The right way to lay people off

September 20, 2010: 1:19 PM ET

By Ben Horowitz, contributor

Cloud computing company Opsware was nobody's darling. Then founders Andreessen and Horowitz put the company through three rounds of layoffs. The unlikely result was a big buyout -- here's how it happened.

"I'm tryin' to right my wrongs / But it's funny them same wrongs helped me write this song" -Kanye West

Shortly after we sold Opsware to Hewlett-Packard (HPQ), I had a conversation with the legendary venture capitalist Doug Leone of Sequoia Capital. He wanted to hear the story of how we went from doomed in the eyes of the world to a $1.6B outcome with no recapitalization. After I took him through the details including several near bankruptcies, a stock price of $0.35/share, unlimited bad press and 3 separate layoffs where we lost a total 400 employees, he was most amazed by the layoffs. He said that during his over 20 years in the venture capital business, he'd never seen a company recover from consecutive layoffs and achieve a billion dollar plus outcome. More

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by VIP.