Cuz a recession is coming and companies are trying to get ahead of it and also playing into it. Also a good time to trim and shutdown entire projects or departments and call it a “layoff”.
But really you can also ask: Why did tech companies hire like 3-4x the amount they are laying off in the last 2-3 years? Why are they mass hiring? The inverse reason is usually why there are mass layoffs.
Notice how badly the share prices of most such tech firms have fallen in the past year. Investors, Wall Street, and Boards of Directors are for-sure putting loads of pressure on tech firm CEO's to Do Something to fight that trend. Slashing some of the (supposed) payroll bloat that was built up "back when the living was easy" is a great way for a CEO to look like he's Doing Something.
was 343 considered that profitable? I always thought halo infinite was not panning out to be the live service they were shooting for, which to be fair, might be uncorrelated to how profitable they are.
Short term possibly foolish investors are about the next quarter. Long term investors consider far more than just the next, easily manipulable quarter.
Irrespective of the real reason, I don't buy the argument that these companies are preempting a recession.
Facebook, Amazon, Alphabet, Apple, Microsoft have an insane volume of cash reserves to the tune of hundreds of billions each company.
Unless their are predicting a decade long crisis there is no way this is the real reason staff is getting trimmed, feels more like an excuse rather than a justificatíon at this point.
What is the distinction between excuse and justification for a public company? We always know their motive, which is to maximize profit. If they believe growth is going to slow/end, then it makes sense to slash some people. An occasional culling seems like a healthy thing for a huge company to do. If we knew how to predict future needs perfectly and how to hire quality people perfectly, then sure we could avoid this, but that is impossible.
Can we acknowledge that predicting the future is impossible, AND that the over-hiring and over-confidence in the moves "a huge company" makes is unsustainable and ultimately makes these places less desirable to work at?
I sure as hell am not applying to anywhere that had layoffs - I don't want to reward those places with my labor.
Even if your business is entirely unaffected a recession, it may still be sensible to do a light layoff before things turn. Especially if you've just gone through several years of an extremely tight labor market.
The reality is most of the big tech companies have had to staff under pretty unfavorable conditions over the past few years. That's meant either scraping the bottom of the barrel in terms of the less talented. Or ballooning TC packages. If you think that all of a sudden it's going to become a buyer's market for employers, then you probably want to free up some spots today. Especially among your weakest performers or your most overpaid.
Big public companies need an excuse to fire as many people as they would "naturally" want to fire given 1. just how many people they hire, 2. how often those people turn out to be duds, and 3. how often they pivot strategies internally that no longer necessitate even better-performing people.
They can't normally fire as many people as they want to fire, without looking bad / "appearing weak" and therefore losing stock value.
But if "everyone's doing it", then they won't look bad/weak.
See also: raising prices. If one company does it, they just lose market-share. But if they do it because "everyone is doing it", then margins can go up vertical-wide without anyone having to explicitly collude in an anti-trust sense.
And yet, I'm looking at a team that was affected by layoffs where solid (or even high) performers were fired while also having been in meetings this week to discuss low performers who weren't fired. "Getting rid of duds" is clearly not what is happening, at least at Google.
Getting rid of high-earners is more correct. Among the highest earners, they pick the bottom 10% of the performers. Or do some MBA-ish cost/productivity calculations and lay off based on some (probably nonsensical, for programmers) "valuation".
Also not what happened on my team. The system did not prioritize more senior vs more junior engineers (in terms of level). Nor did it prioritize people who had unusually large sign-on packages.
I think that there was some VP or senior-director level review of which teams would get cut by how much. Then I think that there was some procedure for choosing people on these teams based on level, tenure, and rating history. But I have no idea what this procedure would be.
I don't see how you think those two facts are related to each other at all. What does cash on hand have to do with if a company truly believes in recession?
For big tech it's 100% about managing cashflows to keep investors happy.
While big tech companies can technically afford to over hire they are seeing slowing growth and a hit to their margins which investors have not and will not view favourably if unaddressed - just take a look at Facebook (META)'s stock.
With the exception of Apple the big tech companies make most of their money from ads and cloud services. A lot of those ad dollars come from smaller business who are now struggling with higher rates and higher costs. Equally cloud services is taking a hit with many of the smaller tech companies who use their services cutting back in light of higher costs of capital and declining market valuations.
While they might all have the cash to weather the storm, why would they when they can just cut some of the fat? I don't like seeing these layoff announcements, but I think if we're honest companies like Facebook and Google have been over hiring for years and have accumulated teams and employees who aren't adding much productive value.
Twitter probably isn't the exception in tech. I'd guess most tech companies could cut 50% of their workforce without much of an impact. And even in the average software development team I'd guess that 20% of the workers are contributing 50% of the value.
If there's no incentive to keep these people around anymore, why would they?
Good talent is hard to hire. These company have more cash than brains or ideas. So even if there's a recession, a few months/quarters means nothing considering their war chest. And it's not worth firing people in January if you need them again in October.
Because they're big and 10,000 is a very small (~5%) percentage of their staff, and is entirely routine and normal housekeeping. Investors want to hear "layoffs" hit the newsprint.
Amazon, Shopify, Wayfair, Google, Meta: all of these companies make money because e-commerce exists. The higher the proportion of all sales taking place on e-commerce, the more valuable the companies are. For Google and Meta, it's the advertising portion, but it's still impactful.
If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, lockdowns, and we saw a 5-6 year jump ahead. Big question: How much of this is temporary, and how much is permanent? Maybe people discover that grocery delivery is way better than going to the store and never stop.
Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.
They all bet that this was a permanent 5-year jump-ahead. They were wrong, there was no jump-ahead. Now there's a looming recession. Everyone has too much headcount. And for publicly traded companies, there are shareholders who will demand that something be done to prove you're not going to bankrupt the company.
To minimize the PR hit, everyone quietly announces their layoffs just after someone bigger than them does, so that they aren't the headline in the news tomorrow.
> They all bet that this was a permanent 5-year jump-ahead. They were wrong
This is the part that really needs explanation. How was every CEO of every major tech company wrong?
Why aren't we having a big tech CEO layoff for massive wrongness?
It certainly feels like there's a lot of groupthink here in any case.
The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end up being pretty costly for the company. These were expensive mistakes.
Groupthink, yes, definitely. The shareholders, through the board, are responsible for hiring and firing management; so I guess shareholders haven't lost confidence in the CEOs yet, or perhaps it's too early still.
The most favorable explanation is that they didn't really think it would be permanent. They just needed the headcount at the time, and they don't need it anymore. The rest is just marketing spin to not make it seem so bad.
Now if they all balloon back up to the same headcount in the next year, but with lower salaries, then we will see if the real motive was to lower salaries. Someone had posted on another thread that the federal reserve stated that the goal of recent policy changes was to lower salaries. It's much easier to layoff and rehire, than it is to give out paycuts.
I think the main reason for the layoffs is AI accelerating jobs.
As Sam Altman stated, programmers in the future will be much more productive than programmers today.
This is Altman selling snake oil. As of yet there is no evidence of this on anything beyond toy examples. And these gigantic codebases are anything but toys.
I agree, think it was also a ripe time for empire building further within these companies. I’ve been at one of these companies for many years and the shift in hiring dramatically changed in the years leading up to covid. Covid just put things into overdrive until reality hit that this kind of growth isn't sustainable or permanent.
> Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.
CEOs answer to shareholders, not employees. From the shareholders' perspective, the risk of losing out on market share was much greater than the risk of having to pay a few months' severance for the 5-10% of the workforce you trimmed.
The cost of being wrong in the other direction was a worse bet for them to make. Missing out on the growth was unthinkable to them. They would rather just fire thousands of workers than miss those possible profits.
The larger companies get, the fewer moves they can actually pull off. There aren't that many options on the buffet table, so it can look like everyone is eating the same thing.
Everyone saw an opportunity to make MORE money during the pandemic, and instead of focusing on long term health, focused on quarterly profits. This lead to massive expansion.
The second answer is that these companies have mass layoffs every year. Are these really that abnormal, given the context of their mass hiring's the year before? Facebooks headcount went absolutely bonkers, they are still up over a two year period.
I think saying they were wrong is a mistake. It was more of a hedge on a bet, a bet they could afford to lose, but not afford to miss taking. It was akin to a game of chicken or mutually assured destruction, where if somebody else was expanding, you had to as well, defensively.
The truth is that everyone takes the money when it's available.
Even if you "knew" a recession was coming and that you were overhiring/overspending, you get far less flak overall for riding the gravy train to the end, then making cuts along with everyone else, than for appearing to be overly conservative and not growing as fast as you could during the boom.
Taking the money and spending it while you can is the equivalent of buying IBM. No one else in your circle will fault you for it when things go south, because they all did the same.
>Why aren't we having a big tech CEO layoff for massive wrongness?
The only job of the board of directors is to decide when to fire the CEO. (Waiting for Tesla's board to do their job..., but I digress)
Sure, capital is represented on the board, but what about labor? No representation, so a round of layoffs is not going to be a reason for this to happen.
Something I'd like to see is if large, profitable, private tech companies are also doing layoffs.
Like, it's reasonable for unprofitable companies to do layoffs. I can see investor pressure causing something similar in large public companies like Google and Amazon, even if they're profitable. But profitable private companies should be snapping up all the best talent now.
But it's not about capturing Talent. It is about the marginal benefit of the next worker that you hire. If they cost more than they raise your bottom line, there's no reason to hire them
CEOs don't get laid off (or fired) for being wrong—not once, not a dozen times. At worst, they get sent off with golden parachutes when the company is doing flagrantly terribly, or they resign if they're hit by a scandal they can't just spin away.
There just aren't systems in place to evaluate CEO performance with anything remotely resembling objectivity. The job has become a way for rich people (on boards) to give their rich friends and colleagues another way to get richer and exercise unwarranted power.
Apple still haven't has one yet. If they aren't having one later this year or if it's much smaller percentage than the other bigs, it really speaks how well Time Cook and the leadership is in forecasting and running the biggest company in the world.
It’s not just that they staffed up, but also that it was really hard to hire since everyone was hiring. So salaries went up, and internal recruiting teams expanded to meet the hiring need.
When the hiring slowed, there was not as must work to do hiring and onboarding new employees. This is why so many companies are including “HR” in their layoffs.
The other piece is even if they didn’t over-hire, they over-paid. I believe these mass layoffs are a natural way for salaries to go back down to pre-pandemic-ish levels.
I mean if you look at the total number of employees by year, all these companies have still added massively to their headcounts in the last 3-4 years. It is not sustainable to continue adding 20-50k employees per year to your payroll.
That some orgs overhired is not in question. What is _insane_ to me is that everyone being let go seems to be an engineer, while the DEI teams remain untouched. That section of the office sure seems to have a lot of free time, between shaming the rest of the company.
It'd be socially unacceptable for me to criticize participants in the special olympics, but I'm pretty sure that they don't control me.
That quote is from a neonazi who wanted to argue that jewish people secretly controlled the world because antisemitism is no longer socially acceptable in most circles.
To be fair, those teams are usually not very big nor paid on the same level as engineers. And, these companies with layoffs still have massive headcounts and cultures to manage. Whether you like/agree with the DEI initiatives or not… much of the company will keep doing what they are mandated to do.
I literally just saw a DEI employee post in my LinkedIn feed about being laid off in one of these recent rounds.
> everyone being let go seems to be an engineer
An article about the most recent Amazon layoffs says "Amazon’s human resources and stores divisions are likely to be among the organizations most severely impacted by the job cuts."
Because it is more expensive to borrow money. Think of it like this, if it costs 1% to borrow money and you can use it to generate a 4% return with a less than efficient operation, the equation makes sense. However when that money is now 4% to borrow, you are forced to increase the efficiency of the operation or shut it down completely.
^^ POTD. Roughly 50% of all US dollars in circulation were printed in 2020 and 2021 -- the status quo became simply unsustainable. On top of that add Baby Boomer retirement capital going low-risk (i.e. out of tech).
On top of the end of cheap money, add increased operating cost due to Baby Boomers leaving the work force (~400k net loss of workers), passed-down costs of reshoring supply chains, and a burgeoning energy crunch due to the war in Eurasia.
Roughly speaking, "tech" investments are riding the tip of the bullwhip here. I expect that not-yet-profitable startups are the most vulnerable, but the sea change pervades anywhere that 2023 dollars are being spent chasing payoffs that are "many" years out and even mildly at risk.
Big tech is more focused on becoming software and automating everything than people. As people become numbers and targets and nothing more than dumb robots with opinions, they become more replaceable. Big tech leading the charge for woke mob diversity. Start your own company, run it, eat big tech.
Short answer: they depend on revenue from businesses, ads, etc, and that is going down or likely to.
Long answer: many people naively think that it's all about the money a company has, and these companies have a ton of money, so why are they laying off people when they could weather through the storm.
While this feels like it should be the case, the answer is that it's a bit more complicated than that. Whether it should be more complicated or not is besides the point, sadly. Business health tends to be measured more in terms of cash flow, and in simple terms, more going out than is coming in is bad, even if you could deal with that for many years.
There's also the difficulty for many of these big multinational companies that their cash reserves might not be in the right place, and moving them might incur significant taxes.
Investors are theoretically investing for the prospect of future returns, and while with growth stocks this is in the form of increased share value, in the long term it's also about dividends which come from profit, and so investors want to see a long term profitable company.
Also worth noting is that while, yes, CEOs are largely compensated in stock and therefore interested in seeing it go up, this is also good for the business in a general sense, as it makes it easier for them to raise money for things by selling stock.
I don't necessarily agree with all of this, I have problems with the taxation issues, and I also think it's a bad thing for many employees, but my general point is that this is complicated and there are reasons for it, even if we might not understand or agree with them.
I think the simple answer is that "investors demand it."
Investors may indeed be predicting a recession, and it's probably true that many of these firms overhired. But there's no specific fiscal reason for most of these companies to cut staff--5% the cost of their workforce is not standing in the way of billion-dollar deals (e.g. MSFT/Blizzard) or long-term R&D spending (Meta, whatever you want to say about their Metaverse project).
Does someone know a site where I can see the total number of employers of all major tech companies in time? I'm curious to see the difference between today and pre-covid, and also look for a correlation between headcount and market capitalization.
Because the capitalist system we have built demands constant growth. Even a very stable solidly profitable business is no good. A time comes when revenues go down and/or costs go up, that inhibits growth. The companies are so big they could weather the storm. Even if they kept all the employees and increased compensation, they would still be profitable.
But if they did that, they wouldn't be growing. The stock price would go down. The investors and executives would lose a lot of their own net worth. The executives don't have some magical button they can press to magically increase revenues instantly. Most non-labor costs also can't be cut. They don't have much control over the prices of the material goods and resources the company needs to operate. The only easy and instant action they can take is to lay people off. To simply stop spending money on work that isn't generating immediate revenues.
And what do you know, GOOG is up 4% today as of the time of this posting.
If they had any class solidarity they would. I guess this is why I have generally never been interested in working for FAANG despite the relevant skill set.
Unless you have an insanely optimistic viewpoint on socialism, it's very unlikely that every laborer will gain if capitalism ends. Even Lenin recognized the need to cap the wages of the highest paid skilled laborers.[1]
"Safety in numbers" herd strategy. "Everyone else" is doing it, so they can "get away with it" now without as much "backlash" as they might otherwise experience.
You will also sometimes see people referring to "bets that didn't pan out", but the more accurate term for the situation of having TENS OF THOUSANDS OF PEOPLE as "bets that didn't pan out" is gross mismanagement and active negligence.
Every one of these CEOs should be out as a result.
WHY they're laying off thousands isn't as important as HOW they're able to do that and still function. The reason tech companies are able to layoff all of these people is because they were so overly bloated and had too much deadweight.
When you can layoff tens of thousands of people and not miss a beat, maybe those people weren't adding much value to the company to begin with..?
No doubt, but I think that only reinforces "gross mismanagement and active negligence", and again, the CEOs should be out as a result, for cause and therefore without their "my family and I are even more permanently wealthy" severance packages.
Yeah in theory, but the Board's let it happen so they really have themselves to blame. The Board's answer to the shareholders (again, in theory) and yet the composition of musical Board chairs never seems to be affected.
So we just keep peeling away layers of the onion until we get to the abuses of proxy voting by large fund managers (e.g. Larry Fink of Blackrock), who unfortunately seem to be accountable to nobody.
Irrational investor expectations in a self-reinforcing feedback loop with economic policy decisions driven by core underlying beliefs that speculation can't destroy productive growth (i.e. if you create a bubble that pops, you'll still be net-positive compared to before the bubble) and that speculation is the best way to create growth in a population-constrained market.
Are the workers here on temporary worker visas like H1B the first to go? Or are companies taking extra steps to retain them and layoff people without immigration challenges?
Because they're publicly traded companies and the largest shareholders feel technology companies:
1) Are capable of "doing more with less"
2) Have too much headcount
2) Overpay engineers by 2-3x
These views are not unique to Wallstreet shareholders; they are shared by a growing number of tech VCs and "thought leaders" (most notable a16z). The next phase will likely be longer hours for less pay.
10 years ago, they had access to cheap credit, offices full of people working hard 8 hours or more, solid product portfolios, no visible limits on growth, and foreign competition was weak.
Fast forward to today. Credit is drying up. Devs feel entitled to WFH, and shorter work days (via WFH) and managers are nervous. Their products have regressed, they are actually worse than 10 years ago. Foreign firms like TikTok are now serious competitors.
Perhaps most disturbing to the C-Suite, once they strip away all of the covid #'s, they can tell growth is or will be declining. It's not just about being revenue positive, it's about the derivative. In this situation it's standard procedure to reign in costs and send a message both to investors and the organization that they want the org to become leaner and meaner. They're not just copying each other, all of these companies are in the same position and this is how execs are trained to act in this situation.
A lot of people have posted here about how when the WFH they don't do a full eight hours, and because of that they say they would never not want the option to WFH. Ok, I'm not explicitly against that, but they should be arguing for a shorter work day. This then gets lumped together with people who feel entitled to WFH for other reasons.
The signal is out that growth is slowing so they chop people. The culture in the Western world especially in USA is that "layoffs" are necessary. USA is one of the only countries in the world with "At Will" employment. In most other countries these level of layoffs would sink a company easily.
USA is a rather ruthless work environment where workers rights are basically non existent.
Because they all need an excuse to get rid of the bottom 10% every once in awhile. It’s not so obvious that’s the reason when they do it all at once. They all have more than enough cash on hand to keep people on through any downturn.
Don’t blame them. If it were my company I’d do the same thing.
In reality they could cut a lot more and be fine. Elon/Twitter is the extreme example.
If you do this unilaterally your best employees will rightly interpret the layoff as a sign the good times are over and will jump ship. However, if you do this at the same time as everybody else then your best employees will be less likely to jump ship.
This is all really pathetic because these companies are laying off, likely thousands of, H-1B workers who will have a tough time finding work willing to sponsor in the 60 day deadline. Likely many will be forced to return to their home country.
Trump's policies during COVID had the same effect, and many foreign workers returned to their home country either by choice or because of visa bans.
All of this seems overly shortsighted for the U.S. to throw away top foreign talent.
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[ 4.8 ms ] story [ 160 ms ] threadBut really you can also ask: Why did tech companies hire like 3-4x the amount they are laying off in the last 2-3 years? Why are they mass hiring? The inverse reason is usually why there are mass layoffs.
Doesn't matter. Investors care about the next quarter.
Facebook, Amazon, Alphabet, Apple, Microsoft have an insane volume of cash reserves to the tune of hundreds of billions each company.
Unless their are predicting a decade long crisis there is no way this is the real reason staff is getting trimmed, feels more like an excuse rather than a justificatíon at this point.
I sure as hell am not applying to anywhere that had layoffs - I don't want to reward those places with my labor.
The reality is most of the big tech companies have had to staff under pretty unfavorable conditions over the past few years. That's meant either scraping the bottom of the barrel in terms of the less talented. Or ballooning TC packages. If you think that all of a sudden it's going to become a buyer's market for employers, then you probably want to free up some spots today. Especially among your weakest performers or your most overpaid.
They can't normally fire as many people as they want to fire, without looking bad / "appearing weak" and therefore losing stock value.
But if "everyone's doing it", then they won't look bad/weak.
See also: raising prices. If one company does it, they just lose market-share. But if they do it because "everyone is doing it", then margins can go up vertical-wide without anyone having to explicitly collude in an anti-trust sense.
While big tech companies can technically afford to over hire they are seeing slowing growth and a hit to their margins which investors have not and will not view favourably if unaddressed - just take a look at Facebook (META)'s stock.
With the exception of Apple the big tech companies make most of their money from ads and cloud services. A lot of those ad dollars come from smaller business who are now struggling with higher rates and higher costs. Equally cloud services is taking a hit with many of the smaller tech companies who use their services cutting back in light of higher costs of capital and declining market valuations.
While they might all have the cash to weather the storm, why would they when they can just cut some of the fat? I don't like seeing these layoff announcements, but I think if we're honest companies like Facebook and Google have been over hiring for years and have accumulated teams and employees who aren't adding much productive value.
Twitter probably isn't the exception in tech. I'd guess most tech companies could cut 50% of their workforce without much of an impact. And even in the average software development team I'd guess that 20% of the workers are contributing 50% of the value.
If there's no incentive to keep these people around anymore, why would they?
Good talent is hard to hire. These company have more cash than brains or ideas. So even if there's a recession, a few months/quarters means nothing considering their war chest. And it's not worth firing people in January if you need them again in October.
If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, lockdowns, and we saw a 5-6 year jump ahead. Big question: How much of this is temporary, and how much is permanent? Maybe people discover that grocery delivery is way better than going to the store and never stop.
Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.
They all bet that this was a permanent 5-year jump-ahead. They were wrong, there was no jump-ahead. Now there's a looming recession. Everyone has too much headcount. And for publicly traded companies, there are shareholders who will demand that something be done to prove you're not going to bankrupt the company.
To minimize the PR hit, everyone quietly announces their layoffs just after someone bigger than them does, so that they aren't the headline in the news tomorrow.
This is the part that really needs explanation. How was every CEO of every major tech company wrong?
Why aren't we having a big tech CEO layoff for massive wrongness?
It certainly feels like there's a lot of groupthink here in any case.
The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end up being pretty costly for the company. These were expensive mistakes.
Now if they all balloon back up to the same headcount in the next year, but with lower salaries, then we will see if the real motive was to lower salaries. Someone had posted on another thread that the federal reserve stated that the goal of recent policy changes was to lower salaries. It's much easier to layoff and rehire, than it is to give out paycuts.
> Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.
CEOs answer to shareholders, not employees. From the shareholders' perspective, the risk of losing out on market share was much greater than the risk of having to pay a few months' severance for the 5-10% of the workforce you trimmed.
Maybe they thought it was only 5% likely, but still worth the risk and expenditure
https://fortune.com/2022/03/31/us-companies-record-profits-2....
Everyone saw an opportunity to make MORE money during the pandemic, and instead of focusing on long term health, focused on quarterly profits. This lead to massive expansion.
The second answer is that these companies have mass layoffs every year. Are these really that abnormal, given the context of their mass hiring's the year before? Facebooks headcount went absolutely bonkers, they are still up over a two year period.
I think saying they were wrong is a mistake. It was more of a hedge on a bet, a bet they could afford to lose, but not afford to miss taking. It was akin to a game of chicken or mutually assured destruction, where if somebody else was expanding, you had to as well, defensively.
Even if you "knew" a recession was coming and that you were overhiring/overspending, you get far less flak overall for riding the gravy train to the end, then making cuts along with everyone else, than for appearing to be overly conservative and not growing as fast as you could during the boom.
Taking the money and spending it while you can is the equivalent of buying IBM. No one else in your circle will fault you for it when things go south, because they all did the same.
Bet on permanent growth - growth is permanent: You're a hero - growth is temporary: Sucks, but you just do some layoffs
Bet on temporary growth - growth is permanent: You're fired - growth is temporary: You're righ! But so what?
The only job of the board of directors is to decide when to fire the CEO. (Waiting for Tesla's board to do their job..., but I digress)
Sure, capital is represented on the board, but what about labor? No representation, so a round of layoffs is not going to be a reason for this to happen.
Like, it's reasonable for unprofitable companies to do layoffs. I can see investor pressure causing something similar in large public companies like Google and Amazon, even if they're profitable. But profitable private companies should be snapping up all the best talent now.
There just aren't systems in place to evaluate CEO performance with anything remotely resembling objectivity. The job has become a way for rich people (on boards) to give their rich friends and colleagues another way to get richer and exercise unwarranted power.
When the hiring slowed, there was not as must work to do hiring and onboarding new employees. This is why so many companies are including “HR” in their layoffs.
The other piece is even if they didn’t over-hire, they over-paid. I believe these mass layoffs are a natural way for salaries to go back down to pre-pandemic-ish levels.
https://www.cnbc.com/2023/01/18/apple-had-slower-headcount-g...
Most grew 15-30%/year the past few years... probably since money was "cheap".
Shows the power hierarchy I suppose. Wild world.
That quote is from a neonazi who wanted to argue that jewish people secretly controlled the world because antisemitism is no longer socially acceptable in most circles.
> everyone being let go seems to be an engineer
An article about the most recent Amazon layoffs says "Amazon’s human resources and stores divisions are likely to be among the organizations most severely impacted by the job cuts."
On top of the end of cheap money, add increased operating cost due to Baby Boomers leaving the work force (~400k net loss of workers), passed-down costs of reshoring supply chains, and a burgeoning energy crunch due to the war in Eurasia.
Roughly speaking, "tech" investments are riding the tip of the bullwhip here. I expect that not-yet-profitable startups are the most vulnerable, but the sea change pervades anywhere that 2023 dollars are being spent chasing payoffs that are "many" years out and even mildly at risk.
Long answer: many people naively think that it's all about the money a company has, and these companies have a ton of money, so why are they laying off people when they could weather through the storm.
While this feels like it should be the case, the answer is that it's a bit more complicated than that. Whether it should be more complicated or not is besides the point, sadly. Business health tends to be measured more in terms of cash flow, and in simple terms, more going out than is coming in is bad, even if you could deal with that for many years.
There's also the difficulty for many of these big multinational companies that their cash reserves might not be in the right place, and moving them might incur significant taxes.
Investors are theoretically investing for the prospect of future returns, and while with growth stocks this is in the form of increased share value, in the long term it's also about dividends which come from profit, and so investors want to see a long term profitable company.
Also worth noting is that while, yes, CEOs are largely compensated in stock and therefore interested in seeing it go up, this is also good for the business in a general sense, as it makes it easier for them to raise money for things by selling stock.
I don't necessarily agree with all of this, I have problems with the taxation issues, and I also think it's a bad thing for many employees, but my general point is that this is complicated and there are reasons for it, even if we might not understand or agree with them.
Investors may indeed be predicting a recession, and it's probably true that many of these firms overhired. But there's no specific fiscal reason for most of these companies to cut staff--5% the cost of their workforce is not standing in the way of billion-dollar deals (e.g. MSFT/Blizzard) or long-term R&D spending (Meta, whatever you want to say about their Metaverse project).
Bluntly: cutting staff is the new stock buyback.
But if they did that, they wouldn't be growing. The stock price would go down. The investors and executives would lose a lot of their own net worth. The executives don't have some magical button they can press to magically increase revenues instantly. Most non-labor costs also can't be cut. They don't have much control over the prices of the material goods and resources the company needs to operate. The only easy and instant action they can take is to lay people off. To simply stop spending money on work that isn't generating immediate revenues.
And what do you know, GOOG is up 4% today as of the time of this posting.
We don't have an AMA or Bar association gatekeeping entry, even.
[1]https://www.marxist.com/wage-differentials-under-lenin-and-t...
You will also sometimes see people referring to "bets that didn't pan out", but the more accurate term for the situation of having TENS OF THOUSANDS OF PEOPLE as "bets that didn't pan out" is gross mismanagement and active negligence.
Every one of these CEOs should be out as a result.
WHY they're laying off thousands isn't as important as HOW they're able to do that and still function. The reason tech companies are able to layoff all of these people is because they were so overly bloated and had too much deadweight.
When you can layoff tens of thousands of people and not miss a beat, maybe those people weren't adding much value to the company to begin with..?
So we just keep peeling away layers of the onion until we get to the abuses of proxy voting by large fund managers (e.g. Larry Fink of Blackrock), who unfortunately seem to be accountable to nobody.
1) Are capable of "doing more with less"
2) Have too much headcount
2) Overpay engineers by 2-3x
These views are not unique to Wallstreet shareholders; they are shared by a growing number of tech VCs and "thought leaders" (most notable a16z). The next phase will likely be longer hours for less pay.
The halcyon days are over.
Fast forward to today. Credit is drying up. Devs feel entitled to WFH, and shorter work days (via WFH) and managers are nervous. Their products have regressed, they are actually worse than 10 years ago. Foreign firms like TikTok are now serious competitors.
Perhaps most disturbing to the C-Suite, once they strip away all of the covid #'s, they can tell growth is or will be declining. It's not just about being revenue positive, it's about the derivative. In this situation it's standard procedure to reign in costs and send a message both to investors and the organization that they want the org to become leaner and meaner. They're not just copying each other, all of these companies are in the same position and this is how execs are trained to act in this situation.
_Shorter_ work days? If anything mine are longer, even considering time I no longer spend commuting.
Any Dev "entitled" to shorter work days seems unlikely to have a long tenure.
Source: Am manager, who codes 50% or more of my time. Nobody I work with feels "entitled" to work less.
The signal is out that growth is slowing so they chop people. The culture in the Western world especially in USA is that "layoffs" are necessary. USA is one of the only countries in the world with "At Will" employment. In most other countries these level of layoffs would sink a company easily.
USA is a rather ruthless work environment where workers rights are basically non existent.
Don’t blame them. If it were my company I’d do the same thing.
In reality they could cut a lot more and be fine. Elon/Twitter is the extreme example.
Trump's policies during COVID had the same effect, and many foreign workers returned to their home country either by choice or because of visa bans.
All of this seems overly shortsighted for the U.S. to throw away top foreign talent.