Inside the 2023 Talent Tsunami: Layoffs, Remote Work & More

Remote work is a big, divisive topic right now. Some think it’s the future, while others think it was an experiment gone wrong. But it’s also not the only way to attract top talent. And the equation for doing so has only gotten more confusion as a myriad of trends intersect, from layoffs to emerging technologies like AI. So how can companies navigate this storm and truly attract the talent that matters? Listen in to find out.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  There's not a lot of increase around why should people come and return back to work? And is it return to work or return to office?

• 0:07Speaker 01

  If it's 47% that wants something, 53% have not listed that as something very significant.

• 0:13Speaker 02

  We're probably at the point now where we need to bring in the nuance.

• 0:17Speaker 00

  Organizations that can be transparent to say that's just not something we can provide may actually even retain their critical talent a little bit longer.

• 0:24Speaker 01

  They're effectively paying for people to be onsite, even though it's more expensive for them to have people onsite a lot of times. I'll just say two words, Elon Musk.

• 0:34Speaker 00

  The word "top talent," by the way, is also subjective.

• 0:40Steph Smith?

  Remote work is a big divisive topic right now. In fact, some people think it's the future, while others say that the pivot to full-blown remote work was, quote, "one of the tech industry's worst mistakes." How can so many smart people have such different opinions on this topic? Well, remote work is actually just one of the many facets that come into play when you're trying to attract top talent. And quite frankly, that equation has only gotten more confusing as several trends intersect, whether it be layoffs or emerging technologies like AI. So how can companies navigate this storm and truly attract talent that really matters?

• 1:24Steph Smith?

  And as they try to do this and they make changes to company policies, how can they tell if they're actually moving in the right direction? Let's just use a simple example. Let's say a company changes the policy and several people leave. Now, is that unwanted attrition? Or is that the company culture becoming more aligned? Today, we have three people from different perspectives joining us to discuss some of these questions. The first is Rob Frohman. He is the co-founder of Keep Financial, which is a tool designed to help you enhance engagement, retention, and performance through vesting cash bonuses. Our second guest is A.J. Thomas. She's an advisor and leadership coach

• 2:07Steph Smith?

  that has led several people in culture teams, from startup to enterprise. So you can bet that A.J. has a pretty unique perspective on what it means to attract and retain tech talent. And then finally, we have Hung Lee. Hung is the writer and founder of Recruiting Brain Food, which is actually one of my favorite newsletters. All right, I am so excited to dive in. But before we do, I just wanted to share that this episode was actually inspired by some of the unique perks that I had never seen before until I joined A16Z. That includes a full body health scan that we get from Q Bio or five weeks of full firm shutdown. Yes, that's right, five weeks where the whole firm is shut down. In fact, we're actually on one right now.

• 2:49Steph Smith?

  So if you're hearing my voice, if you're seeing my face on screen, I'm actually on vacation. The real Steph Smith is out of office. All right, let's dive in. As a reminder, the content here is for informational purposes only, should not be taken as legal, business, tax, or investment advice, or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any A16Z fund. Please note that A16Z and its affiliates may also maintain investments in the companies discussed in this podcast. For more details, including a link to our investments, please see a16z.com/disclosures.

• 3:30Steph Smith?

  Okay, so I feel like there are so many trends intersecting right now. There's the macro climate and layoffs, there is a return to office, or in some cases, people being forced to return to office. There are technology trends like AI. And so I guess just to kick things off, with so many things happening at the same time, what are each of you paying attention to? What's really grasping your attention when it comes to this question of what it takes to attract talent in 2023?

• 4:01Speaker 02

  Yeah, I think you're right to mention all of these trends. I think they call it polycrisis these days, don't they? And I don't think you need to be like any sophisticated academic to be aware of it. Just being kind of in the washing machine that's been the last three years can tell you enough about sort of how much these trends are sometimes in tension, sometimes they're accelerants, sometimes they're suppressants, and they're all just moving us around. And the overall sense that most of us have, if we're truly honest with ourselves, Is this sense of discombobulation, you know, this sense of, oh, I'm not sure previous confidence that we had prior to twenty nineteen, twenty twenty. I don't think any of us are as confident as we are, as we were back then.

• 4:43Speaker 02

  Cause we all know that we're in a world that is in the cusp of these huge changes. And you've mentioned a few already to the geopolitical angle, hostility, globalization, the cost of living crisis, record inflation, the huge shift that Covid pushed everyone to remote and now push everyone back. And then if that wasn't enough, you know, only six months ago, OpenAI launched ChatGPT, completely change everything again. So I think all of us are thinking, okay, it's gonna be completely chaotic. It's gonna be difficult to predict. It's thinking about how do we kind of build a resilient business against unpredictable change.

• 5:22Speaker 00

  And I believe it's actually an inflection point for us. It's an inflection point for those that are thinking about ways to attract talent, thinking about ways to actually even help talent self-select. And I think a lot of that is gonna be grounded on what assumptions are we questioning? So with the wave of all of these things that are happening, it can be very easy to kind of mass, you know, collide into that and say, okay, all companies need to be doing this now, or most companies need to be doing this now. I actually believe that where you wanna land should be around what assumptions are right for the organization that you are trying to steer forward.

• 6:03Speaker 01

  You know, when I think about it from an employee's perspective, and by the way, this varies from industry to industry very significantly. I think a lot of times we think about the tech industry only, and many industries are still going through a lot of the pain that, you know, we all saw in, you know, healthcare, transportation, logistics, other areas are still seeing incredible challenges hiring employees and retaining them. But, you know, getting back to the key thing I'm thinking about is how do you create some stability in the system, right? When you have all of these things happening, you know, macroeconomic climate, when you have, you know, AI creating questions, I think folks are looking for stability more than they were necessarily thinking about. A year or two years ago, and from an employer's perspective, that's frankly what

• 6:48Speaker 01

  they've wanted forever.

• 6:50Steph Smith?

  Given so many things going on, are there any specifics that you're seeing, whether it's in data reports that you're reading, or just anecdotally what you're hearing? Like Hong, you have so many readers of your newsletter. What do people really care about?

• 7:04Speaker 02

  I think the remote revolution, so to speak, opened a lot of people's eyes in this, and we've got multiple data points to suggest that companies that are operating a remote-first policy typically have a significant advantage against companies that do not. And this pertains to, you know, the, if you like, quote unquote, "top talent." Let's talk about them in terms of, you know, the software engineers, the high-demand people that we've always been looking to recruit. I think VMware, for instance, did a sort of before and after comparison in terms of their time to hire when it comes down to where they're doing on-premise hiring pre-Big OvA period, and then they switched to remote hiring. And they reduced their time to hire by 100%. So they went down from basically half the time.

• 7:46Speaker 02

  And in fact, not only through speed of processing candidates, but also through reduction of assessment load, because, you know, the logistics simplicity of doing a Zoom call compared to in-person interviews, having to configure everything with the idea that this person, you know, may never come on-site, suddenly unblocked a lot of sort of other things they felt they had to do. So I think that's still the case. And I still think it is the case that the job seekers would ideally prefer a remote or at least a flexible working environment. And there is a bit of a tension at this point where some companies are rolling back the remote policies, or at least they're starting to put additional conditions upon it, which you can see it's kind of a mission creep back to the office.

• 8:30Speaker 02

  But I think companies are trying to do this now, maybe because they feel a bit more confident, market has swung away, if you like, from the candidate control. And maybe now the companies are seeing a little bit of an opportunity to claw back some of what they may have always perceived to be an overly permissive position when it comes down to, you know, working mode.

• 8:49Speaker 00

  Thinking about your question, what trends, what data, what things we're seeing, what some anecdotal things, fractional work has hit the knowledge workers. And I think if you think about top talent, you're seeing a lot more folks really wanting to take control of the things that they are working on. I think there was study and a research that was done that around sixty-five percent of folks would actually choose a job with slightly lower pay if it meant working at a company that aligns with their mission or their personal values. And that's specifically true, I think, for the new generation that's getting into the workforce. Right? They want more autonomy. They want more freedom. They want the ability to be able to say, this is the stuff that I'm working on and it is creating impact.

• 9:33Speaker 00

  There is more of that type of critical thinking that is happening, I think, in the next generation of the workforce. What I'm seeing at least are organizations that can provide ways in which to engage their current workforce to say, okay, what are the things that are truly impactful that you want to lean into? It's going to be great. But also organizations that can be transparent to say, that's just not something we can provide. May actually even retain their critical talent a little bit longer, at least. And I know that's a little bit different than what you'd normally see, like a point A to point B. But at least what I'm seeing is the more transparent the conversations you can have, even in hiring, right? I think years ago it was like, come join this company, really awesome benefits. Here are all the things you're going to experience. Here are all the perks.

• 10:19Speaker 00

  And I think the companies that are going to win, and I tend to be a little bit more future oriented on this and also curious, this is what it means to be at this organization. And here's what you're going to be signing up for. And if you can sign up for that, we're in for a wonderful road ahead. And if you can't sign up for that, we may just be frustrating each other for the first year that you're here. Until you leave, right? That's right. Those are the maximum things that I'm seeing is I think the workforce, especially those that are knowledge workers in the advent of AI coming into place and disrupting a lot of that kind of knowledge work. You know, folks are starting to think about more fractional work, side hustles, things they want to lean into that are closer to what they're passionate about and what they want to contribute to.

• 11:00Speaker 01

  There's two missing elements to this. One is what's actually in the best interest of the organization as well. You know, can they get the performance they want? And I think, you know, the argument is yes, our productivity is great and, you know, and all these things. But I think some studies are sort of coming out, Meta is sort of saying like they've noticed that people who are back at the office three days a week are more effective, or if they've already been in the office for a while before they went out on remote versus native remote, you know, because they joined the company, you know, right during the remote phase. I don't even know if that term has been used, but I think about it from that perspective. Look, if you give an employee an option that says, hey, you know, would you like to work from home five days a week, you know, with the complete

• 11:45Speaker 01

  option of coming into the office or not, like who's not going to say, okay, they're going to say, okay. People talk about performance and the productivity of people in the office. The thing I don't think that is very clear right now, unless you all have information on this, is what is the ultimate impact going to be on attrition, on retention? For people who are native remote or significantly remote now. I think we're too early in this process to know whether those people are still going to feel the connectivity to the organization or whether they're going to feel like they can just, you know, leave sooner because they haven't made the personal connections that as strong as they made the personal connections when they were in the office all the time. So that's like one body of questions that I have and I think about.

• 12:30Speaker 01

  The other thing is about all these different perks, what's important to attract? You know, the kind of workforce that you want. I remember the old adage that used to go between my parents where my mom would say she's going to the store. They're having a sale, it's 40% off. And my father would say, yeah, but it's 60% on. And you know, the fact that there's still cost and expense associated with this stuff. You know, a lot of the statistics we get back go 63% of employees want that 47% of employees want that. We need to think about the reverse of those percentages, which mean that's 47% that wants something, 53% have not listed that as something very significant. So my

• 13:14Speaker 01

  personal perspective on this is something we're working on is completely flexible compensation benefits package where basically people can get exactly what they want from a comp and benefits perspective to, you know, sort of employers decide and employees to personalize it because every one of us on this podcast right now is different. We all have different experiences. We're all going through different things in our lives. And guess what? That's all going to shift three, six months from now. Systems out there should be flexible enough, especially in this age of hyper-personalization, to allow employees to make decisions today and then make slightly different decisions a few months from now without it negatively impacting the employer.

• 13:55Steph Smith?

  I mean, one thing that comes to mind there is the fact that we don't really have that much data, to your point, about who top performers are and what they prefer, right? Because we kind of give everyone the same set of benefits, and I'm sure some analysis could be done across companies. But to that end, you can imagine how, to your point, Rob, kind of any benefit could be seen in a positive or negative light. Like, let's just use the wide swath of benefits that Fang offers. Well, if you know, you're offering nighttime meals, you could imagine that, okay, people are going to work harder and later. You also might imagine if you're offering meals and massages and all of these kind of auxiliary

• 14:37Steph Smith?

  benefits, you may just attract talent that wants to relax and not work very hard, right? There's kind of two sides of that coin. And the same analysis could be applied to a lot of benefits, right? The one that I like is Anduril. Palmer Lucky says that he offers his employees. Tools and technology for all of their side projects, not just their work projects because he thinks that'll attract ambitious people. But again, you can imagine how someone might position that as, oh, I'm actually funding people's next company, not my own.

• 15:07Speaker 01

  I think that's true, but you know, what I love about that is it's a principles based approach to providing a benefit. He's saying, I'm not telling you what to work on. I'm just saying that I'm going to provide you with the platform, with the tools to do the thing that is exciting to you. And by the way, it might be that, you know, my kid's school wants to do an auction and I want to run the online auction piece of it. And I want to create a really cool element. It might not be for profit. I think that's the key is allowing people to be able to, you know, individualize and be their authentic selves. And I think that's a really big part of what culture is.

• 15:47Speaker 00

  Rob, I can't agree more with what you just said there. And also I think there's a lot of wisdom that can be pulled from. I mean, it's graduation season right now. There are a lot of new folks that are graduating that are wanting this kind of work. I think A-Team actually published a really wonderful data set around what new grads are actually looking for with their new employers. And some of the standout pieces there are really about the terms, Rob, that you had discussed and I think you had offered earlier too, which is around that flexibility, that personalization. And then the thing that I'm adding along is, okay, what is it that is going to resonate with them to be able to create more impactful work?

• 16:28Speaker 00

  For them, career growth is impactful work, not the ability to, you know, go up a rung on this non-existent ladder that has existed for decades. And so that actually gives me a lot of hope for the new generation. But it also is going to take us being able to educate folks that are currently in the workforce to receive that kind of mindset. Right? Most folks want a four day work week. Most folks want more flexibility. The fact that companies are thinking about how they fund other things outside of the work that people are currently doing in their organization is showing really interesting signals.

• 17:07Steph Smith?

  You mentioned the younger generation and it does feel like there's some data showing up that, you know, as all three of you have alluded to. This is not a monolith and it does seem like certain generations maybe respond to different perks or different types of cultures. Let's just use remote work as an example. Can you really offer an organization where, you know, some people get to work fully autonomously and others get to go into the office? Are you able to break down organizations so that you can kind of offer different generations what they're looking for? Or is this a matter of certain companies just needing to orient around certain group kind of targeting Gen Z while others targeting maybe an older generation?

• 17:48Steph Smith?

  How do you think about attracting different folks with so many different competing interests?

• 17:54Speaker 00

  One provocation that I have is do organizations believe that remote work is a philosophy for the organization? Or for specific roles in the organization? That's a nuance. No one's really talking about that. People are talking more about remote works for everyone, for the whole entire company. How can you get really strategic and say there are specific roles in the company that can be remote? How does that manage from a fairness and equity perspective? So that's a provocation. One other piece that is coming up as you ask that question is around how are people communicating the roles?

• 18:35Speaker 00

  Because again, if you go to a company, you think about the Atlassians and the Automattic, you know, who runs WordPress, they were remote way before remote was a thing. They were remote when it was more stigmatized as a thing. And so I wonder how they're presenting things now with the learnings based on having come from pre-COVID remote to post-COVID remote. And I think there's a lot of wisdom there we can pull.

• 18:59Speaker 02

  Great that you mentioned the likes of Automattic and another company is like Basecamp. And basically companies that were remote first pre-COVID. So they made a conscious choice to do so rather than be forced by external circumstances, which is the vast majority of everyone else. And there were some interesting features as to how they did that. I mean firstly, they did in fact target experienced workers. A lot of remote companies did not hire early entry talent because of exactly the concept of this person needed to have control of their home work environment, so to speak. So they couldn't be living with parents or in a busy flat share with, you know, student college or whatever it might be. They also needed to have the experience of working independently without the proximity of management.

• 19:42Speaker 02

  And all of that kind of pointed towards someone who is basically a senior contributor that had experience. And again, if you look demographically at the types of people that are most pro-remote, the remote evangelists, so to speak, they are all of that demographic. They are individual contributors who have established a level of expertise, that have built up some social capital, that have built up some capital capital, so that they can go ahead and, you know, provision their home office in such a way that makes sense for their lives. Typically, they're even people that have got young families to take care of and think about, and that kind of adds a plus, plus, plus to the concept of having that control at work. You speak to young people entering a workplace for the first time, that is the last thing they want.

• 20:27Speaker 02

  There's a great bit of research by a company called ISMS, who basically conduct an annual survey for graduates in the US and elsewhere as to what they desire. And this is the first time when I encountered this kind of gerontocratic view of what remote was. It was very clear that someone who was an early career person did not want remote. It was something that, you know, they thought about, yes, no, they literally didn't want it. They wanted the office because they wanted the learning, they want the acceleration of learning through being alongside more senior people, and they wanted to get out of their domestic situation, which is living with their folks or living in a busy, you know, crowd shared place.

• 21:08Speaker 02

  So AJ's completely right, and I think, Rob, you mentioned earlier about this idea that, you know, we've treated things monolithically, and sometimes we need to make generalizations, of course, in order to have a conversation. But we're probably at the point now where we need to bring in the nuance, because what is positive for one group of people is negative for another. And when it comes to things like building companies and designing an organization, we might need to make choices as to which demographic that we service. You know, if we are absolutely a remote-first company, we are probably optimized as an employer for a senior individual contributor that has already achieved a certain degree of material comfort in order to provide for home, a working.

• 21:51Speaker 02

  Has social security in the sense of social capital. So in other words, they don't feel they need to come to the office in order to make friends. I went to an event last year in Barcelona and I was actually stunned by a comment. This is by the way, at two thousand twenty two was like peak remote evangelism, right? Everyone was like totally into it. There wasn't even a question mark that was a bad idea. Apart from one guy who stepped up and said, I hate remote. And everyone just stunned, it's like, who is this guy? Who's who's say this heretical claim? Turned out he was from Latin America, I think Venezuela or something. And he said he was a recent immigrant to Poland, a random town in Poland. And he said it was the worst thing ever to be remote from the office because he had no friends. He had no social contact.

• 22:36Speaker 02

  He literally had nobody because he was a new person in a country where he had no social contact, no social capital. And he actually walked one and a half hours into the office every day in order to interact with the two or three people that might be there.

• 22:51Steph Smith?

  Might.

• 22:51Speaker 02

  And when I heard that story, it started opening my eyes and realized, you know what? We have to consider the social environment, the social capital that everyone has. And the higher social capital you have, the more confidence you have not to have to make those friends at the office. But if you're a younger person relocating, you're an immigrant, you've gone to a different place, you probably want to go in and meet your colleagues.

• 23:14Speaker 01

  Wow, super interesting set of comments. It's funny, my anecdotal, not scientific surveys have suggested that there's become this expectation for younger folks to have the right to work from home. I'm not saying they want to, it's just is something that is kind of this, you know, inalienable right that they have. And it brings up whole concept of, you know, should it be a privilege versus a right? I think when you talk about people that built up social capital and things like that, it sounds a lot more like it's a privilege that somebody's earned over time and they're able to take advantage of it, right? My last company is a company called Cabbage, we had six hundred employees. I would have been that guy on stage.

• 23:58Speaker 01

  In Barcelona back in 2018, 2019, who was refusing remote work because it was something that was being requested by a lot of people. And I was very committed to what I thought was in an office culture we had built that was really special. And really traded these authentic connections between people. Now, we ended up doing one floating day a week that people could take advantage of after you had been with the company for some period of time a year or something like that. So that's how we actually addressed that. And then we moved into the pandemic and I was blown away by the level of productivity of the team. Now, I think that pandemic period, especially for a company like Cabbage, which was serving small businesses that were

• 24:40Speaker 01

  really ground zero of the economic crisis from the pandemic. I think it was a very unusual circumstance. So if you're in a, and we're not in ordinary times now either, but if you're in ordinary times and you have remote work, that's the apples to apples comparison I would need to make to the pre pandemic period. I think anytime you have extreme extrinsic situations happening, you can't really get a clean read on whether remote work is as effective as working from home. You need like sterile environments in both situations, in my opinion. The other thing I brought up earlier was I still don't know what the long term impact of attrition is going to be due to remote work.

• 25:24Speaker 01

  I don't know if on average people are going to work longer for the same company or going to work the same amount of time. Or they're going to work a fewer number of months or years because they never got that personal in person connectivity with people. I have no idea if anybody's seen any statistics on that, I'd love to see them. The final thing is we actually have some clients who are devising financial benefits. And we got to be careful on these things because you don't want to create pay discrepancies, but they're effectively paying for people to be on site. Even though it's more expensive for them to have people on site a lot of times, they believe productivity makes it worthwhile to actually pay people more if they come in the office.

• 26:09Speaker 01

  That way, people have a choice. They could work from home and effectively earn less money, or they can come into the office and effectively earn more money by doing that.

• 26:19Steph Smith?

  I will start by saying I'm a big remote work advocate, but it's been, to your point, Hung, really interesting to see how different opinions have ping ponged. And then also the nuance that is arising that we have to, I guess, at least acknowledge. It's kind of crazy that I've seen the spectrum go anywhere from it's the only perk that matters to someone like Sam Altman saying this is one of the tech industry's worst mistakes, right? There's such a diversity of opinion and maybe what we've already addressed is this idea that that's because there's a diversity of need in terms of the employees and what they're looking for. But I do want to just rapid fire, get your perspectives really quick on this question.

• 27:01Steph Smith?

  If companies, as they are ping ponging from an era where many had to go remote and many of them are now debating the reverse, some of them have already enacted that reversal, does the return actually work? And I ask this because we are seeing some companies mandate that people aren't coming in. We don't have data yet on whether that reversal actually encourages more productivity. Just real quick, any thoughts on whether the return actually works?

• 27:31Speaker 00

  I think from a standpoint of getting people to return, again, what is the why? A lot of the conversation that is out there, at least that I have seen, in my own personal opinion, shows about how people can get and return back to work. But there's not a lot of increase around why should people come and return back to work? And is it return to work or return to office, right? And again, I would put the provocation out there. Are organizations optimizing for certain things? It's just like compensation. People will trust your system if they can validate where those principles come from.

• 28:12Speaker 00

  So for example, if you say, these are the reasons around us coming back to work are for X, Y, and Z, so that they can impact A, B, and C. That's probably more probable to have a dialogue with folks. But if you're just mandating, come back three to four days a week. It's a must. This is what we're doing. I think it decreases the level of trust. I think about culture in an organization as an architecture. Right. Whereby those mission, vision and values are really the operating system. And then you've got the applications that layer on top of that, which are the different functions. Product, marketing, engineer, sales, et cetera, recruiting, legal. And then you've got the features, which are really the goals and the initiatives and the OKRs and the things that need to be accomplished.

• 28:57Speaker 00

  And I think the remote work or return to work or return to office is an operating system level discussion. And I'm not hearing a lot of that kind of discussion happening. It's happening at the application level. Right? Mm hmm. What are the companies that need to, or here are our goals to make that happen. And there's a lot of assumptions. And I think that there should be some dialogue around the why I'm seeing a lot of how and what happens if you don't.

• 29:25Speaker 01

  I'm going to analogize this to the world of having kids and them entering your life and then them exiting your life when they leave for school, college, university, depending on where you live. One of the most disruptive moments of your life is when you have children. It changes everything, like getting married, moving in with someone. All that's amateur game. When the kids arrive, it's the real thing. It's incredibly disruptive. Then when the kids leave to go to school, college, it's equally disruptive on the parents. And it causes a tremendous amount of turbulence. It's extremely emotional, all those things. So here's my analogy. See if you guys think it makes sense or not. We moved to this remote work situation, which all sorts of new technology had to come

• 30:08Speaker 01

  in, all sorts of new ways, working, operating, communicating, figuring out how to schedule things, very disruptive. If people want to bring employees back into the office to work, it's going to cause disruption. As much disruption as occurred on the way out is going to happen on the way in. And I think the most important thing. Is that you understand that you prepare for that and you handle that, not just be like, yesterday you were out, today you're in, you know, here's your desk. Like to me, if you handle it in that kind of way, it's gonna cause a lot of problems. But if you really are thoughtful about the way you approach these things, you know, it's still going to be hard, but you're gonna get through it.

• 30:50Speaker 01

  Just like I somehow, my wife somehow got through our kids leaving for college. People will sort of figure out how to come back in the office and make it work. But you gotta put the work in.

• 31:00Speaker 02

  I'll just say two words, Elon Musk is maybe something we need to drop right in here. Because even though, you know, I dare say, most people listening to this podcast will probably have negative to hostile attitudes to Elon Musk. But I think he confronted this in a totally different way, which was to say, okay, great, I'm just gonna crush it. And the most efficient way to get to operational change was to simply mandate it in a dictatorial way. And forget about the conversations and the dialogue. Now, what he managed to do was to obviously wipe out more than seventy percent of the company. I believe pre Musk, Twitter was significantly bigger than it was now. They're down to twenty percent, I believe, in terms of headcount.

• 31:42Speaker 02

  Clearly, lots of things are not happening or working well in that organization. But it is, I think, an important moment in how other tech leaders, other business leaders might observe what has gone on. Yes, it's problematic, yes, it's difficult, but it seems at a kind of a higher level, maybe the most efficient way to get there. To basically say, you know what, this is the new culture. If you don't like it, you can leave. Even presumptively, he was saying, if you don't turn up, that's your resignation. Clearly, that would be illegal in most jurisdictions on the planet. And indeed, there's been legal cases, obviously, from Twitter employees based in the EU and so on. However, it may be the way to cut the gaudy or not, is to brutalize the business.

• 32:25Speaker 02

  I'm not suggesting this is the way forward, but it is clearly a method forward. And you do wonder how many leaders have been quietly inspired by this approach and may in fact be adopting some of the, some of Musk's methodology, if not values, if not processes, given his example.

• 32:43Steph Smith?

  One thing that is very clear and to your point is that he took a stance with his companies. And I'm curious to know if the three of you have examples of other companies, maybe not in the exact same fashion, who are making Clear statements or clear choices, rather, about what they offer, what they don't offer, what their culture is or isn't. And in ways that are really defensible, like I think the Andorl example is interesting, right? Because you don't hear of many companies doing that. I think what's less of a statement is if, you know, a company is going to say, you know, we're going to give slightly better healthcare. Well, that's nice, but that's not actually so much of a differentiator. Are you seeing other examples of that where companies are getting creative? Quite frankly, because, you know, one way to differentiate is remote work. We're not remote work.

• 33:28Steph Smith?

  One way is through compensation, of course, but it feels like there's other options, especially if companies are maybe not as heavily capitalized.

• 33:37Speaker 02

  It's actually something A G mentioned earlier. So it's about basically being very transparent and honest with your true culture as a business. We may have kind of went through a period where a lot of companies felt obliged to kind of check the boxes as to what was the sort of culture that everyone felt, you know, was right for everyone else. And they ended up producing a lot of content about this. A lot of mission statements came out, a lot of, you know, very conspicuous kind of signaling that I think a lot of it was disingenuous. I think now is maybe a moment for a lot of companies to truly think, you know, what kind of company it is and to externalize that in some way, externalize the reality of those values. And what will happen is that you'll attract people that are into it and you'll repel people that are not.

• 34:22Speaker 02

  And that type of sorting through, I think, would do a great deal to resolve a lot of the problems that we have currently in employer-employee relations in the sense that, you know, I think a lot of people have joined companies on the false premise that they've been presented with.

• 34:37Speaker 00

  Yeah, I really like that. You know, there's a live and work anywhere program from Airbnb. But the reason why that was developed for them was because their mission as a company was to find a place for everyone to feel like they belong. And so that worked really well for that organization. And so I think there are organizations, I would say there are probably little bits of light that you can look at in who is your company? What are you really trying to accomplish? And maybe there are new and innovative ways to create other benefits or things that really align to the type of talent you want to attract. The word top talent, by the way, is also subjective.

• 35:21Speaker 00

  Because top talent can mean something completely different to an organization that has very different missions and values than another organization who is thinking about things in a more radical or innovative fashion. It could be different in tech, it could be different in manufacturing. And again, I would implore to say, we need to actually look internally during this time of destabilization to get to really know who are your organizations? What are the things that you hold dear? And then maybe you can create something new. Innovation, I think, comes from that and the ability to shift perspective and dispassionately assess, right? Like some companies, oh, we've been around for forty years. This is how we do things. But how you do things often shadows why you do things.

• 36:05Speaker 00

  And if you just take a beat and say, why are we doing this? Even the example that Hung said around Elon Musk, it will attract the top talent that is right for the organization based on where they're going. And so I think it's really that first principles approach of thinking about that and not getting swept in the wave or the current that allows for you to have that strong employment brand, that strong philosophy, a great culture where the people that self-select into it will thrive. You want people to self-select in. You don't want to just screen people in.

• 36:37Steph Smith?

  I think that's such a great way to summarize this idea that companies can design their culture in a more thoughtful way is important, right? Because I mean, even if you look at most, we talked about perks for a while. We talked about remote work maybe being one of them. A lot of company pages, if you look at their perks, are pretty identical to their competitors. They're pretty identical to other industries and, you know, at face value, it just feels like there's room for innovation there. And maybe this is a prompt for folks listening to think critically to your point, AJ, about, okay, who do we want to attract? How do we design specifics around attracting those individuals in particular and not everybody?

• 37:21Steph Smith?

  And as companies may do this, I'd love to just close out with, what would you encourage people to pay attention to?

• 37:28Speaker 02

  I kind of would go with a warning because I do sense that there are a lot of business leaders that might have adopted almost an adversarial approach now to potential candidates and job seekers. Given the previous period that we had, sort of immediately after the pandemic and during that sort of shift to remote period, 2021 to 2022, where very much the employers felt that they needed to bend over backwards to attract all of this top talent. I think there is a bit of a backlash right now, and I think business leaders, in fact, I hear it in the conversations after a few drinks, where managers are saying this quite explicitly and saying, you know what? Now we're going to knock these people into shape with that kind of adversarial mindset.

• 38:12Speaker 02

  So my warning would be to those folks, that is not the right attitude to adopt. I think we need to accept, business leaders and hiring managers need to accept that the world has changed for the better, that we do need to have a more equitable relationship with our employees. But that doesn't mean being overly permissive, that means being true to your values, but recognizing that now is just not an opportunity to throw a cudgel at the job seekers just because you've heard about a lot of layoffs. It's not going to work for you as a business. And even if you do end up, let's say, hiring a few people because they are under economic stress, you're not going to keep those folks because, you know, they joined you for those stressful reasons. You have to hire people that are motivated to work for your business irrespective of these externalities.

• 38:56Steph Smith?

  Such a good way to put it.

• 38:58Speaker 01

  There's never a recession for great talent. You know, your greatest bestest, not a real word, talent is always going to have options. But the one thing that remains true, which has been sort of a theme I've hammered home here a little bit, is the fact that Everybody remains different. All of your great talent all have very individual needs and wants and desires. And so I really do think a move to enabling more flexible compensation arrangements, where it's a zero sum game for the employer, but it's very impactful to the employee, can allow you to retain people longer and to put some specifics around that. And Shopify has rolled something like this out that allows employees to determine

• 39:43Speaker 01

  how much cash versus equity they want. And there's some guardrails around it, but largely they have that ability. We're adding in the ability to actually pull some of your salary upfront to be paid for your loyalty to the company. Just like a venture capitalist will invest in a company. They invest in 10 different companies. They reserve some amount of money to invest in the best of those companies down the road, should they need more cash or do another round. You should be doing the same thing with your compensation.

• 40:17Speaker 00

  My final thought on this is just a reframe of the word attracting in general. We talk a lot about retention as it refers to internal employees. And I would actually challenge folks to think about attracting their internal employees. There are a lot of ways to think about attraction if it is somebody that is external that you want to bring in that is a top talent. What about the people that are currently inside, right? There are ways in which you can apply the same methods you're doing for external to folks that are internal as well. And think about retention as an outcome, not as something you have to go chase after how you attract those people inside your organization. Because it could mean them moving into a different role that could be highly impactful

• 41:01Speaker 00

  and you already have somebody there. And so it's a little bit of a nuance again, work in the tension of the nuance. At first it sounds a little bit kooky like, oh yeah, of course. But I do challenge folks to think about their employment branding, right? That's not just for external. That is for your internal folks. How do you think about that for your folks that are probably ready for their next roles? And so I think you're going to get a lot out of, I always think about the metaphor of everybody wants to bake a cake. But very few people pay attention to the ingredients they already have. The sugar, the butter, the flour, the basics. How do you get that really amazing depth of substance in those ingredients? You can put any kind of fondant on it or icing that you want.

• 41:46Speaker 00

  But at the end of the day, if that cake is substantial and amazing, everyone's going to have a piece of it and it's going to be great.

• 41:53Steph Smith?

  All right, if you have made it this far, I want to hear from you. What is the best perk that you have seen out in the wild? What's the most unique one? And also, would you take a pay cut to stay remote? Or are you dying to get back into the office? And if you like this topic as much as I do, make sure to subscribe because we've got a lot more where this comes from, including our next video with Mark Andreessen, as he talks about how society is reshuffling due to the rise of remote work.

• 42:23Steph Smith?

  Thanks for listening to the A16Z Podcast. If you liked this episode, don't forget to subscribe, leave a review, or tell a friend. We also recently launched on YouTube at youtube.com/A16Z underscore video, where you'll find exclusive video content. We'll see you next time.