27; investors and executives. What a stain.

I&#x27;ll be another data point for &quot;I&#x27;d totally leave if after reading this email, even if I wanted to stay before I read it.&quot;<p>As a point of reference, a (long-established) company gave me over $50k (cash) in severance after 4+ years of service. That was what I&#x27;d consider &quot;generous&quot;.

I went through a couple rounds of interviews with them a few months back. It was a really odd and disjointed experience in general, and the staff seemed completely checked out. I had to politely decline.

&quot;We want you staying late to help out on a project. We want you busting ass on Z2. The next few months are going to be an exciting time at Zenefits and we want everyone participating in that.<p>But if you can&#x27;t get excited about that, then frankly we need you to make space for someone who will.&quot;<p>Seems like a strange way of lifting moral during tough times.

The voluntary layoff says nothing about stock. Are there still employees being held hostage by golden handcuffs?

I think my favorite part of all this is that Sacks has dubbed his start at Zenefits as &quot;Day One&quot; and is dubbing this Tony Hsieh move &quot;The Offer&quot;.<p>I imagine that after today he will go home to The Woman and sit in The Chair and pat David The Dog on his scruffy head while feeling well accomplished.

&quot;The Offer&quot; - brought to you by the LeBron James school of self-marketing and endearing yourself to people.

By tech standards, this is an extremely generous severance. And, in the Bay Area, 3 months would be more than enough time for a young (under 30) person to find a job. Unfortunately, it may not be that way in Arizona, but that&#x27;s not the CEO&#x27;s fault.<p>I have to give the CEO credit. He&#x27;s probably had to fight his CFO and board tooth and nail to get that package. I view it the same way that I view Obama&#x27;s work on health care. Is it perfect? No. But it&#x27;s better to compromise and get something done than to get nothing accomplished at all. What do you expect Sacks to do, stand up to his board, get fired, and then have everyone get nothing?<p>Most tech companies, when they lay people off, don&#x27;t offer severance or even announce a layoff. They hide it as a &quot;performance&quot; based layoff or put in a stack-ranking system. Sacks is trying to do the most honorable thing that he can.<p>This is also a way for CEO Sacks to distance himself from the Y Combinator way of doing things. YC would advise him to do the standard sleazy startup thing. He&#x27;s not doing that.

David Sacks<p>* takes responsibility for the situation.<p>* admits that he&#x27;s laying people off, rather than disguising it as performance-based firing.<p>* offers a severance that is generous by tech standards, and<p>* allows people whose roles have changed to escape with severance and their reputation intact.<p>This is very much not the Y Combinator way of doing things. Are we sure that Zenefits was once YC?

My favourite part was &#x27;we have reset our relationships with our key stakeholders&#x27;. This kind of implies there is a button he can press and everything is ok. Personally I wouldn&#x27;t send mails with such unsubstantiated nonsense, but there you go.