Buffer dismissed 10 people, what failed, how to plan to recover from here showed concrete numerical value and released

ByReynermedia

Services that will allow you to post all posts on social media at onceBufferTen employeesLayoffI explain why I did it by official blog.

Tough News: We've Made 10 Layoffs. How We Got Here, the Financial Details and How We're Moving Forward - Open
https://open.buffer.com/layoffs-and-moving-forward/


As a big mistake that Buffer made, "raising aggressive growth", "lack of ability", "having believed too much in their financial model", "overly enthusiastic recruitment" and "team restructuring" are raised.

· Aggressive growth selection
From the fourth quarter of 2014 to the first half of 2015, our growth rate slowed down. This is a phenomenon that occurs naturally as it gets high level income and it becomes difficult to maintain a large growth rate. As we were in a sound financial situation, we made a choice to grow further. Despite being hindsight, we thought too much about "making Buffer a better company" at this time and it was too aggressive to change too much.

· Ability shortage
For companies with only 10 employees, each person will play a variety of roles, but if the company has more than 500 employees, employees will be able to perform more professional duties. In Buffer, there were no experts in disadvantaged fields such as finance and HR, and some things were overlooked despite making a big mistake.

· Too believe in their financial model
We now understand that their financial model is incomplete.

· Excessively enthusiastic adoption
Hoping for growth, I continued to adopt it excessively.

· Team restructuring
We restructured the product team by data analysis experts and product managers. With this, it became a group without experts in the organization.

In order to fix these mistakes, Buffer seems to be working on suppressing expenses above income first. Buffer went for cost reduction is as follows.

· 10 layoffs to return to a sound financial situation
Successfully saved 585 thousand dollars (about 61 million yen)

· 40% cut the salary of the two founders until the end of 2016
Successfully saved $ 94,000 (about 10 million yen)

· Two founders will lend 100,000 dollars (about 10 million yen) at the lowest possible interest and repayment will be made when Buffer's financial situation improves
Successfully saving $ 200,000 (about 21 million yen)

· Adjusted the royalty of salary, specifically changed the annual salary increase rate from 5% to 3%
Successfully saved $ 74,000 (about 7.8 million yen)

· Quit the privilege of providing 100 dollars a month as a health supplement
Successfully saved $ 49,000 (about 5.1 million yen)

· Cut the annual leave bonus paid to the team
Successfully saved $ 50,000 (about 5.4 million yen)

· Withdraw from the Berlin office
Successfully saved $ 400,000 (about 42 million yen)

· Sponsor budget cut
Successfully saved $ 75,000 (about 7.9 million yen)

And as the most difficult decision, we decide to lay off 10 employees. Founder Joel Gascoyne and Leo Widrich said they repeated five hours of meetings every day for this decision. The reason why layoffs were to be done was extremely simple, so it seems that 80% of Beffer's expenditure was personnel expenses. By layoffs of 10 people, it is possible to save $ 585,000 (about 61 million yen) by the end of the year, which means that $ 100,000 will remain in the bank account every month.

When deciding which employees to actually lay off, Buffer seems to have used a Yes / No format chart.


By reducing the cost including 10 layoffs, it will be possible to save 1.5 million dollars (about 160 million yen) by the end of 2016, Buffer.

The red in the graph below shows the transition of the balance of the bank account when no remedial measures are taken, and the blue shows the change in the balance when the remedial measures are executed.


The graph below shows Buffer's income (monthly) for the past year and a half. The income itself is steadily growing, and further growth can be expected by cutting unnecessary expenses.


In addition, Buffer forecasts "strengthening financial aspects" and implementing internal audits to build a sound organization for future growth. In addition, Buffer seems to be planning to withdraw some small teams etc in the beginning of 2017 because the development team is scattered around the place.