How a Values Based Company Culture Helped When Laying Off 60 Employees
Connor Gillivan
I scale companies w/ SEO & content. Daily posts about the process. 7x Founder (Exit in 2019).
It was March in 2015 as my first eCommerce company, Portlight, was having its best year of monthly revenue since we started in 2010. In the first quarter, we were averaging over $500,000 of revenue per month and we were on pace to finish 2015 with over $10 million in yearly sales. We were listing new products, working on new projects, and adding great people to our team. We were young, optimistic, and confident in the company that we had built. My two best friends and I were efficiently running the team and we were working cohesively together.
What You’ll Learn in this Column
In this column, I want to tell you all about the time when all of this build up hit a massive wall. I want to tell you about the next 4 months of the business and provide an example of how quickly things can change when running a rapidly growing business. This story will demonstrate how a values based company culture allowed me and my co-co-founders to lay off over 60 employees while still retaining strong, positive relationships with the people we worked so hard to persuade to join our unique company culture.
The Amazon Roadblock
About 1 month after the events that I introduced you to came a roadblock that would send the company down a slippery slope. As we were getting bigger, Amazon was as well. We were on pace to complete the year with over $10 million in sales — 15% of which was going to Amazon — but Amazon was a multi-billion dollar publicly traded company that was received lots of pressure from the retail industry.
Amazon had really shaken up the commerce industry with books, retail pricing, fulfillment, and international selling. As more and more sellers flocked to the Amazon Marketplace, the brand integrity slowly decreased as well leading to issues between Amazon and its thousands of brands being sold on the marketplace.
Brand Integrity
Brand integrity is the act of selling goods only from suppliers who are able to provide you with authorized permission via written contracts called an authorized distribution agreement. With more sellers came greater risk that the products being sold weren’t actually coming directly from the manufacturer with the written authorization. The products may be coming from distributors of the manufacturers and sometimes even retailers where sellers could make a small increase in price and still make money.
As an effect, sellers would sometimes be selling their products on Amazon without the brand specifically recognizing them as an authorized seller. As this “issue” became more talked about in the eCommerce industry, brands started to hire lawyers and brand integrity personnel to protect their branded products. As these hired investigators found unauthorized sellers listing their client’s brand on Amazon, they immediately reported the seller to Amazon claiming counterfeit selling.
Amazon Supports the Brands over Sellers
Amazon found themselves in a sticky situation where they either had to support their sellers or back the brands that were complaining about their brand integrity. Intelligently, Amazon decided to support the brands as those brands were helping them to rake in millions of dollars of sales each day. Sellers were the ones handling the transaction and customer service, but they could be sacrificed for other sellers to ensure brand integrity did not become a massive issues for Amazon.
As this transition occurred, Amazon began to implement new measures to ensure that all of their product listings accurately described the brand and product details that the customer would be receiving.
Portlight’s Running Status
At this time, Portlight was managing over 500,000 active listings on our Amazon store. Of course, everything was not perfect and we did not have continuous systems in place making sure that our product listings were a 100% match. It would have been extremely difficult to do that with such a large inventory and with product details being changed regularly by other sellers making requests to Amazon’s product catalog team.
We rarely received complaints from our thousands of monthly customers and we always made sure to list products using proper UPC codes as recommended by Amazon. But it wasn’t enough…not with the pressure that Amazon was facing from outside brands seeking to clean up their brand presence on the Internet.
Amazon Cuts our Revenue
On a Wednesday before I was scheduled to go on a vacation with my girlfriend to Puerto Rico, we received a notification from Amazon that our seller account had been temporarily suspended and that all of our listings had been closed until the issues that they outlined were resolved. Amazon provided a discreet reason as to why our account had been temporarily suspended and then let us know how we could appeal their decision with a formal letter.
Thanks Amazon.
Getting Unsuspended then Suspended then Unsuspended…
We were confident that we would get unsuspended, but we knew having our revenues completely cut for even a few weeks would put us in a dangerous financial situation. Urged by my co-founders, I boarded the plane to Puerto Rico and attempted to enjoy the must anticipated trip taking breaks throughout the first two days to write the formal appeal letter to Amazon. I returned that following Monday and we still hadn’t heard back from Amazon.
Have you ever been in a state of limbo? It’s the absolute worst, especially when you have a team of over 50 people wondering what is going to happen next and, of course, thinking of the worst. You’re optimistic about the outcome, but you also have no clue what is actually going to happen and when. It’s quite nerve wracking and definitely led to many sleepless nights for me and my co-founders.
Over the next 4 months, we were reinstated to sell on Amazon and then suspended again numerous times. Amazon couldn’t make up their minds and it continued to chip away at the stability of our company. Every time that we made a major adjustment to our seller systems and processes to appeal to Amazon’s complaints, they found another reason to suspend us.
Being the Bearer of Bad News
It was an extremely difficult and trying period of time as the CEO of the company and it taught me a great deal about running a business that I have never experienced prior. In that 4 month period, the company went through 3 formal rounds of layoffs in order to keep the company afloat at the run rate that we had evened out to after each suspension.
As the CEO of the company, I was responsible for sharing the the news with our team each time we decided to go through another round of layoffs. These were people that I had been working with for 2-3+ years and some that I had known even longer. Some had moved down to Orlando from the Northeast to work with the company and the rest had made the decision to work with us instead of another company in Orlando.
In order to make sure that we did it “right”, we spent time researching and speaking with our group of mentors who had handled layoffs in their past experience. We put together all of the advice that we had and came up with the best approach each time. We were really in a time crunch as our reserves continued to deplete and we were forced to go with what we thought would be the best possible way to share the news.
I had no idea how the team would accept the news each time, but I knew that I had to stick to the way that we always shared news with the team: honestly. We had worked tirelessly to build a company culture characterized by the core values that we all shared as a team and we had to continue demonstrating those values even in the toughest of times for the company.
Making the Layoffs
Imagine this. I’m sitting in the back of our 4,200 square foot office with our 30+ in-house employees sitting around me in office chairs. We’ve called a meeting this morning without giving much detail and we’ve congregated in the normal oval that we do when having company wide meetings. I haven’t slept, but I have an agenda ready to share the grave news. I took hours the previous night to come up with how I wanted to explain the situation then present our decision to make layoffs. Everyone is ready and I take a deep breath.
I start speaking and continue speaking as I look out on the blank faces of my team members. I talk and I talk some more then I stop. I apologize to the team and am greeted with more blank faces and silence. I open the floor to any comments or questions that the team may have so that we can inform them as much as possible about our decision.