After 18+ months in the AI era, software companies that haven't re-accelerated growth have a team execution problem, not a market timing one. The capital and opportunities are too vast to miss. This failure to ship a relevant product and capture new revenue warrants drastic measures, including replacing a significant portion of the team.

As a company grows, founders can't know everyone. The key to preserving culture is not maintaining personal relationships but ensuring early, influential employees don't become political gatekeepers. Be ruthless in removing those who play for themselves, not the company.

In a turnaround, a leader's most critical first step is restructuring their direct reports. McLaren's CEO replaced every key leader—CFO, HR, commercial, etc.—to create a unified group that could then drive cultural change down through their own departments.

While founders may avoid firing people out of charity, the true damage is to team morale. Your best employees know who isn't pulling their weight. Keeping underperformers makes top talent feel devalued and resentful, which is more destructive than the financial cost of the underperformer.

Focusing on "bad to great" is more effective than "good to great" when scaling. Bad behaviors and destructive norms are so corrosive that they make it impossible for excellence to take root. A leader's first job in a turnaround or scaling effort is to eliminate the bad—like dirty bathrooms or incompetent employees—before trying to implement the good.

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.

A company's culture isn't its mission statement; it's the worst behavior it's willing to accept. High-integrity employees will leave a toxic environment, while transactional, self-serving employees who tolerate anything for a paycheck will stay. This selection process causes a continuous erosion of culture.

CEO Zach Brown revived McLaren not by firing everyone, but by transforming a "toxic work environment" into one of transparency and collaboration. He kept many of the same long-term employees, showing that fixing culture can unlock the potential of an existing team, even in a high-stakes environment.

Culture is an emergent outcome of underlying organizational conditions. To change it, leaders must modify the environment, processes, and reward systems that shape employee beliefs and behaviors. The culture will then shift as a natural consequence.