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Layoff spree in Silicon Valley spells end of an era for Big Tech
- FartyMcFarter 4y agoIf you look at Meta, even after these layoffs they've grown by 17% per year since 2019. It's bad for the people affected, but if you look at the big picture it's hard to call this a crash for now.
- brtkdotse 4y agoCan’t find the source but Hard Fork podcast said that after these layoffs Meta headcount is down to where they were in March THIS YEAR
- Spooky23 4y agoI think remote made hiring easier by removing the constraint of office space. I’m in the process of hiring a few hundred people - we’d never be this far down the funnel in 2019 because we’d be out of desks.
- jeltz 4y agoIt would not surprise me. Meta have been hiring like crazy this year. No wonder thet had to do layoffs. Just simple missmamgemnet where they hired too fast, nothing more.
- jokethrowaway 4y agoIt doesn't seem like we're done yet with interest rates. The more that happens the more the industry will chill. Will variable rates mortgages and wealthy tech workers end up paying for the covid lockdowns and government excesses?
- arcticbull 4y agoPeople are overwhelmingly in fixed rate debt this time, and lending standards tightened meaningfully after 2008. I wouldn't bet on that being a catalyst. [edit] We're talking like 2-4% of originations have been ARMs from 2009 onward, vs. a peak of 35% in 2004-2007.
- theGnuMe 4y agoThe issue is that people will be stuck for 5-10 years in their current house. There will be limited new construction and eventually remodeling will stop. Watch the numbers out of Home Depot and Lowes.
- sokoloff 4y agoHigh income (rather than wealthy) people are going to be the ones paying for government.
- epolanski 4y agoAlso, IT and R&D has been likely impacted less than other departments like HR and recruiting. There's no doubt that for the next few years we're not gonna see the levels of compensation raise we've seen in the last 24 months, but it's not "end of an era" rather than a correction imho.
- georgeplusplus 4y agoIt's not a recession, it's just two quarters of consecutive falling GDP. Screw what the textbooks say. It's only a correction.
- deleted 4y ago[deleted]
- dr_dshiv 4y agoYeah, but a few more disorganized unwinding events like ftx and things could keep correcting for a while to come.
- nibbleshifter 4y ago
- kasey_junk 4y agoGDP grew last quarter.
- deleted 4y ago[deleted]
- SantalBlush 4y agoShow us a macroeconomics textbook used in the US that says this.
- SantalBlush 4y ago
- dontbenebby 4y ago[dead]
- selfmodruntime 4y agoI actually think they're wrong here. Yes, a couple thousand people lost their jobs, but I really think it's just companies trimming some fat. Engineers are largely still employed, and except for maybe Meta billions of people are still using Big Tech's products.
- rvcdbn 4y agoI don’t understand why you say “except for Meta”? Billions of people are still using WhatsApp, Instagram, and FB last time I checked.
- selfmodruntime 4y agoBecause their primary product is mainly Ads, which has been suffering under the new Apple privacy guidelines.
- ushakov 4y agowhy did they hire those people in the first place?
- marcinzm 4y agoWhy not? If economic conditions continued going well then they had the staff to meet their needs. If they didn't then they'd cut the worst performing employees and anyone else they didn't want. Since every other company would also be doing layoffs they'd get no bad PR for it and low risk of employees leaving for greener pastures (since all other pastures would likely be closed). Layoffs aren't some massive horrible thing for a company. They're just another part of doing business.
- headsoup 4y agoBecause execs don't do all the hiring. Middle management and project teams go wild when no one is looking too closely at the costs and things can blow out pretty quickly. Then growth slows and suddenly there's a need to tighten the belt a bit and a lot of waste is found
- 4y ago
- sgt 4y agoAgree with the other comments. There's been recent layoffs, but over time it's still mostly a hiring spree, not a layoff spree.
- WeylandYutani 4y agoBig tech is fueled by the old tech of advertising money. In a recession companies slash their marketing budget. How does Twitter, Google, Meta etc make money? With ads.
- jhrmnn 4y agoApple, Microsoft, Amazon?
- tomnipotent 4y agoAds account for single-digit % of revenues for these businesses.
- bushbaba 4y agoDisagree. Amazon makes more than YouTube on ad rev. Apple makes a decent penny on ads themselves. Don’t forget all the technology these companies sell to empower the ad ecosystem.
- tomnipotent 4y agoYou can't disagree with their revenue breakdowns. That doesn't even make any sense. Apple $365b 2021 revenues had $31b from ads, about 8.5%. Amazon $31b/$470b. Microsoft $10b/$198b. None of these companies are ad-driven, or have cultures based upon them. Losing the ads division would not irreparably harm the business. Youtube had 2021 revenues of $28.8b. Google ad revenue for 2021 was $209b. That's what an ad-driven business looks like.
- Nicksil 4y ago>Apple, Microsoft, Amazon? Ads.
- PedroBatista 4y agoConsumer spending and big enterprise accounts, which in a recession..
- cletus 4y agoYou can't look at total layoffs. If you really want what this means look at how many engineers were laid off. I know some were in Meta's layoffs but how many? 100? 1000? 5000? Each of those numbers means something different. It's still incredibly expensive and hard to hire and retain engineers. If that remains true then this is really a blip. It won't really be the "end of an era" unless there is a glut of engineers in the market. This happened in 2000. In the UK, the unemployment rate for engineers was huge (>35% IIRC) and that excluded those who had left the industry. Another interesting question is what will the collapse in share prices to do hiring and retention since equity is a massive (typically >50%) part of total compensation. Those who got hired last year in particular have seen a huge amount of paper value disappear.
- phyrex 4y agoAbout 5000
- de_keyboard 4y ago> This happened in 2000. Any good write-ups about this? Sounds like a very interesting time.
- mch82 4y agoThe “Dot-com bubble” Wikipedia article is a great starting point, https://en.wikipedia.org/wiki/Dot-com_bubble https://en.wikipedia.org/wiki/Dot-com_bubble. The “Video game crash of 1983” was a similar event that happened 30 years earlier, https://en.wikipedia.org/wiki/Video_game_crash_of_1983 https://en.wikipedia.org/wiki/Video_game_crash_of_1983. Apple and Nintendo were the phoenix that rose from those ashes.
- ghaff 4y ago>Another interesting question is what will the collapse in share prices to do hiring and retention since equity is a massive (typically >50%) part of total compensation. Those who got hired last year in particular have seen a huge amount of paper value disappear. Yes. At least at the large firms, the best case scenario is probably that effective overall comp has and will continue to take a huge haircut. And corresponding cost of living will not. In fact, pretty much the opposite. Even housing in high cost of living areas will probably be pretty sticky with respect to prices. That said, there's little indication so far that things are in "would you like fries with that?" territory as they were in the tech sector (well beyond just engineering) as they were in ~2000 to 2003 when many people left the industry for good. I was laid off and was very lucky to land a (less well-paying) new job in short order. There weren't much in the way of nibbles. There will probably be reasonably plentiful jobs. But comp will come down to earth commensurate with other branches of engineering for example.
- ystad 4y agoI'm not so sure I would equate these layoffs as an end of an era. This is just exaggerated reporting by wapo. In my opinion, these are corrections to the excessive hiring done in 2020. If you take each of the companies, the layoffs cane from bets which didn't make money. I don't think this marks as an end of an era.
- AlchemistCamp 4y agoThis piece is mostly wishful thinking. The Paper Belt would love to see the information technology industry falter, but its relative impact is only growing.
- acdha 4y agoThe Washington Post is in the information industry - paper used to be the medium but that’s changed since the turn of the century and they employ a number of top-notch engineers. Referring to them as “the paper belt” makes as much sense as referring to Microsoft as being in the floppy disk industry because they previously used a lot of those. Part of what you’re seeing is just that the tech giants are integral to modern society and get covered the way e.g. railroads were a century ago. I think it’s especially strong for companies like Facebook, however, because they’ve not only taken the lion’s share of the profits and lowered standards in a way which has had real-world impact, and things like Facebook’s infamous pivot to video or Google’s AMP were bad-faith attempts to give tech companies more control over journalism. Angry bees are to be expected after kicking the hive.
- Taikonerd 4y ago> Angry bees are to be expected after kicking the hive. They may be angry, but newspaper coverage isn't supposed to be about settling scores and getting revenge on the companies that threatened your profits. It's supposed to be about reporting facts and making reasonable inferences. I know that ideal isn't always adhered to, but let's not excuse the media too quickly when they behave badly.
- avereveard 4y agoHere's my hunch: a lot of top performers valued security during Covid and didn't move for a couple years. Late last year mobility resumed, and company went into hiring frenzy because the market was filled with top performers looking around. At the other side tech companies enjoyed lot of growth during Covid as the world digitalized, and are now, well not yet in a crunch, but flatlining toward where their natural growth would have been if Covid didn't happen. Pair lack of growth with over hiring and you get a readjustment. I don't see reason to call this a jobpocalypse yet.
- headsoup 4y agoHigh inflation and higher interest rates are probably going to lower demand somewhat too, I don't think the layoffs have peaked just yet either.
- seaman1921 4y agoAgreed. Cutting out the under-performers while still increasing the overall headcount is perfect for the companies, I wish Alphabet did that too
- Existenceblinks 4y agoThey created unnecessary problem and fixed it. I would call this just.. a correction.
- psychstudio 4y agoAt least, valuation-wise, I agree. We've been on a ridiculous, risk-on market rally for a decade and a half, fuelled by incredibly cheap money and plenty of discretionary excess, and tech stocks have been the vehicle for speculative trading. My money is on energy and associated mining sectors outperforming in the next market cycle. I think we're about to see the return of Peter Lynch style investing after the washout of excess from tech.
- SkipperCat 4y agoI do not disagree, but I do think there is still room for growth with established tech such as semiconductors and maybe cloud. There's so many thing still "old school" in this world and I see tech advancing more and more into those sectors. But I'm guessing it will be a very saw-tooth pattern for the next few years. What I am avoiding like the plague are companies that have no profits, no dividends and no real innovation. Any company that is still aiming for growth before profits is just scary.
- oars 4y agoQuestion from someone who was not yet in the industry during the 2000 and 2008 crashes: during that time, were there companies which took advantage of this situation and picked up all of the available talent? I'm surprised that Google and Amazon aren't jumping in and poaching all of these talented engineers from Meta, Stripe and Twitter.
- devoutsalsa 4y agoYes. I was a tech recruiter in San Francisco from 2005 to 2013. Recruiting from 2008 to about 2012 was much easier. 2009 was super easy. There were many applicants applying to jobs.
- Manjuuu 4y ago> during the 2000 Google itself in that case afaik. Times are different now.
- alex_young 4y agoGoogle had ~300 employees in 2001: http://web.archive.org/web/20011212085049/http://www.google.com/corporate/execs.html http://web.archive.org/web/20011212085049/http://www.google....
- Manjuuu 4y agoAnd they kept hiring from there during the years right after the dotcom boom, already 3000 in 2004: https://www.globaldata.com/data-insights/technology--media-and-telecom/googles-employee-headcount/#:~:text=Number%20of%20Google%20Employees%20(2004%20%2D%202021) https://www.globaldata.com/data-insights/technology--media-a...
- FartyMcFarter 4y ago> I'm surprised that Google and Amazon aren't jumping in and poaching all of these talented engineers from Meta, Stripe and Twitter. My hunch is they might be doing exactly that, even if they don't want to grow a lot at the moment since their profits and share price are lower than they have been. Poaching top experienced people can be done almost quietly, as it doesn't result in significant headcount expansion by itself.
- scaredginger 4y agoGood riddance. Big tech firms have been able to make as many questionable investments as they want for far too long
- blastonico 4y agoI don't think it's the end of an era. IMHO, it's only a correction of a super-estimate mistake done during the pandemics. People tends to believe that the current situation will last forever, the bad and the good ones.
- z9znz 4y agoThis is the typical hyper-reactionary behavior of many companies, not just SV. They are playing a game that is more about pleasing investors than actually building performant companies. That's why you'll see insane hiring phases (and hear stories of so many new people with nothing to do and no onboarding systems yet in place), and a couple of years later you'll see huge layoffs when there are big public economic fears.
- joshuahedlund 4y agoI was surprised by how much many of these companies, already huge, expanded further in 2020-21 when covid “changed everything” until it didn’t. (Hiring 10k more people in a year doesn’t make the news; laying them off does) I wonder if part of the broad labor shortage of the last year or two was from so many people pivoting into remote roles for tech companies (not all engineering roles either). It was unsustainable. Now things are going back.
- tartoran 4y agoI just hope the leetcode and other dubious interviewing techniques goes away with it as well
- zarkov99 4y agoWhat would you replace leetcode with? For all its faults, and I agree there are many, leetcode is at least more or less objective and (for employers) very cheap.
- nowherebeen 4y agoCheap I agree but objective is definitely not one of them. It’s a way to not get sued.
- finolex1 4y agoIf anything it's only going to increase as competition gets slightly tougher.
- JKCalhoun 4y agoAs an aside, I tell people looking to go into software engineering that the best thing you could bring to an interview is a shipping app. The bar is such that most people ought to be able to push something out to the App Store or wherever. Second best is a GitHub repo but often those I have seen simply included test apps resulting from a CS course or perhaps worse, code copied from somewhere else. Regardless, app or code (or both) give the interviewer something else to talk about with the candidate about (and you would expect a good deal of enthusiasm from the candidate in this kind of discussion).
- scarface74 4y agoNone of the large tech companies care if you have shipped an app or have open source work. Even as a regular old journeyman “enterprise developer” from 1996-2020, I’ve never been asked about open source work. The only reason I have any open source work on GitHub now - I stopped programming as a hobby the minute I graduated from college in 1996 - is because my company has a very straightforward open source process where I can open source reusable project work I do for customers (consulting).
- cosmiccatnap 4y agoThis Article like much of the commentary around the current recession leaves the CEOs here mostly blameless in a world where half of all profit increases were done by companies, not by the growth of material cost or the loss of venture capital. They are not laying people off because they are struggling quite the opposite, they are laying them off because they promised 17% growth and they can achieve that by firing their engineers and assuming more with come. It's always sad to see the "who could have forseen this" argument passed around whenever things like this happen. In fact if you treated companies like any financial advisor would tell you to treat something like a 401k or a savings account they would have considered what these companies have been doing for the last two years outright gambling with them and in turn also gambling employees futures. With a lack of accountability for these reckless financial decisions though there is little chance that things will improve in the short or long term. This will continue to happen until legislation provides some kind of guardrail to simply firing at will anyone who disrupts a profit margin with their well paid talent and years of service.
- twawaaay 4y agoNothing further from truth. Companies still desperately need developers to make their business goals reality. This is not changing anytime soon. There has been no advancement that makes developers less relevant. What changed is how companies react to perceived bumps on the road and productivity. Companies learned that global recession can affect them and it pays to prepare. Companies also learned that fast hiring causes low productivity down the line. The easiest way to fix this is to fire a bunch of people at a time rather than individually and then blame it on perceived recession (even if it barely affects the company). My experience is also that large proportion of hires can barely program at all and got into business because every other job they could get pales when compared to software development. There are multiple reasons why these people got successfully hired (broken hiring, enormous pressures, etc.) I can't blame people for trying to do their best but from our point of view it has a huge effect on entire IT business. Also companies started playing a kind of chicken game, it seems. Everybody waits for one company to lay some people off so that they can use it as an excuse to do the same.
- OmarShehata 4y ago> My experience is also that large proportion of hires can barely program at all This seems like an oft repeated myth, but you say it's your personal experience, so I'm really curious what you mean by this. These are folks you've seen in SWE who just like, not opening any PRs? Just pretending to do busy work while some nice coworkers do their assigned tasks? How does this work?
- nevon 4y agoHave you never had a coworker that needs so much help that they end up "costing" so much of other people's time and focus that you would have been better off if they weren't there at all? While I thankfully haven't encountered a lot of people that far out on the competency spectrum, I have met a few, or more than a few that are not too far off. Not a large proportion of hires, as OP said, but still.
- kaidon 4y ago
- sf4lifer 4y agoIt's a recession when your neighbor loses his job; it's a depression when you lose yours. Harry S Truman I went thru the previous crashes. It feels like the start, but not the eye of the storm. Companies are cutting jobs, not going going out of business. The casualty rate of startups in dotcom felt like 90%+. In 2008 major banks had to get bailed out. Today, companies are making cuts to get back to 2019 levels. There is still a long way to go before it's a hard reset.
- JKCalhoun 4y agoFrom some comments here I'm inclined to (snarkily) add "It's culling under-performers when they're laying off your co-workers, it's a layoff spree when it's your job."
- kwertyoowiyop 4y ago“Trimming the fat”: your coworkers “Slicing to the bone”: you
- deleted 4y ago[deleted]
- fnordpiglet 4y agoIn 2000 the only companies in the Bay Area not going out of business were the “For Lease” sign companies. I don’t think a two year hiring spree with a pullback spells the end of anything other than an aberration caused by a global natural disaster.
- newaccount2021 4y ago
- tkiolp4 4y agoDoesn’t look like. In 2022 (and probably part of 2023) we’ll see tech companies fixing what they did wrong during the pandemic. That’s all.
- vishnugupta 4y agoI’d rather say it’s end of “growth at all cost” era than big tech. Businesses will go back to the basics of optimization of unit economics, being efficient, steady growth and such. Which on the contrary means more emphasis on tech, not less. Remember that much of the tech foundations for 2010s success were laid in mid to late 2000s. I saw it from within Amazon as AWS was building the core infrastructure components that went on to become independent services in 2010s. So I expect 2020s to go through similar phase. Maybe AI? Robotics? VR/AR? I don’t know.
- mch82 4y agoRobotics and factories. Big tech happened because of open source and remote work (international collaboration on the internet). C, gcc, Linux, BSD, and publicly funded protocols like email and HTTP unlocked the last 20 years of growth. The next wave of open source is happening in robotics and manufacturing. We’re around 2005 right now in software terms. The iRobot, Nest, Oculus generation of companies was the first .com wave. Robotics and manufacturing teams are figuring out how to work remotely (accelerated by the pandemic).
- tome 4y agoSounds interesting. Do you have any more info you can share about developments in robotics and manufacturing?
- JanneVee 4y agoI see it once in a while comments out there on the internet(even here) flat out denying that companies have people employed that serve no purpose for the company. The reasoning goes like that economic incentive they would either never been hired in the first place or kept around when they are not useful anymore. Not realising that there is that most companies don't do weeding out pf personel continously. When ever there is a economic downturn they look what employees they really need... this is what is happening now.
- rightbyte 4y agoI am still in the "how can they possibly need that many people" camp and I see those comments alot. E.g. Uber seem to have about as many engineers as taxi companies would have dispatcher telephonists (at least wage adjusted numbers).
- socialismisok 4y agoIt was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way--in short, the period was so far like the present period that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. Tech might be changing, and it may be the end of an era, but it's not the end of tech.
- cs702 4y agoThe last time there was a slowdown like this one in Silicon Valley, it lasted three years, from 2000 to 2003. Back in 2000, many tech companies were buying products services from, and selling products services to, one another. When the flow of fresh capital from VCs and IPOs dried up in mid-2000, money-losing tech companies cut spending to conserve cash, reducing revenues at other tech companies, which in turn did the same, and this dynamic became self-reinforcing process affecting the entire tech ecosystem, first gradually and then "suddenly." Tech companies that had been growing at double-digit annual rates in 1999 found themselves with sudden, "unexpected," double-digit revenue declines a couple of years later. Many tech companies that couldn't make cash last for three years failed during this unpleasant period, including many which had good products and capable teams. If the current wave of layoffs and revenue slowdowns gradually becomes a self-reinforcing process affecting the entire tech ecosystem, it could take a long while for the layoffs and revenue declines to end. These things can take a life of their own, and individual companies can't stop it, because they must cut spending to survive.
- gilbetron 4y agoWhile it may end up being like the dot com bust in the next year or two, right now it is nowhere near what it was like then, having lived through it. It was crazy and grim and just kept going. So far, this year, it just seems like a correction from the massive amount of money dumped into the economy in 2020, plus the insane idea that the changes to people's lives during Covid were going to be permanent. Now, within the Crypto market, yes, that is a lot like the dot com bust. I'm just wondering what the FAANG of crypto will be!
- ghaff 4y agoCrypto seems very reminiscent. Some, both grifters and otherwise, made out like bandits while most of the hoi polloi took it in the teeth.
- ericflo 4y agoI think you're forgetting 2008 and "RIP Good Times"
- i_like_apis 4y agoHow is two high profile layoffs a “spree”?
- elforce002 4y agoBet money we'll see a hiring spree in 2024.
- 29athrowaway 4y agoHow is this different from the .com crash?
- throwaway111322 4y agoTo me it seems like COVID remote work plus whatever this economic condition is called created a perfect environment for outsourcing. Not sure whether it will work out any better than before. But around me and anecdotally from others, there's lots of hiring going on not just the traditional destinations that come to mind but everywhere from Spain to Egypt to South America to Eastern Europe. Even elsewhere in the States. While there are hiring freezes esp on the West coast. Especially with junior devs. Some teams have few or no junior devs locally. Only a few senior engineers overseeing outsourced coders.