My Own Tech Layoff Story

“Sometimes when things are falling apart, they may actually be falling into place.”

I was in my office on Tuesday morning with my younger daughter, and a friend (and office-mate) struck up a conversation about overcoming adversity. He’s a management coach, and he was interested in stories about times when something bad (like a layoff) turned into something good (like a new opportunity). I told him that I actually had one of those specifically, as I was laid off from my first startup and how it totally set me up for success at my second startup! He asked me to write about that experience, so I’ll do it here!

Laid off from my first startup

I joined my first startup at age 26, and I was employee #20 as the first product manager at a company called Visioneer in 1993. We had a cool “always on” desktop, sheet-fed scanner that could scan paper in about 6 seconds. It had essentially a zero-footprint form factor, and would sit between a keyboard and a monitor. The accompanying software made it easy to drag-and-drop scanned documents into email, fax, and OCR software for editing. This was all before USB, multi-function peripherals, and even the PDF document format! By the time I joined, we had raised a Series A from TVI (Technology Venture Investors) and Mayfield Fund.

When I joined, we had a prototype that was an all-metal box. The final product ended up being a pretty cool one that looked like this.

The product hit the market and debuted as #1 on the Ingram Micro best seller list for input devices. It won the PC Computing MVP Award for Usability the year both Quicken 5 and Word 6 came out, as well as the PC Computing MVP Award for Input Devices the year the Microsoft Natural Keyboard came out. When Walt Mossberg wrote about our product in his Wall Street Journal column, we had Pac Bell bring in extra telephone lines into our office, and we had every employee answering phones that day!  I used to be able to travel around the country and demo the product at PC user group meetings and come home with paper checks from enthusiastic user group members buying the product at a discount. Every trade show had people gathering around our booth to see this product in action.

While cool, this product ultimately had some trouble hitting true product-market fit. Taiwanese vendors had flooded the market with low-cost scanners, and ours was expensive (the initial list price was $500). Also, the printer manufacturers started bundling scanning functionality in their new lines of multifunction peripherals (MFPs), enabling them to subsidize the costs of the MFP hardware with the profits from toner cartridges — similar to the “razors and blades" model in the personal care products market! Even after expanding our distribution, we just failed to meet our aggressive sales targets despite the positive product reviews.

Failure to meet sales targets creates an environment of friction, and each member of the executive team had different ideas towards how to solve the problems. The venture capitalists had helped put together a “dream team” of executives, but they all had different experiences and biases for a path forward. My boss, the VP of Marketing, was the former head of marketing for cc:Mail, the most popular LAN-based email package sold into companies at the time, and she understood the go-to-market associated with collaboration software at the time. The VP of Sales used to run Western Region Sales for NEC back when the MultiSync monitor was dominant, and she knew how to do large-scale hardware distribution. We had a VP of Operations from SuperMac, Flextronics, and Apple, and he knew how to do manufacturing at scale. The VP of Engineering had an impressive track record of startups with tenure at Prime, Apollo, and later Sun, and he understood how to make products for very technical buyers.  And the CEO had just come from NetFRAME Systems, which was a high-end PC server vendor. Getting clarity on a single path forward was a challenge.

Through our struggles hitting product-market fit, virtually the entire marketing department was laid off. I learned of my release while on a business trip doing a Novell User Group meeting in Providence, RI. The risks that everyone talks about with joining a startup came to fruition. I worked there for about a year, having worked my ass off, and I was left without a job.

Things looked up almost immediately

While I was let go, I remember it not feeling too negative. The day I was let go, I had called into my corporate voicemail box from my hotel in Providence and had a message from our CEO. I called him back and found out I was laid off. He offered the opportunity to just come home. Instead, I let him know that it wouldn’t be right for the company to cancel its participation in the user group meeting, so I finished my business trip and then came home. He relayed that he was touched that I put the company first. I remember when I came back into the office how nice and pleasant he was to me, even offering to let me hang out and get paid for a few more days. I didn’t take him up on it, but I appreciated the gesture.

Also, it didn’t take long to get alternate job offers. One of our company’s Board members reached out to me to have me interview with his company, and he had given me an offer (Verity). My former boss at Visioneer referred me to her former colleague from HP who was co-founder of another successful company who gave me an offer (Remedy). Even a former set of colleagues at Oracle got in touch with me and had me interview at Mosaic (later to become known as Netscape), but I never took it far enough to get an offer. As a side note, Marsha still gives me crap because she thought that Mosaic sounded the best of all the opportunities I was looking at, and she was right about the outcome! All of those startups ended up doing IPOs but Netscape made history at the time. With the number of shares they were floating in my initial interviews, I would have been a millionaire by age 28.

But the funny thing is that the same day I got a voicemail from the Visioneer CEO, I also got a voicemail from my friend, Wayne. It turns out we had a mutual friend and former colleague who had dated a former recruiter for Visioneer. When this recruiter found out about the layoff, she spread the word to our mutual friend who then told Wayne. So, he learned I was laid off before I even knew and had reached out to me! The startup he had joined a year earlier (Latitude) was looking for its first product manager and was on the verge of closing with the candidate. With the timing, I was inserted into the recruiting mix and ended up getting the job. I was employee #30.

It kept getting better

Even though Latitude went public after all the companies I mentioned (Verity, Remedy, and Netscape), I think it was the right fit for me. I really appreciated the unity of the executive team. Where Visioneer had trouble gaining alignment among its executives, one thing I appreciated about interviewing with Latitude was that all of the executives — the CEO, the VP of Marketing, the VP of Engineering, and the VP of Sales — all worked together at ROLM in the 80’s. Rather than matchmaking by venture capitalists, these people all chose to work together, and it showed. There was so much emphasis placed on having a collaborative culture, and this one turned out to be the favorite job I ever had in my career.

I was able to immediately fit in, as the first project my boss put me on was one with my friend, Wayne. I had met Wayne during Oracle’s orientation in 1990, and we ended up working together in the same group at Oracle on Oracle Data Browser until 1993. My first project at Latitude in 1994 was on its email gateway with Wayne, so I already had a “buddy” to help me navigate a new culture there. I learned the importance of having a nurturing culture to set new team members up for success.

Incidentally, I was also able to directly leverage the technical knowledge that I gained at Visioneer in integrating with LAN-based email, as I already had the experience for integrating Visioneer’s products with cc:Mail, Microsoft Mail, DaVinci eMAIL, Novell Groupwise, and other packages that were popular at the time. Through Visioneer’s relationship with Microsoft, I also had gotten visibility into the MIcrosoft platform that would ultimately become Microsoft Exchange.

More importantly, my time at Visioneer had given me a more “360 degree” view of startup marketing, as I had a one-year “crash course” in a startup marketing department in a VC-backed company. (At Oracle, I was a product manager that reported into a product development organization). Given that Latitude had chosen this structure of having the product management function report into marketing, too, I was ready to go in with this structure in a new company. Both Latitude and Visioneer were Mayfield-portfolio companies and they shared an ecosystem, including using Geoffrey Moore (author of “Crossing the Chasm”) to help portfolio companies find product-market fit. So, I was familiar with many of the mechanics of what was to come right out the gate.

I characterize the one year I spent at Visioneer is the single year of my career that contained the most learning. Marsha would back me up on that. I learned not only mechanics of startups, marketing, and failed product-market fit, but also so many issues regarding culture and executive management.

We were able to take Latitude to product-market fit, to profitability, and then to IPO. As Latitude grew, I was called on to lead various functions. While I started as the company’s first product manager, I got promoted to director of marketing, then VP of product management (as a peer to the VP of marketing), and then VP of marketing presiding over both marketing and product management. I was an officer of a publicly traded company by age 32, and I honestly don’t think I would have been set up for that had my first startup been Latitude.

Moreover, I had a great 7-year run at what became my favorite job ever. Even last year when I visited the Bay Area, I got together with old friends from that company.

So, even though that one year at Visioneer turned out to be very conflict-driven with a ton of hard work, only to end up in a layoff, it provided me with so much of what I needed to be successful in the next go-around.

Could have even been better financially

The irony is that the one year at Visioneer ended up working out OK financially and could have been even better! When I was a Visioneer, I had vested a year’s worth of stock options, plus we also had the opportunity to participate in the Series B fund raise.

Visioneer did an IPO after I left that didn’t do that well, but I ultimately got cash from the sale of its hardware assets to Taiwanese company Primax, and stock in a new entity called Scansoft which was created by merging Visioneer’s software assets with Xerox’s OCR software assets. Scansoft did pretty well as an OEM imaging software vendor. I didn’t have the long term vision and sold the Scansoft stock after my investment tripled. So, it was good, not great.

However, Scansoft ended up buying Nuance, a voice recognition software vendor, and took the name Nuance. And Nuance sold to Microsoft for $10B. Oh well!

What did I learn?

The net is that I think that the year I spent at my first startup where I got laid off seemed like a bad outcome at the time. It turned out to be anything but. I got the learning, the experience, and even some cash. I had the experience to later appreciate what good startup life could be like.

Most importantly, I also learned to have respect and empathy for people who have worked in failed startups. Many people think that people who have had an uninterrupted string of successful startups are the smartest. I now know that they are simply the luckiest. It turns out that I’ve found that it’s often better to hire someone that’s learned from past company mistakes than someone who’s just gotten lucky and not learned those lessons.

I have also appreciated those that viewed me with the same lens.

For this, I love the Schwarzenegger quote.

“Strength does not come from winning. Your struggles develop your strengths. When you go through hardships and decide not to surrender, that is strength.

— Arnold Schwarzenegger