Recessionitis: Why Do Startups Hire People Right Before Going Belly-up?

Matthew Yglesias's commenters are angry at Portfolio for hiring Ryan Avent and firing him three weeks later.  And believe me, I'm not about to defend this, both because Ryan's a friend, and because, well, that should just never happen to anyone.

Nonetheless, it has happened at every startup I've ever worked at--at least the ones that went bust, which was most of them.  I myself turned down a nice, stable job at Booz Allen right out of business school to work for an exciting new tech strategy company, which then laid me (and the rest of my associate class) off.  I worked for several other startups where I lasted less than three months, because the whole company (or in one case, division) was shut down.  At that, I've never felt too badly used, because at the first startup I worked for, one guy worked there for exactly one hour--he had finished up at his old company the night before, came in at 9 am on Tuesday morning, and at 10 am was called into the staff meeting where they told us the company was done.

(Anecdotal evidence suggests that 85% of these meetings are held at 10 am, with the remaining 15% evenly divided between 1 pm, 2 pm, and 3 pm.  Not sure why 10 am is the heavy favorite.  It's not like you really want to sleep in before you fire everyone who works for you.)

Yet the bosses who did this were among the best bosses I've ever worked for.  I still remember that company very fondly, as did everyone else I knew who worked there.  The reason:  they didn't know it was coming.  They found out the company was shutting down when the bastards funding us failed to wire the money for our payroll.  I'm sure that was also the case with the people who hired Avent.  These things happen because the people disbursing the money aren't the people running HR.

Recommended Reading

Most executives making hiring decisions don't go to the money men and say, "Hey, I want to hire someone--should I go ahead, or are you going to suddenly shut down the company and ruin some guy's life?"  Nor would the money people likely tell them if they did.  The money people are comfortably far away, not meeting the person whose life they're helping immeasurably complicate.  And they have their own organizational problem. They haven't decided whether or not to shut down the company.  Sometimes they don't shut it down.  And if they say, "Hey don't hire anyone, because we might be about to fire the whole staff in two weeks", then all the other people will stop making whatever it is you make, and start looking for other jobs, and the best people will leave first, and suddenly you'll have to fire everyone, because the company's not making any money at all.  A Ryan Avent who is a chess piece, not an actual human being sitting across the desk from you, seems like a worthwhile sacrifice to the greater good.

This is what hiring freezes are for.  Unfortunately, when someone as central to your website as Felix Salmon leaves, it's hard to just let that slot lie empty.   Luckily, Conde still has quite a lot of money--enough to undo a lot of the damage (and give themselves a nice PR bonus) by offering Ryan a really generous severance package.  I hope they do.