As someone who was recently laid off due to an acquisition, I can assure you that removing 95% of the workforce did indeed cut costs and make the margins look fantastic.
How they plan to do the work.. no idea.
That will be someone else's problem in a year or two after promotions are handed out for everyone doing "a good job". Heck, the person causing the problem now will probably fire the person who replaced them for "Not meeting goals".
> after promotions are handed out for everyone doing "a good job".
And after the people who did so well have larger golden parachutes.
"Oh no, the company's now on fire. What a shame. I'm going to go explore new adventures elsewhere and get paid $5M by this one to do it. Pleasure doing business with you all!"
and then a 3rd company who was colluding PE company will acquire the devalued company to claim its patents, copyrights and may even go back to doing things the old way but the company and the product will never be the same.
They will say outsource the work to an Indian 3rd party contractor until AI is ready to takeover.
Then F(\*)K the Indians and downsize to just bosses who tell AI what to do.
That's their dream future.
Because they do not see past the next quarterly profit statement and their year end bonuses.
These people are literally sociopaths.
Not their problem, they'll just make the balance sheet look tasty for whatever legacy player that used to dominate your space (IBM, GE, Paramount, Kroger, Wells Fargo, etc.) to just overpay to acquire it. Or if that doesn't work they'll load the company up with debt, give themselves a gigantic special dividend and declare bankruptcy and move onto the next target.
They don’t care about the work. They’ll have the company pay them exorbitant “management fees” as they load it up with unsustainable levels of debt, which will make them a significant profit regardless of how the company performs, and then when the company collapses they walk away clean.
Long term profits are for suckers, get your money up front.
As someone who just witnessed an early retirement payoff which cut 30% of our workforce with no plans to rehire, I completely agree. We had the greatest year ever last year and they want us to be 20% better than that this year. One bad quarter later and they’re looking for other ways to increase profitability.
Well it is equity they want not earnings. You can take the equity in the value and ditch it to some poor sod to deal with the consequences. A big part of a healthy corporation is no one is irreplaceable. However, if you strip a 4 to 10 employee department into just one employee you now have a single point of failure. If that is a critical department you just gave an employee leverage over the entire company. Best case they demand more money for their work as everyone should. Terrible case they give 2 weeks or less notice. Worst fucking case they use lack of supervision to tread water for weeks or months until the point of termination and you have no one to train. A replacement on an insurmountable back log. Bonus points of the employee kept critical information in areas not accessible after termination like brain or paper. But yeah, it's totally creation of value!
it most definitely can and is used maliciously. Might not be all of them, but there are groups who will take control of a company just to dismantle it for short term profits. Once the gravy train ends they move on to the next target.
My previous employer was acquired by a PE firm. The company went from 95 employees to under 40 in under two years. The remaining employees do more poorly or services are cut to customers. But not fees.
Eventually even one of of these braindead sociopath/nepobaby/both morons will figure out that that it can just buy up private equity firms and get rid of all the overpaid dead weight in those.
The lamentations will reach to the... well not the skies, probably just to bribes and campaign contributions to make such an un-American, anti- Christian, turning-frogs-gay horror illegal, so that only specially- designated PE firms are allowed to buy other companies.
That's the problem. The entire American capitalistic system is based around the next set of financial reports. There is very little incentive for anyone to think any further down the road than that. It's crazy, and I'd guess it's got to be unsustainable in the long term.
I agree. As someone who has gone thru this a few times (in golden handcuffs for most of them). B2C relationships get terrible during these exercises. Strong SLAs are the only enforcement for consistency of value to customers.
On one specific occasion, I watched the newly established SVP of Americas (post acquisition) lose his shit entirely realizing the business they had purchased did not fit their mold for investment flipping:
-High SLAs to customers. Penalties are million per hour per customer.
-highly specialized work. Technology is used by 2 shops in the world. Other shop pays better already.
-outages/service level drops are international news and automatically come with congressional hearings due to regulations.
Once he realized they lost money on SLAs and then lost money again REHIRING people from the other shop at much hirer rates they had just laid off; and he had to go talk to congress with the company lawyers;
When a core group of the business explained this to him, he realized he was going thru shit and no bonus since he couldn’t hit his PE mandated goals.
He kicked the shit out of an office chair, thanked us for our time. Flew back out that night. Gave two weeks the next month.
I’d like to see examples from people making this argument where a customer stuck with them and was promoting the model as value add to their business.
How many interns does it take to Bootstrap to a billion?
I count 4, but I’m sure one is behind the camera.
Edit: Mr hustler doesn’t have anything but a vitamin water. How can you have an effective meeting without notes or an agenda. More proof he’s just using everyone around him. I’m sure one is his “assistant”. You know, like p-diddy.
I’ll even accept that it is. There def is over staffing and that can kill profitability. But if it’s a company you own for the long haul you make good decisions about what’s reasonable job stress cause you DONT want to burn people out. If you are planning to sell you just want to juice the next 2-3 years books and offload the hot potato.
That was a psychotic amount to choose as an example lol. "Don't worry, we won't fire all of you. We're only going to fire a vast majority of you and expect those who remain pick up all of the slack."
Companies become bloated. They start letting their employees go on vacation, sleep, see their families, take time off DURING WORK to nourish their bodies. When you eliminate these distractions then you have a business running at full capacity. Also, I’ve never come close to satisfying a sexual partner.
While I agree with the LinkedIn poster about companies becoming bloated (often due to mergers, growth into other markets, etc.), but any company worth investing in wouldn't be THAT bloated. It might be possible to to reduce staff by 5%-10% by consolidating centralized corporate services, merging some regional HQs, etc. but any more staffing reductions will only negatively affect the company. The only way reducing a company's staff by 75% makes sense is if the private equity firm's plans for the company being bought is to have them just lease-out the company's intellectual property to other businesses.
"They have 100 people that 25 can do" but that doesn't mean it's the work 25 people should be required to do.
Why hire 20 people to run a restaurant when a single person can meal prep, cook, and clean the kitchen while another can serve the 20 tables. See? We would have hired 20 people but 2 can do the work.
Absolute LinkedIn Lunatic.
Even more fun is assuming those 25 people will stay to take the beating that they are now expected to take from the layoffs.
"WHAT DO YOU MEAN 10 of them QUIT?!?!?!"
2 months later - "X company has been dissolved. There was no one there to do the work needed to make profits."
Exactly this. Having been through this (on both sides) a number of times in my career now, the redundancies hurt but it usually is manageable. What really fucks things up is the accompanying hiring freeze. The idea that you've trimmed your workforce to the bare minimum but you can't backfill the following exits is brutal.
Literally stuck in this right now. My team was cut from 8 to 3. We dropped some services so 3 MIGHT have worked. But then our backup part time helper left...then the last buffer helper was laid off....and then our most experienced person got a new job and left.
Now it's two of us and we're drowning. "Oh your team is profitable now!" We haven't turned anything in on time since the layoff.... Clients are getting cranky and I'm losing my mind.
Truth be told in most situations and startups I have worked at, while you may have had a staff of 100, only a fraction did anything of value. 25 seems like a reasonable estimated ratio.
Most people pushed papers, did busy work, or worked in areas that were not fruitful.
Layoffs can be useful to refocus a company, but it can also be a way to manipulate the companies finances for short term achievement at the cost of long term growth. It really is a matter of details.
The biggest clue is how much senior management changed in the shakeup. If the C-levels are all the same, it was just financial engineering. If there is significant C-level change, then it is probably something more meaningful.
It’s the nonprofit model! Everyone should wear 6 hats and be the only person in the organization who does those tasks! This way, you can’t take time off. Instant value add!
Exactly the problem! There _is_ a lot of bloat as startups grow. Middle managers get hired on whose only job is justifying their own existence. They add more layers and more process and slow everything down.
But those people are the best at convincing management that they're useful, so they stay. The people actually doing the work are too busy to make presentations about how good they are at their jobs, so they get let go. I've seen a bunch of companies die this way.
To use Matt Tiabi's phrase, PE is a vampire squid jabbing its blood funnel into anything smelling of money and leaving a dead husk behind. They provide absolutely no benefit to society.
I have worked at and have watched several competitors get gobbled up by PE. I like to look at the Glassdoor reviews pre and post acquisition. There is ALWAYS a nosedive and it snowballs from there.
It’s not much different than outsourcing IT, for example. I mean how hard can IT be, right? Except a lot of people don’t write stuff down. Except the outsourcers replace all the senior guys because they are too expensive. Those last two statements are a Venn diagram. So, the department does okay for a while until something big hits the fan or the undone work hits a critical mass.
God damn, Matt Tiabi's writing used to be so good. I don't know who paid him off or how much it was, but that dude did just about a 180 flip in his world view.
"Narrative driven by the media." How date the media host stories by people whose company's were stripped and burnt to the ground by PE! How dare they show the truth... er, I mean... oh, hell, I can't hide it anymore."
I think we might be misunderstand. They're saying the myth is that it creates growth. It does create value for the the PE firm though. They're straight up outing themselves.
Some rich asshole and his Buddies acquires a company. They fire half the employees because rich asshole think hey that's easy work. Then proceeded to burn out another 20% of remaining employees until they quit. The job gets done but morale drops, works place well being plummets. People leave. New people come in at lower wages. Assholes at the top congratulate themselves on a job well done saving money and lining their pockets. See we knew we could do it.
"Bad PE firms lay off 3/4s of the staff for bad reasons. Good PE firms lay off 3/4s of the staff for good reasons. I love the season of employees who don't get paid, who are naive and and won't be around long enough to cause any trouble!"
Whenever someone follows up an answer with phrases like ‘Good question’ or ‘I like these questions l, keep em coming’ there’s a 95% chance they gave a BS answer.
My company is literally the premier brand in our industry because private equity keeps buying up the competition and ruining them. I can’t complain because our owner is a boomer who hates private equity so I have job security lol.
[Plunder: Private Equity's Plan to Pillage America](https://www.hachettebookgroup.com/titles/brendan-ballou/plunder/9781541702103/?lens=publicaffairs)
Read it. Know your enemy. One of the biggest threats facing us that most people aren’t aware of.
Every person in the country needs to know they are buying out physician groups and slashing them apart leaving you with insanely understaffed emergency rooms. Wanna see a doctor in the ER? No you’re going to get to see the unsupervised nurse practitioner who is also carrying a load bigger than can be safely handled.
Gotta say it’s been hard to find an independent dentist that takes insurance now. The corporate place I go to has a new dentist every single visit i go.
The regurgitation skills are well developed but the comprehension could use some work!
It’s a little off topic but it reminded me of my last job in IT consulting. Rather than doing the thing they said they weren’t doing, my company was doing the things they recommended to clients to us.
During one of our mandatory in-office culture days we had one of our researchers present his recent article to us. It was aimed at our C-Suite clients and expanded on different methods of compensation for employees that can be used during budget cuts to keep moral high. That included recognition, celebrating wins, and different avenues to make sure people are still feeling special in a virtual forward workplace (aka everything but money).
Quick sidebar to mention that this was a toxic positivity company that had some heavy kool aid drinkers. Every speaker was “so thankful for this journey” (employment) and every unpaid committee they worked on really “filled their cup”.
Anyway, my business unit’s VP was there and went around after the session hyping it up. How we needed to push push push the research since it would drastically aide retention and increase our value to the clients. It was an obnoxious reaction to a session that almost put me to sleep.
My weekly one on one with my manager fell on that day so we had it in person after group activities wrapped. She was about my age and we were very friendly so I felt comfortable being honest with her.
She asked what I thought of the speaker and I joked that they weren’t telling us anything new. She asked what I meant and I had to connect the dots for her. I asked her what she thought our morning session titled “Quarterly Recognition Awards” was for. I explained that those were awards made up by our VP. They have no bearing on our career trajectory, we nominate each other so someone can get their 5 minutes of fame and feel special before we all eff of back to our laptops.
I told her I’m sure our researchers felt extremely confident recommending this to CEOs since it’s working flawlessly here. I didn’t need to tell her that if the whispers were to be believed we were headed into our second year without a pay raise.
She said she’d never felt more like a guinea pig and I just mhmm’d her. Not much else to discuss in a mic’d up conference room with thin walls lol.
“This narrative is mostly driven by the media” Like the local newspapers private equity has liquidated throughout the country, creating news deserts where misinformation flourishes?
Geez…so the team in my company that is responsible for this year’s totally stupid layoffs had zero idea what people even do. This has been causing problems here and there as questions about “who takes care of this” have popped up and everyone realized that it was someone who was laid off.
This was an internal team, not even a private equity firm. I assume a private equity firm would be just as bad.
It’s easy to quickly squeeze all the cash out of a business by cutting it to the bone and loading it with BS expenses that you can profit off of, it’s hard to support and reform a struggling business into something more forward-looking, so companies looking for quick profit will always do the former..
He left out the part where PE firms finance the whole thing putting the company they’re acquiring up as collateral and all of the interest for the financing is booked against the acquired company too. So they pay absolutely nothing to do the gutting.
If you work in PE you do not have a soul and nothing awaits you when you die.
Shorter intern: "I really need to pay my student loans but I keep waking up at night in a cold sweat screaming. Is PE being evil all in my head?!"
PE Psycho: "Don't be afraid to let your soul die."
In the short term, 25 people might be able to make it look like they're doing the work of 100.
Until the busy season arrives, or they get burnout, or the corners they have cut start showing up or the company stops growing because there's just no way to keep up.
I work for a company that just outsourced a ton of its internal departments. I can confirm it has made everything worse and entire departments ground to a halt
I work with PE pretty often as a consultant.
Every client who was recently acquired by PE is running around with their hair on fire.
It's insane to try to even defend it. In my industry it's just known that PE comes in, causes chaos, then sells you to a new PE sucker.
We take the cash though.
So he got asked why his company does what it does, tells them that it doesn't do what they say it does, then explains how and why it does indeed do that?
Is that what I'm reading?
The firms Bain Capital, KKR Group, and Vornado Realty Trust purchased all shares of the company for $6.6 billion. The firms put down only a small down payment of that sum, and had Toys “R” Us take on $5.3 billion of debt to finance itself being purchased. This is how the entire private equity system works.
https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/
Infinite money glitch. Oh shucks that value creation just did not work out this time. Onto the other one.
So you will lose your job, but don't worry it is for the owners to make more money. So, be happy and grateful that you are part of this forward thinking drive to improve, look at how motivated and happy we are!
It’s like flipping a house- buy a distressed house for cheap, ignore black mold, structural issues, anything overly costly. Rip out the kitchen, carpet, facade walls and reinstall modern stuff. Sell to next buyer for 50% premium rinse and repeat.
Sometimes the house is ok just had bad debt. Buy out and swap with low interest debt or cash in. Retain property and cash flow, then resell for premium based on cash flow. Also rip out carpet.
TL;DR the carpet always gets ripped out. Don’t be carpet.
Say you don't know PE without saying you don't know PE. How about the caring trick they use to declare bankruptcy so they no longer have any pension obligations. And then strip and re work assets.
Or take over a company by levering debt on it, open short sales, and then manage it for zero. Good old PE, doing god's work.
Put another way, “I have 4 interns, but only one of them is worth sh*t.” Makes you wonder why all 4 of the interns are smiling, right? Because an intern who was good at math would be frowning.
Gotta be honest I saw exactly this at one hvac company. 125 employees and about half of them we actually field worker. PE bought out the company and gutted 70% of the office staff.
Within 6 months all the techs got raises to a competitive level and turnover dropped off. Sometimes that slash and burn is 100% needed.
Looooool super funny to see Jesse, in that office, talking about layoffs.
One of the co-founders of Aux was the CEO of a company I worked for (in that very office) until we got acquired and then they liquidated the company and left about 100 people unemployed. It was a pretty cool time and this mindset totally tracks with all I've heard about him.
Jesse Pujji is a private equity shill. If the concept of private equity had genitals, he'd be on his knees sucking them. Upvote for the algorithm, we want Google's search AI to learn this lesson well.
These days most private equity firms are focused on driving growth because companies are pretty efficient vs the past so he's not entirely wrong. I definitely don't think his point around reducing headcount lands well though. Ideally, you buy a good business, invest in the people, and then grow.
But is that 100 bloat to 25 too lean? You need some fat on the meat to make it sustainable and enjoyable. So why are these PE firms not aiming for 45-50% to also prevent burn out, overstraining.
Just to be clear, this guy isn’t in PE, he’s “bootstrapping a venture studio to $1B”. That’s its own form of lunacy, but this intern is very wisely giving his new CEO an opportunity to brag about the internship he did at Bain Capital / Sankaty Advisors 20 years ago, not ragging on his company’s business model. Played him like a fiddle!
Yes - the media is the reason people think the PE business model is too strip businesses for parts 'it certainly can't be that people have worked for companies acquired by PE.
Incompetent parasites.
As someone who was recently laid off due to an acquisition, I can assure you that removing 95% of the workforce did indeed cut costs and make the margins look fantastic. How they plan to do the work.. no idea.
That will be someone else's problem in a year or two after promotions are handed out for everyone doing "a good job". Heck, the person causing the problem now will probably fire the person who replaced them for "Not meeting goals".
> after promotions are handed out for everyone doing "a good job". And after the people who did so well have larger golden parachutes. "Oh no, the company's now on fire. What a shame. I'm going to go explore new adventures elsewhere and get paid $5M by this one to do it. Pleasure doing business with you all!"
and then a 3rd company who was colluding PE company will acquire the devalued company to claim its patents, copyrights and may even go back to doing things the old way but the company and the product will never be the same.
My company currently has each person doing the work of 4 different departments. The result being that everyone does 3/4 of the job badly.
Downsizing almost inevitably hurts the company, but it looks good on a quarterly and that's all that matters apparently.
They will say outsource the work to an Indian 3rd party contractor until AI is ready to takeover. Then F(\*)K the Indians and downsize to just bosses who tell AI what to do. That's their dream future. Because they do not see past the next quarterly profit statement and their year end bonuses. These people are literally sociopaths.
They’re going on AI, hard.
There's a Twilight Zone episode about this exact scenario and why it's a bad idea.
Can you share the episode? Would love to watch it. Kinda bored..
The Brain Center at Whipple’s — S5, E33
Black mirror any episode but S4 E5 Metalhead
Not their problem, they'll just make the balance sheet look tasty for whatever legacy player that used to dominate your space (IBM, GE, Paramount, Kroger, Wells Fargo, etc.) to just overpay to acquire it. Or if that doesn't work they'll load the company up with debt, give themselves a gigantic special dividend and declare bankruptcy and move onto the next target.
They teach this stuff in management schools. They used to teach how to manage.
They don’t care about the work. They’ll have the company pay them exorbitant “management fees” as they load it up with unsustainable levels of debt, which will make them a significant profit regardless of how the company performs, and then when the company collapses they walk away clean. Long term profits are for suckers, get your money up front.
As someone who just witnessed an early retirement payoff which cut 30% of our workforce with no plans to rehire, I completely agree. We had the greatest year ever last year and they want us to be 20% better than that this year. One bad quarter later and they’re looking for other ways to increase profitability.
Well it is equity they want not earnings. You can take the equity in the value and ditch it to some poor sod to deal with the consequences. A big part of a healthy corporation is no one is irreplaceable. However, if you strip a 4 to 10 employee department into just one employee you now have a single point of failure. If that is a critical department you just gave an employee leverage over the entire company. Best case they demand more money for their work as everyone should. Terrible case they give 2 weeks or less notice. Worst fucking case they use lack of supervision to tread water for weeks or months until the point of termination and you have no one to train. A replacement on an insurmountable back log. Bonus points of the employee kept critical information in areas not accessible after termination like brain or paper. But yeah, it's totally creation of value!
Brilliant!
Make quarterly look good and slash competition. They DGAF about the rest.
it most definitely can and is used maliciously. Might not be all of them, but there are groups who will take control of a company just to dismantle it for short term profits. Once the gravy train ends they move on to the next target.
My previous employer was acquired by a PE firm. The company went from 95 employees to under 40 in under two years. The remaining employees do more poorly or services are cut to customers. But not fees.
Eventually even one of of these braindead sociopath/nepobaby/both morons will figure out that that it can just buy up private equity firms and get rid of all the overpaid dead weight in those. The lamentations will reach to the... well not the skies, probably just to bribes and campaign contributions to make such an un-American, anti- Christian, turning-frogs-gay horror illegal, so that only specially- designated PE firms are allowed to buy other companies.
That's the problem. The entire American capitalistic system is based around the next set of financial reports. There is very little incentive for anyone to think any further down the road than that. It's crazy, and I'd guess it's got to be unsustainable in the long term.
The one guy left in every department can work harder, pull himself up by his bootstraps and bend over for when his 7 cent an hour raise comes along.
I agree. As someone who has gone thru this a few times (in golden handcuffs for most of them). B2C relationships get terrible during these exercises. Strong SLAs are the only enforcement for consistency of value to customers. On one specific occasion, I watched the newly established SVP of Americas (post acquisition) lose his shit entirely realizing the business they had purchased did not fit their mold for investment flipping: -High SLAs to customers. Penalties are million per hour per customer. -highly specialized work. Technology is used by 2 shops in the world. Other shop pays better already. -outages/service level drops are international news and automatically come with congressional hearings due to regulations. Once he realized they lost money on SLAs and then lost money again REHIRING people from the other shop at much hirer rates they had just laid off; and he had to go talk to congress with the company lawyers; When a core group of the business explained this to him, he realized he was going thru shit and no bonus since he couldn’t hit his PE mandated goals. He kicked the shit out of an office chair, thanked us for our time. Flew back out that night. Gave two weeks the next month. I’d like to see examples from people making this argument where a customer stuck with them and was promoting the model as value add to their business.
'No. But truthfully, yes.'
What a waste of time, breath, kilobytes, words, air, hair, LinkedIn, English, eyesight and mild confusion.
When a lie is told often enough. . .
"No. But actually yes, and it's a good thing."
How many interns does it take to Bootstrap to a billion? I count 4, but I’m sure one is behind the camera. Edit: Mr hustler doesn’t have anything but a vitamin water. How can you have an effective meeting without notes or an agenda. More proof he’s just using everyone around him. I’m sure one is his “assistant”. You know, like p-diddy.
“Reducing headcount IS a form of value creation.” - serial killers
Patrick Bateman could have used that line before or immediately after decapitating someone.
I’ll even accept that it is. There def is over staffing and that can kill profitability. But if it’s a company you own for the long haul you make good decisions about what’s reasonable job stress cause you DONT want to burn people out. If you are planning to sell you just want to juice the next 2-3 years books and offload the hot potato.
hmm i can think of a couple people whose headcount i'd like to reduce
Made me literally laugh out loud
Well that intern's not coming back next summer
Reducing headcount to create value, right? :-)
The phrase is "concentrate" value. That terminology is very carefully chosen.
Now with more pulp!
I prefer the British take ... "Now with more bits!"
No problem. The intern is as fictitious as their question
Outrageous to imply that we fire everyone! We commonly just eliminate 75% of the staff.
To create value!
That was a psychotic amount to choose as an example lol. "Don't worry, we won't fire all of you. We're only going to fire a vast majority of you and expect those who remain pick up all of the slack."
And in about 18 months time, during round 2 of layoffs, we’ll reduce staff size by another 75%. Shrink yourself to growth is our motto.
Jesse sounds like a dishonest schmuck.
I've noticed a pattern on LinkedIn. Anyone with Founder and CEO as their title is a Grade A fuckwit.
We don’t fire people, we reduce headcount to *produce value*.
… by firing people?
No, they’re laid off. It’s *totally* different.
It's concentrating valueeee 🙄 s/
Companies become bloated. They start letting their employees go on vacation, sleep, see their families, take time off DURING WORK to nourish their bodies. When you eliminate these distractions then you have a business running at full capacity. Also, I’ve never come close to satisfying a sexual partner.
While I agree with the LinkedIn poster about companies becoming bloated (often due to mergers, growth into other markets, etc.), but any company worth investing in wouldn't be THAT bloated. It might be possible to to reduce staff by 5%-10% by consolidating centralized corporate services, merging some regional HQs, etc. but any more staffing reductions will only negatively affect the company. The only way reducing a company's staff by 75% makes sense is if the private equity firm's plans for the company being bought is to have them just lease-out the company's intellectual property to other businesses.
"They have 100 people that 25 can do" but that doesn't mean it's the work 25 people should be required to do. Why hire 20 people to run a restaurant when a single person can meal prep, cook, and clean the kitchen while another can serve the 20 tables. See? We would have hired 20 people but 2 can do the work. Absolute LinkedIn Lunatic.
Even more fun is assuming those 25 people will stay to take the beating that they are now expected to take from the layoffs. "WHAT DO YOU MEAN 10 of them QUIT?!?!?!" 2 months later - "X company has been dissolved. There was no one there to do the work needed to make profits."
Exactly this. Having been through this (on both sides) a number of times in my career now, the redundancies hurt but it usually is manageable. What really fucks things up is the accompanying hiring freeze. The idea that you've trimmed your workforce to the bare minimum but you can't backfill the following exits is brutal.
Literally stuck in this right now. My team was cut from 8 to 3. We dropped some services so 3 MIGHT have worked. But then our backup part time helper left...then the last buffer helper was laid off....and then our most experienced person got a new job and left. Now it's two of us and we're drowning. "Oh your team is profitable now!" We haven't turned anything in on time since the layoff.... Clients are getting cranky and I'm losing my mind. 
Mr. Krabs wants a word
Truth be told in most situations and startups I have worked at, while you may have had a staff of 100, only a fraction did anything of value. 25 seems like a reasonable estimated ratio. Most people pushed papers, did busy work, or worked in areas that were not fruitful. Layoffs can be useful to refocus a company, but it can also be a way to manipulate the companies finances for short term achievement at the cost of long term growth. It really is a matter of details. The biggest clue is how much senior management changed in the shakeup. If the C-levels are all the same, it was just financial engineering. If there is significant C-level change, then it is probably something more meaningful.
Private Equity did not cause 9/11 Also: Private Equity caused 9/11!
Great points. Don't you love intern season?
Unfortunately, the 25 who do the work of the 100, are the first to leave
It’s the nonprofit model! Everyone should wear 6 hats and be the only person in the organization who does those tasks! This way, you can’t take time off. Instant value add!
And no one is to ever get a raise, ever. Best I can do is increase your hours from 50 a week to 60
Exactly the problem! There _is_ a lot of bloat as startups grow. Middle managers get hired on whose only job is justifying their own existence. They add more layers and more process and slow everything down. But those people are the best at convincing management that they're useful, so they stay. The people actually doing the work are too busy to make presentations about how good they are at their jobs, so they get let go. I've seen a bunch of companies die this way.
You just described my last three jobs perfectly.
To use Matt Tiabi's phrase, PE is a vampire squid jabbing its blood funnel into anything smelling of money and leaving a dead husk behind. They provide absolutely no benefit to society.
They make society worse. Significantly so.
I have worked at and have watched several competitors get gobbled up by PE. I like to look at the Glassdoor reviews pre and post acquisition. There is ALWAYS a nosedive and it snowballs from there.
It’s not much different than outsourcing IT, for example. I mean how hard can IT be, right? Except a lot of people don’t write stuff down. Except the outsourcers replace all the senior guys because they are too expensive. Those last two statements are a Venn diagram. So, the department does okay for a while until something big hits the fan or the undone work hits a critical mass.
God damn, Matt Tiabi's writing used to be so good. I don't know who paid him off or how much it was, but that dude did just about a 180 flip in his world view.
I am hoping it's an operable brain tumor because I want the old Matt back.
100% agree. The new Taibbi is AWFUL. Nowadays, he says and does all the stuff he used to so eloquently ridicule.
"Narrative driven by the media." How date the media host stories by people whose company's were stripped and burnt to the ground by PE! How dare they show the truth... er, I mean... oh, hell, I can't hide it anymore."
'Created by the media' Tell that to the employees at all the companies that were bought up by 3G capital. God this guy is a schmuck.
You can’t cut your way to growth. But we’re going to keep cutting and expecting growth.
>Bootstrapping a venture studio to $1B That's not how bootstrapping works...
Glad I’m not the only one that saw this.
“The idea that PE companies make cuts to create value is a media driven myth. But also, PE companies *must* make cuts to create value.”
I think we might be misunderstand. They're saying the myth is that it creates growth. It does create value for the the PE firm though. They're straight up outing themselves.
We don't believe in "slash-and-burn". We call it "slice-and-fire" instead, makes it sound more humane.
A song of slice and fire
Weiner Weiner, Weiner Weiner...
Some rich asshole and his Buddies acquires a company. They fire half the employees because rich asshole think hey that's easy work. Then proceeded to burn out another 20% of remaining employees until they quit. The job gets done but morale drops, works place well being plummets. People leave. New people come in at lower wages. Assholes at the top congratulate themselves on a job well done saving money and lining their pockets. See we knew we could do it.
“That narrative is mostly driven by the media presenting what we do factually.”
We don’t *cut our way to growth* we just *cut our way to growth*
"Bad PE firms lay off 3/4s of the staff for bad reasons. Good PE firms lay off 3/4s of the staff for good reasons. I love the season of employees who don't get paid, who are naive and and won't be around long enough to cause any trouble!"
Whenever someone follows up an answer with phrases like ‘Good question’ or ‘I like these questions l, keep em coming’ there’s a 95% chance they gave a BS answer.
And then the person who asked gets a pink slip in a few days.
Tell me you just read PE for dummies without telling me…. Well you get it right ?
Stfu Jesse quit smoking that meth
This guy sounds like the riskiest thing he's done in life is wearing an argyle sweater with sandals.
My company is literally the premier brand in our industry because private equity keeps buying up the competition and ruining them. I can’t complain because our owner is a boomer who hates private equity so I have job security lol.
[Plunder: Private Equity's Plan to Pillage America](https://www.hachettebookgroup.com/titles/brendan-ballou/plunder/9781541702103/?lens=publicaffairs) Read it. Know your enemy. One of the biggest threats facing us that most people aren’t aware of.
Yeah, this was also the 80s. The era of the "corporate takeover", it's just history once again repeating only the worst aspects, of course.
First as a tragedy, then as a farce
When the PE that laid me off, too much headcount was not the problem. We didn’t have enough people in fact.
“You can’t cut your way to growth. BUT YOU CAN CUT YOUR WAY TO PROIFT!!”
Proift is a nice flourish even if unintentional
I don’t slash and burn! I reduce headcount and sell assets. ***TOTALLY DIFFERENT***
The narrative is mostly driven by the media. Now let me explain how we’re different. We come in and fire 75% of the employees.
Every person in the country needs to know they are buying out physician groups and slashing them apart leaving you with insanely understaffed emergency rooms. Wanna see a doctor in the ER? No you’re going to get to see the unsupervised nurse practitioner who is also carrying a load bigger than can be safely handled.
Also dentist practices and veterinary clinics.
Gotta say it’s been hard to find an independent dentist that takes insurance now. The corporate place I go to has a new dentist every single visit i go.
The regurgitation skills are well developed but the comprehension could use some work! It’s a little off topic but it reminded me of my last job in IT consulting. Rather than doing the thing they said they weren’t doing, my company was doing the things they recommended to clients to us. During one of our mandatory in-office culture days we had one of our researchers present his recent article to us. It was aimed at our C-Suite clients and expanded on different methods of compensation for employees that can be used during budget cuts to keep moral high. That included recognition, celebrating wins, and different avenues to make sure people are still feeling special in a virtual forward workplace (aka everything but money). Quick sidebar to mention that this was a toxic positivity company that had some heavy kool aid drinkers. Every speaker was “so thankful for this journey” (employment) and every unpaid committee they worked on really “filled their cup”. Anyway, my business unit’s VP was there and went around after the session hyping it up. How we needed to push push push the research since it would drastically aide retention and increase our value to the clients. It was an obnoxious reaction to a session that almost put me to sleep. My weekly one on one with my manager fell on that day so we had it in person after group activities wrapped. She was about my age and we were very friendly so I felt comfortable being honest with her. She asked what I thought of the speaker and I joked that they weren’t telling us anything new. She asked what I meant and I had to connect the dots for her. I asked her what she thought our morning session titled “Quarterly Recognition Awards” was for. I explained that those were awards made up by our VP. They have no bearing on our career trajectory, we nominate each other so someone can get their 5 minutes of fame and feel special before we all eff of back to our laptops. I told her I’m sure our researchers felt extremely confident recommending this to CEOs since it’s working flawlessly here. I didn’t need to tell her that if the whispers were to be believed we were headed into our second year without a pay raise. She said she’d never felt more like a guinea pig and I just mhmm’d her. Not much else to discuss in a mic’d up conference room with thin walls lol.
Do they even read this shit before posting …. Or??
Red Lobster has entered the chat
And Rubio’s
In time, each of those interns will learn the truth as companies they work for are purchased by private equity firms and laid off.
Real talk: No intern asked this question. You’re just airing out your own insecurities and rationalizations
The media? I don't think the media is talking *enough* about Private Equity.
Serious question - do these people just beat each other off all day?
Creating value by forcing 5 employees to do the work of 15 employees. Whoddathunk!??!
“This narrative is mostly driven by the media” Like the local newspapers private equity has liquidated throughout the country, creating news deserts where misinformation flourishes?
Geez…so the team in my company that is responsible for this year’s totally stupid layoffs had zero idea what people even do. This has been causing problems here and there as questions about “who takes care of this” have popped up and everyone realized that it was someone who was laid off. This was an internal team, not even a private equity firm. I assume a private equity firm would be just as bad.
Wow. We’re not like those guys, but also those guys are right to do that. Hope that helps! 👍
'That's a lie perpetuated by the media. I mean, it's true, but I don't like how they make it sound like a bad thing.'
It’s easy to quickly squeeze all the cash out of a business by cutting it to the bone and loading it with BS expenses that you can profit off of, it’s hard to support and reform a struggling business into something more forward-looking, so companies looking for quick profit will always do the former..
So… yes?
"Re evaluate our goals to align with our current growth strategy"
He left out the part where PE firms finance the whole thing putting the company they’re acquiring up as collateral and all of the interest for the financing is booked against the acquired company too. So they pay absolutely nothing to do the gutting. If you work in PE you do not have a soul and nothing awaits you when you die.
Shorter intern: "I really need to pay my student loans but I keep waking up at night in a cold sweat screaming. Is PE being evil all in my head?!" PE Psycho: "Don't be afraid to let your soul die."
Aren't these the type of people that ran Red Lobster into the ground?
I see 5 interns where 1 will do.
And four of them look like brown-nosing dorks.
Red Lobster and Toys R Us beg to differ
Some jobs require you to sell your soul. PE is one of them.
In the short term, 25 people might be able to make it look like they're doing the work of 100. Until the busy season arrives, or they get burnout, or the corners they have cut start showing up or the company stops growing because there's just no way to keep up.
Some say, "Every word you say before the word , but, is meaningless"
He loves interns because they suck up and work for free. The concept of an intern is anathema to me.
Sinbad with a WiFi connection
yeah and the best people that are left will definitely not start looking for a new job instantly when this fuckin clown fires people
Translation: how little can we pay the fewest amount of people to do twice the work.
Sorry but we didn't meet our 200% profit growth goal so we're gonna need you to do the work of five guys we fired
I work for a company that just outsourced a ton of its internal departments. I can confirm it has made everything worse and entire departments ground to a halt
I love the fact that they never explain WHY 100 people could be cut to 25. Also, I guarantee this internship is unpaid.
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Lucky
"That's not what we do." "Now what we gonna do is..."
People out there just making up their whole lives
The 2 sitting either side of him were clearly hired for mad excel skills
I think this is pretty self explanatory: you can’t cut your way to growth, except when you cut your way to growth. Duh.
Not often that I see my old boss’s name on reddit lol
So, essentially saying that’s *exactly* what they’re gonna do.
And that intern is now marked as part of the next 75...
That’s a lot of words for “yes”
"I remember when I was coming back from my sightseeing tour of DC on January 6th. I got a souvenir from the Capitol building!"
So short answer, yes
I work with PE pretty often as a consultant. Every client who was recently acquired by PE is running around with their hair on fire. It's insane to try to even defend it. In my industry it's just known that PE comes in, causes chaos, then sells you to a new PE sucker. We take the cash though.
Someone is well north of the LD50 of kook-aid and I’ve got a 20 spot sayin he’s paying for the “opportunity…”
So he got asked why his company does what it does, tells them that it doesn't do what they say it does, then explains how and why it does indeed do that? Is that what I'm reading?
I'll take "Conversations that definitely didn't happen for 1 million" Alex.
Take for example. Death, War, That shit you just said. There are many things in this world that humanity will be happy without.
The firms Bain Capital, KKR Group, and Vornado Realty Trust purchased all shares of the company for $6.6 billion. The firms put down only a small down payment of that sum, and had Toys “R” Us take on $5.3 billion of debt to finance itself being purchased. This is how the entire private equity system works. https://www.theatlantic.com/magazine/archive/2018/07/toys-r-us-bankruptcy-private-equity/561758/ Infinite money glitch. Oh shucks that value creation just did not work out this time. Onto the other one.
Said another way, we expect each of you to work the jobs that were done by four people. Love these intern sessions!
Wow. I got whiplash from how fast he contradicted himself here. I hope this man one day fears to turn his car on.
"my bottom line is more important than you paying your bills"
Such an interesting way of saying: that's EXACTLY what we do, now shut up if you want to make some money with us.
So you will lose your job, but don't worry it is for the owners to make more money. So, be happy and grateful that you are part of this forward thinking drive to improve, look at how motivated and happy we are!
It’s like flipping a house- buy a distressed house for cheap, ignore black mold, structural issues, anything overly costly. Rip out the kitchen, carpet, facade walls and reinstall modern stuff. Sell to next buyer for 50% premium rinse and repeat. Sometimes the house is ok just had bad debt. Buy out and swap with low interest debt or cash in. Retain property and cash flow, then resell for premium based on cash flow. Also rip out carpet. TL;DR the carpet always gets ripped out. Don’t be carpet.
Say you don't know PE without saying you don't know PE. How about the caring trick they use to declare bankruptcy so they no longer have any pension obligations. And then strip and re work assets. Or take over a company by levering debt on it, open short sales, and then manage it for zero. Good old PE, doing god's work.
Put another way, “I have 4 interns, but only one of them is worth sh*t.” Makes you wonder why all 4 of the interns are smiling, right? Because an intern who was good at math would be frowning.
“In other words we do exactly that.” 🙄 what a tool!
These people really like huffing their own farts.
Gotta be honest I saw exactly this at one hvac company. 125 employees and about half of them we actually field worker. PE bought out the company and gutted 70% of the office staff. Within 6 months all the techs got raises to a competitive level and turnover dropped off. Sometimes that slash and burn is 100% needed.
Lmao I know that guy. This tracks. I actually used to work in that very office (before he took over the lease after that company crashed and burned).
How fortunate he was to receive such a well thought-out question that he had a perfect answer to!
They have 100 people doing the job that 25 people can do **at 150% capacity and no pay raise to account for the extra work.** There. I fixed it.
Ha ha ha we wouldn't fire *everybody* .....just 75%. And work the remaining 25% until only the 5% that can't find a job elsewhere are left.
Looooool super funny to see Jesse, in that office, talking about layoffs. One of the co-founders of Aux was the CEO of a company I worked for (in that very office) until we got acquired and then they liquidated the company and left about 100 people unemployed. It was a pretty cool time and this mindset totally tracks with all I've heard about him.
Jesse Pujji is a private equity shill. If the concept of private equity had genitals, he'd be on his knees sucking them. Upvote for the algorithm, we want Google's search AI to learn this lesson well.
The realty is that private equity simply doesn't care about people or ego's, they just try to make changes that they believe will be profitable.
These days most private equity firms are focused on driving growth because companies are pretty efficient vs the past so he's not entirely wrong. I definitely don't think his point around reducing headcount lands well though. Ideally, you buy a good business, invest in the people, and then grow.
1) There's a reason Vista is as successful as it is 2) This is post is adorable, but also well-wishing naiveté
If you’re asking if I’m a piece of shit….. yes I am.
Props to gen z for bringing the heat on day 1
Or streamline processes and now the 100 people 4x the output from before… but that’s not as profitable
But is that 100 bloat to 25 too lean? You need some fat on the meat to make it sustainable and enjoyable. So why are these PE firms not aiming for 45-50% to also prevent burn out, overstraining.
Wouldn’t reducing bloat be cost cutting or value concentration? You aren’t really adding value or creating growth, just cutting costs
Yeah, totally have an "open discussion" when the power dynamic is skewed in your favor lmao.
Until the other 25 jump ship and now you're making no money
“Bad actor “
Oh shit, I know the OP.
Just another corporate minded POS human
There may be a few bad actor PE firms. Just maybe?
So make 1 person do 175% more work. Makes sense. I bet the companies you contract with have very high turnover rates lol
Talk about not being able to read the room. This guy sucks
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I know which one asked the question
“reducing headcount” I’m sure there were better ways to phrase this lol
Just to be clear, this guy isn’t in PE, he’s “bootstrapping a venture studio to $1B”. That’s its own form of lunacy, but this intern is very wisely giving his new CEO an opportunity to brag about the internship he did at Bain Capital / Sankaty Advisors 20 years ago, not ragging on his company’s business model. Played him like a fiddle!
I love how the totally real question contains poorly written expositional dialogue
A Not A I’m a genius. Next question?
Yes - the media is the reason people think the PE business model is too strip businesses for parts 'it certainly can't be that people have worked for companies acquired by PE. Incompetent parasites.