Since March 11, over 430 tech startups have laid 50,000 employees off, with many more furloughed. The cuts have hit nearly every industry — including global tech companies like Uber, Lyft and Airbnb —and the cuts don’t stop there, as Rolls Royce announced 9,000 redundancies last week and the major banks are expected to be next.
These layoffs have meant a huge influx of talent entering the job market, the likes of which we haven’t seen since the dotcom bubble burst. Yet, this talent pool is entering a stagnant market, which — depending on whose analysis you believe — could take between one to four years to recover.
It is puzzling then that many corporates, when forced to make this decision, typically only offer the default outplacement services of career coaching, CV writing, interview techniques and how to use LinkedIn, when there is a fantastic opportunity to provide an alternative path: helping those with an entrepreneurial bent build their own startup.
Forward-thinking companies could be a driving force in creating the next generation of high growth startups, stimulating economic growth in their local communities and changing their former employees lives for the better.
This isn’t wishful thinking. This process is tried and tested.
The Nokia model
Perhaps one of the most famous examples of a corporate that ‘got this right’ is Nokia. Ten years ago, the company was faced with making over 40,000 job cuts. It opened centres in Europe, India and the US to help those faced with redundancy to find a new job, either inside or outside the company. It also formed ‘Bridge’, an entrepreneurial stream for employees that had an idea for a startup.
This programme enabled ex-staff to pitch for seed capital of €25,000, with up to four ex-employees being able to band together in order to access a potential pool of €100,000. It also offered training, tools and guidance for successful growth, alongside exposure to angel investors, venture capitalists and others.
Since its inception, Bridge has helped over 1,000 startups get their beginning. Out of all the teams that came through the programme, a third were tech-focused startups, a third used it to build careers as freelancers and a third used the opportunity to move into a completely different area that they had always wanted to pursue. The scheme is credited for fuelling the rise of the Finnish tech ecosystem, which includes success stories like Supercell and Rovio.
Of course, many will be worried that the current economic climate is not conducive for startup success. They couldn’t be more wrong; times of rapid disruption provide ample opportunities for startups to take advantage; in fact Uber, Airbnb, Disney and Microsoft were started during recessions.
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How to make it work
For corporates looking to be the ones pioneering the alternative pathway, there are a number of key factors to make this a success:
- Empowering collaboration: let those who are being let go of find a space to meet, make connections and potentially form teams around common problems they want to solve.
- Find the right partner to provide the best experience for your people to maximise success — buying a course of Udemy isn’t really going to move the needle.
- Be clear on the degree of your involvement. Is it just offering the opportunity to develop the skills and mindset, or do you have IP not being worked on that you can make available for teams to develop, or are you willing to put seed investment into ideas that could help solve your challenges or open up new markets/customer segments.
- Communicate, communicate, communicate. This is a great initiative and can be used to attract new talent, build stronger relations with the communities and customers companies serve and create something, which is very difficult to do in these times, and build stronger brand equity. It’s not about unicorn building, but empowering your people to create their future
- They say the most important factor in success is timing, and while that might feel counterintuitive right now, Covid-19 is reshaping every industry, providing the perfect timing. Corporates have the opportunity to play a leading role in reshaping this future and helping to kickstart the economy.