This might be true, but personally I'd rather the company try to remain a going concern.
You could refuse the severance as an employee if you wish to go down swinging.
Edit: Knowing the company is doomed in a month or 2 and not employees offering severance is not a good thing yo do, in my book.
It's pretty easy to say "oh you should have done this differently" with almost zero actual knowledge of the situation or experience.
Not surprising though, that Elon would be in the same camp as this Convoy CEO, not likely to shed too many tears over worker concerns.
Elon has said several variations of this have happened on several occasions.
And yet this fragility never really made it into IR reports or SEC filings or annual reports.
So either he exaggerates (shocking concept from a man whose company has on multiple occasions had to follow him around and say "his claims of Tesla doing X, or doing it by Y date, are visionary, and not statements of fact"), or there's some hinky accounting going on.
FedEx famously (allegedly) came down to a hand of blackjack in Vegas to make payroll & avoid bankruptcy.
(I'm just trying to nail down the timeline of full truths/no cap from Elon.)
It’s nothing like a layoff. For example, imagine that you are a supplier to company A and now your contract is both unpaid and cancelled and you’re going to have to lay off some of your own staff. Do you recover the contract money from company A, to give your staff severance? Or can company A stiff you and use it to give their own staff severance? (No, they can’t.)
Usually it is the reverse.
A whole two people who claim to be ex-convoy employees have chimed in from what I have seen. Hardly representative of what the average ex-employee thinks. Certainly not enough to form a conclusion either way.
If the CEO wanted to continue operations for another month to allow folks to find new work, they could have.
A statement that's just verifiably untrue. Companies that shut down provide severance all the time. It's just a matter of priority.
The directors had reduced expenses, had been seeking further investment, to increase revenue, and finally to sell the assets of the business, before voluntarily ceasing to trade. They executed their power and duties in good faith, with the care and diligence a reasonable person in their situation would have. It's not a crime to have a business fail.
Not really true. The company is owned by its shareholders, and they may choose to use funds belonging to the company (after paying outstanding obligations) to pay severance, or they may divide the funds among themselves. If there are no funds, they can choose to invest more to pay severance. Obviously they're unlikely to want to do that, but it's not a case of "can't" but rather "won't".
If they can do this, they can pay salaries another month. Making a go/no go call at the edge is difficult. It sounds like Convoy thought it was getting a loan that didn’t come through.
Put another way: if the CEO shut down the company while loan negotiations were in place, it would have zeroed out the common stock while giving preferred investors a pay-out (in addition to everyone some severance).
If leadership decides to use the remaining funds on salaries rather than severance - then they should be judged on that! What good is buying one extra month for a doomed company? That month is more valuable to individual employees who can use it to look for new jobs
Deploying capital into something that literally has no return just doesn't make sense. You're also ignoring the reality that most capital comes in at the start. It doesn't come in at the end. That's an irrational investment. Would you buy a house that's burning down in the interest of the current homeowners?
Could a company receive funds at the end? Legally, sure, maybe (maybe not given fiduciary duties to LPs).
Investors would have to say to their limited partners: we're going to take your money, and hand it over to employees, and those employees will do no work for us and the company is shutting down anyway. That's a very ineffective use of capital and those types of decisions are worse in the end for the economy, I would argue, which does impact everyone.
Startups are risky for investors. They're risky for employees too. I think a better solution might be to bolster unemployment insurance. After all, investors often have downside protection (usually in the form of preferred shares or preferences). Employees need downside protection too. But let's not perverse how capital should work.
Disagree - it frees those employees to begin working for more productive companies sooner rather than drag them through "you are fired with no provisions for healthcare. Good luck and don't get sick during the donut period."
- yes, it's an special qualifying trigger for the exchanges but you are asking someone navigate this in short order(likely end of the month or less than two weeks)
People should remember the board and CEO for screwing over employees.
After people are let go, severance and continuation of healthcare beyond some term mandated by law (maybe state, maybe federal, maybe varies by state, don't know) are not considered employee claims in this sense.
CEO and the board didn't follow the YC guidance mentioned above, and it's on them.
This is important if you're staying in more or less the same field - many specialties are smaller worlds than you may think.
I am somewhat bad with names, so I've learned to take notes. I have a list of people I'd love to work with again, and another of people whose presence will stop me from accepting an offer.
This is not a thing that happens in reality.
Severance for companies with an ROI are one thing. Severance for a failed company is quite another.
It's a choice.
I shut down a VC backed startup over a decade ago and yes we did provide severance.
Parent is basically saying they gambled you sift landing and lost, as most psychopaths would.
