The VC Has No Clothes

Barry Diller had some rather sharp words for CEOs this week in regards to the recent spate of layoffs:

“The idea of a company that’s earning money, not losing money, that’s not, let’s say ‘industrially endangered,’ to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one’s counting is really a horrible act when you think about it on every level. First of all, it’s certainly not necessary. It’s doing it at the worst time. It’s throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason.”

While I applaud the message, I’d say he’s directing it at the wrong target.  The real problem is the VCs.   Over the past couple months I’ve continually heard CEOs utter the words “the VCs wanted us setup for growth before the crash, and now they want us structured much more conservatively.”

Draw your own analogy, but the problem in many ways is the current crop of Harvard and Wharton MBAs who flit from board meeting to board meeting, offering cookie cutter advice as the velvet glove over their iron funding fist.  “Today we all wear our underwear on the outside” could as easily be the direction, and surely it would become the new fashion.

Are cutbacks evil?  Hell no, companies owe it to their employees to ‘right size’ in order to protect the many, just as employees owe it to the company to increase their efforts to make things work in bad times.  That even means that yes, it is okay to cut to maintain profits, but let’s avoid the Knee Jerk “Me Too” Box Parties.  After all, fear is a commodity that is best not crowd sourced.

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