When facing financial distress, avoid a "death by a thousand cuts." A single, deep reduction—even with an extra margin—is better. This prevents the cycle of fear and productivity decline that comes with repeated rounds of layoffs, allowing the remaining team to refocus on critical milestones needed for the next financing.

Facing a potential shutdown in 2019, Jeremy Allaire made the brutal decision to sell off non-core business units and reduce headcount from 450 to 59. This extreme focus on the core USDC product, despite the pain, saved the company and fueled its subsequent explosive growth.

Running a travel business, Matt O'Hayer was in NYC on 9/11. Witnessing the first tower hit, he immediately realized his revenue would go to zero and laid off 140 people via phone before the second tower collapsed. This is a stark example of extreme, decisive leadership required during a black swan event to ensure any possibility of survival.

When the pandemic caused revenue to drop over 90%, Toast was forced to lay off half its staff. This near-death experience reset the company's focus to a 'basement stage' scrappiness. This led to rapid development of essential features for survival, like QR code ordering, which became central to their future growth.

Jack Dorsey framed Block's massive 40% layoff not as a response to business trouble, but as a proactive adaptation to AI-driven efficiencies. He chose one decisive cut over repeated, gradual reductions, arguing the latter is more destructive to morale, trust, and focus during a technological transition.

Dorsey justifies Block's large layoff by contrasting it with the alternative: yearly, demoralizing 10-20% cuts made with their "backs against the wall." Acting decisively allows the company to move forward with integrity and avoid a culture of constant fear.

If a company culture has become bloated and mediocre, laying off 50% of the staff just leaves you with a smaller mediocre company. The 'A' players have likely already left. The only way to truly fix a deeply ingrained mediocre culture is to fire almost everyone and rebuild from the ground up.

When taking over the Commerce Department, Howard Lutnick cut 20% of the workforce (12,000 people) immediately. His rationale is that making deep cuts quickly and decisively removes uncertainty. It signals to remaining employees that restructuring is over and "the next shoe is not going to drop tomorrow," allowing them to refocus.

A successful pivot may require extreme measures. After their initial product failed, the founder fired almost everyone, kept only two engineers, and built the new product for over a year while burning almost no cash. This radical, lean approach provided the runway to find true product-market fit before scaling again.