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Who gave tech CEOs permission to blame their mistakes of the past 2 years on ZIRP ? This has become a kind of meme. The problem is, ZIRP has been the reality, o

by pyb 4y ago

Who gave tech CEOs permission to blame their mistakes of the past 2 years on ZIRP ? This has become a kind of meme. The problem is, ZIRP has been the reality, on and off (mostly on), since 2008.

notinfuriated 4y ago
Do you need permission to shift the blame for your own poor planning? As far as they're concerned, this was all played out just fine, they needed the headcount in case they could grow more, and if things changed, they can always lay off 15% of the workforce. I'll add the implicit statement to their note on ZIRP myself (in italics): > Starting in the middle of 2020, the world moved in an unprecedented environment for many companies. As interest rates plummeted to 0% and monetary policy pushed lots of money into the economy, companies had easy access to capital, and demand for products and services surged. Organizations hired aggressively to meet market demand and the war for talent reached a fever pitch. The result, for Lattice, was that growth skyrocketed. [We either ignorantly assumed it would be like this forever, or knowingly took the risk that we'd have to lay people off when the economic picture meaningfully changed.] > Fast forward a couple of years to 2023, and the economic picture has meaningfully changed. (Aside, anyone else annoyed that so many companies have adopted the term "impacted" as the verb to refer to people who were laid off? The company is experiencing a layoff, an event as a noun, through which coworkers are impacted. Maybe I've only noticed this recently. It rubs me the wrong way, as we're avoiding saying what happened out loud, like the company is absolved from their responsibility as the subject performing the act of firing on the object. That said, the severance here is fairly generous so this isn't a knock on Lattice so much as pervasive SV culture.)
- Apocryphon 4y ago
  Lattice might be an actual instance of a business whose growth was commensurate with demand ("revenue has grown by five times since the start of the pandemic"), but you'd have to imagine that a lot of other tech companies grew for the sake of growth enabled by ZIRP and pandemic hype for tech. There were a lot of valuations based on unrealistic future projections that seemed untethered to reality. Maybe Lattice did the right thing, given the circumstances, but surely not all of the other headcount-exploding companies did. It seems like a copout to blame it all on ZIRP going away and not actual corporate leadership. And yes I understand fiscal environments might compel said leadership to pursue that path, either as a game theory thing or because boards and investors agitate for it. But it still seems wrong to blame it all on the Fed and not bear any responsibility.
- milkshakes 4y ago
  this is the best comment on this general topic that i have seen so far on this site. thank you.
jamil7 4y ago
The cynical part of me is wondering if they're all jumping on the opportunity to do some "reorganising" with ZIRP as a get out of jail free card.
- pyb 4y ago
  Yes, that's what I was trying to say.
  - Apocryphon 4y ago
    This pop psych/business management article from Stanford calling it "social contagion", but it framed it in a reductive way so a lot of people on HN were mad at it https://news.ycombinator.com/item?id=34339698 https://news.ycombinator.com/item?id=34339698
    - pyb 4y ago
      I thought what this Stanford professor said was rather sensible, but some people want to believe that the tech industry always functions in a rational way.
      - Apocryphon 4y ago
        Also a lot of people too easily fall for clickbait framing and they missed the point of the article, which is that layoffs have a lot of detrimental effects on people, don't always help the company, and can be sort of a cargo cult response to economic downturns. Instead they focused on the professor ignoring the actual economic causes, which is a fair critique but not the article's main thesis.
- aeyes 4y ago
  Wild guess: In the last 2 years they probably hired way more than the 15% they are cutting now. 15% which is 100 people in their case isn't even that much, they could have implemented a hiring stop and trimmed low performers over the next 6-12 months ending up with the same headcount. Wild guess 2: Since they are letting go so few people, they'll do another round in the future.
0xCMP 4y ago
I mean how many people said tech would be in a bubble until ZIRP was gone and then they'd need to "come back to reality" or similar? And the minor freakout in 2014-2015 when the Fed tried to raise rates? IIRC it was primarily in Tech like it was this past year. The most successful companies/investors seem to be the ones which kept assuming ZIRP would continue when it shouldn't. What we should take away from that is probably worth an entire separate conversation, but it was the general sentiment. You couldn't really explain the size of VC deals any other way than "invested somewhere is better than invested no where". Edit: Re another comment of band wagoning - It could simply be easier to do because others are already doing it, sure, but there are plenty of HN posts explaining the huge risk you're taking by laying people off to losing your best people.
- Apocryphon 4y ago
  "[M]uch of what we consider technological innovation is, in fact, business model innovation. I’d add that a lot of what is perceived as innovation is also some form of ZIRP-fueled arbitrage. Everything is ZIRP." https://www.readmargins.com/p/zirp-explains-the-world https://www.readmargins.com/p/zirp-explains-the-world
adrr 4y ago
They all hired mediocre talent at inflated salaries over the last 2 years. We all were forced to hire. I've had VCs tell me i need to double engineer head count. I had CFOs tell me that they will take away my open headcount if i can't fill positions by fiscal end.

by pyb 4y ago

Who gave tech CEOs permission to blame their mistakes of the past 2 years on ZIRP ? This has become a kind of meme. The problem is, ZIRP has been the reality, on and off (mostly on), since 2008.

notinfuriated 4y ago

Do you need permission to shift the blame for your own poor planning? As far as they're concerned, this was all played out just fine, they needed the headcount in case they could grow more, and if things changed, they can always lay off 15% of the workforce. I'll add the implicit statement to their note on ZIRP myself (in italics): > Starting in the middle of 2020, the world moved in an unprecedented environment for many companies. As interest rates plummeted to 0% and monetary policy pushed lots of money into the economy, companies had easy access to capital, and demand for products and services surged. Organizations hired aggressively to meet market demand and the war for talent reached a fever pitch. The result, for Lattice, was that growth skyrocketed. [We either ignorantly assumed it would be like this forever, or knowingly took the risk that we'd have to lay people off when the economic picture meaningfully changed.] > Fast forward a couple of years to 2023, and the economic picture has meaningfully changed. (Aside, anyone else annoyed that so many companies have adopted the term "impacted" as the verb to refer to people who were laid off? The company is experiencing a layoff, an event as a noun, through which coworkers are impacted. Maybe I've only noticed this recently. It rubs me the wrong way, as we're avoiding saying what happened out loud, like the company is absolved from their responsibility as the subject performing the act of firing on the object. That said, the severance here is fairly generous so this isn't a knock on Lattice so much as pervasive SV culture.)

Apocryphon 4y ago
Lattice might be an actual instance of a business whose growth was commensurate with demand ("revenue has grown by five times since the start of the pandemic"), but you'd have to imagine that a lot of other tech companies grew for the sake of growth enabled by ZIRP and pandemic hype for tech. There were a lot of valuations based on unrealistic future projections that seemed untethered to reality. Maybe Lattice did the right thing, given the circumstances, but surely not all of the other headcount-exploding companies did. It seems like a copout to blame it all on ZIRP going away and not actual corporate leadership. And yes I understand fiscal environments might compel said leadership to pursue that path, either as a game theory thing or because boards and investors agitate for it. But it still seems wrong to blame it all on the Fed and not bear any responsibility.
milkshakes 4y ago
this is the best comment on this general topic that i have seen so far on this site. thank you.

jamil7 4y ago

The cynical part of me is wondering if they're all jumping on the opportunity to do some "reorganising" with ZIRP as a get out of jail free card.

pyb 4y ago
Yes, that's what I was trying to say.
- Apocryphon 4y ago
  This pop psych/business management article from Stanford calling it "social contagion", but it framed it in a reductive way so a lot of people on HN were mad at it https://news.ycombinator.com/item?id=34339698 https://news.ycombinator.com/item?id=34339698
  - pyb 4y ago
    I thought what this Stanford professor said was rather sensible, but some people want to believe that the tech industry always functions in a rational way.
    - Apocryphon 4y ago
      Also a lot of people too easily fall for clickbait framing and they missed the point of the article, which is that layoffs have a lot of detrimental effects on people, don't always help the company, and can be sort of a cargo cult response to economic downturns. Instead they focused on the professor ignoring the actual economic causes, which is a fair critique but not the article's main thesis.
aeyes 4y ago
Wild guess: In the last 2 years they probably hired way more than the 15% they are cutting now. 15% which is 100 people in their case isn't even that much, they could have implemented a hiring stop and trimmed low performers over the next 6-12 months ending up with the same headcount. Wild guess 2: Since they are letting go so few people, they'll do another round in the future.

0xCMP 4y ago

I mean how many people said tech would be in a bubble until ZIRP was gone and then they'd need to "come back to reality" or similar? And the minor freakout in 2014-2015 when the Fed tried to raise rates? IIRC it was primarily in Tech like it was this past year. The most successful companies/investors seem to be the ones which kept assuming ZIRP would continue when it shouldn't. What we should take away from that is probably worth an entire separate conversation, but it was the general sentiment. You couldn't really explain the size of VC deals any other way than "invested somewhere is better than invested no where". Edit: Re another comment of band wagoning - It could simply be easier to do because others are already doing it, sure, but there are plenty of HN posts explaining the huge risk you're taking by laying people off to losing your best people.

Apocryphon 4y ago
"[M]uch of what we consider technological innovation is, in fact, business model innovation. I’d add that a lot of what is perceived as innovation is also some form of ZIRP-fueled arbitrage. Everything is ZIRP." https://www.readmargins.com/p/zirp-explains-the-world https://www.readmargins.com/p/zirp-explains-the-world

adrr 4y ago

They all hired mediocre talent at inflated salaries over the last 2 years. We all were forced to hire. I've had VCs tell me i need to double engineer head count. I had CFOs tell me that they will take away my open headcount if i can't fill positions by fiscal end.