Guide to Corporate Undevelopment

One of the joys of consultancy is that you can undo as well as do. This piece is a great guide for corporate un-development (we do this sort of work, but haven't for a few years now - looks like its coming back though). Some nuggets:

It’s really shocking.

“Shocking” is being polite. It’s earth-shattering. We’re back to one or two calls a day, which is translating into three of four new engagements a week. To put that into perspective, from 2002 through 2008, we were maybe getting five new deals a month. But now, all these calls are building up. We got a call yesterday to help a company and today, the request changed; it went from, “Can you help the company” to “we need you to close the company” because one of the investors is not going to ante up.

Have you seen other investors pulling out of deals?

We saw this years ago; it’s just starting now.

The role of PR:

Is PR cheaper than advertising? The answer is yes. Are you better to have a third party tell reporters how great your product is? The key is to negotiate. I’m not a believer in cutting public relations if the machine is well-oiled and people are reading about you. It takes three to six months to get public relations up and running. Why throw it away?

Now, do you need an inside marketing person? Probably not at $150,000 a year. Also, outside PR probably has a wider net.

And the lessons from experience?

Meaning you have to make all of your cuts at once? Can’t it be an iterative process?

I’ve been doing this for 30 years and if you do it strong and deep one time, everyone complains for a period of time, then gets over it. Also, I’ll be honest with you, I’ve terminated people and two weeks later, I’ve brought them back and apologized for cutting too deep. Usually, they come back. It’s acceptable to be human as long as you’re not a jerk.

I’m almost afraid to ask, but what kind of severance packages are startup employees getting?

Sadly, right now they’re minimal. Two weeks is a maybe.

The termination thing is different in UK/Europe by the way, its harder to get rid of people just like that - and bringing them back in 2 weeks is tantamount to getting a major lawsuit, so its far harder to overcut and make up.