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
You don't know it's doomed. Plenty of companies have turned around while running on fumes. This is fundamental to start-ups.
> month is more valuable to individual employees who can use it to look for new jobs
Everyone who lost their jobs at Convoy is eligible for unemployment. The same unemployment most workers get when they're fired. Perhaps the discussion should be around improving this benefit for everyone?
It's swell when people gamble with employees well-being on the miniscule odds of a miracle. And even better idea is to offer severance, and those employees with the same appetite for risk can get additional options from the folks who leave. That'd be a win/win, except for the leadership who would rather gamble using other peoples chips but keep most of the winnings.
> Everyone who lost their jobs at Convoy is eligible for unemployment
Unemployment benefits don't come anywhere close to tech salaries! They take time to process.
> Perhaps the discussion should be around improving this benefit for everyone?
We can multitask. What is in my power to control is to avoid working with anyone associated with this decision and encourage everyone else to do the same - board-members and the entire C-Suite. We have a - let's call it poor culture fit
I think you can take out private unemployment insurance, if you are worried about that? (Or just have savings.)
Red herring
You're participating in mental gymnastics to validate what is essentially poor leadership. Why?
I think the big question is how well communicated the risks are. In our case I believe everyone knew, and there'd have been no hard feelings if people had chosen to look for new jobs once funds got tight.
In other countries they would have to pay the salaries.
There’s no perfect set point and the trade offs will always have downsides.
Given the risks of working for a company in the stage Convoy was in I’m not exactly sure this is a bad outcome.
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)In spirit though, I agree. Social healthcare not tied to employer would allow for more labor mobility. These transitions should not abrupt or catastrophic ideally.
But that's a bad thing - because once your employment tied healthcare abruptly ends, you scramble to get something to restore it.
This may include settling or taking less optimal jobs or accepting a lower paying job.
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.
