500 Startups Managing Partner Christine Tsai experienced mixed emotions the first time she as a founder had to let someone go.
“I don’t think there was a hesitation that it was the right thing to do, it was just that the person wasn’t a great fit in terms of their skills and culture,” she said.
It’s natural to have doubts and think emotionally before letting someone go, said Tsai. “You never know people’s circumstances or how this impacts them personally, even in a good job market like this.”
“It’s OK to think those things, but don’t let that prevent you from making the right decision,” she added. “It’s just a sign that you’re still human.”
“Maybe people who are really ruthless about it just don’t care,” said Tsai, “but hopefully, we never become that type of company where we just don’t give a s*** about people.”
“The first person I had to fire we did because of cultural reasons,” said Ethan Appleby, founder and CEO of Vango, an ecommerce startup for art purchases. “They did some blatant things — acting up at one team event, being really inappropriate.”
When the time came to drop the hammer, “they had the idea that it was coming and were pretty cool about it, so it wasn’t as hard as it could’ve been,” said Appleby. “With engineers, I knew he’d land on his feet pretty quickly.”
If you’re thinking about it, definitely do it. It’s hard for it to work out if you’re even wondering. — Ethan Appleby
But what if he’d had three kids and a Golden Retriever depending on him? “I don’t think that would have changed the decision,” said Appleby, “it just would have made it more difficult to do.”
“I was incredibly nervous the first time I had to let someone go,” said 500 Startups Partner Sean Percival. “The employee/boss relationship had already deteriorated and they were very antagonistic in just about all of our conversations.” As a result, “I was expecting a blow-up and my stomach turned for days as I prepared to deliver the news.”
As is generally the case with events we dread, reality did not meet Percival’s expectations. “The final meeting went incredibly smooth, and as it turns out they were already close to accepting another job. Obviously they knew the end was coming.”
So all my worries were really for nothing. When it was all said and done, I felt a huge relief. — Sean Percival
“It’s better just to power through these tough decisions so you can get back to working on what really matters: building your business,” said Percival.
Long hours, the ongoing pressure to deliver and working in close quarters are just a few factors that shape startup culture. When someone doesn’t fit into the general flow — or steps out of it entirely — many entrepreneurs want to take corrective action.
“That can be a little bit harder to determine,” said Tsai, “because in some cases, if a person’s not performing, you give them the benefit of the doubt and some milestones or feedback, then see if they improve.”
Letting someone go is never fun. But if it is the right decision, you’ll feel a huge relief after doing it. — Christine Tsai
“If it still doesn’t improve over some amount of time, it makes sense to fire them,” said Tsai, “but that’s hard to make a decision on” if a founder can’t articulate exactly why someone needs to go, particularly in larger teams where one monkey can’t stop the show.
“Sometimes someone needs to do something really egregious, like if they went so far as to harass someone, or people by and large can’t work with that person,” she added. “In the cases where it’s not so obvious, it’s harder.”
It’s important to establish your culture, but it can’t become too rigid, said Tsai, especially in large, diverse organizations. “Our company is much bigger, so people don’t get along all of the time, and that’s fine as long as they can work together,” she said.
When the time comes, “be transparent about why the termination is happening,” said Tsai. “If you did things right, it shouldn’t be a surprise to the person.”
It’s not personal, it’s just business. — Sean Percival
Percival said he had “very little preparation or advice” before he separated an employee. “I leaned on my boss at the time but mostly to ensure we were compliant and reducing our liability. Since we had previously given the employee a written warning, the issues were already well documented,” he said.
“In the actual meeting where you break the news, sometimes it’s a good idea to have another person present,” said Tsai, who recommended tapping another co-founder or senior employee. “A lot of this depends on the relationship with the person, or what are the grounds for termination, or if you think the termination is not going to go over well,” she added.
To prepare for his first firing, “I thought of the key talking points that I wanted to make and wrote it out,” said Appleby. “I actually went home and was by myself for an hour thinking about what I was going to say, trying to be as clear and concise as possible – to give them a sense of why.”
Once you’re in the room, “keep it really short,” he advised. “Don’t talk too much, just get right to the point. Let them ask questions if they have them.” Ignore popular convention and “don’t do it on a Friday, so you can see if the morale of the team is ok and people can get their questions answered,” said Appleby.
“Over time and many more firings I learned to not make it emotiona,” said Percival. “It sounds bad, but you need to approach it like a machine; say as a little as possible, and stick to the absolute facts.”
Even though most startups are too small to have a dedicated HR role, founders can still step up and become effective managers, Tsai said.
“It’s prudent to address stuff right away, but especially on a smaller team, you have to act faster,” she advised. “In small companies, where founders and CEOS are wearing a lot of different hats, it varies on how people handle it.”
Instead of a formal review process, find organic ways to stay connected to your employees, said Tsai. “If there’s some basic reporting structure, it’s worth doing individual meetings, and they don’t have to be heavy-handed,” she said. “It’s just a time to check in individually.”
No matter how chill you think your office is, Tsai said private meetings will reveal hidden issues: “If you’re talking one on one, they may feel more comfortable there than bringing things up in a group setting.”
“A lot of founders tell themselves that they don’t need to be working on their team, since it’s too small, or they have a launch coming up,” said Tsai, “but you can set it up to be less bureaucratic and set the stage early on to show you do care about your people.”
Many startups don’t start working on internal communication until they’ve matured, which is a mistake, she said. “It’s much harder to insert that in later if you’re not used to it, so it’s a good exercise to start from the beginning,” said Tsai.
“The founders will set the tone for the company, and that starts on Day One.”
