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I couldn't disagree with this article more. The main point is that tech, despite being generally over hiring and having a valuation bubble burst, is going throu

• deleted 4y ago
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• Blackstone4 4y ago
  Yes but if you are management and you have been wanting to make changes and cut the fat, it was previously difficult to do layoffs without extensive negative coverage. Now you can do it and fly under the radar so it may be opportunistic in nature.
  • jcadam 4y ago
    A lot of this occurred in 2008 as well. Many of those jobs simply never came back, even after the economy recovered.
    • robluxus 4y ago
      > Many of those jobs simply never came back What happened to the people? Did new jobs get created?
      • SuoDuanDao 4y ago
        the job market was worse for the decade after 2008, probably due at least in part to that. It didn't really recover until the great resignation.
        • tayo42 4y ago
          I feel like people really just got used to the world after 2008.maybe I'm misremebering. Before 2008 everyone was going to college because it was a guaranteed job after you graduate. Then the financial crash happened and it became hard for everyone to get jobs. Then we got cynical about college
          • SoftTalker 4y ago
            We got cynical about college also because the costs spiraled way faster than incomes or prices for other things were rising. Colleges never lay people off, they keep expanding their administrative bureaucracy, all funded by growing student enrollment and easy student loans. Student enrollment is going to start falling (demographics as well as more people questioning the value) and colleges are going to be in for a world of hurt because they don't know how to tighten their belts.
            • jcadam 4y ago
              University Problem: Students are complaining about insufficient parking on-campus. University Solution: Wipe out 1/4 of the available parking space to build a shiny new library, renovate the old library - turning it into a "student life center" nobody knew they needed, then triple the price for student parking permits and require all freshmen to live in the overpriced on-campus housing.
• onion2k 4y ago
  Google Search gave people a super power they never had before. There were lots of search engines before Google. By many metrics they were better than what Google is today. They certainly showed fewer ads.
  • karlshea 4y ago
    By what metrics? Just ads? Even with the deterioration of Google Search it’s still WAY better than anything from the AltaVista/Ask Jeeves era.
    • sam0x17 4y ago
      Is it though? Google has dropped so much from its index these days it is no longer "just put that phrase you wrote ten years ago in quotes and the forum post will come right up". Smaller search engines obviously also suffer from this, but I do believe that peak previous gen are better than this
      • karlshea 4y ago
        I feel like this is some real rose-colored glasses memories, I can’t even begin to agree.
        • sam0x17 4y ago
          My point is more that google of today undeniably has the resources to be that detailed, but they are actively choosing to dumb things down and use AI to figure out what I meant to search instead of just searching for what I tell it to, and they are actively choosing to drop things from the index when they could afford to index literally everything.
          • karlshea 4y ago
            Well I definitely agree about that!
• thrashh 4y ago
  I remember COVID when tech stocks shot right up, probably because everyone was stuck having to use tech and other companies looked in free fall Then COVID ended and now we’re going back to normal, and tech stocks are also going back to before If you change your lifestyle because you got a $100k windfall, you are going to realize that your income never changed. Companies that hired because they thought their COVID-inspired valuation was permanent were mistaken I’m currently working for a tech company that was negatively impacted by COVID, did not get a random influx of cash and so did not hire and so currently does not have to lay anyone off.
  • wyclif 4y ago
    It's not so much COVID, it's that essentially what has happened is that the cheap VC investment and loan money dried up, as did the high valuations. That's the simple explanation.
    • wintogreen74 4y ago
      It's been an entire generation of cheap or free credit. There are people who are now adults who have lived their entire lives well beyond their purchasing means because financing was close to zero, letting you live in a bigger house, drive a fancier car and all lifestyle aspects beyond what you could purchase outright. This is not a judgement call but just an observation, and now that interest rates have risen (quite modestly IMO) we're seeing the impact on just about everything. VC funding was not immune and despite the article downplaying cost savings, when employees are your major cost by a margin of 5-10x, lay-offs make an big impact on how long you can stay alive. The costs of lay-offs are overstated here based on my experiences on both sides of a lay-off.
      • Apocryphon 4y ago
        The article might be over-arguing that layoffs are always bad, but it definitely raises responses to the idea that layoffs are always a good tactic: > Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors, with companies paying the contracting firm. [...] Companies sometimes lay off people that they have just recruited – oftentimes with paid recruitment bonuses. When the economy turns back in the next 12, 14, or 18 months, they will go back to the market and compete with the same companies to hire talent. They are basically buying labor at a high price and selling low. Not the best decision. Certainly it's a case-by-case basis, but I definitely remember companies such as Patreon doing layoffs in early 2020, only to be hiring again a few months later in the year.
• candiddevmike 4y ago
  RE: 1, that growth was never there IMO, it was all based on acquisition targets and pushing the whole "build a profitable business" onto someone else's shoulders. "Successful startup" meant bleeding enough money to survive until you IPO.
• tfandango 4y ago
  As much as I grump about not having enough people to do what is being asked of us, I'm also thankful that we run leaner than most in times like this.
• tempsy 4y ago
  you’re confusing cause and effect. tech valuations have come down because the Fed has raised rates which long duration stocks like growths tech cos are extremely sensitive to. when borrowing money becomes more expensive, these companies can no longer fuel business expansion or stock buybacks with cheap debt, and at the same time facing a demand issue because consumers are facing the same phenomenon. lower growth projections combined with expanding operating costs due to headcount are unsustainable for growthy tech firms that normally burn a lot of cash to fuel growth, so it becomes necessary for these firms to slow hiring and layoff workers to slow their burn and conserve cash.
  • onlyrealcuzzo 4y ago
    The meme-y-ist of tech stocks like Peloton weren't doing stock buybacks. The idea that Apple is "taking on debt to buy back stock" is pretty misleading. Sure, Apple has some debt - but it has net cash. Ditto for the rest of the megacap tech stocks.
    • tempsy 4y ago
      i didn’t say every company was. this is mostly true of the mega cap companies. and it’s not misleading at all. Apple and Meta are both known to sell bonds aka taking on debt for the primary purpose of buying back their own stock. that doesn’t have anything to do with their multibillion pile of cash.
      • mulligan 4y ago
        Meta has sold a single bond, in August of 2022. That isn't a pattern and it isn't enough for them to be "known to sell bonds to buy back stock"
        • tempsy 4y ago
          They got caught in the hype and lost a lot of money. Apple has many times. I don’t know why this is suddenly a conspiracy that some mega cap tech firms used cheap debt to buy back their stock. It’s not. It’s actually the primary way that these companies hid dilution from investors due to employee stock comp.
• david38 4y ago
  False. As well there are many companies that would normally raise capital for this time and are unable to. Not just startups. Those companies hired to expand projects assuming when the time came they could raise money. Now there is no money.
• autokad 4y ago
  I agree with you, as I was thinking this in November 2021 (when Netflix hit a wall in growth) that the pandemic didn't create tech company growth, it pulled growth forward. What this told me was that the growth in tech was much smaller than people had realized, and that other tech companies were going to hit the same wall within a year. I told my friends to beware of what's coming, and that mass layoffs in tech were likely to happen. The fact that it all played out just as I thought gives me an indication I was right.
• spaceman_2020 4y ago
  The second type of company will never be sustainably profitable. The barrier for entry is so low that the moment it turns on the profitability levers, some new startup will pop up with a slightly different model. Happening to Uber in my local market. A new startup (BluSmart) with an all-electric fleet and full-time driver employees showed up. Uber's service quality declined as they started squeezing drivers for profits. The new startup has stolen a big chunk of marketshare (and more importantly, mindshare) and Uber is now considering exiting this market altogether.
  • wnolens 4y ago
    If Uber can't make the economics work with an assload of venture capital to be able to take huge losses, how would a (presumably?) less well funded competitor succeed? Uber too big/slow to adopt the second-comer's strategy?
    • spaceman_2020 4y ago
      Well, the second comer is raising a bunch of VC funding too (iirc raised $25M so far and in talks to raised $250M more). VCs buy in because "this time, it's different" narrative. Or more likely because they know they can offload their shares to the next VC in the next round (who can then dump on retail). It's a game of musical chairs with the ultimate goal of dumping on retail investors. If not that, at least dump it on other VCs.
    • Firmwarrior 4y ago
      I'll bet that Uber has a lot of waste and bloat that the new guys could avoid I've heard some horror stories about a rideshare rider paying inflated surge prices while the driver just gets the normal rate, for example. (not sure which service this was) Theoretically it should be dirt cheap for Uber to leverage its customer service and app for any new market to compete on razor-thin margins, but in practice they could be wasting most of that money and leaving the door wide open to a really lean competitor
      • spaceman_2020 4y ago
• madengr 4y ago
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• gumby 4y ago
  > The second type of tech company is something like WeWork Perhaps you can edit to find a better example? There is no more technology in WeWork than there is in a corner sandwich shop.
  • anonuser123456 4y ago
    Which is parent posts point. A lot of unicorns are “we marginally improve user experience via technology with a low barrier to entry”. This was the .com era all over; people believed that the first company to own “pet food.com” would somehow corner the market on pet food exclusively.
• cesarvarela 4y ago
  This works only under the assumption that markets are rational.
• m0llusk 4y ago
  Google completely failed to capture the value they unlocked which is why the pivoted to ads in a way that has greatly diminished the value of their search results. WeWork is not a digital version of coworking, it is a venture capital version. Without conjured money to make their business operations possible they fail and are currently approaching the end of their runway. Coworking operations that pay for their properties and operations with revenue from members are completely different in almost every way from the locations, the outfitting and maintenance of the spaces, and the various options for payment.
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• acdha 4y ago
  > The first is a company like Google, where their tech enables a step-function increase in human productivity. Google Search gave people a super power they never had before. This type of company is extremely valuable as they can capture the value of the productivity they unlock. The second type of tech company is something like WeWork. There’s another distinction to consider: WeWork, Uber, etc. have most of their costs scaling with every customer and limited competitive moat (people who travel heavily might value sticking with one global app, but locals don’t). Google or Facebook have costs to get started but their costs to go from 1M users to 10M aren’t linear, and that’s really what VCs are looking for. A lot of the bubble came from deliberately misrepresenting companies in the former group as having the revenue potential of the latter.
• JediPig 4y ago
  welp time for the pig to talk about reality. #1, you are spot on, with the free money, and ZIRP, it has created 1000s of zombie companies are a live because they have access to the money. There are two valuations to consider when talking about this bubble. a. Companies that make zero $$$ or near to it, and worth billions. Those are the ones that are going to be worthless after the bubble pops. b. Companies that make money, just not enough to be profitable. There are few out there, but they are ones that will get effected the most. Some have valuations that should be significantly higher, but not. c. Companies that producing $$$ and can cover expenses. PE ratios are out of sync, they are too high for what EPS they give. What is going to happen? If the ZIRP doesn't come back or too late, you are going to see a lot of money and zombie companies get hurt hard. I think this is necessary, so good companies can transverse to a correct risk vs reward. The biggest problem people living in the west, US, is the multipolar world is coming. US is not prepared for it, and if anything, resisting. Imagine 50% of the world rejecting the USD. It is not far off. US is now 59% of all global trade. Getting below 50% will have devastating effects. Inflation as you see it now, will be hyperinflation. The world is going multipolar, and US is not prepared.
• deleted 4y ago
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