Interesting. Looks like the bulk of their spend is on sales and marketing, which I suppose makes sense in that these companies require using this kind of money to acquire new customers. But obviously that spells out the questions, how sustainable is this business model, and also, how much of this are they decreasing in addition to or as part of the layoffs?
This is on the Condensed Consolidated Statements of Operations. Total OpEx: 351,625; Sales and Marketing as part of that is 190,754 or about 54% of their operating expenses. I don't read finance statements that often so I don't know how normal this is for the industry.
You could start by going through some Accounting or Finance videos from edu sites like Khan Academy, and also spend some time looking at the financials for public companies on a site like Yahoo Finance. Annual statements are also available on EDGAR (https://www.sec.gov/edgar/searchedgar/companysearch) rather than, e.g., Yahoo Finance, but maybe a bit harder to parse even though its closer to source data.
I think you only need some basics to learn how to look at a financial statement and understand information like whether or not the company is profitable, or roughly how long the company can survive if things continue the way they are, or get better, or get worse. If you want to be able to really understand and assess a business and its financial health based on these statements, I'm not sure you can just learn that. I certainly don't have the confidence that I can do that yet. My feeling is that I'd probably have to work in the industry in some capacity where I am looking at this information daily, across dozens or hundreds of companies.
At best, I can pick up on anomalies that can later be explained (e.g., I saw there was a large amount of cash added to GitLab in the past year, and later it was clear that this was largely because of their IPO, which seems obvious but nobody told me there was an IPO before reading the statements (granted, the existence of the statements tend to imply this is a publicly-traded company)). That gives me some confidence that I know what I am reading, but I haven't done much outside of Khan Academy videos and taking a university-level accounting 101 course where I learned about the accounting equation, the accounting cycle, and how to write financial statements based on the financial events for a business.
In the US at least, there is a baseline standard based on Generally Accepted Accounting Practices and SEC reporting requirements. Generally it is reported quarterly (every three months) with a big year end summary.
They’re a bunch of terms and abbreviations you’ll also need to understand eg FY means Fiscal Year, what the various GAAP measures are, and often many companies and industries have their own non-GAAP measures.
To really understand it all takes a lot of work, corporate accounting is nothing at all like managing person cash flow, there are a lot of accounting practices you need to understand like depreciation, how revenue is recognized, etc - all of which can be games to a degree.
Note that a private company doesn’t have to release this kind of info.
Where’s your entrepreneurial spirit? Companies will pay at least $1,000 to offload the negative PR of copying others’ layoff emails verbatim. No brainer.
Good on them for offering proper severance. At my company, we got 2wks and nothing else. Not even a thoughtful letter from the CEO. Nothing. (And this was a sizable tech company in the middle of an IPO).
Burning bridges who might have been references for subsequent employment is almost never a good idea.
There is always a time and place, of course. But generally speaking, you don't speak ill of your (former) employer or even talk about it publically lest there be ramifications beyond your imaginations.
It might hurt the feelings of HR at the new place where he wants to apply though.
No one disagrees with you in principle, but there are realcitrant social practices punishing this kind of feedback. It is always taken as a grudge rather than an observation, and this makes you less attractive as a hire.
This goes the other way too: Generally speaking, companies are expected to refrain from negative commentary when contacted as a reference by subsequent employers. The only exception, and seldom done, is if the employee was terminated due to egregiously bad circumstances.
That is to say, (former) employee doesn't speak ill of (former) employer and (former) employer doesn't speak ill of (former) employee. It's how society keeps itself oiled.
Severance: A single payout equal to four months' base salary, and payments will be made according to local processes and timing requirements.
Equity: We’re accelerating vesting through 2023-03-15 and removing the vesting cliff for team members who have been granted equity and have been with us for under six months.
Healthcare: Based on location and current benefit options previously selected by team members, healthcare premiums will be covered for up to six months, where possible. Modern Health for mental health support will continue for all team members for six months.
Hardware: Team members can keep their hardware and home office equipment subject to our security protocols.
Career support: We will provide outplacement services with a third-party vendor, including coaching, resume building and guidance, and job-seeking support.
The economy and stock market impacts similarly positioned companies all at the same time. And in this corner of the Internet, that seems like "everyone."
There are other companies doing great -- Stryker (NYSE: SYK) is near their all-time high and has not done layoffs as far as I know.
Besides the economic realities of companies selling shovels to out of work miners, companies always have people they want to layoff but generally want to avoid both the confrontation and publicity.
Once the flood gates open up by your competitors or the sector as a whole starting layoffs, it makes sense to get your own house in order.
Occams razor suggests that if the trend were kicked off by wildly profitable companies that have previously been fined for wage fixing then the cost of capital might not be the whole story.
Partly. Another factor is that VC money is starting to dry up. Yet another is that many companies piled on employees during the PANDEMIC! They found that they didn't need that much staff.
I don't know if Gitlab hired a bunch during the PANDEMIC! They might be back to pre PANDEMIC! numbers.
They found out they didn't need EXACTLY the same percent of staff than all the other herd didn't need? :P Even if they're massively different megacorps with different financials? :D
Everyone is subject to the same macro-economic trends. Massive growth and free money the past few years, now turned into rising interest rates and a bearish market.
I’ve been performing it informally for many years and more formally for the last year and a half as Zapier’s Principal Data Scientist. I really enjoy combining my advanced technology, business, economic and statistical skills with large scale business opportunities to produce innovation for people and earnings for the company.
My goal is ensuring executives are making decisions using the best information possible. It’s highly collaborative to maximize the amount of pooled information (because executives are deep experts, too). Based on how it’s gone so far, I think it’s innovative and has a strong beneficial affect on the quality of decisions (and output as you’d expect). ie- applying more technology & skills improves output volume and quality.
It requires exceptional executives and an exceptional executive data scientist today, no doubt. Though, based on my experience it is possible given mutual due respect. Executives are domain experts, and I’m a business economist-statistician / econometrician. We work together to pool our understanding given our vantage points and differing abilities, skills and knowledge. By working together, and applying the right skills to important situations, it’s possible to avoid a lot of conformation bias it would be difficult to avoid otherwise (and the result is growth and smooth operation). ie- through analysis, it’s possible gain alignment & prevent all kinds of erroneous assumptions (resulting in increased growth).
There are only so many numbers between 1 and 10 where the cut from the layoff is deep enough to have an effect and not too much. Going above 10 says very different things.
7% is the amount of layoff larger companies can "in general" layoff without hurting operation too much. Hence why some huge companies lay of the bottom 7% of performers every year (and normally hire that amount too).
So if the layoffs come not because of hard "we have x to much cost" reasons but of "we need to be more robust for potential dives in profit and increased cost" reasons and an arbitrary number must be chosen which isn't affecting operation too much but also makes a difference 7% is a common choice "because that worked well for some other large companies". Especially when the push comes from shareholders without much company insight 7% is likely.
If your company is smaller you make decisions on a one by one basis (after having some target for rough performance where you cut). But the moment your company has 100+ or even 1000+ people that gets impractical so a % line is set for how many people need to be cut.
- They are on venture capital, not profitable, and the process around IPO, being purchased, or getting more rounds of funding has been complicated by the downturn. So, they need to change their rate of burn to last longer.
- Companies are profitable and their leaders want to keep the profit margin for their owners (share holders). If income is down or doesn't grow to the level it had then they can lay off to reduce expenses which pushes up profit levels. This has become trendy in the past 40 years.
- Income has been reduced and companies are breaking in less money. They may no longer be making a profit. To return to break even (or profit) they need to lay off.
There are other reasons. These are some that come to mind.
This is the correct answer. The Fed rate is the main driver for these layoffs. The fed is trying to cause a slowdown in the economy (including layoffs) in order to temper inflation.
This isn't an explanation. The job market has been red hot over the past year, and the total of tech layoffs comprise a small fraction of overall job growth in the US. HN users think there is a recession because they are only focused on their particular industry, and refuse to look at what the actual economy is doing.
Employment usually peaks just before a recession, along with denial of course.
The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
I've been reading these predictions on HN for almost a year now, and so far they've been false. If people keep repeating them, eventually we'll witness a recession and they'll be right, but that doesn't make their analyses correct, it just makes them a broken clock.
They're giving a broad time frame for recession to hit, and they keep moving it back, so eventually they will necessarily be right. In other words, they make predictions that are so vague, they necessarily can't be wrong. This is why their predictions are useless.
Fed reps are on record as saying interest rate hikes are to get a pullback in labor market, and that’s expected to affect lower paid industries, but with the relationship with investments, it can make sense to see it in tech
Specifically the Fed is trying to wrestle away the monetary power that Labor has, quoting a "wage-price spiral". In other words, the Fed is trying to cause a recession in order to fend off inflation, at the cost of Labors current economic power.
Yes, it's a brutal calculus, but inflation is also really corrosive for labour, since wage rises tend to take a while to respond to inflation and... cause more inflation.
They are stuck on the horns of a dilemma they created 10 years ago with 10 years of sustained QE and ZIRP, which led to the asset bubble we now see deflating.
I agree that they are stuck in a bind, for sure, and they are definitely causing a recession in order to stave off the larger dragon/danger of inflation.
Also agree it's largely due to QE! I think the only thing I find weird enough to pause and think "huh, that's weird" is the timing. Labor gets market power and oh wow, we better fight inflation.
Maybe it just all happened at the same time and COVID caused it to bubble over. Just seems weird timing to me.
The tech sector didn't start layoffs early last year because they forsaw a possible recession more than a year ahead. Moreover, layoffs are still contained within tech. It's time for a new theory.
Some of it is that other companies doing it provides PR cover, where it's sort of implied that "It's not just us, look...we're posting similar reasoning".
Ultimately the only thing really regulating these labor markets are competitive forces. If all the competitors are cutting their labor costs, you have reduced risk of your labor jumping ship, less mobility, etc. and have opportunity to cut costs as well. You have an opportunity to reduce costs and increase profit and revenue at the same time.
It may also be the case that this is an actual correction trend in the market to overhiring. Whether or not that's the case or the target is more of the former is ambiguous to any outsiders so this will be the explanation given because it puts things in a more positive light than the strategic "we have a golden opportunity to cut labor costs so let's do it."
Because you always need to find some reason why you lay of which is satisfying for various parties (through not really the people fired, but investors both current and future, people with shares, companies you sell to, the public, etc.).
And "currently everyone does so and the economy is bad" is a good excuse.
And there are many reasons why a company might lay of people even if it's currently not strictly necessary:
- you don't really need that many people (anymore), common for small companies which grew to fast
- you want to restructure your company majorly and doing it will less people is easier
- you prefer to go a bit slower, so that e.g. current investment money lasts longer
- you want to be more robust to a potential economic dive, so you reduce money cost at the cost of going a bit slower and in turn can compensate hits in actual revenue better (at least for some time)
- you have accumulated a bunch of people which are not bad enough to fire them because of performance but also you know you can get better people, so you use it as an excuse to let people go, go slower for a "not short but not too long" while and then rehire. Alternatively companies like Amazone do that every year fire bottom x% then rehire roughly the same amount.
- you expect salaries to fall in the industry as a whole by quite a bit
Lastly group dynamics to affect Investors, CEOs, Board Members, HR people etc. too, so it might be a "everyone does so so we better do so, too" situation (potentially forced onto the company by the board of shareholders).
Are you serious? Maybe you all should take a basic economics course. We are in a recession. Businesses know this. It doe snot matter if the Fed says if we are in one or not. Layoffs do not happen if the future business outlook is positive.
It's cargo cult corporate leadership. My company has less than 200 employees, so our layoffs weren't newsworthy, but the c-suite decide to cut 5% last week citing "trends in the industry." I can't speak for other departments but our engineering team definitely _is not_ bloated yet they still axed two positions from teams working on the highest priority projects in the company. Absurd.
I mean, it does instill some fear though. Knowing that a lot of companies are going around laying off 5-10% of their folks means I'm a lot less confident I can get a new job if I'm laid off or quit my job. Which means I'm going to keep my head down and do my work and not rock the boat at my current job as much.
Yes, I'm paid well, and yes I have more of a cushion to land on if I got laid off, but I know folks who got laid off last year who haven't been able to get a new job for months. I don't have 6 months of all of my living expenses just laying around in a bank account, and even if I did, that pretty much wipes out my savings.
"Other people are doing worse than you" doesn't mean there aren't rational fears. Making an engineer's salary doesn't set you up for life within a few years.
Don't drive class division. Even the highest paid engineer is closer to being homeless than being any of the people deciding these layoffs. If the primary economic force you have is the sale of your labor, you are labor, and need to act like it.
Our "high" salaries could quickly evaporate if we're not paying attention while the owners of capital are taking advantage of excuses to wage class warfare.
Engineers are still not proles lol. And they will never be, so it's always funny to hear a bunch of highly paid SWE talk like they are class conscious workers. In reality, most are thoroughly professional managerial class, with 0 connection to anything close to labor.
It's even funnier when that discourse seem to mostly happen when firings happen, as if losing your highly-paid cushy job makes you a proletaire.
The difference is the people on r/antiwork by and large have menial jobs, and/or are students in that very predictable/boring pseudo-socialist phase of their life. People on HN are making like $200k/yr typing JavaScript into a computer.
That's not necessarily true. I've never made remotely close to that as I've always worked on open source projects. Right now I could really use one of those 200k/year jobs but it looks like they're disappearing. So what's next?
Franky I'd say this sort of attitude is much more corrosive – the idea that people who feel they are being treated unfairly or poorly should roll over and accept it merely because other people are being treated more unfairly or poorly.
I don’t really agree with the idea that there is an underlying wish to “instil fear” or whatever. I agree even less with the attitude that we should all shut up and be happy so long as someone else is worse off.
Workers are workers. Even the most highly paid workers have more in common with the homeless than they do with capitalist class. Get laid off, maybe have a large medical bill, and then any worker could find themself desparate for just a roof over their head. So yeah, it sucks when these huge layoffs are happening, it sucks lot. The best thing that could come from this is for tech workers to realize how precarious their lives are and start standing in solidarity with other tech workers and workers generally. Don't try to drive a wedge between tech workers and other workers.
The working class and employing class have nothing in common.
Scare probably in the sense that performance goes up and some people will quit additionally. So the 7% becomes 10-15% by itself, without them having to pay a severance package.
For the 7% you have to look like you care, since you will be hiring in the future and probably with lower salaries. Mass layoffs are a good way to lower wages throughout the industry.
You lay off hard to instill fear and legally-depress everyone's wages, but you give good severance so that when you inevitably want to hire people in the next two months (as GitLab is likely to do), they're aren't too terrified to accept your offer because of all the layoffs you just did. 7% of staff as "layoffs" comes out to about 150-ish? people, but they are also currently hiring for over 100 open job position at GitLab on job boards right now. GitLab is also up 74% year-over-year in quarterly revenue, and had their highest sales quarter ever just four months ago, according to their own PR department (https://ir.gitlab.com/news-releases/news-release-details/git...)
It's a pretty transparent process, frankly. Lots of companies are doing 'fake layoffs' (layoffs they don't need, done solely to appease the executive class, who strongly desire a recession), but unfortunately for them, the truth is that the economy isn't anywhere close to a recession, so they simultaneously have to keep hiring open, to keep labor incoming, to keep up with all the new business growth or increased sales they're experiencing right now.
None of what you have said is evidence that the intention is to "instill fear".
Also, I am not sure how confidently you can assess the health of Gitlab. Those open positions my not actually be "open". While their revenue was up four months ago, much has changed since then. Their next quarter might be down and they are adjusting now.
> isn't anywhere close to a recession
No one knows where the economy is headed.
> It's a pretty transparent process, frankly.
Except that it is not. Perhaps you are correct, but you really have no evidence their decisions were to maliciously "instill fear". It is equally plausible that they are doing what they think is best for the company and the remaining employees.
Attrition tends to happen with the most qualified individuals leaving for other companies.
Attrition is not targeted or evenly distributed (depending on the goals). This can result in what would later be perceived as being lopsided compared to the layoff cut. For example (and purely made up), if part of the layoff was to cut back on marketing of the self hosted instances, then you would be looking to lay off marketing, and developer evangelists. However, if attrition doesn't hit those roles (because who's going to be leaving in this economy), you can have it take much longer to scale back that headcount. Saying to the developer evangelist "ok, we don't have something for you to do, we're going to switch you back to an entry level developer position with this other set of roles and responsibilities with a corresponding pay cut" isn't something that can be done easily.
If you target specific people, even if they do garbage work, somebody somewhere will find something to sue you over. If you do a less targeted layoff, you'll hit some of that target group anyway, and some will leave over their own volition after. Yeah you'll lose some good people but the whole point of this charade is that in management's eyes the engineers and knowledge workers are cogs in a machine, so collateral damage is okay and it'll all come out in the wash over the next few years with new hires.
I think there are several reasons to do it this way:
- Effective number will be higher because some employees will be disgruntled because of the layoff event and will leave on their own. It's usually estimated that the effective number is twice as high
- By doing a layoff you can quickly get rid of people who are overpaid. The attrition would take much longer. And with the regular performance review process you can only get rid of under-performers
- With a layoff you can get rid of entire teams, wouldn't happen normally
- Finally, and probably most importantly, shareholders expect a layoff, especially if other companies had already done it. Cargo cult CEO thinking. You could see the stock price rising for some of the previous companies announcing layoffs
- Why is this beneficial? The disgruntled will be the high performers. In no shape or form is this beneficial for culture.
- Assuming you mean average performers who are paid well, ie. well tenured? Considering these types harness significant domain knowledge it would be a strategic mistake to let them go in any meaningful number. The focus on smaller cuts tends to be low performers or recent hires.
- The only time this is beneficial is when there is indeed 1) a financial dire straights situation or 2) a significant change of course (ala Google) and blood letting has to be rapid, otherwise you're letting go of top performers in the process. It would be much cheaper to reassign to other teams given the cost to source/acquire and onboard top talent.
- Bingo. This is the primary reason almost always.
1. I actually also think it's not beneficial. However, company leaders must realise of this side-effect yet it doesn't stop them from lay-offs. I just wanted to point out a difference vs regular attrition, since this was the question asked by OP.
2. I could also be people hired recently, it is often the case that they're paid more than their peers on the same level.
3. Maybe re-assigning people from a dismantled team doesn't make sense because these people will be upset about their former team being dissolved and thus spread the negative energy to other teams?
Can attest to this. I worked at an open source consultancy for a while. During a tough period, and having made some bad bets (trying to get into the enterprise Java world), they did some downsizing - or actually, it was more like warning that there would be downsizing. A lot of people quit, not even waiting to get a severance package. Including many people they definitively weren't happy to lose.
Our banking corporation did that some... 7? years ago. Instead of random firing rounds happening locally and globally few times per year, where even locally best people were sometimes let go ie due to current under-allocation, and everybody would be nervous for months afterwards... just nothing.
Helped morale tremendously. Don't treat your employees like numbers, it will bite you back eventually, in all aspects including finances. Even most cold-hearted sociopaths on the top should grok that.
From a cost basis, this could possibly be true. But, with that type of attrition, you would probably see a greater percentage of high-performers go because they have good options. Then, you not only have lower producing staff, but it also becomes more difficult to hire top level talent back, because they want to work with other folks like themselves.
Isn't that attrition going to happen anyway? And with mass layoffs, wouldn't top talent, with plenty of options, be wary of a company who is likely to layoff 7% of its staff to please stockholder share pricing? I don't know the answer to top talent retention, but it seems easier and less expensive to turn your existing staff into "top talent" under the tutelage of the existing top talent and implement a hiring freeze with no huge news cycle.
You're missing the point - the point is to send a message, to employees and to the investors. That they're SERIOUS COMPANY that does the right thing. Follows the market. Listens to economy. That won't hear complaints from the entitled lazy overpampered engineering workers. That they need to get back to the factory and be like all other quiet labor. That HARD DECISIONS can be made without regret when bankers ask for them.
Exactly- Facebook laid off 7% of their staff and then followed it up with a $40 billion stock buy back. That's over $3,600,000 per laid off employee. The economy isn't the issue here, the companies know that since layoffs in mass are happening they can get away with it without taking the same reputational hit as if they did this on their own.
The stock buy-back really exposes the game though... for $20bn they could retained their employees for another <5 years and just waited for the economic climate to change a bit... it's unlikely to take more than 18mo.
Whilst there's good arguments to be made about workforce planning during recessions, and how you need to not have "slack employees" doing nothing... there are similar arguments to be made about stock buy-backs (ie., that having 40bn in reserves is a massive economic cushion).
That they choose to weaken their cash position for the sake of a temporary boost to stock prices shows that their incentives arent well-aligned to most stakeholders in this.
Sort of yes, but also no. He pays his employees with that stock, and it being higher makes that a better deal. Additionally, being valued as a growth company is much better than being a value stock.
Mind you, Im not interested in buybacks but if they paid a dividend I'd hold them till they lose their advertising business.
>"Additionally, being valued as a growth company is much better than being a value stock"
Could you elaborate, how does the buyback help them to be valued as a growth company? Also doesn't the fact that he paid for the buyback with employee layoffs really damage FB as a prospective employer when FB at some point in the future again needs to hire? What was the logic here?
> how does the buyback help them to be valued as a growth company
Buybacks are what growth companies do, dividends are what value companys do (for whatever reason). But more generally, FB needed to show profit growth to go back up in value, and the easiest way to do that is lay off a bunch of people.
> Also doesn't the fact that he paid for the buyback with employee layoffs really damage FB as a prospective employer when FB at some point in the future again needs to hire? What was the logic here?
Maybe it does. But if they offer shedloads of money, I can't see people worrying about. For context, FB performance reviews are hardcore, so it's not like people were resting and vesting there. I dunno what his real logic was (I left in 2018), but the above seems reasonable, to me, at least.
As someone who was recently laid off at one of these % cuts at another company, these cuts target specific groups, for instance people who have higher salaries. Well paid people won't just quit.
I’ve seen this happen over the years and I’m always curious why there isn’t a discussion beforehand that offers the “overearners” a chance to stay at a reduced salary. I’ve asked people who were in those positions, and they’ve often indicated that they would have stayed at a lower salary, at least for a while.
The fun thing is that their R&D cost is dwarfed by expenses on Sales&Marketing and General&Administrative. So, if I understand their financial statements for 2022FY correctly, a 7% cut on R&D could lower their total expenses by 2% at best https://ir.gitlab.com/news-releases/news-release-details/git...
Even cutting their R&D 100% would not make GitLab profitable, if other expenses are kept the same, so economics is clearly not the reason for layoffs.
Yeah, I can't be sure. However, the "tech" part of the layoff most likely falls under the R&D expenses, which are relatively small compared to their overall costs. So I don't see, how cutting any number of core development workforce would make a significant difference. At least in the financial sense.
It's just the first cut (for all companies). You can't do 50% right away as you don't know what will happen, so you need to do in steps. If they were just 7% over hired then they could just do attrition + a bit tougher perf reviews, or close a few teams over the course of a year but there is high chance for all companies they are not 10% or 7% or 15% over hired but 50%
pay through unspecified transition period, but also 4 months salary PLUS 6 months health insurance?
that is such a nice severance package that I almost wish I worked there and was getting laid off!
But I have been thinking "the job market is still ok", but am starting to doubt that, it seems like it really is going to be a lot harder to get a job.
At this point it's beginning to look like tech companies are doing this because it's the trendy thing to do, along with inserting a few words about AI in their websites and pitch decks.
We are a SaaS tool and we've has to justify our value to customers as everyone is looking to cut expenses. We also did cut our own spending on SaaS tools. So I think that this is sort of percolating through the industry. There is a real contraction in SaaS spending.
"What explains why so many companies are laying large numbers of their workforce off? The answer is simple: copycat behavior, according to Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business."
A few weeks ago I was opining that companies were laying off staff because "that's what everybody else was doing." I'm glad to see to few folks concur.
Copycat behaviour is not uncommon, I think, and is swayed by market sentiment. If the (equities) market ( mean in a general sense) feels bullish, then Microsoft, Google, etc. start piling on employees. Because hey, we're tech companies, we have to justify our market ratings by pursuing (or at least looking like we are pursuing) growth, so that's what they do.
Then, when things sour, the mood becomes one of conservatism. Then it looks good to shed employees. This is all despite the fact that it may have little to do with the actual state of the companies.
Microsoft in particular is hardly a heavily cyclical company, so there is little need to behave like one. Not really. They could adopt a more even approach to hiring. If they tried.
Companies bleat on about how difficult and expensive it is to hire staff. And yet, here we are.
It's not purely about the recession. If it was, they would halt hiring, keep talent, trim executive bonuses, and be precise about where dead weight exists. Not 5%+ layoffs of major teams and roles.
You see other industries, they're laying people off sure, but we're not talking 5%+. They're doing the above, being more precise about their spending. Like Blackrock, huge losses, and still "only" let go of 500/16000, ~3%.
You will not see tech companies balloon to the same number of employees ever again, if anything they will continue to shrink astronomically. No matter what happens to the economy, as these decisions are not because of the recession or the pandemic, both of those reasons are amplifiers not sources.
Well, I am glad top see so many people deluded and thinking we are not in a recession. The only reason it doe snot look like a recession yet is because inflation is still higher then the Fed Rate. This is why the Industrials are not layoff as many people yet.
> You will not see tech companies balloon to the same number of employees ever again
I feel that people do not understand Macro economics and the complexities of this market with inflated asset prices from years of near zero interest rates. You cannot compare numbers
Economic indicators may look solid, but why? I assert it is because the Fed rate is STILL below the inflation rate. This is why the housing market has not totally seized up yet. The next inflation numbers will be high and then you will see people scrambling again.
Nowhere was that stated. Hopefully you understand that both we are in a recession, and you are being misled as to why these layoffs are happening are both true. As stated, if it was purely because of the recession, the likes of Blackrock would also be hitting 5%+ layoff numbers.
What corporations, consider recession, and what the Fed considers a recession or two different things.
Now, Yahoo is letting off all these people. That does not happen during recession. If you follow what the Fed says about recessions, you’ll be left behind.
It's a coordinated attack on the companies, and anybody that is going to hold shares long term. Focused specifically on the ones that will buy shares after one or two announcements of larger than usual profits but will hold for more than a couple of months.
The people doing this do not lose time thinking about workers.
(About Gitlab specifically, they are not profitable, so a layoff is a normal survival strategy if their cash is running low.)
I would be very willing to believe this if it wasn't for the fact that so many tech companies have fundamentals that just don't make sense.
We've just gotten so used to the idea that "tech companies don't need to make profit" that we don't even question it any more. I still hear people shocked when a companies revenue goes up but their stock price drops while completely ignoring the reality that costs also went up.
The truth is all companies need to have profit and many of these tech companies have never showed that they're even capable of turning a profit.
What's happening is that investors are going to boards and telling them you need to make serious progress towards profitability. If sales are growing slowly or even declining there is no other option but to do layoffs.
IMHO this is still just the beginning, there's a lot of feedback in the tech ecosystem that are going to start playing out as more and more companies start scrambling to show profitability.
I don't know how this has gone over everyone's heads here, because what's happening is extremely obvious.
If you're a big FAANG-like company, you've seen workers make big gains in wages over the past year, and turnover rates have been increasing significantly during the great resignation. This isn't enough to sink you, but you don't like it, because it does eat into your margins a little. Of course you're still making massive profits, but workers getting any measure of power scares you. Imagine if this trend continues? Workers are only getting harder to find!
So what do you do? You can't walk up to all your CEO friends and say "Hey how can we go about paying everyone less? What if we all agree to lay off our expensive people at the same time? That way, we'll have a massive pool of workers to hire from that are all looking for jobs, and since they'll all be scared from having been laid off they'll happily take pay cuts. Additionally, it'll scare the hell out of the rest of the employees to see all their friends get blown up with no warning right in front of them. They'll want desperately to keep the jobs they have and won't leave!"
You can't say that because coordinated wage suppression is highly illegal (remember Apple and Google?). But wink/nod based wage suppression? Totally fine! If everyone just happens to fire their expensive workers at the same time but leaves no record of getting anyone to agree to it, it's perfectly allowed. This is not "copycat" behavior. This is all the CEOs recognizing what the game is and cashing in on it.
And better yet, there's nothing the tech workers can do about it! There are no real tech worker unions to speak of, and these companies know their workers have a highly libertarian bent who believe in the meritocracy myth, so there's no real risk of unionization no matter how bad things get. It's a pure win for them, with no real downsides, and the general consensus is that if they're smart they'll do this every so often to bring workers to heel. And given the pervasive attitudes about labor that I see among tech workers I don't see any reason to think that's wrong.
Indeed. I remain shocked at how many people who work in this industry are still making excuses for the companies that are performing these completely unnecessary layoffs. (They'll never be laid off of course, of course – only the other people who are old and bad at their jobs.)
These companies overhired and now they are realizing that the positive cash flow to justify all of these new employees isn't existing. None of these layoffs are focused on laying off their most expensive people. The severance packages have been very good meaning that the laid off employees have a long time to find another well paying job.
> These companies overhired and now they are realizing that the positive cash flow to justify all of these new employees isn't existing.
This is false in a broad sense - the majority of CEOs plan to increase headcount this year in spite of layoffs. You can find examples here and there where it is true, but in general it is not. There's tons of literature of this readily available, but here is an example from as recently as yesterday: https://finance.yahoo.com/news/ceo-outlook-report-optimism-r...
> None of these layoffs are focused on laying off their most expensive people.
The people you see laid off tend to be newly hired at higher recent market rates or people who have been there a very long time, both of whom are either expensive in a relative sense or an absolute one.
But even that is besides the point. Even if you fire randomly you still see this benefit if you're a CEO.
>the majority of CEOs plan to increase headcount this year in spite of layoffs.
This just means that companies are continuing to hirer. It doesn't mean that they plan on increasing headcount to above where it was before the layoff.
It's so weird to post the first thing that feels like a thought, just to carry water for CEOs who are never going to see you write this, and will never like you, without getting paid for it. 1300s feudal serfdom mindset. And it's everywhere.
If you're continuing to hire past these layoffs, and expanding plans to do so, it's to take advantage of the environment created by the layoffs. If there really was a fiscal crisis you'd also see mass hiring freezes, but we're not seeing that.
> “We expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today,” said Meta CEO Mark Zuckerberg.
I don't really see it. Gitlab isn't a Google-style megacorporation; its CEO is co-founder, and it still has a reputation for having fairly horizontal management.
The idea that its execs just decided to lay off a bunch of people for no reason just to wage some plausibly deniable class warfare doesn't really make sense to me.
I dunno, maybe look at more than one company doing layoffs and think about whether the group as a whole is in dire fiscal straits, whether they're continuing to hire through the layoffs, and who the winners and losers will be through the whole ordeal. Those details are elsewhere on the thread and are easily googleable if you have a real interest.
If you have a hard time believing capitalists wouldn't literally do capitalism when they see a chance for it, I don't know what I can tell you really.
"I don't really see it" is a pretty... well it's something, that's for sure.
It's less that it's the trendy thing to do, but more that the bar has been lowered.
If this is an option you're considering, then it's a much easier message to sell if everyone is doing it. Otherwise you look like the bad performer and it'll hurt morale and stock price even more.
In my view they see a few benefits. If the "market climate" is layoffs, then they can be much less competitive with offers to any candidates they do want to hire. It's an opportunity to let go a contingent of lower-performing workers, and lastly, it's a way for the CFO to send a message to all the managers that they aren't getting the incremental headcount they are always asking for to inflate their team sizes.
I don't necessarily think this is a good thing, but I think dismissing it as copy-cat behavior is not digging deeper than the surface layer.
Instead of the group of managers making the case they are doing a good job because their team has grown over time, there is a shift in power to the managers saying they have saved the company x number of doll-hairs because they cut xyz budget and team.
The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).
I've got already a message of a former colleague working on Gitlab. He wants to leave. He thinks thats better to negotiate a salary while in a job, than when you are desperate running against the clock. We are going to take him back.
My issue with analyses like this is they argue that layoffs are a bad idea and it's just companies shooting themselves in a foot. That's what people want to hear, so it gets a lot of clicks and citations. But, this also means that all the big companies (and that's a lot of them) that just announced layoffs made a obviously bad move. Are they all stupid? I find it hard to believe.
It's more plausible, that yeah, layoffs are trust destroying and life ruining, but they make shareholders rich, so they are a rational choice expected from CEOs.
Ouch with those down votes. Prolly don't say "all" cause absolutes are almost always wrong. But the sentiment is correct. They're not in those positions because they're technically smart, but because they're good at social climbing and empire building. And in my experience exceptionally bereft of integrity. Layoffs are a tool in their C level signaling system. Maybe they're good for the company and maybe they're not, but they're doing what the other C levels are going so they're mostly safe from repercussions and scrutiny.
I find it very easy to believe. A lot of executives appear to have a prime motivation that is "number goes up" which IMHO makes them extremely susceptible to the same levels of groupthink and other cognitive fallacies as one would see on /r/wallstreetbets.
I appreciate that isn't necessarily the case for all executives but given that executive's fallacies are mostly disproved by a slow to react and sometimes illogical economy as opposed to a nearby cold logic machine, it makes cliff-marching much easier for them.
And stupidity isn't the only possible reason for a party to engage in what seems like a counter productive move.
Certain motivations are often hidden.
Mike has been married for 12 years, happy couple, no children. He suddenly changes in attitude and make his wife life a nightmare every single day, turning his brother in law against him, losing the one job his wife's brother gave him out of pity. Never crosses a line, but jobless and a constant jerk, he ultimately get the divorce document handed over by his wife.
Is he stupid? He might have won the lottery and had his own agenda for what he would do with the money. And that's a personal affair. Let's not underestimate to which extent business and the capital at wide can go making up stories, getting books to look a certain way for a zero sum profit far below the cost inflicted to the other parties.
Agreed. Most of the time using a substantial layoff to boost your balance sheets would raise eyebrows with shareholders. This layoff spree is gives shortsighted leadership the cover they need to bump numbers during a not-a-recession-for-PR-purposes recession.
In that regard, I wonder if it becomes a Wall Street meme--layoffs for the sake of doing layoffs. Companies that performed layoffs made shareholders rich, so therefore if your company isn't doing layoffs in a layoff climate it's assumed that shareholders are better off putting their dollars somewhere else.
That's the gist I get from currently working in a company that did layoffs, the affected number of employees will not impact OPEX in any meaningful way if the issue is cash got more expensive, even less compared to pre-2020/21 levels.
But if they didn't do layoffs when earnings showed an increase in OPEX the shareholders would see it as a bad sign, so to signal to those that this is a serious-business™ the layoffs happen.
Crisis of confidence are pretty well known/studied, this seems to be a flavour of trying to avoid a crisis of confidence if the herd mentality isn't followed.
It all just sounds stupid, and like higher management aren't too far away from behaving like children and not responsible adults.
It depends entirely on what's driving the layoffs, is it:
1. Actual market costs requiring a diminished future projection of cash flow
2. A Market expectation of investors who'll rate your company as less valuable if you dont.
I'd posit right now #2 is more likely than #1 given all the record profits being reported everywhere. When #2 happens, it's definitely going to affect people. When there's no actual problem, just some future expectation of problems, that's going to cost you.
Most of them over hired like crazy during the pandemic bubble. I wouldn’t say they were stupid but collectively most of them made a massive mistake. So yeah it isn’t hard to believe for me. I don’t think the layoffs are a stupid decision but I do think the extreme over hiring as if the bubble was a new normal was. Between 2020-2022 I literally conducted over 200 interviews for my previous employer. It was like we couldn’t hire fast enough and I would always hear that we were way behind from what we wanted to hire.
> Most of them over hired like crazy during the pandemic bubble. I wouldn’t say they were stupid but collectively most of them made a massive mistake.
It wasn't a massive mistake if the rapid growth grew their stock enough that paying a few hundred/thousand extra employees for a year or 2 was worth the cost.
I’d agree with you if any of them that did this had a stable or positive stock price. Looking at tech stocks and it’s hard to find an example where I feel the hiring was a good thing.
This sounds like a typical HN accusatory comment. "It sounds like you should have dropped everything to solve whatever issues you have. Did you? No? Well it's your fault then."
Pretty similar to the stupid "did you submit a PR?" response to literally any issue with open source software.
Maybe you didn't mean it like that but that's what it sounds like.
Lmfao. Do you know how hiring works at a large company? When your management chain has won a few headcount marbles during this quarter’s game of Hungry Hungry Hippos, it’s not in your interest to blithely challenge them on it.
That would likely be a career limiting move.
I remember the dot-com bubble days. We'd hire like mad... literally anyone who could spell HTML or PHP. There was no reason to speak up. We didn't know the gravy train was going to be over in a couple of years.
I might think this way if this was my first rodeo. When executives allocate money for hiring I assume they've put some thought into it with data outside my immediate view. You think I should be questioning executives? Most of us are out here just trying to survive and making C titles look bad in public is how you get fired immediately.
There’s a middle ground between saying nothing and making them look bad in public. Talk privately to your director/VP. Ask questions. You don’t even have to come right and say you think they’re wrong, but showing interest in the direction and financial health of t the company is unlikely to hurt you in any way.
Nope, I expect the people making these decisions who are responsible (and paid extremely well) for the financial health of the company to be doing an exhaustive due diligence when it comes to budget. The only real question is do any of these executives take responsibility for their actions. That question has ultimately been answered over the past couple of weeks so why bother asking...
We are doing due diligence, but it can never be exhaustive; the single best source of qualitative information is from talking to people who are closest to the work and then trying to synthesize a view of reality from the multiple points of view expressed.
You’re not under any obligation and can keep your head down if you like. I can see the spreadsheets with perfect clarity. I need to marry that data with the more complex and hard-to-get view of the elephant that can only from the people who are working with/on it every day.
The companies are doing it for a short term stock price bump. They are always incentivized to think short term because of the way our distorted markets work.
Most executives and shareholders I meet are truly clueless in their business and how to be effective. I think this shows more in larger organizations because lower level employees are far removed from important decisions.
It’s fair to disagree, but in my mind it is why you pay top $$$ for great executives. But also unfortunate that an average executive can cause harm to a business due to a large sphere of influence.
These companies laying off people are doing so because they made a mistake to begin with (over hiring). So, yeah, if you make one mistake, you can make another.
And no: not all tech companies have over hired during the pandemic and they are not firing people these days. No one talks about them because that doesn't sell.
Part of the problem is that it’s very difficult to quantify the higher order effects of layoffs. It’s easy for an exec to understand “if we fire a bunch of people then our labor costs will go down”. It’s much harder to anticipate the effects of “if we fire a bunch of people then those who remain will be demoralized, will lose trust in us, may leave on their own, may be too distracted to work effectively for awhile, etc.” That means the risk assessment is a comparison between a sure thing and a bunch of possibilities—and there’s a long history of companies surviving after layoffs. It seems perfectly rational.
I have a couple observations from going through layoffs at a growth stage startup. If you have to do layoffs then you shouldn’t worry too much about protecting top performers—a noticeable percentage of them (10-20% maybe) will leave on their own _after_ the layoffs. You have broken trust with these folks, and they almost surely have other options. The people who stay either deeply and firmly believe in the company (good!) or for some reason feel like they don’t have other options (less good). Secondly, layoffs don’t end with the pink slips—your company is choosing to go down a long, slow path of rebuilding until almost anyone who remembers the layoffs is gone anyway. It will be harder to recruit top talent at standard market rates for awhile because folks will want to price in a risk premium to hedge against continued future instability, so replacing the fired folks may actually be more expensive in the long run.
If my interpretation of the overarching sentiment here on HN is accurate, it is that the big tech companies make tons of profit and hence the layoffs are unnecessary. It is within that context that I said that.
Interesting takeaway. One of the big lessons I took away from the prior three years is that there’s an absolute ton of groupthink and trend chasing among tech leadership. Going all in on remote, over hiring 21-22, now layoffs all come to mind.
There are notable exceptions. Apple rejected (thus far) all three of those trends and is weathering this period much better than most of the industry.
Just a quick reminder regarding those "they", "shareholders" - it is a pet peeve of mind how we tend to forget who are the vast majority of these sharholders "getting rich" by the count of people, not necessarily by the value.
In the USA 401(k)[0] & 403(b)[1] plans are used by vast majority of people as their retirement funds. It is very rare for a small organizations to be able to offer full pension plans. What they do offer are investment plans like 401 & 403.
All those little 401k/403b plans, through the plans and the mutual funds are the "they" "shareholders", "getting rich".
In 2019 21% of US workers participated in pension plans, while 43% in 401K/403b [2]
The median 401k balance is downright scary. For ages 55-64, it's only $84k. Percentage participating in these plans doesn't mean much if they don't have much in it.
I would imagine there are two occurrences at play, some employees affected by both some by one, but 1. You're wondering when you'll be next 2. People you have been working with are just gone now.
If your plane is gonna crash without dumping some excess weight, killing everyone on board, what do you do? You throw a ton of stuff out of the plane in an effort to continue on. This is what layoffs are. It’s a survival mode tactic. The cost of lower morale is smaller than the cost of complete failure.
When all of these companies act together to influence the labor market, they can subsequently cut long-term costs due to the natural suppression it effects on wages. I'm seeing very significant reductions.
typically a company also refocuses where they spend effort or make changes how they operate and that leaves a lot of people without meaningful work that matters. not only will those people be demoralized, but those around them too, together with continue collaboration and communication complexity. waiting for that to organically resolve it self would be terrible leadership.
Many/most of these companies have a huge portfolio of projects underway and have lots of open headcount that they’re hiring for. What sense does it make to say cut an engineer from one org only to hire another one a month later for another org?
Literally no thought is given to redeploying the labor force against the new set of projects. Just cut and rehire. It’s the ultimate short-termism, lack of vision and lack of leadership. Ironically all of these companies blather on about leadership but fail to even demonstrate a scintilla of it. Leadership just means “plays political game competently” at these companies.
So the plane has been flying over valleys at record altitude and we see a couple of mountains ahead that we will easily clear. Despite being absolutely no where near crashing, let's throw a couple of crew overboard so that we can continue to climb to new heights and keep the hype engines of our overvaluation going?
These pat responses still elide whether future results are contingent upon drastic action. You simply cannot justify all actions by claiming past success is irrelevant.
Maybe you missed the memo, but corporations are supposed to grow exponentially, for all eternity -- never mind the Laws of Thermodynamics (or any other sanity check, for that matter).
google’s profit not only dropped 34% in the last quarter, it is also the fourth consecutive quarter that their profit as dropped. if they didn’t change anything and just continued on, what do you predict the next 4 quarters would look like? what do you think the comp of those at google will look like taking into account that more than 50-60% of one’s compensation is equity?
> The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive.
Well... for whom though? When megacorp CEOs laid people off the stocks soared - massively enriching the C-suites executing the layoffs and the investors demanding the layoffs.
The error in your thinking is that the financials of the company and its continued success matters - when the people in charge are optimizing for THEIR OWN financials.
It takes long time for the layoff effects to hit the company.
The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
And this is what tech did better than any other industry. The average required know-how depth of a tech white collar worker is easily two three levels below when compared to other industries. Pharma and chemicals come to mind from personal experience.
I think this is the logic that can make a company like Citadel, which fires 10% of their staff per year, work out well. If you have no expectation of job safety, it attracts a certain kind of person, but there's also no love lost if a layoff round is a little bigger than normal.
Exactly. I worked at a Citadel like fund and that's the vibe. The calculus was like this - I'd rather risk being fired than work in a place where low performers are cozy.
The reality is that working at a place like that or a FAANG for just a few years sets you up for a great career no matter what happens. So even if you get fired after a few years you are still better off.
It's good to have coworkers who can think rationally and make decisions this way, too. It's a virtuous cycle.
> When someone makes $500k+, what does "unpaid overtime" even mean?
It means shit work/life balance, thus missing on a lot of people that would want to have it and results in worse productivity (people need time off or they break).
Great anecdote, but burnout generally isn't caused by that for most people. At its core, it's because of stress. Incompetent coworkers and organizations may certainly cause stress, but rarely is it so bad that it causes burnout.
The ambitious people who take 500k/year jobs at HFT firms are to top .25% of "workers" in some abstract measure, and have different expectations and causes of burnout relative to the median burnout experiencer who is for example a school teacher or administrative assistant in an office job. Some people have an addiction to the fast pace, feeling of being need, and stress.
Loss of efficiency/productivity might not be the product of burnout. It might be the cause.
People get addicted to the dopamine hits of getting things done and when they hit a wall, enter a vicious cycle of depressive withdrawal. Recovering from burnout by taking a break is simply resetting that dopamine addiction. Just a personal theory.
If you work in a high paced environment with competent colleagues, management and tooling, you can just keep rolling with the punches and never hit the wall.
Being ambitious and having an environment that lets you run (and rewards you for it) is what prevents burnout at a place like that.
A lot of people at hedge funds like having a baseline level of good stress in their lives. It's only when the stress starts to make you feel insecure that it creates problems.
I worked at one of these firms for a while, and my "burnout" point came when I realized I wasn't actually getting rewarded for my extra contributions to the company (my bonuses were going up by a small amount each quarter, no matter what).
I’d rather do actual work than generate signals for wealth managers to personally capitalize on in a government protected and policed fiat currency scam. It’s no different than a church deeming priests the most pious.
Fingers crossed white collar jobs are on the verge of being AI’d away.
Real logistics information should be made public and democratically planned online across the globe in an organized way, not micro managed by elites who spend a lot getting us to memorize and recite that they own imaginary things.
> The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
I don't know, but I imagine that there's a pretty substantial difference between an isolated layoff and an industry wide layoff. Maybe it hits differently when you get to see the sausage made.
Where is a top performer at Google going to go? I'm sure there's some companies out there that aren't doing layoffs right now, but most of those probably can't offer FAANG/MANGA salaries.
Startups. Top performers at Google, if they've been smart about their finances, are sitting on a few million in the bank and have runways between ~10 years to infinity. They can afford to work for equity for a few years to take a slice of the pie when the company takes over another industry.
My own pet theory about this round of layoffs is as follows. The tech companies spent 2021 massively over-estimating the value of boot camp folks and new grads. They spent 2022 learning a tough lesson. I saw this first hand. So much lost time mentoring low-quality hires.
Now they will spend 2023 massively underestimating the value of their senior folks (10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc.). The problem in 2024-2026 will be that experienced engineers/managers and PhDs who know how to operate well in industry do not grow on trees. Fixing that mistake is going to be a LOT harder than firing a bunch of junior engineers. It may take a decade or longer, and I think the burnt bridges could even be existential for at least one of the FAANGs. (I also bet you'll guess a different one than me, so maybe more than one ;-))
Also: the alternative is not just startups. Smaller companies, sole props, and of course also skiing.
I am getting very close to that "~10 years to infinity" number in my accounts. I might do a startup, probably self-funded, likely keep it small. I know who my first 5 customers will be, the work will be fun, I know I can execute well. Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code. Totally not worth the ridiculous pageantry when I can do it on my own or with 1-2 helping hands.
I'll be making a tiny fraction of what I make today, but the work will be enjoyable and I'll be building what I've wanted to build for the last ten years. Also, I will own the damn thing, which is much more tax-efficient than taking a few years of massive paychecks, and that's something I am more sensitive to now that my money is making so much money. If I were laid off today, I'd need at least double my current comp to return to a FAANG. And even then probably wouldn't.
> Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code.
Why are these large companies so slow? Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
A combination of risk aversion, regulatory burden, and process. The corporate machine can't afford to trust the judgement of individual contributors or even their managers or even their directors or sometimes even their VPs.
Credit where it's due: some of that is because of real risks that large corps do need to worry about but scrappy startups don't need to worry about.
A lot of it though -- especially the burdens that come from standardized processes and distributed responsibility -- boils down to a combination of (1) the cost of treating employees like cogs and (2) some amount of empire building.
> Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
It can go either way, but the question is kind of ill-formed. The decisions that slow stuff down happen at the VP+ level. If you're being slowed down by an IC, it's usually not the IC's fault (you'd rather not even have to interact with them in the first place, but someone VP+ demanded that you must).
That said, generally the valuable people with tons of experience are the ones building/fixing stuff. The "process implementation cogs" are typically more commodity-like labor.
Because for FAANG to invest resources in a program, they need to make sure that it will return hundreds of millions of dollars. Don’t forget that every year they need to show to the shareholders that they grow with double digits, and for FAANG this means billions of dollars in extra revenue.
So a lot of time is spent evaluating a program in stead of just doing the program.
This as well. Things that make for fantastic lifestyle businesses -- a few people doing mid-seven revenue with minimal compute expenses -- just isn't worth it for a FAANG spending an order of magnitude more than that per hour just on one guy's compensation package.
>I also bet you'll guess a different one than me, so maybe more than one ;-)
Only thing I'll say is it won't be Apple, since they did none of the above/didn't get into the "hiring Spree" in the same way all the rest of the tech giants did, which includes what I'd call FAANG-adjacent spots like Uber, etc.
The highest performing, most expensive employees are going to be pretty senior and pretty experienced, ie older - the demographic least inclined to bet the farm on equity in a startup.
They’re likely to be at the stage of their life where their “runway” is their kids’ college tuition, or their (possibly early) retirement plan. Most will be far more inclined to take a (stable) pay cut rather than make a risky bet.
Plus, this whole downturn is rooted in drying up credit. Startups are more likely to fold than ever, and will largely have to either slow hiring or reduce non-equity compensation.
I think there is another point of view to this. Once you hit the 5-10M NW range as employee, you're basically free to take risky bets on start ups. You're looking for something that will be game changing (10M+) rather than another 500K in the bank.
You've got college, housing etc. covered, so it's fine to go take risks in order to get large lottery tickets.
The problem is that "industry wide" doesn't mean much if you know your company is doing well. It's jarring seeing "record profits" and "layoffs" mentioned within a few weeks/months of each other. If you get laid off even when things are going great, what hope do you have for knowing when the next layoff occurs?
> The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
This is an interesting way to think of the Leetcode style interview. If you don't require any particular experience and you have built your company's systems in a way that any "competent" developer can join and be effective, layoffs may not be such a big problem.
This is why React is so popular; not because it is inherently good or performance or has great DX but because of how easy it is to swap one so-so React dev for another so-so React dev.
Cynically, aren’t corporate blub languages like Java and Go kind of built on the same notion? That is, they intentionally limit the amount of complexity possible so that there is a low ceiling for mastery and workers are interchangeable.
Have you ever seen a company (from the inside) where everything was easy and clean and documented, and you needed no institutional knowledge / context be effective?
If it's really possible, I think it's the very rare exception.
I worked at a bigco that followed this approach. I think the alleged fungibility of programmers is surface-level.
Sure - ~any decent programmer can jump into ~any codebase and do your JIRA tickets. But there's a more holistic ownership you miss out on that's going to be the difference between a system aging gracefully and a system becoming a giant hunk of butchered junk that's been one-small-jira-ticket-ed to death over a decade and now needs a very costly and distracting replacement/rewrite.
I worked at a different company that did the opposite of this. Programmers were expected to stay either 1 year or 10 years, and you'd be compensated according to which bucket you were falling into. They had excellent retention rates, and the dev team was small, <30 engineers. We never rewrote systems. They had owners who had either written them, or been handed off apprenticeship-style over the course of a year or two from the former master to the new master.
Place 1 was a fucking mess of tech debt and had constant incidents that made high value customers mad, execs mad, and oncall engineers mad. One of my coworkers literally went into his first oncall shift, got paged at night three times in two days, and resigned the next morning when he found out that yeah this is just kind of normal and good luck convincing leadership to let us fix it.
Place 2 literally never had tech incidents. The worst oopsies were generally related to (it was a trading shop) other people in the market fucking up and resulting in trade breaks that we had to clean up after hours, or exchanges having problems and sending us garbage data that we had to resolve by calling someone from the exchange to confirm order statuses and so on.
I only left place 2 because I was moving across the country and they didn't do remote (and still don't, even post covid). I was laid off from place 1.
> One of my coworkers literally went into his first oncall shift, [...], and resigned the next morning
I've seen people nope right out of there, and (anecdotally) it's always been an experienced person seeing something that was worse than they should've expected, and having an idea how unusually bad it is.
Ah no nothing like that. And 10 is just a pithy way to say that they want people to stay a long time if they're good. And they did that by, each year, if they wanted you out, you got a very small bonus. If they wanted you to stay, you got a very large bonus. That's all I meant - they retain you by giving you many dollars via payroll.
I think the point is that salary + bonus = your real salary, but they give much if it in the form of a bonus so they can more easily choose to give your overall "salary" a cut.
It's how it works in the trading world. The base is decently competitive (for devs anyway) but the bonus is based on trading results and functions similarly (from an incentives/alignment and retention perspective) for how stock works for other companies.
When you know for an absolute fact that you hold ownership and are held accountable for a codebase, assuming you're competent, things like tech debt and bugs suddenly become much more important and consequential to you.
I am not sure about this (not disagreeing, just not sure). First, 10% of top performers out in 2 years is a normal attrition rate for a 20 year tenure. And I suspect mean time at the company is much lower.
But even more important, I think most top performers understand and accept the risk that their employment may end. For example, the company can fold. It is easier for top engineers to accept that because they likely have better connections and can pretty easily find a good job elsewhere. My 2c.
> The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
Is this true this round? I have noticed a few things:
* On the hiring front, much more demand for senior, staff, principal devs, less demand on the junior / intern front.
* (Anecdotally) A LOT of junior / new people laid off. It seems in this round companies want a small but elite force, rather than opting for junior people.
Companies have always preferred to hire experienced ICs. They hired juniors because they couldn't find or afford more senior people. It does seem that a lot of juniors are being impacted. But the hiring front likely reflects the fact that there are now more senior folks in the market, and likely that they can offer lower salaries since job seekers have less leverage.
> The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
Yes, and that's the number one thing successful small business owners learn. The ones who don't learn this aren't successful.
You want as many of your staff as possible to be easily replaced. If you're running a restaurant, do you really want the success of your restaurant to hinge on a single talented chef?
Nope. You make sure that there's a process so that another few chefs can drop in quickly without changing the menu or the quality of the food. All the other kitchen staff don't do "complicated", they follow instructions.
If the business depends on having developers that are in the top 5% (say, one of the criteria to working on the code is understanding Haskell with Monads), the business is at constant risk because the developers are not easily replaceable.
While they certainly have some people who are cogs, all of the small businesses I know are heavily reliant on their owner constantly being around being that person and putting in soul-crushing hours, though, as they can't rely on anyone else and yet simply aren't large enough to have the entire business be built out of cogs. A result of this is that they are businesses that are fundamentally trapped at their current size because of this reliance on their size, and I will claim the only way they grow is by figuring out how to bring on other dedicated strong people to help them get some horizontal scale. I honestly don't think you can try to do the "everyone is a cog" thing until you are at least a medium-sized business.
You are talking about a Franchise model. At a good nice restaurant the individuals recognize me as an individual. You can't just drop someone in and have them know what I like or the service I am used to. You can make yourself a McDonalds, but you better not have any large customer contracts because they are not compatible with the 'franchise' everyone can do everything model (because they expect individualized attention, and often individualized features).
Depends on the environment. In a startup, the top performers often say basically “what took you so long? Glad we can move faster now. And try to hire some more top performers for me to work with.”
> The main effect is that you lose the trust of the top performers.
Why? top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning. With that said, it's not always easy to identify who's who-- it's possible top-performs are affected or incompetence isn't, which can erode trust.
> top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning
That's thinking from a notch or two below top-performance. Top performers know what's "in the wheel house" for others around them and how to use it optimally. Don't be fooled by local maximums!
There are many factors involved in employee assessment of employer suitability. Steve Blank has observed [0] that when top employees recognize that when an employer moves to assessing them from a purely financial perspective, it's time to go.
- The people let go might have been good friends or at least people they enjoyed working with.
- While they’re not targeted, their coworkers are, they’ll sympathize with the tension. Also that workforce is now doing the same work amount with fewer people.
- They are expected to do a lot of education and bringing people up to speed. More churn means more work, and it’s also harder emotionally if you’re not sure how long the person will stay in the company.
You typically are asked to work longer hours to make up for missing staff, deal with a lot of nonsense and get "at least you didn't get laid off" as a reward at the end of it. When the money people turn out their pockets (become low performers in their role) no point in sticking around or at very least, no reason to coutinue to be a high performer when the business is signaling its going to be a low performer in regards to the value its going to be able to deliver to you.
> The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
I've been through one of the tech layoffs that happened during the pandemic, so N=1 and all, but this was exactly what happened.
On the day of the layoffs, few top performers were affected. It was a classic layoff with an HR email and immediate lockout. Managers of affected people learned later. Some people learned they were being laid off after hearing it in mainstream media first.
After 6 months, many best performers (more than 10% in my opinion) have left after struggling with low morale. A lot of company knowledge was lost, portions of the codebase became unmaintainable, projects went from being certainly doable to being in perpetual uncertainty about cancellation. The responsibilities of the the top performers fell on less experienced people, some received promotions but buckled under the pressure in disruptive ways.
Two years later, the company is still rebuilding but has obvious competency gaps. There was also difficulty in filling them because HR was disproportionally affected by layoffs. The distrust in management persists and more than a few people are openly talking about leaving. Though the hiring in tech has cooled down which had a chilling effect on people leaving, too.
Top performers are pets. You use layoffs to generate excess opex savings in order to retain them.
You guys are acting like companies are too dumb to think of these very basic concepts. I have personally witnessed discussions that can roughly be described as “ok we need to add an extra three people in order to fund retention for X.”
Things might be a little different regarding losing trust of top-performers when layoffs happen broadly across a sector.
If every semiconductor manufacturer reduces headcount by N%, there may not be much incentive for an engineer to jump ship. If only one of those companies doesn't lay anyone off, though, the dynamics are completely different.
> If you cut 10%, expect 10% from the top to flee within a couple of years.
If the company was laying off the deadwood and the quiet quitters, the top performers know who they are, and are not concerned about being laid off themselves.
Top performers don't particularly care to work with deadwood and quiet quitters, either.
> If the company was laying off the deadwood and the quiet quitters
That's a big if, though.
Executives doing layoffs also tend to do them quickly and plan them in secret in order to reduce the chance leaks. That means they are deciding who to cut with very limited time and information. They make lots of mistakes.
Both times I've been through large layoffs, I saw skilled respected peers get the axe while deadwood didn't. It causes the loss of valuable employees and completely destroys respect for executives who are apparently so clueless that they don't even know which of their employees are worth keeping around.
As someone sometimes in that position, if I can get 85-90% accuracy (in both directions), I think that’s about the best I can possibly do in a 500-ish person organization.
I hate the false positive (including a good performer incorrectly beyond that required by the depth of layoff) more than anything else for its deep unfairness to the individual, the team, and the company.
It's rare that "deadwood" and "quiet quitters" do literally zero work. Even if you feel that your job is secure, you might not appreciate having their work dumped into your lap, especially since there's a good chance that it's not critical-path work. And you might not want to be in an environment where morale is low and trust in leadership just took a major hit.
They're deadwood if they cost more than the value they produce. Nobody missed them. And the livewood didn't have to go redo all the stuff they messed up.
> The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
This can be a good thing. In my experience these people are generally unambitious people who's claim to fame is that they held a job for a long period of time rather than any innate talent.
And when you have a majority of seniors who's only value is in being a well of knowledge, they're resistant to any change that reduces the value of that knowledge. This can quash innovation and perpetuates the anti-pattern of information hording.
Productivity takes a hit for a week. And then starts up anew with new direction and new energy.
Sometimes layoffs are erratic and cause employees to question management's logic.
Most times, every employee is put on alert to not get complacent in their job and always be on the lookout for a better position. (this might be a net positive, POV)
What are the different kinds of layoffs? 7% sounds like one person from every-other-pizza-team but in practice isn’t it more like “we laid off the self driving garbage truck team (70 of 1000 employees) in order to focus on our core infrastructure and future as a builder of large language models”?
I think it's a brinksmanship game. The company that does the least amount of layoffs and survives will be in the better condition coming out of the recession.
> and in the end not clear they're a financial net positive
This feels like another instance of Deming's (paraphrased) "People will destroy the enterprise to align to their incentives."
The people who make these decisions may be incented on the _short term_ cost savings. It's a fractally smaller version of the entire org aligning to shareholder expectations at the expense of company growth.
Generous severance, half the layoff size of other firms by percentage, particular attention paid to health care. I have always admired GitLab, and I remain impressed.
It's interesting the number of company layoffs recently that have listed "you can keep your laptop" as part of the severance package. Is it possible that shipping charges for layoffs of this size plus the overhead and personnel to deal with such numbers of returns is more expensive than just having employees keep them?
Most companies, especially remote first ones like Gitlab, don’t have sizable IT departments that could deal with receiving, cleaning, reformatting, and deploying hundreds of laptops anyway. Can you imagine the poor technician who gets 150 laptops FedEx'ed to his house? The company is paying tens of thousands in severance costs per employee, way easier to just add the mostly-depreciated laptop onto that figure than deal with the logistics.
If they would lower their prices to be competitive they’d get a lot more cash. We tried to switch to Gitlab and at every turn they acted like We just weren’t worth the $$. Seems they want nothing but big enterprise accounts and they push everyone else to free
This rings so true. A best friend ran her business through GitLab for years. She was a subscriber for a team of 3-5 people, but recent pricing and plan changes [1] caused her to switch back to GitHub.
She's got a small team on GitHub and has all of the critical features for less than a single seat at GitLab now.
I don’t get this - did every single company hire hundreds of people for no good reason? A global event forcing folks to temporarily use more online services is, well, temporary. I just don’t get the mindset that triggered all these companies to mismanage their teams so badly.
It's quite simple: If you don't follow the herd, you risk being blamed if you fail. But if you follow the herd and do what everyone else is doing, even if the herd runs off of a cliff, nobody points any fingers.
You'd think somewhere, in at least one of these larger tech companies, there would be a leader boldly proclaiming "this is our time to increase our investments and beat our competitors!" But it turns out there is even less diversity of thought in tech leadership than there is racial and gender diversity.
That said, Gitlab may be making a very prudent decision given their circumstance. I don’t know enough to conclude one way or the other. But considering what they are doing so closely mirrors what nearly everyone else is doing, skepticism is warranted.
It makes me sad. These are actual human beings losing their jobs. I guess they don't include “human cost” or “how much pain we inflicted” as a column in financial reports.
In many cases, these were people they shouldn’t have hired in the first place. When the herd said “hire 10% more employees!” the same lemmings did as the herd commanded.
It certainly isn’t the fault of those being hired, but it might have given them a chance to find employment somewhere that truly needed their skills and didn’t see them as “headcount”.
No, because the rising tide of automation should, at least ostensibly, lift all boats. If the extra utility created by automation is captured by technocrats, that’s a political and social problem, not a technical one. Pointing out the ways that technology can be abused isn’t an argument against technology - it’s an argument against abuse, and for governance that optimizes the wellbeing of constituents.
Companies hire in a frenzy based off future growth, esp. in tech, not exactly always current needs. How many times have you heard a recruiter or someone say in a company all-hands that we're going to grow our engineering team 300% by EOY, or TRIPLE our headcount.
20-22 there was basically infinite cash sloshing around the system. If your competitors takes advantage of that, hire like crazy to build out and innovate, what do you do?
Not saying it’s good management of a company, but that’s the mechanism driving this.
Companies generally give as little evidence as possible of layoffs before they happen. Morale and productivity take a huge hit as soon as employees start to realize what's coming.
If you keep an eye open on who's hiring on linkedin you'll see a surprising number of companies posting new positions will have layoffs the next week.
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[ 2.9 ms ] story [ 328 ms ] threadI mean, “dutonians” from PagerDuty is enough to illustrate how ridiculous this whole thing is
However I want companies to understand how terrible that malpractice is.
https://ir.gitlab.com/news-releases/news-release-details/git...
Fiscal Year 2022 Highlights:
Total revenue of $252.7 million GAAP operating margin of (51)%; Non-GAAP operating margin of (39)%
hence cutting costs before borrowing money becomes too expensive (0% interest rates are gone)
This is on the Condensed Consolidated Statements of Operations. Total OpEx: 351,625; Sales and Marketing as part of that is 190,754 or about 54% of their operating expenses. I don't read finance statements that often so I don't know how normal this is for the industry.
I think you only need some basics to learn how to look at a financial statement and understand information like whether or not the company is profitable, or roughly how long the company can survive if things continue the way they are, or get better, or get worse. If you want to be able to really understand and assess a business and its financial health based on these statements, I'm not sure you can just learn that. I certainly don't have the confidence that I can do that yet. My feeling is that I'd probably have to work in the industry in some capacity where I am looking at this information daily, across dozens or hundreds of companies.
At best, I can pick up on anomalies that can later be explained (e.g., I saw there was a large amount of cash added to GitLab in the past year, and later it was clear that this was largely because of their IPO, which seems obvious but nobody told me there was an IPO before reading the statements (granted, the existence of the statements tend to imply this is a publicly-traded company)). That gives me some confidence that I know what I am reading, but I haven't done much outside of Khan Academy videos and taking a university-level accounting 101 course where I learned about the accounting equation, the accounting cycle, and how to write financial statements based on the financial events for a business.
They’re a bunch of terms and abbreviations you’ll also need to understand eg FY means Fiscal Year, what the various GAAP measures are, and often many companies and industries have their own non-GAAP measures.
To really understand it all takes a lot of work, corporate accounting is nothing at all like managing person cash flow, there are a lot of accounting practices you need to understand like depreciation, how revenue is recognized, etc - all of which can be games to a degree.
Note that a private company doesn’t have to release this kind of info.
https://www.youtube.com/watch?v=TkX-TPaodoM
The film included a lot of people who had really been fired and what their honest reactions were
There is always a time and place, of course. But generally speaking, you don't speak ill of your (former) employer or even talk about it publically lest there be ramifications beyond your imaginations.
No one disagrees with you in principle, but there are realcitrant social practices punishing this kind of feedback. It is always taken as a grudge rather than an observation, and this makes you less attractive as a hire.
That is to say, (former) employee doesn't speak ill of (former) employer and (former) employer doesn't speak ill of (former) employee. It's how society keeps itself oiled.
He's not burning bridges if he uses a throwaway, or otherwise doesn't attach his name to his report.
But looking at his comment history, I'm guessing he's talking about Tempo Automation (TMPO).
Equity: We’re accelerating vesting through 2023-03-15 and removing the vesting cliff for team members who have been granted equity and have been with us for under six months.
Healthcare: Based on location and current benefit options previously selected by team members, healthcare premiums will be covered for up to six months, where possible. Modern Health for mental health support will continue for all team members for six months.
Hardware: Team members can keep their hardware and home office equipment subject to our security protocols.
Career support: We will provide outplacement services with a third-party vendor, including coaching, resume building and guidance, and job-seeking support.
why is everyone doing this at the same time?
There are other companies doing great -- Stryker (NYSE: SYK) is near their all-time high and has not done layoffs as far as I know.
Once the flood gates open up by your competitors or the sector as a whole starting layoffs, it makes sense to get your own house in order.
I don't know if Gitlab hired a bunch during the PANDEMIC! They might be back to pre PANDEMIC! numbers.
My goal is ensuring executives are making decisions using the best information possible. It’s highly collaborative to maximize the amount of pooled information (because executives are deep experts, too). Based on how it’s gone so far, I think it’s innovative and has a strong beneficial affect on the quality of decisions (and output as you’d expect). ie- applying more technology & skills improves output volume and quality.
etc....
So if the layoffs come not because of hard "we have x to much cost" reasons but of "we need to be more robust for potential dives in profit and increased cost" reasons and an arbitrary number must be chosen which isn't affecting operation too much but also makes a difference 7% is a common choice "because that worked well for some other large companies". Especially when the push comes from shareholders without much company insight 7% is likely.
If your company is smaller you make decisions on a one by one basis (after having some target for rough performance where you cut). But the moment your company has 100+ or even 1000+ people that gets impractical so a % line is set for how many people need to be cut.
- They are on venture capital, not profitable, and the process around IPO, being purchased, or getting more rounds of funding has been complicated by the downturn. So, they need to change their rate of burn to last longer.
- Companies are profitable and their leaders want to keep the profit margin for their owners (share holders). If income is down or doesn't grow to the level it had then they can lay off to reduce expenses which pushes up profit levels. This has become trendy in the past 40 years.
- Income has been reduced and companies are breaking in less money. They may no longer be making a profit. To return to break even (or profit) they need to lay off.
There are other reasons. These are some that come to mind.
2. Consumer spending is down (Source: https://www.bea.gov/data/consumer-spending/main).
So you have the producers spending more to operate, and consumers spending less. This leads to an inevitable contraction in the economic output.
Also known as recession.
The real economy is not doing well globally, inflation is a serious problem, and the impact of the rate hikes will take about 10 months to show up (so should hit this year).
They are stuck on the horns of a dilemma they created 10 years ago with 10 years of sustained QE and ZIRP, which led to the asset bubble we now see deflating.
Also agree it's largely due to QE! I think the only thing I find weird enough to pause and think "huh, that's weird" is the timing. Labor gets market power and oh wow, we better fight inflation.
Maybe it just all happened at the same time and COVID caused it to bubble over. Just seems weird timing to me.
He got it exactly right.
It may also be the case that this is an actual correction trend in the market to overhiring. Whether or not that's the case or the target is more of the former is ambiguous to any outsiders so this will be the explanation given because it puts things in a more positive light than the strategic "we have a golden opportunity to cut labor costs so let's do it."
And "currently everyone does so and the economy is bad" is a good excuse.
And there are many reasons why a company might lay of people even if it's currently not strictly necessary:
- you don't really need that many people (anymore), common for small companies which grew to fast
- you want to restructure your company majorly and doing it will less people is easier
- you prefer to go a bit slower, so that e.g. current investment money lasts longer
- you want to be more robust to a potential economic dive, so you reduce money cost at the cost of going a bit slower and in turn can compensate hits in actual revenue better (at least for some time)
- you have accumulated a bunch of people which are not bad enough to fire them because of performance but also you know you can get better people, so you use it as an excuse to let people go, go slower for a "not short but not too long" while and then rehire. Alternatively companies like Amazone do that every year fire bottom x% then rehire roughly the same amount.
- you expect salaries to fall in the industry as a whole by quite a bit
- financial distress (e.g. interest rates and/or profit)
Lastly group dynamics to affect Investors, CEOs, Board Members, HR people etc. too, so it might be a "everyone does so so we better do so, too" situation (potentially forced onto the company by the board of shareholders).
Are you serious? Maybe you all should take a basic economics course. We are in a recession. Businesses know this. It doe snot matter if the Fed says if we are in one or not. Layoffs do not happen if the future business outlook is positive.
According to their website, they have (had) 2,159 employees, so this affects ~151 people.
Yes, I'm paid well, and yes I have more of a cushion to land on if I got laid off, but I know folks who got laid off last year who haven't been able to get a new job for months. I don't have 6 months of all of my living expenses just laying around in a bank account, and even if I did, that pretty much wipes out my savings.
"Other people are doing worse than you" doesn't mean there aren't rational fears. Making an engineer's salary doesn't set you up for life within a few years.
Our "high" salaries could quickly evaporate if we're not paying attention while the owners of capital are taking advantage of excuses to wage class warfare.
It's even funnier when that discourse seem to mostly happen when firings happen, as if losing your highly-paid cushy job makes you a proletaire.
Except for the part where if you get fired, a countdown starts for when you become homeless and then starve? Especially in the US?
"professional managerial class"
are still labor, since their primary expression of economic power is through the sale of their labor.
Stop trying to drive class division.
I don’t really agree with the idea that there is an underlying wish to “instil fear” or whatever. I agree even less with the attitude that we should all shut up and be happy so long as someone else is worse off.
The working class and employing class have nothing in common.
Also, if the intention was to "instill fear". Why give good severance? Why not give nothing?
For the 7% you have to look like you care, since you will be hiring in the future and probably with lower salaries. Mass layoffs are a good way to lower wages throughout the industry.
You lay off hard to instill fear and legally-depress everyone's wages, but you give good severance so that when you inevitably want to hire people in the next two months (as GitLab is likely to do), they're aren't too terrified to accept your offer because of all the layoffs you just did. 7% of staff as "layoffs" comes out to about 150-ish? people, but they are also currently hiring for over 100 open job position at GitLab on job boards right now. GitLab is also up 74% year-over-year in quarterly revenue, and had their highest sales quarter ever just four months ago, according to their own PR department (https://ir.gitlab.com/news-releases/news-release-details/git...)
It's a pretty transparent process, frankly. Lots of companies are doing 'fake layoffs' (layoffs they don't need, done solely to appease the executive class, who strongly desire a recession), but unfortunately for them, the truth is that the economy isn't anywhere close to a recession, so they simultaneously have to keep hiring open, to keep labor incoming, to keep up with all the new business growth or increased sales they're experiencing right now.
Also, I am not sure how confidently you can assess the health of Gitlab. Those open positions my not actually be "open". While their revenue was up four months ago, much has changed since then. Their next quarter might be down and they are adjusting now.
> isn't anywhere close to a recession
No one knows where the economy is headed.
> It's a pretty transparent process, frankly.
Except that it is not. Perhaps you are correct, but you really have no evidence their decisions were to maliciously "instill fear". It is equally plausible that they are doing what they think is best for the company and the remaining employees.
Attrition is not targeted or evenly distributed (depending on the goals). This can result in what would later be perceived as being lopsided compared to the layoff cut. For example (and purely made up), if part of the layoff was to cut back on marketing of the self hosted instances, then you would be looking to lay off marketing, and developer evangelists. However, if attrition doesn't hit those roles (because who's going to be leaving in this economy), you can have it take much longer to scale back that headcount. Saying to the developer evangelist "ok, we don't have something for you to do, we're going to switch you back to an entry level developer position with this other set of roles and responsibilities with a corresponding pay cut" isn't something that can be done easily.
If you target specific people, even if they do garbage work, somebody somewhere will find something to sue you over. If you do a less targeted layoff, you'll hit some of that target group anyway, and some will leave over their own volition after. Yeah you'll lose some good people but the whole point of this charade is that in management's eyes the engineers and knowledge workers are cogs in a machine, so collateral damage is okay and it'll all come out in the wash over the next few years with new hires.
- Effective number will be higher because some employees will be disgruntled because of the layoff event and will leave on their own. It's usually estimated that the effective number is twice as high
- By doing a layoff you can quickly get rid of people who are overpaid. The attrition would take much longer. And with the regular performance review process you can only get rid of under-performers
- With a layoff you can get rid of entire teams, wouldn't happen normally
- Finally, and probably most importantly, shareholders expect a layoff, especially if other companies had already done it. Cargo cult CEO thinking. You could see the stock price rising for some of the previous companies announcing layoffs
- everyone is doing it so it's that much easier to buck responsibility for the decision
- Why is this beneficial? The disgruntled will be the high performers. In no shape or form is this beneficial for culture.
- Assuming you mean average performers who are paid well, ie. well tenured? Considering these types harness significant domain knowledge it would be a strategic mistake to let them go in any meaningful number. The focus on smaller cuts tends to be low performers or recent hires.
- The only time this is beneficial is when there is indeed 1) a financial dire straights situation or 2) a significant change of course (ala Google) and blood letting has to be rapid, otherwise you're letting go of top performers in the process. It would be much cheaper to reassign to other teams given the cost to source/acquire and onboard top talent.
- Bingo. This is the primary reason almost always.
2. I could also be people hired recently, it is often the case that they're paid more than their peers on the same level.
3. Maybe re-assigning people from a dismantled team doesn't make sense because these people will be upset about their former team being dissolved and thus spread the negative energy to other teams?
4. I'm glad we agree :)
Helped morale tremendously. Don't treat your employees like numbers, it will bite you back eventually, in all aspects including finances. Even most cold-hearted sociopaths on the top should grok that.
FB laid off about 14% of their staff.
Whilst there's good arguments to be made about workforce planning during recessions, and how you need to not have "slack employees" doing nothing... there are similar arguments to be made about stock buy-backs (ie., that having 40bn in reserves is a massive economic cushion).
That they choose to weaken their cash position for the sake of a temporary boost to stock prices shows that their incentives arent well-aligned to most stakeholders in this.
Mind you, Im not interested in buybacks but if they paid a dividend I'd hold them till they lose their advertising business.
Could you elaborate, how does the buyback help them to be valued as a growth company? Also doesn't the fact that he paid for the buyback with employee layoffs really damage FB as a prospective employer when FB at some point in the future again needs to hire? What was the logic here?
Buybacks are what growth companies do, dividends are what value companys do (for whatever reason). But more generally, FB needed to show profit growth to go back up in value, and the easiest way to do that is lay off a bunch of people.
> Also doesn't the fact that he paid for the buyback with employee layoffs really damage FB as a prospective employer when FB at some point in the future again needs to hire? What was the logic here?
Maybe it does. But if they offer shedloads of money, I can't see people worrying about. For context, FB performance reviews are hardcore, so it's not like people were resting and vesting there. I dunno what his real logic was (I left in 2018), but the above seems reasonable, to me, at least.
I think it comes down to bad management, my direct manager didn’t even know I was getting cut.
At one of the companies I worked at, the strategy was the opposite. Lower employee salaries in the hopes that people would quit.
There's not too much detail in that press release.
Thanks for sharing the link to the report!
Also, I looked at the wrong year. Currently they are in Q4 2023FY, the statements for the last quarter are here https://ir.gitlab.com/news-releases/news-release-details/git...
Lot of companies adopting Gitlab.
that is such a nice severance package that I almost wish I worked there and was getting laid off!
But I have been thinking "the job market is still ok", but am starting to doubt that, it seems like it really is going to be a lot harder to get a job.
https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
Copycat behaviour is not uncommon, I think, and is swayed by market sentiment. If the (equities) market ( mean in a general sense) feels bullish, then Microsoft, Google, etc. start piling on employees. Because hey, we're tech companies, we have to justify our market ratings by pursuing (or at least looking like we are pursuing) growth, so that's what they do.
Then, when things sour, the mood becomes one of conservatism. Then it looks good to shed employees. This is all despite the fact that it may have little to do with the actual state of the companies.
Microsoft in particular is hardly a heavily cyclical company, so there is little need to behave like one. Not really. They could adopt a more even approach to hiring. If they tried.
Companies bleat on about how difficult and expensive it is to hire staff. And yet, here we are.
No, they are doing this because we are in a recession and businesses are always the first to know and labor is the last to know.
You see other industries, they're laying people off sure, but we're not talking 5%+. They're doing the above, being more precise about their spending. Like Blackrock, huge losses, and still "only" let go of 500/16000, ~3%.
You will not see tech companies balloon to the same number of employees ever again, if anything they will continue to shrink astronomically. No matter what happens to the economy, as these decisions are not because of the recession or the pandemic, both of those reasons are amplifiers not sources.
> You will not see tech companies balloon to the same number of employees ever again
I remember people sating this in 1999.
> both of those reasons are amplifiers
Nope, they are canaries in the coal mine.
https://news.ycombinator.com/item?id=34725407
https://news.ycombinator.com/item?id=34727185
https://news.ycombinator.com/item?id=34726977
Economic indicators may look solid, but why? I assert it is because the Fed rate is STILL below the inflation rate. This is why the housing market has not totally seized up yet. The next inflation numbers will be high and then you will see people scrambling again.
Nowhere was that stated. Hopefully you understand that both we are in a recession, and you are being misled as to why these layoffs are happening are both true. As stated, if it was purely because of the recession, the likes of Blackrock would also be hitting 5%+ layoff numbers.
No, we are not in a recession
Now, Yahoo is letting off all these people. That does not happen during recession. If you follow what the Fed says about recessions, you’ll be left behind.
The people doing this do not lose time thinking about workers.
(About Gitlab specifically, they are not profitable, so a layoff is a normal survival strategy if their cash is running low.)
We've just gotten so used to the idea that "tech companies don't need to make profit" that we don't even question it any more. I still hear people shocked when a companies revenue goes up but their stock price drops while completely ignoring the reality that costs also went up.
The truth is all companies need to have profit and many of these tech companies have never showed that they're even capable of turning a profit.
What's happening is that investors are going to boards and telling them you need to make serious progress towards profitability. If sales are growing slowly or even declining there is no other option but to do layoffs.
IMHO this is still just the beginning, there's a lot of feedback in the tech ecosystem that are going to start playing out as more and more companies start scrambling to show profitability.
If you're a big FAANG-like company, you've seen workers make big gains in wages over the past year, and turnover rates have been increasing significantly during the great resignation. This isn't enough to sink you, but you don't like it, because it does eat into your margins a little. Of course you're still making massive profits, but workers getting any measure of power scares you. Imagine if this trend continues? Workers are only getting harder to find!
So what do you do? You can't walk up to all your CEO friends and say "Hey how can we go about paying everyone less? What if we all agree to lay off our expensive people at the same time? That way, we'll have a massive pool of workers to hire from that are all looking for jobs, and since they'll all be scared from having been laid off they'll happily take pay cuts. Additionally, it'll scare the hell out of the rest of the employees to see all their friends get blown up with no warning right in front of them. They'll want desperately to keep the jobs they have and won't leave!"
You can't say that because coordinated wage suppression is highly illegal (remember Apple and Google?). But wink/nod based wage suppression? Totally fine! If everyone just happens to fire their expensive workers at the same time but leaves no record of getting anyone to agree to it, it's perfectly allowed. This is not "copycat" behavior. This is all the CEOs recognizing what the game is and cashing in on it.
And better yet, there's nothing the tech workers can do about it! There are no real tech worker unions to speak of, and these companies know their workers have a highly libertarian bent who believe in the meritocracy myth, so there's no real risk of unionization no matter how bad things get. It's a pure win for them, with no real downsides, and the general consensus is that if they're smart they'll do this every so often to bring workers to heel. And given the pervasive attitudes about labor that I see among tech workers I don't see any reason to think that's wrong.
This is false in a broad sense - the majority of CEOs plan to increase headcount this year in spite of layoffs. You can find examples here and there where it is true, but in general it is not. There's tons of literature of this readily available, but here is an example from as recently as yesterday: https://finance.yahoo.com/news/ceo-outlook-report-optimism-r...
> None of these layoffs are focused on laying off their most expensive people.
The people you see laid off tend to be newly hired at higher recent market rates or people who have been there a very long time, both of whom are either expensive in a relative sense or an absolute one.
But even that is besides the point. Even if you fire randomly you still see this benefit if you're a CEO.
This just means that companies are continuing to hirer. It doesn't mean that they plan on increasing headcount to above where it was before the layoff.
If you're continuing to hire past these layoffs, and expanding plans to do so, it's to take advantage of the environment created by the layoffs. If there really was a fiscal crisis you'd also see mass hiring freezes, but we're not seeing that.
> “We expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today,” said Meta CEO Mark Zuckerberg.
https://www.prnewswire.com/news-releases/41-of-companies-pla...
I like my CEO, but it doesn't bother me if he doesn't know about me. He has much more important stuff to think about.
>without getting paid for it.
I don't care about money. I join companies to have fun working on their projects.
>you'd also see mass hiring freezes
Hiring has slowed down. Large companies are always going to want new people.
>“We expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today,” said Meta CEO Mark Zuckerberg.
Meta's employee count has typically grown over 20% every year. This was also said before the layoffs were public knowledge.
The idea that its execs just decided to lay off a bunch of people for no reason just to wage some plausibly deniable class warfare doesn't really make sense to me.
If you have a hard time believing capitalists wouldn't literally do capitalism when they see a chance for it, I don't know what I can tell you really.
"I don't really see it" is a pretty... well it's something, that's for sure.
If this is an option you're considering, then it's a much easier message to sell if everyone is doing it. Otherwise you look like the bad performer and it'll hurt morale and stock price even more.
The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).
It's more plausible, that yeah, layoffs are trust destroying and life ruining, but they make shareholders rich, so they are a rational choice expected from CEOs.
I find it very easy to believe. A lot of executives appear to have a prime motivation that is "number goes up" which IMHO makes them extremely susceptible to the same levels of groupthink and other cognitive fallacies as one would see on /r/wallstreetbets.
I appreciate that isn't necessarily the case for all executives but given that executive's fallacies are mostly disproved by a slow to react and sometimes illogical economy as opposed to a nearby cold logic machine, it makes cliff-marching much easier for them.
Mike has been married for 12 years, happy couple, no children. He suddenly changes in attitude and make his wife life a nightmare every single day, turning his brother in law against him, losing the one job his wife's brother gave him out of pity. Never crosses a line, but jobless and a constant jerk, he ultimately get the divorce document handed over by his wife.
Is he stupid? He might have won the lottery and had his own agenda for what he would do with the money. And that's a personal affair. Let's not underestimate to which extent business and the capital at wide can go making up stories, getting books to look a certain way for a zero sum profit far below the cost inflicted to the other parties.
In that regard, I wonder if it becomes a Wall Street meme--layoffs for the sake of doing layoffs. Companies that performed layoffs made shareholders rich, so therefore if your company isn't doing layoffs in a layoff climate it's assumed that shareholders are better off putting their dollars somewhere else.
It's definitely one of those "if we're not growing, we're dying, lets cut all the employees off"
But if they didn't do layoffs when earnings showed an increase in OPEX the shareholders would see it as a bad sign, so to signal to those that this is a serious-business™ the layoffs happen.
Crisis of confidence are pretty well known/studied, this seems to be a flavour of trying to avoid a crisis of confidence if the herd mentality isn't followed.
It all just sounds stupid, and like higher management aren't too far away from behaving like children and not responsible adults.
1. Actual market costs requiring a diminished future projection of cash flow
2. A Market expectation of investors who'll rate your company as less valuable if you dont.
I'd posit right now #2 is more likely than #1 given all the record profits being reported everywhere. When #2 happens, it's definitely going to affect people. When there's no actual problem, just some future expectation of problems, that's going to cost you.
It wasn't a massive mistake if the rapid growth grew their stock enough that paying a few hundred/thousand extra employees for a year or 2 was worth the cost.
it sounds like you knew at the time that it was a mistake to hire this much and you were part of the interview processes.
did you ever speak up, tried to make a case that it is the wrong move?
Pretty similar to the stupid "did you submit a PR?" response to literally any issue with open source software.
Maybe you didn't mean it like that but that's what it sounds like.
You’re not under any obligation and can keep your head down if you like. I can see the spreadsheets with perfect clarity. I need to marry that data with the more complex and hard-to-get view of the elephant that can only from the people who are working with/on it every day.
It’s fair to disagree, but in my mind it is why you pay top $$$ for great executives. But also unfortunate that an average executive can cause harm to a business due to a large sphere of influence.
And no: not all tech companies have over hired during the pandemic and they are not firing people these days. No one talks about them because that doesn't sell.
I have a couple observations from going through layoffs at a growth stage startup. If you have to do layoffs then you shouldn’t worry too much about protecting top performers—a noticeable percentage of them (10-20% maybe) will leave on their own _after_ the layoffs. You have broken trust with these folks, and they almost surely have other options. The people who stay either deeply and firmly believe in the company (good!) or for some reason feel like they don’t have other options (less good). Secondly, layoffs don’t end with the pink slips—your company is choosing to go down a long, slow path of rebuilding until almost anyone who remembers the layoffs is gone anyway. It will be harder to recruit top talent at standard market rates for awhile because folks will want to price in a risk premium to hedge against continued future instability, so replacing the fired folks may actually be more expensive in the long run.
do you realize that for most software engineers at the hi-tech companies, the majority of their compensation is in the form of equity?
and at startups, reduced headcount cost gives more runway for the company and hence employment.
But the vast majority of software developers get no or very little equity.
There are notable exceptions. Apple rejected (thus far) all three of those trends and is weathering this period much better than most of the industry.
Immensely.
In the USA 401(k)[0] & 403(b)[1] plans are used by vast majority of people as their retirement funds. It is very rare for a small organizations to be able to offer full pension plans. What they do offer are investment plans like 401 & 403.
All those little 401k/403b plans, through the plans and the mutual funds are the "they" "shareholders", "getting rich".
In 2019 21% of US workers participated in pension plans, while 43% in 401K/403b [2]
[0]: https://en.wikipedia.org/wiki/401(k)
[1]: https://en.wikipedia.org/wiki/403(b)
[2]: https://www.pensionrights.org/resources/information-center/
https://www.personalcapital.com/blog/retirement-planning/ave...
You could just instigate a hiring freeze and let natural attrition run its course.
But that would involve having some balls and managing a business in a way that is good for everyone.
Literally no thought is given to redeploying the labor force against the new set of projects. Just cut and rehire. It’s the ultimate short-termism, lack of vision and lack of leadership. Ironically all of these companies blather on about leadership but fail to even demonstrate a scintilla of it. Leadership just means “plays political game competently” at these companies.
"Past performance is not indicative of future results"
and this is just one prominent example.
Well... for whom though? When megacorp CEOs laid people off the stocks soared - massively enriching the C-suites executing the layoffs and the investors demanding the layoffs.
The error in your thinking is that the financials of the company and its continued success matters - when the people in charge are optimizing for THEIR OWN financials.
The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years.
The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.
The only way you can safely pull off layoffs is if you ensure that anything you do in the company requires the experience of a boot camp. That means that everyone is fungible and you can easily swap them.
And this is what tech did better than any other industry. The average required know-how depth of a tech white collar worker is easily two three levels below when compared to other industries. Pharma and chemicals come to mind from personal experience.
The reality is that working at a place like that or a FAANG for just a few years sets you up for a great career no matter what happens. So even if you get fired after a few years you are still better off.
It's good to have coworkers who can think rationally and make decisions this way, too. It's a virtuous cycle.
Drift? I think you mean Sprint.
When someone makes $500k+, what does "unpaid overtime" even mean?
It means shit work/life balance, thus missing on a lot of people that would want to have it and results in worse productivity (people need time off or they break).
Solution: take a job that doesn't pay $500k.
I hate this saying and rarely say it, but "you can't have your cake and eat it too"
No one should take a $500k job and expect the culture to be 9-5, clock in clock out.
It takes most people 10+ years to earn $500k (often still working their asses off overtime). $500k is a shit ton of money.
In fact, it will make it worse, because you’ll keep telling yourself to hold on for the money while your mental health exponentially deteriorates.
https://www.mayoclinic.org/healthy-lifestyle/adult-health/in... https://www.helpguide.org/articles/stress/burnout-prevention...
People get addicted to the dopamine hits of getting things done and when they hit a wall, enter a vicious cycle of depressive withdrawal. Recovering from burnout by taking a break is simply resetting that dopamine addiction. Just a personal theory.
If you work in a high paced environment with competent colleagues, management and tooling, you can just keep rolling with the punches and never hit the wall.
A lot of people at hedge funds like having a baseline level of good stress in their lives. It's only when the stress starts to make you feel insecure that it creates problems.
I worked at one of these firms for a while, and my "burnout" point came when I realized I wasn't actually getting rewarded for my extra contributions to the company (my bonuses were going up by a small amount each quarter, no matter what).
Fingers crossed white collar jobs are on the verge of being AI’d away.
Real logistics information should be made public and democratically planned online across the globe in an organized way, not micro managed by elites who spend a lot getting us to memorize and recite that they own imaginary things.
I don't know, but I imagine that there's a pretty substantial difference between an isolated layoff and an industry wide layoff. Maybe it hits differently when you get to see the sausage made.
Where is a top performer at Google going to go? I'm sure there's some companies out there that aren't doing layoffs right now, but most of those probably can't offer FAANG/MANGA salaries.
My own pet theory about this round of layoffs is as follows. The tech companies spent 2021 massively over-estimating the value of boot camp folks and new grads. They spent 2022 learning a tough lesson. I saw this first hand. So much lost time mentoring low-quality hires.
Now they will spend 2023 massively underestimating the value of their senior folks (10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc.). The problem in 2024-2026 will be that experienced engineers/managers and PhDs who know how to operate well in industry do not grow on trees. Fixing that mistake is going to be a LOT harder than firing a bunch of junior engineers. It may take a decade or longer, and I think the burnt bridges could even be existential for at least one of the FAANGs. (I also bet you'll guess a different one than me, so maybe more than one ;-))
Also: the alternative is not just startups. Smaller companies, sole props, and of course also skiing.
I am getting very close to that "~10 years to infinity" number in my accounts. I might do a startup, probably self-funded, likely keep it small. I know who my first 5 customers will be, the work will be fun, I know I can execute well. Doing this at a FAANG would require pulling in 20+ full timers for a year before shipping our first line of code. Totally not worth the ridiculous pageantry when I can do it on my own or with 1-2 helping hands.
I'll be making a tiny fraction of what I make today, but the work will be enjoyable and I'll be building what I've wanted to build for the last ten years. Also, I will own the damn thing, which is much more tax-efficient than taking a few years of massive paychecks, and that's something I am more sensitive to now that my money is making so much money. If I were laid off today, I'd need at least double my current comp to return to a FAANG. And even then probably wouldn't.
Why are these large companies so slow? Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
A combination of risk aversion, regulatory burden, and process. The corporate machine can't afford to trust the judgement of individual contributors or even their managers or even their directors or sometimes even their VPs.
Credit where it's due: some of that is because of real risks that large corps do need to worry about but scrappy startups don't need to worry about.
A lot of it though -- especially the burdens that come from standardized processes and distributed responsibility -- boils down to a combination of (1) the cost of treating employees like cogs and (2) some amount of empire building.
> Are the 10+ yoe engineers, scientists with deep domain expertise, experienced people managers, etc. helping or hurting this?
It can go either way, but the question is kind of ill-formed. The decisions that slow stuff down happen at the VP+ level. If you're being slowed down by an IC, it's usually not the IC's fault (you'd rather not even have to interact with them in the first place, but someone VP+ demanded that you must).
That said, generally the valuable people with tons of experience are the ones building/fixing stuff. The "process implementation cogs" are typically more commodity-like labor.
So a lot of time is spent evaluating a program in stead of just doing the program.
Only thing I'll say is it won't be Apple, since they did none of the above/didn't get into the "hiring Spree" in the same way all the rest of the tech giants did, which includes what I'd call FAANG-adjacent spots like Uber, etc.
They’re likely to be at the stage of their life where their “runway” is their kids’ college tuition, or their (possibly early) retirement plan. Most will be far more inclined to take a (stable) pay cut rather than make a risky bet.
Plus, this whole downturn is rooted in drying up credit. Startups are more likely to fold than ever, and will largely have to either slow hiring or reduce non-equity compensation.
You've got college, housing etc. covered, so it's fine to go take risks in order to get large lottery tickets.
This is an interesting way to think of the Leetcode style interview. If you don't require any particular experience and you have built your company's systems in a way that any "competent" developer can join and be effective, layoffs may not be such a big problem.
Before you mention that one is a UI library and the other is a programming language: that's my point.
There are a lot of FE devs that work backwards from React to JS/TS.
If anything, complexity grew like an atom bomb.
If it's really possible, I think it's the very rare exception.
Sure - ~any decent programmer can jump into ~any codebase and do your JIRA tickets. But there's a more holistic ownership you miss out on that's going to be the difference between a system aging gracefully and a system becoming a giant hunk of butchered junk that's been one-small-jira-ticket-ed to death over a decade and now needs a very costly and distracting replacement/rewrite.
I worked at a different company that did the opposite of this. Programmers were expected to stay either 1 year or 10 years, and you'd be compensated according to which bucket you were falling into. They had excellent retention rates, and the dev team was small, <30 engineers. We never rewrote systems. They had owners who had either written them, or been handed off apprenticeship-style over the course of a year or two from the former master to the new master.
Place 1 was a fucking mess of tech debt and had constant incidents that made high value customers mad, execs mad, and oncall engineers mad. One of my coworkers literally went into his first oncall shift, got paged at night three times in two days, and resigned the next morning when he found out that yeah this is just kind of normal and good luck convincing leadership to let us fix it.
Place 2 literally never had tech incidents. The worst oopsies were generally related to (it was a trading shop) other people in the market fucking up and resulting in trade breaks that we had to clean up after hours, or exchanges having problems and sending us garbage data that we had to resolve by calling someone from the exchange to confirm order statuses and so on.
I only left place 2 because I was moving across the country and they didn't do remote (and still don't, even post covid). I was laid off from place 1.
I've seen people nope right out of there, and (anecdotally) it's always been an experienced person seeing something that was worse than they should've expected, and having an idea how unusually bad it is.
How did this work? You got a raise after 10 years?
You're anyway better with job hopping.
But even more important, I think most top performers understand and accept the risk that their employment may end. For example, the company can fold. It is easier for top engineers to accept that because they likely have better connections and can pretty easily find a good job elsewhere. My 2c.
Is this true this round? I have noticed a few things:
* On the hiring front, much more demand for senior, staff, principal devs, less demand on the junior / intern front.
* (Anecdotally) A LOT of junior / new people laid off. It seems in this round companies want a small but elite force, rather than opting for junior people.
Yes, and that's the number one thing successful small business owners learn. The ones who don't learn this aren't successful.
You want as many of your staff as possible to be easily replaced. If you're running a restaurant, do you really want the success of your restaurant to hinge on a single talented chef?
Nope. You make sure that there's a process so that another few chefs can drop in quickly without changing the menu or the quality of the food. All the other kitchen staff don't do "complicated", they follow instructions.
If the business depends on having developers that are in the top 5% (say, one of the criteria to working on the code is understanding Haskell with Monads), the business is at constant risk because the developers are not easily replaceable.
Why? top-performers are most positioned to be aware of incompetence around them and may in fact welcome a housing cleaning. With that said, it's not always easy to identify who's who-- it's possible top-performs are affected or incompetence isn't, which can erode trust.
That's thinking from a notch or two below top-performance. Top performers know what's "in the wheel house" for others around them and how to use it optimally. Don't be fooled by local maximums!
https://steveblank.com/2009/12/21/the-elves-leave-middle-ear...
- The people let go might have been good friends or at least people they enjoyed working with.
- While they’re not targeted, their coworkers are, they’ll sympathize with the tension. Also that workforce is now doing the same work amount with fewer people.
- They are expected to do a lot of education and bringing people up to speed. More churn means more work, and it’s also harder emotionally if you’re not sure how long the person will stay in the company.
Not always.
Sometimes projects are killed, so amount of work stays the same, or even better - some people are moved to help other teams
In my country that would be illegal
I've been through one of the tech layoffs that happened during the pandemic, so N=1 and all, but this was exactly what happened.
On the day of the layoffs, few top performers were affected. It was a classic layoff with an HR email and immediate lockout. Managers of affected people learned later. Some people learned they were being laid off after hearing it in mainstream media first.
After 6 months, many best performers (more than 10% in my opinion) have left after struggling with low morale. A lot of company knowledge was lost, portions of the codebase became unmaintainable, projects went from being certainly doable to being in perpetual uncertainty about cancellation. The responsibilities of the the top performers fell on less experienced people, some received promotions but buckled under the pressure in disruptive ways.
Two years later, the company is still rebuilding but has obvious competency gaps. There was also difficulty in filling them because HR was disproportionally affected by layoffs. The distrust in management persists and more than a few people are openly talking about leaving. Though the hiring in tech has cooled down which had a chilling effect on people leaving, too.
You guys are acting like companies are too dumb to think of these very basic concepts. I have personally witnessed discussions that can roughly be described as “ok we need to add an extra three people in order to fund retention for X.”
If every semiconductor manufacturer reduces headcount by N%, there may not be much incentive for an engineer to jump ship. If only one of those companies doesn't lay anyone off, though, the dynamics are completely different.
If the company was laying off the deadwood and the quiet quitters, the top performers know who they are, and are not concerned about being laid off themselves.
Top performers don't particularly care to work with deadwood and quiet quitters, either.
That's a big if, though.
Executives doing layoffs also tend to do them quickly and plan them in secret in order to reduce the chance leaks. That means they are deciding who to cut with very limited time and information. They make lots of mistakes.
Both times I've been through large layoffs, I saw skilled respected peers get the axe while deadwood didn't. It causes the loss of valuable employees and completely destroys respect for executives who are apparently so clueless that they don't even know which of their employees are worth keeping around.
Of course, every company is different.
I hate the false positive (including a good performer incorrectly beyond that required by the depth of layoff) more than anything else for its deep unfairness to the individual, the team, and the company.
This can be a good thing. In my experience these people are generally unambitious people who's claim to fame is that they held a job for a long period of time rather than any innate talent.
And when you have a majority of seniors who's only value is in being a well of knowledge, they're resistant to any change that reduces the value of that knowledge. This can quash innovation and perpetuates the anti-pattern of information hording.
Sometimes layoffs are erratic and cause employees to question management's logic.
Most times, every employee is put on alert to not get complacent in their job and always be on the lookout for a better position. (this might be a net positive, POV)
https://matduggan.com/us-layoffs-are-unspeakably-cruel/
What could possibly be more clear than
"we were spending $X and now we're spending $(X - c)"
> Both with direct and indirect costs
Employees themselves are direct costs that are removed with layoffs.
This feels like another instance of Deming's (paraphrased) "People will destroy the enterprise to align to their incentives."
The people who make these decisions may be incented on the _short term_ cost savings. It's a fractally smaller version of the entire org aligning to shareholder expectations at the expense of company growth.
The laptops everyone has are COVID-era and about to expire for warranty, and would just be binned anyway. So there is no point taking them back.
She's got a small team on GitHub and has all of the critical features for less than a single seat at GitLab now.
[1]: https://about.gitlab.com/blog/2021/01/26/new-gitlab-product-...
You'd think somewhere, in at least one of these larger tech companies, there would be a leader boldly proclaiming "this is our time to increase our investments and beat our competitors!" But it turns out there is even less diversity of thought in tech leadership than there is racial and gender diversity.
That said, Gitlab may be making a very prudent decision given their circumstance. I don’t know enough to conclude one way or the other. But considering what they are doing so closely mirrors what nearly everyone else is doing, skepticism is warranted.
It certainly isn’t the fault of those being hired, but it might have given them a chance to find employment somewhere that truly needed their skills and didn’t see them as “headcount”.
I’m a highly paid tech employee and idk it’s different feeling bad for someone who lost their $10/hr job vs someone making 400k tc
If you do what everybody else does, you can blame outside factors if it goes wrong.
If you decide to be the one that _doesn't_ follow the trend, if it goes wrong, the blame falls on you.
Not saying it’s good management of a company, but that’s the mechanism driving this.
Are they running job ads but not hiring?
If you keep an eye open on who's hiring on linkedin you'll see a surprising number of companies posting new positions will have layoffs the next week.