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Peloton just laid off 2,800 employees. Here’s how employers can avoid the same fate.

Protocol Workplace

Welcome back to our Workplace newsletter. Today: how to hire at a high-growth company, four-day workweeks, and a look at what’s distracting your employees at work.

—Amber Burton, reporter (email | twitter)

Hiring for keeps

Earlier this week, Peloton laid off almost 3,000 employees after demand for its signature exercise bike plummeted. And the layoffs mirror the path of many startups that grow quickly, only to have to scale back significantly.

Peloton was not the only company to downsize just a month into the new year. Glossier, a beauty brand that thrived in the early days of direct-to-consumer online sales, laid off more than 80 corporate employees in January following its own explosive growth. Most of those who were laid off were tech workers, TechCrunch reported.

The common denominator among these startups is the need to balance a rapid increase in product demand with strategic staffing. Ask any startup founder and they’ll confirm that Glossier and Peloton are far from the only ones dealing with this challenge.

Thanh Nguyen, founder and CEO of OpenComp, said he’s familiar with the issue, even as the leader of a company whose business is compensation and hiring. “The challenge when you're high-profile, like Glossier and Peloton and many other companies, quite frankly, is [that] growth is a big agenda when you take on financing,” he said.

Nguyen sat down with Protocol to discuss the latest news, where most startups go wrong and how you can develop a more strategic hiring plan.

This interview has been edited for clarity and brevity.

What’s your initial reaction to what went wrong with hiring here?

I think whether it’s Glossier, or Peloton, or many others, I think there's a bunch of operational disciplinary things that teams need to really uphold as they think about this uber-aggressive growth. You can't step away from looking at your burn in the data that you’re using to develop what you’re going to spend.

I liken this to personal finance: Just because you get a bonus, you can’t just go out and spend it in one fell swoop. The thoughtful thing to do is really kind of think about what you really need to spend that on, and does that align with your core business strategy and financial strategy?

As a founder and a CEO … we want to envision where we're going to be in the future and how we get there, and how that services our customers, but we also have to be really disciplined and grounded on that growth. And I think there's a lot of operational tooling that needs to be done for you to do that.

How can a company embrace the growth they're seeing while balancing that discipline?

Look, I think [for] these companies it's a double-edged sword. We're all trying to raise capital so we can eliminate that risk. Like, "Hey, I don't want to have to worry about money in order for me to grow." But when you have that much money, that much war chest, at your disposal, it's human nature and a natural tendency to just say, "Hey, we're just going to go after it."

I think companies that do that really well are very highly disciplined on reading and understanding and segmenting growth in a way that allows them to still get to where they want to go, but they have measured feedback. Meaning, they get good data coming back on the investment and the return that they're putting in.

If you go out and try to hire 3x or 4x [the number of employees], it's hard to ingest all those people, and also it’s hard to get that information back — that what you're doing from a net result and customer perspective is right.

You’ve got to plan growth, and you’ve got to plan success long term. You can't just plan it based on one or two insights that you believe that you're going to bet that much money on, in my opinion as a business owner.

I think the other factor is, can you actually onboard and ingest all these folks? Because the reality is, you're going to get 75% or 80% absorption on this, there's always going to be churn. So your top-line number, where you want to grow, you're probably going to add another 25% to 30% on top of that if you really want to get there, because you're going to have churn out. I don't think people realize that there's that deviation that always happens, especially as it relates to talent.

I want to talk about who a lot of these companies usually have to cut first. It seems like I keep using Glossier as an example, but that's because it's no different than a lot of other companies: Tech teams get cut first. Why is that?

The challenge, or what they were trying to solve for, was heavily invested in tech and engineering, meaning streamlining their end-to-end customer interaction and solutions. So they invested in that layer. I think, specifically to them, the reality is when you over-hire in that area, you're hiring really high-salary skills and role types. So for them to actually understand that business strategy, it made sense. It was very much tied off to those engineers.

But the reality in what you're saying is essentially that these jobs that we're talking about are just getting more and more pricey. Certainly from a company perspective, salaries are constantly going up just because of everything that we're hearing, reading and seeing ourselves. I mean, it's really difficult in this talent market to hire and retain folks. So I think the downstream effect is the fact that it’s getting more and more expensive to build and grow companies. And that's inherent in what you're seeing in a lot of these venture deal sizes just getting larger and larger, because it's more costly to build companies.

What’s the biggest takeaway you would say startup founders or CHROs should take away from these recent news events?

If I'm a CHRO today, and I'm in a heavily capitalized company that is growing really aggressively, I think to be responsible you have to really get your house in order. Ensure that there is a support infrastructure to handle growth. Far too often, when you get a lot of money, you're asked to grow, and we go off and hire. But the reality is, if you don't have any infrastructure to support that onboarding, 20% to 30% of those people that you hire on the onset will leak out of that business in six to eight months.

Could your company do a 4-day workweek?

The four-day workweek won't be for everyone, but some companies are already giving it a shot. When Nomad Goods, an iPhone case-maker in Santa Barbara, transitioned to a four-day workweek at the beginning of 2021, upper management worried about a possible loss of productivity. The company wasn’t new to experimenting with work schedules: Prior to the switch, Nomad had tried a yearlong pilot in which it gave employees every other Friday off as part of a 9/80 work schedule (nine workdays, 80 hours of work). But the adjustment to working four nine-hour days each week has been well-received. “I think if we go back to five days, we’re going to have, like, riots,” founder Brian Hahn said to my colleague Allison Levitsky.

Protocol looked at a few indicators to evaluate whether the four-day workweek might be worth trying at your company. Frankly, it just doesn't work for every organization. For example: Mark Zuckerberg told Meta employees in a recent all-hands meeting that he didn’t think transitioning to a four-day workweek would be productive.

Read the full story.


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Today's tips & tools

What does working in the metaverse look like? It’s basically taking all of your colleagues and putting them in something that resembles like a multiplayer video game. I wrote about three popular platforms (Gather, Virbela and Teamflow) in December, but because the experience is so visual, fellow reporter Sarah Roach and I wanted to show you the “metaverse office” in video form.

The experience is … pretty awkward. You have to get adjusted to navigating an unfamiliar world via avatar. Playing around with boats and go-karts and having impromptu dance-offs is fun, but not particularly helpful for getting work done. The part that’s useful is the social aspect: You can collaborate and run into colleagues naturally, the same way you would in the office.

Watch the video if you want a taste of the work metaverse. And if you want to see Sarah’s avatar complete a rather impressive dance sequence.

— Lizzy Lawrence, reporter (email | twitter)

Working from home is great, but ...

It’s OK, we can say it: The transition to hybrid work isn’t all sunshine and roses. There are still lots of distractions and more pressure to prove you’re “on” all the time. Many employees love the flexibility, but a recent Superhuman survey of over 1,000 knowledge workers provided some insight into what some employees still find challenging in flexible work environments. Here are some of the survey's highlights:

  • Distractions in the workplace are not coming from where you think (the call is not coming from inside the house). Instead, respondents said the real problem is their in-person co-workers. 39% of office workers who responded to the survey said their colleagues are distracting, while 24% of remote workers said they’re distracted by their WFH environments.
  • Meetings and emails also topped the list for distractions in the workplace. 31% of remote workers said too many meetings limit their ability to be productive at work, and 27% of remote workers said email hampered productivity.
  • There’s also a growing feeling that workers in and out of the office need to prove they are online. 58% of office workers said they’re expected to be seen online throughout the day, and 74% of remote workers said they feel the need to be “ultra-responsive."

Making moves

Software company Tangoe appointed Maria Gotes as its chief human resources officer. Gotes was formerly chief human resources officer at Masergy.


Whether you work on the top floor or the shop floor, Workplace celebrates who you are and what you can bring to your business. Discover the place where you can be more you.

Learn more

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Thoughts, questions, tips? Send them to Have a great day, see you Sunday.

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