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> I take full responsibility for the decisions that led us here When an incident occurs in prod and it affects the livelihood of 12.000 people (or more if you

> I take full responsibility for the decisions that led us here When an incident occurs in prod and it affects the livelihood of 12.000 people (or more if you include family), you'd expect at the very least a post-mortem. I've never seen a company produce one after that. What was the root cause? crazy hiring, massive wage war Could the current situation be anticipated? hell yeah, out of a pandemic, war raging in Europe, petrol production going down, supply chain problems all over the world, resulting in inflation going massively up... Don't need an MBA to anticipate the economy was par for a correction. what could you have done to prevent this? realize it was too good to be true. Don't enter the rat race, be cautious about hiring. Focus business. what steps will you take in the future to prevent this from happening again? "I take responsibility" is a beautiful thing to say but it's completely empty if you don't take the consequences as well, and don't learn anything in the process. I bet you that if/when we recover from this dip, the same hiring practices as before will re-submerge so that resiliency doesn't move and we see the same move in another 5/10y. So I guess the answer to this question is "none, loyalty goes only one way and trust me when I tell you that no-one is safe"

MuffinFlavored 4y ago
> you'd expect at the very least a post-mortem. "Despite getting paid millions to be good at my job, I did what every other CEO was doing when the Federal Reserve set interest rates low and hired a bunch of staff. I didn't think "hmm... this might change in the next 6-12 months". It changed. I am now doing what every other CEO is doing and jumping on the bandwagon and correcting." Now I don't actually have proof that interest rates directly affect Google (who is probably flush with cash/very profitable/has high margins/has lots of money coming in). I don't think they were financing 12,000 employee salaries with "cheap debt" and now they can't. Not sure how inflation plays into it. I just like to tell myself "these people weren't top performers and if you work for a company like Google (and get paid a lot), you are expected to do a lot/be a top top top performer"
- charles_f 4y ago
  > these people weren't top performers Problem is that this is not how this is unravelling. Large lay-offs like that cull entire departments, not the lower performers.
  - cmrdporcupine 4y ago
    What I'm hearing from Googlers I know -- the layoffs are not on the whole tied to perf. They're across the board in terms of years of service and seniority and product areas and roles and some people recently promoted have gotten the axe, too. Doesn't seem to be departmental. When Google does that (axe a PA or department or product) they have a process of giving a chunk of time usually to let people move themselves, or be moved; e.g. when they killed Fiber at my site (Waterloo) they moved everyone (including me) into other roles and brought new projects into the office, and people in Mountain View and other places were given a few months to find something else internal.
    - charles_f 4y ago
      It's the same at Microsoft and Amazon, I've seen top-tier people with >10y service getting axed in both instances.
      - tgma 4y ago
        I'm not suggesting there aren't top tier people but I know firsthand that just being there for 10yr (specifically the past 10 years at G) does not in any shape or form imply you're top tier. You could have been literally coasting for a decade.
        cmrdporcupine 4y ago
        Yes, will this is in part the Faustian bargain that is often made to work at Google. People often become mediocre working there, and Google is on the whole frankly fine with this because it keeps those people from going & working at potential competitors. That this is now changing, is interesting. In any case, like I said above, this round of layoffs doesn't seem to be indexed on performance. At least not completely, from what I've heard. It should be interesting to see how many new startups get built out in the next year as a result of this.
- bretpiatt 4y ago
  Interest rates have a large indirect impact on their business, not in the day to day operations but in the value of the future cash flows vs. risk free rate. Super simplifying, if risk free interest rate is 0% then you can value current cash flow the same as future ones. When you have 5% risk free in 14 years that new dollar is worth half of what it is today. This has big impact on enterprise value for growing businesses.
  - MuffinFlavored 4y ago
    > Interest rates have a large indirect impact on their business Can you expand on how please? Wouldn't this depend on Google (or other companies) actively financing things through debt with loans from banks? Why would they need to do this if they have tons of cash on hand? > Alphabet cash on hand for the quarter ending September 30, 2022 was $116.259B If anything, can't they put that money somewhere and earn interest on it? Higher interest rates means they'll earn more on it. How do they experience increased costs from interest rates if they aren't financing projects through debt? Or are they?
    - formercoder 4y ago
      They are related but different concepts. The value of a company is equal to the discounted value of its future cash flows. If rates go up, that means a higher return can be had for zero risk, which means all cash coming in the future at more than zero risk is now worth less. There is a second term other than risk free rate in the discounting equation which is related to capital structure. So, amount and cost of debt does impact valuation (though there is some debate and theory that makes my statement not quite true), but it is not the only factor.
      - MuffinFlavored 4y ago
        Are you saying in a perfect world, the perfect CEO would "can" (get rid of) every team/project that isn't projected to 5% ROI yearly (assuming risk free rate has roughly gone from 0.25% -> 5%)? Obviously there are exceptions where you want to eat losses up from (R&D a big project for a few years hoping it returns a lot down the road)?
- specialp 4y ago
  I think this is more of sliding the levers to keep the earnings good. There was a massive amount of money dumped into the economy over the last couple of years. Companies produced record earnings, and their stock prices correspondingly increased. Now to keep "growing" they need to decrease spending to keep earnings at the same or higher levels. It is also an opportunity to cut some cruft. A lot of good people get swept up too but most large tech companies have had huge layoffs in the past. They can then cite the necessity to do it as "everyone is having to tighten up" Google could still be profitable without cutting staff, but their profit would drop and be perceived as not "growing"
  - jbay808 4y ago
    I think it's beyond that -- with interest rates rising, companies need to increase earnings or else decrease their expenditures, in order to maintain their valuation.
  - candiodari 4y ago
    I'm not sure about this. Here's WHO is asking for this: https://www.theguardian.com/technology/2022/nov/15/major-investor-calls-on-google-owner-to-aggressively-cut-staff-and-pay https://www.theguardian.com/technology/2022/nov/15/major-inv... His first argument is bullshit, because Google is effectively debt-free. So Google can choose what to do with its money. He is quite open about that it's simply HIM wanting money: "TCI also called on Alphabet to increase its already substantial share repurchase programme to run down its $116bn of cash, given that large-scale mergers and acquisitions are limited owing to regulatory scrutiny. It urged it to copy Apple’s approach and become “cash neutral” over time." His style described in the article sounds like "corporate raiding" from the 80s. One might point out corporate raiding caused a financial crash ...
- Matticus_Rex 4y ago
  > I don't think they were financing 12,000 employee salaries with "cheap debt" and now they can't. Not sure how inflation plays into it. Think macro-level. It's not that each individual firm says "oh, debt is cheap" and takes on more debt to increase spending. It's that economy-wide a lot of firms are responding to that incentive, and that increased spending is showing up at other firms as increased revenue (and at the macro level, as a general shift in demand). So your revenue goes up. What do you do with it? Well, if you have projects you could start or increase funding for that look like they'd be profitable, you do that. You might even leverage it a bit; if you think the risk-adjusted ROI of something is way higher than the interest rates you can get, why wouldn't you? And even if you think there's a good chance that the cheap credit dries up and the economy goes into recession, (a) leaving money on the table for a long-term bet isn't something most CEOs can pull off without shareholders fighting them on it, and (b) you're not actually aiming for zero layoffs -- any company that is innovating and iterating is going to need to lay off some people to match their workforce to their needs sometimes. Inflation's effects take place at the level of deep incentives. It's not something you can fix by thinking "hmm... this might change in the next 6-12 months."
- ngcazz 4y ago
  Hearing a lot about top performers getting laid off too
- pgodzin 4y ago
  > Now I don't actually have proof that interest rates directly affect Google (who is probably flush with cash/very profitable/has high margins/has lots of money coming in). It affects everyone. When interest rates increase, the risk-free rate of return is much higher than when interest rates were 0. That means the ROI of each incremental dollar needs to be higher than it previously was, and when companies have a lot of projects with low risk-adjusted returns, they'll axe those.
int0x2e 4y ago
I love your thinking, but sadly most large corporates seem to suffer from very slow and very bad deciding making processes. Some examples from the tech giant I called home for 5+ years until I recently quit: 1. When the pandemic hit, mangement froze all hiring and emphatically urged us to optimize costs so we wouldn't have to lose anyone. 2. When the pandemic concerned turned into the hype of 2021, we tried to hire at a crazy rate, often competing with insane offers. 3. When the war started, we again went into a hiring freeze, and now a round of layoffs. In my experience - our management basically did what everyone else did, which meant we couldn't leverage any of our unique advantages and beat the market in some way. The reason I joined the company I did after the megacorp is that they had a very simple strategy for hiring - hire top talent in strategic areas when you can find it, but ignore anything else, don't lower the quality bars, don't make insane offers, etc. It's almost as if having common sense is such a rare thing now, that it's become a winning strategy...
- 98codes 4y ago
  The fact that even with all that I can't tell which tech giant you're talking about feels like a strong signal of the problem you described.
- endtime 4y ago
  > hire top talent in strategic... don't make insane offers How does this work? I left Google after ten years last year, when the market was still competitive, and I had multiple strong offers. I wasn't going to leave...lets call it significant money on the table if I somehow had a "non-insane" offer somewhere else...
  - int0x2e 4y ago
    It's interesting, because I took a pay cut to join this startup. I had grown tired of not being challenged and not learning as much anymore, and I definitely got tired of the corporate politics and endless bureaucracy. Don't get me wrong - I did cool stuff, and I did have impact, but nearly as much as I thought I could. At the startup, I was really impressed by the caliber of folks I met, and over the past 2 months I've been here, I've only grown more happy with my decision. It's so thrilling to see what a team of A players can get done when you set clear goals... I think it's worth the pay cut (to me at least), and I am very hopeful for a further exit to make me more than happy financially as well...
dragonwriter 4y ago
> When an incident occurs in prod and it affects the livelihood of 12.000 people (or more if you include family), you’d expect at the very least a post-mortem. Yeah, this isn’t an “incident”, this is capitalism working as designed. The pro-forma taking of responsibility is just part of the ritual that labor, management, and capital all know is fake of pretending otherwise. If you don’t want to work at a firm that overhires when the winds are even vaguely positive and overfires when the winds blow the other way, form a labor coop; otherwise, you are a resource to which “cattle, not pets” applies just as much as to one-of-many VM in the cloud.
- charles_f 4y ago
  "I take full responsibility" indicates that, at least on the PR side, that there is responsibility to take, ergo that's an incident.
  - 8note 4y ago
    He might be expecting a fat compensation bonus, by being responsible for a profit increase
shepherdjerred 4y ago
>> I take full responsibility for the decisions that led us here Obligatory: https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ
justin_oaks 4y ago
Yup, the "I take full responsibility" reminds me of people I know who cause me grief and say "Sorry" with no intent of making any changes. How sorry can you be if you don't intend on avoiding it in the future?
- ipaddr 4y ago
  Wouldn't full responsibility be paying for these people's salaries over the last 2 years and finding new work for all 12,000 people yourself?
  - justin_oaks 4y ago
    Exactly. "Full responsibility" with no particular consequences is meaningless. Or perhaps he could take a paycut as a proportion of people fired. It's not the same, but it's a step in the right direction.
AdrianB1 4y ago
Since Google is no longer restricted by "don't be evil", overhiring to keep the best employees is a valid business plan. It is easier to overhire than to attract , interview and offer to better candidates and most companies are doing it. Quantity leads to quality, eventually.
neuronic 4y ago
But then youn cannot just do the same things again next time without admitting that you consciously repeated mistakes.
mbar84 4y ago
Gavin Belson taking full responsibility https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ
deleted 4y ago
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maximinus_thrax 4y ago
> and it affects the livelihood of 12.000 people I'll stop you right there. Why would they do a post-mortem for this? They're not accountable to the employees. This should be a reminder for everyone as to who SLT actually works for.
- UncleMeat 4y ago
  Corporations should be accountable to their employees. The system we have today is harmful.
  - scottyah 4y ago
    The employees who stay get paid more than if everyone stayed. Same idea as with unions, you're splitting the pie into less slices so each is bigger.
    - UncleMeat 4y ago
      It isn't the same sized pie in both situations. There's shit that won't get done by my team anymore. I just sent an email to a stakeholder group telling them that I have to kill a valuable project. It isn't like if Google fired 95% of people that comp for the remainder would hit $10m a person.
    - maximinus_thrax 4y ago
      > The employees who stay get paid more than if everyone stayed As someone who survived numerous rounds of layoffs, that's not true. The employees who stay get to work more (under more job security pressure) but that's about it. It's not like the wages of the workers who get laid off are reallocated as bonuses for the remaining employees.
      - morepork 4y ago
        Google pays a large amount of stock based comp, so at least that part of their wages will likely go up, at least in the short term.
jedberg 4y ago
From the point of view of a CEO of a public company, no post-mortem is necessary because nothing went wrong. Hiring during a soaring economy and then letting people go as the economy cools is just standard operating procedure. Grow when money is cheap, stabilize when it's not. If you don't do that, then you'll get out-competed by the companies that are doing that.
- tipalti_layoff 4y ago
  I'd kind of disagree with this sentiment. Sure, that works for Ford at the assembly line, but you have to get tech companies a little bit more credit. They don't scale with the number of heads if they are doing it right ;-)
- srveale 4y ago
  To me the strategy has seemed so backwards the last few years. You are the CEO of a giant tech company, and your goal is to achieve maximum well-being of the company in, say, 3 years time. You are confident you can weather the short term ups and downs. You could: 1. Follow trends. Go on a hiring frenzy at the same time as everyone else. You have to compete with absurd compensation packages because everybody already has a job or is getting multiple offers. 2. Buck the trend. Hire when others are in the middle of layoffs. Show strength when others are making their sheepish apologies. Pay discounted labour prices for top talent. To me choice #2 is a no-brainer but obviously nobody will ever put me in a position to decide, and it's easy to be an arm-chair CEO. Is it really that these companies are so short-sighted, and are more worried about next quarter than next year? Could nobody see the interest rate hikes coming? I just can't imagine how executives/boards would overlook the impact on stock price if a company was publicly known to use foresight in their hiring practices. What if the headline was something like "Google hiring continues at same rate during recession," doesn't that send a strong signal to investors?
  - yafbum 4y ago
    You can't necessarily survive #2 if it causes the talent you actually need the most to bail in high times. You can play this game at the margin by starting to freeze hiring before everyone else does, so that you can be there earlier to hire again at discounted rates in the downturn
mindslight 4y ago
Meanwhile, here is an actual quote from the figurehead that led the quantitative dumping that put us where we are today: "I don't take responsibility at all" Remember how a few short years ago, it was widely recognized that Wall Street and Main Street were completely out of sync? That was due to trillions of dollars in helicopter money meant to make the financial markets look good despite the pandemic. These layoffs are part of the bill that's coming due.
outworlder 4y ago
> I take full responsibility for the decisions that led us here That's a meaningless statement. They never face any consequences. A CEO taking responsibility for layoffs should add their name to the list too.
- ok_dad 4y ago
  No shit, this guy took ~$250mm in stock in each of the last few years from what I can find, and even if that is worth half of what it was before this year he could give each outgoing employee about $10k of that stock (to sell maybe) to make their lives easier. Instead he gave them a few words written by some PR manager. Taking responsibility must mean something different to a CEO than it does to me, a common dude.
  - hyperbovine 4y ago
    "oooh you mean financial responsibility. yeah I take none of that."
  - edanm 4y ago
    > "[...] he could give each outgoing employee about $10k of that stock (to sell maybe) to make their lives easier." To be fair, I think the package they are actually offering is way, way more valuable than 10k: "We’ll also offer a severance package starting at 16 weeks salary plus two weeks for every additional year at Google, and accelerate at least 16 weeks of GSU vesting." Plus healthcare, 2022 bonuses being paid out, and some other items on there.
- AnIrishDuck 4y ago
  "It is I who must remain and bear the heavy burden of their failure" Silicon Valley somehow feels even more relevant years after it has wrapped.
- deleted 4y ago
  [deleted]
- heresie-dabord 4y ago
  Translation: "I support this decision, because I support all my own decisions." It is ethically meaningless, like "thoughts and prayers".
charcircuit 4y ago
>I've never seen a company produce one after that. Almost every company does. They may not make it public, but yes leadership will reflect on this. >"I take responsibility" is a beautiful thing to say but it's completely empty if you don't take the consequences as well This isn't how most large tech companies work. If someone causes an outage that costs the company 7 figures there are no consequences assuming it wasn't done maliciously. It is more about learning and figuring out what went wrong and how to avoid it in the future and it is not about punishing people.
vishnugupta 4y ago
Just about everyone understands that "full responsibility" is meaningless. One thing I've come to internalise is in a public (maybe most of private too) company CEO's fiduciary responsibility is to maximise shareholder value. From what I've learnt the switch from "profit" to "share holder value" occurred sometime in the 80s. So they'd do whatever it takes to reduce cost; outsourcing to 3rd world countries, financial engineering, wage suppression, hiring contractors and what not to ensure stock prices keep going up.
hintymad 4y ago
> Focus business People simply have different incentives during booming years. Companies want growth in marketshare, so they throw initiatives on the wall to see which ones stick. So, more hiring. Managers want more scope, and size of their teams is a good indicator. So, they hire more. Of course, I don't doubt their motives. They may genuinely believe the causes of their teams and diligently come up with initiatives. It's just that their initiatives may not get the same level of scrutiny when almost-free investment dries up. Again, more hiring.
sireat 4y ago
Whenever I see CEO taking "full responsibility" and staying put I am reminded of Gavin: https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ Full responsibility that does not involve massive shakeup at the top is not full responsibility.
eightysixfour 4y ago
This isn't a service outage; it was investment that no longer make sense in the new fiscal environment. Google's revenue went from $38.3b (Q2FY20) to $69b (Q3FY22), are you suggesting they should not have hired during that kind of growth?
deleted 4y ago
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snotrockets 4y ago
> what could you have done to prevent this? realize it was too good to be true. Don't enter the rat race, be cautious about hiring. Focus business. Nothing could have been done, because nothing needed to be done. Is there a recession? Probably. Was valuation and market expectation inflated? Obviously. Did Google overhire? looks like it. But is that the cause for the firing? Of course not. Last quarter revenue was almost 69.1B, 6.1% Y/Y. That is still an offensive amount of money. Management decided to hurt people because other companies are doing it. Here's your root cause analysis: management is beholden to fads, not facts. Layoffs don't improve performance (https://www.careerusa.org/resources/career-files/158-resources/career-files/16-must-read-articles/372-lay-off-the-layoffs.html https://www.careerusa.org/resources/career-files/158-resourc...), but the market demands it, and nobody in the c-suite has the long term vision and spine to do what is right, rather than to appease short term fads.
- KerrAvon 4y ago
  Yes, but I would add that we're not in a recession currently. Really. There may be one coming, but it hasn't happened yet.
  - snotrockets 4y ago
    That's just makes this decision more harmful, both to the people Pichai and Alphabet management just wrecked their lives, and to the long term prospects of Alphabet the company.
  - draw_down 4y ago
    [dead]
  - YokoZar 4y ago
    Planet Money had an episode this week showing a poll where literally 99% of CEOs responded that they thought a recession was going to happen in 2023.
    - snotrockets 4y ago
kaczordon 4y ago
Hindsight is 20/20(pun). Did you sell all your stocks at the top in Jan 2022? No one can predict a recession otherwise they’d be billionaires. How would you expect other people to predict that there would be a recession? IMO google tried to stave off layoffs for as long as possible.
- andromeduck 4y ago
  The bar for onsite got rediculoisly low at on point. It varied quite a bit by org but many new hires were clearly not the same caliber as previous years.
  - kaczordon 4y ago
    THe BaR wAS HiGHeR WhEN i jOiNeD. Just kidding(a little bit). So many smart people at google though in general the average caliber IME was always really high compared to other places.
    - andromeduck 4y ago
      Yeah I think I still better than a lot of places is judging by some of the candidates I interview but I think its still true in general that as CS has become more of a established profession and path to high income job the types of person persuing it has changed and the demand for CS degrees has caused colleges to dilute their CS programs quite a bit - especially in terms of number and choice of electives.
rsj_hn 4y ago
Imagine you are running a restaurant and normally you get 100 people a night and you service that with 10 staff, and you know for the next year you will get 200 people a night and can support that business with 20 staff and then after it will go back down to 100 people. So you can choose to: 1. Refuse to hire the extra staff for a year and lose out on the profits of 100 customers a night for a year. 2. Go with the flow, expanding when demand increases and contracting when demand decreases. Most people will go with option 2 as that is what gets you more money and also allows the economy to respond to price signals in a rational way. This is particularly true of growth companies like Google. The idea of a growth company is not to maintain constant revenues and employment over time. People who go to work for Google should understand that Google will hire more staff when demand goes up. But then they should also understand that Google will cut staff when demand falls. That it's predictable that demand goes up and down does nothing to change this calculus. It's like people blaming the home builders in 2010 for expanding home building. I mean, when there is an increased demand for new housing, why wouldn't they expand home building?
SuperQue 4y ago
> "none, loyalty goes only one way and trust me when I tell you that no-one is safe" Yup, I know someone who had been there since 2006 that was laid off. Not even high scores on Perf will save you. I have no idea what methodology went into it. That's a whole postmortem on its own.
saos 4y ago
> I bet you that if/when we recover from this dip, the same hiring practices as before will re-submerge so that resiliency doesn't move and we see the same move in another 5/10y Of course I agree. It’s my mantra in the workplace now. My place of work is not my friend or family. I’m there to offer my skills and service for a certain time and then I’m out.

MuffinFlavored 4y ago

> you'd expect at the very least a post-mortem. "Despite getting paid millions to be good at my job, I did what every other CEO was doing when the Federal Reserve set interest rates low and hired a bunch of staff. I didn't think "hmm... this might change in the next 6-12 months". It changed. I am now doing what every other CEO is doing and jumping on the bandwagon and correcting." Now I don't actually have proof that interest rates directly affect Google (who is probably flush with cash/very profitable/has high margins/has lots of money coming in). I don't think they were financing 12,000 employee salaries with "cheap debt" and now they can't. Not sure how inflation plays into it. I just like to tell myself "these people weren't top performers and if you work for a company like Google (and get paid a lot), you are expected to do a lot/be a top top top performer"

charles_f 4y ago
> these people weren't top performers Problem is that this is not how this is unravelling. Large lay-offs like that cull entire departments, not the lower performers.
- cmrdporcupine 4y ago
  What I'm hearing from Googlers I know -- the layoffs are not on the whole tied to perf. They're across the board in terms of years of service and seniority and product areas and roles and some people recently promoted have gotten the axe, too. Doesn't seem to be departmental. When Google does that (axe a PA or department or product) they have a process of giving a chunk of time usually to let people move themselves, or be moved; e.g. when they killed Fiber at my site (Waterloo) they moved everyone (including me) into other roles and brought new projects into the office, and people in Mountain View and other places were given a few months to find something else internal.
  - charles_f 4y ago
    It's the same at Microsoft and Amazon, I've seen top-tier people with >10y service getting axed in both instances.
    - tgma 4y ago
      I'm not suggesting there aren't top tier people but I know firsthand that just being there for 10yr (specifically the past 10 years at G) does not in any shape or form imply you're top tier. You could have been literally coasting for a decade.
      - cmrdporcupine 4y ago
        Yes, will this is in part the Faustian bargain that is often made to work at Google. People often become mediocre working there, and Google is on the whole frankly fine with this because it keeps those people from going & working at potential competitors. That this is now changing, is interesting. In any case, like I said above, this round of layoffs doesn't seem to be indexed on performance. At least not completely, from what I've heard. It should be interesting to see how many new startups get built out in the next year as a result of this.
bretpiatt 4y ago
Interest rates have a large indirect impact on their business, not in the day to day operations but in the value of the future cash flows vs. risk free rate. Super simplifying, if risk free interest rate is 0% then you can value current cash flow the same as future ones. When you have 5% risk free in 14 years that new dollar is worth half of what it is today. This has big impact on enterprise value for growing businesses.
- MuffinFlavored 4y ago
  > Interest rates have a large indirect impact on their business Can you expand on how please? Wouldn't this depend on Google (or other companies) actively financing things through debt with loans from banks? Why would they need to do this if they have tons of cash on hand? > Alphabet cash on hand for the quarter ending September 30, 2022 was $116.259B If anything, can't they put that money somewhere and earn interest on it? Higher interest rates means they'll earn more on it. How do they experience increased costs from interest rates if they aren't financing projects through debt? Or are they?
  - formercoder 4y ago
    They are related but different concepts. The value of a company is equal to the discounted value of its future cash flows. If rates go up, that means a higher return can be had for zero risk, which means all cash coming in the future at more than zero risk is now worth less. There is a second term other than risk free rate in the discounting equation which is related to capital structure. So, amount and cost of debt does impact valuation (though there is some debate and theory that makes my statement not quite true), but it is not the only factor.
    - MuffinFlavored 4y ago
      Are you saying in a perfect world, the perfect CEO would "can" (get rid of) every team/project that isn't projected to 5% ROI yearly (assuming risk free rate has roughly gone from 0.25% -> 5%)? Obviously there are exceptions where you want to eat losses up from (R&D a big project for a few years hoping it returns a lot down the road)?
specialp 4y ago
I think this is more of sliding the levers to keep the earnings good. There was a massive amount of money dumped into the economy over the last couple of years. Companies produced record earnings, and their stock prices correspondingly increased. Now to keep "growing" they need to decrease spending to keep earnings at the same or higher levels. It is also an opportunity to cut some cruft. A lot of good people get swept up too but most large tech companies have had huge layoffs in the past. They can then cite the necessity to do it as "everyone is having to tighten up" Google could still be profitable without cutting staff, but their profit would drop and be perceived as not "growing"
- jbay808 4y ago
  I think it's beyond that -- with interest rates rising, companies need to increase earnings or else decrease their expenditures, in order to maintain their valuation.
- candiodari 4y ago
  I'm not sure about this. Here's WHO is asking for this: https://www.theguardian.com/technology/2022/nov/15/major-investor-calls-on-google-owner-to-aggressively-cut-staff-and-pay https://www.theguardian.com/technology/2022/nov/15/major-inv... His first argument is bullshit, because Google is effectively debt-free. So Google can choose what to do with its money. He is quite open about that it's simply HIM wanting money: "TCI also called on Alphabet to increase its already substantial share repurchase programme to run down its $116bn of cash, given that large-scale mergers and acquisitions are limited owing to regulatory scrutiny. It urged it to copy Apple’s approach and become “cash neutral” over time." His style described in the article sounds like "corporate raiding" from the 80s. One might point out corporate raiding caused a financial crash ...
Matticus_Rex 4y ago
> I don't think they were financing 12,000 employee salaries with "cheap debt" and now they can't. Not sure how inflation plays into it. Think macro-level. It's not that each individual firm says "oh, debt is cheap" and takes on more debt to increase spending. It's that economy-wide a lot of firms are responding to that incentive, and that increased spending is showing up at other firms as increased revenue (and at the macro level, as a general shift in demand). So your revenue goes up. What do you do with it? Well, if you have projects you could start or increase funding for that look like they'd be profitable, you do that. You might even leverage it a bit; if you think the risk-adjusted ROI of something is way higher than the interest rates you can get, why wouldn't you? And even if you think there's a good chance that the cheap credit dries up and the economy goes into recession, (a) leaving money on the table for a long-term bet isn't something most CEOs can pull off without shareholders fighting them on it, and (b) you're not actually aiming for zero layoffs -- any company that is innovating and iterating is going to need to lay off some people to match their workforce to their needs sometimes. Inflation's effects take place at the level of deep incentives. It's not something you can fix by thinking "hmm... this might change in the next 6-12 months."
ngcazz 4y ago
Hearing a lot about top performers getting laid off too
pgodzin 4y ago
> Now I don't actually have proof that interest rates directly affect Google (who is probably flush with cash/very profitable/has high margins/has lots of money coming in). It affects everyone. When interest rates increase, the risk-free rate of return is much higher than when interest rates were 0. That means the ROI of each incremental dollar needs to be higher than it previously was, and when companies have a lot of projects with low risk-adjusted returns, they'll axe those.

int0x2e 4y ago

I love your thinking, but sadly most large corporates seem to suffer from very slow and very bad deciding making processes. Some examples from the tech giant I called home for 5+ years until I recently quit: 1. When the pandemic hit, mangement froze all hiring and emphatically urged us to optimize costs so we wouldn't have to lose anyone. 2. When the pandemic concerned turned into the hype of 2021, we tried to hire at a crazy rate, often competing with insane offers. 3. When the war started, we again went into a hiring freeze, and now a round of layoffs. In my experience - our management basically did what everyone else did, which meant we couldn't leverage any of our unique advantages and beat the market in some way. The reason I joined the company I did after the megacorp is that they had a very simple strategy for hiring - hire top talent in strategic areas when you can find it, but ignore anything else, don't lower the quality bars, don't make insane offers, etc. It's almost as if having common sense is such a rare thing now, that it's become a winning strategy...

98codes 4y ago
The fact that even with all that I can't tell which tech giant you're talking about feels like a strong signal of the problem you described.
endtime 4y ago
> hire top talent in strategic... don't make insane offers How does this work? I left Google after ten years last year, when the market was still competitive, and I had multiple strong offers. I wasn't going to leave...lets call it significant money on the table if I somehow had a "non-insane" offer somewhere else...
- int0x2e 4y ago
  It's interesting, because I took a pay cut to join this startup. I had grown tired of not being challenged and not learning as much anymore, and I definitely got tired of the corporate politics and endless bureaucracy. Don't get me wrong - I did cool stuff, and I did have impact, but nearly as much as I thought I could. At the startup, I was really impressed by the caliber of folks I met, and over the past 2 months I've been here, I've only grown more happy with my decision. It's so thrilling to see what a team of A players can get done when you set clear goals... I think it's worth the pay cut (to me at least), and I am very hopeful for a further exit to make me more than happy financially as well...

dragonwriter 4y ago

> When an incident occurs in prod and it affects the livelihood of 12.000 people (or more if you include family), you’d expect at the very least a post-mortem. Yeah, this isn’t an “incident”, this is capitalism working as designed. The pro-forma taking of responsibility is just part of the ritual that labor, management, and capital all know is fake of pretending otherwise. If you don’t want to work at a firm that overhires when the winds are even vaguely positive and overfires when the winds blow the other way, form a labor coop; otherwise, you are a resource to which “cattle, not pets” applies just as much as to one-of-many VM in the cloud.

charles_f 4y ago
"I take full responsibility" indicates that, at least on the PR side, that there is responsibility to take, ergo that's an incident.
- 8note 4y ago
  He might be expecting a fat compensation bonus, by being responsible for a profit increase

shepherdjerred 4y ago

>> I take full responsibility for the decisions that led us here Obligatory: https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ

justin_oaks 4y ago

Yup, the "I take full responsibility" reminds me of people I know who cause me grief and say "Sorry" with no intent of making any changes. How sorry can you be if you don't intend on avoiding it in the future?

ipaddr 4y ago
Wouldn't full responsibility be paying for these people's salaries over the last 2 years and finding new work for all 12,000 people yourself?
- justin_oaks 4y ago
  Exactly. "Full responsibility" with no particular consequences is meaningless. Or perhaps he could take a paycut as a proportion of people fired. It's not the same, but it's a step in the right direction.

AdrianB1 4y ago

Since Google is no longer restricted by "don't be evil", overhiring to keep the best employees is a valid business plan. It is easier to overhire than to attract , interview and offer to better candidates and most companies are doing it. Quantity leads to quality, eventually.

neuronic 4y ago

But then youn cannot just do the same things again next time without admitting that you consciously repeated mistakes.

mbar84 4y ago

Gavin Belson taking full responsibility https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ

deleted 4y ago

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maximinus_thrax 4y ago

> and it affects the livelihood of 12.000 people I'll stop you right there. Why would they do a post-mortem for this? They're not accountable to the employees. This should be a reminder for everyone as to who SLT actually works for.

UncleMeat 4y ago
Corporations should be accountable to their employees. The system we have today is harmful.
- scottyah 4y ago
  The employees who stay get paid more than if everyone stayed. Same idea as with unions, you're splitting the pie into less slices so each is bigger.
  - UncleMeat 4y ago
    It isn't the same sized pie in both situations. There's shit that won't get done by my team anymore. I just sent an email to a stakeholder group telling them that I have to kill a valuable project. It isn't like if Google fired 95% of people that comp for the remainder would hit $10m a person.
  - maximinus_thrax 4y ago
    > The employees who stay get paid more than if everyone stayed As someone who survived numerous rounds of layoffs, that's not true. The employees who stay get to work more (under more job security pressure) but that's about it. It's not like the wages of the workers who get laid off are reallocated as bonuses for the remaining employees.
    - morepork 4y ago
      Google pays a large amount of stock based comp, so at least that part of their wages will likely go up, at least in the short term.

jedberg 4y ago

From the point of view of a CEO of a public company, no post-mortem is necessary because nothing went wrong. Hiring during a soaring economy and then letting people go as the economy cools is just standard operating procedure. Grow when money is cheap, stabilize when it's not. If you don't do that, then you'll get out-competed by the companies that are doing that.

tipalti_layoff 4y ago
I'd kind of disagree with this sentiment. Sure, that works for Ford at the assembly line, but you have to get tech companies a little bit more credit. They don't scale with the number of heads if they are doing it right ;-)
srveale 4y ago
To me the strategy has seemed so backwards the last few years. You are the CEO of a giant tech company, and your goal is to achieve maximum well-being of the company in, say, 3 years time. You are confident you can weather the short term ups and downs. You could: 1. Follow trends. Go on a hiring frenzy at the same time as everyone else. You have to compete with absurd compensation packages because everybody already has a job or is getting multiple offers. 2. Buck the trend. Hire when others are in the middle of layoffs. Show strength when others are making their sheepish apologies. Pay discounted labour prices for top talent. To me choice #2 is a no-brainer but obviously nobody will ever put me in a position to decide, and it's easy to be an arm-chair CEO. Is it really that these companies are so short-sighted, and are more worried about next quarter than next year? Could nobody see the interest rate hikes coming? I just can't imagine how executives/boards would overlook the impact on stock price if a company was publicly known to use foresight in their hiring practices. What if the headline was something like "Google hiring continues at same rate during recession," doesn't that send a strong signal to investors?
- yafbum 4y ago
  You can't necessarily survive #2 if it causes the talent you actually need the most to bail in high times. You can play this game at the margin by starting to freeze hiring before everyone else does, so that you can be there earlier to hire again at discounted rates in the downturn

mindslight 4y ago

Meanwhile, here is an actual quote from the figurehead that led the quantitative dumping that put us where we are today: "I don't take responsibility at all" Remember how a few short years ago, it was widely recognized that Wall Street and Main Street were completely out of sync? That was due to trillions of dollars in helicopter money meant to make the financial markets look good despite the pandemic. These layoffs are part of the bill that's coming due.

outworlder 4y ago

> I take full responsibility for the decisions that led us here That's a meaningless statement. They never face any consequences. A CEO taking responsibility for layoffs should add their name to the list too.

ok_dad 4y ago
No shit, this guy took ~$250mm in stock in each of the last few years from what I can find, and even if that is worth half of what it was before this year he could give each outgoing employee about $10k of that stock (to sell maybe) to make their lives easier. Instead he gave them a few words written by some PR manager. Taking responsibility must mean something different to a CEO than it does to me, a common dude.
- hyperbovine 4y ago
  "oooh you mean financial responsibility. yeah I take none of that."
- edanm 4y ago
  > "[...] he could give each outgoing employee about $10k of that stock (to sell maybe) to make their lives easier." To be fair, I think the package they are actually offering is way, way more valuable than 10k: "We’ll also offer a severance package starting at 16 weeks salary plus two weeks for every additional year at Google, and accelerate at least 16 weeks of GSU vesting." Plus healthcare, 2022 bonuses being paid out, and some other items on there.
AnIrishDuck 4y ago
"It is I who must remain and bear the heavy burden of their failure" Silicon Valley somehow feels even more relevant years after it has wrapped.
deleted 4y ago
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heresie-dabord 4y ago
Translation: "I support this decision, because I support all my own decisions." It is ethically meaningless, like "thoughts and prayers".

charcircuit 4y ago

>I've never seen a company produce one after that. Almost every company does. They may not make it public, but yes leadership will reflect on this. >"I take responsibility" is a beautiful thing to say but it's completely empty if you don't take the consequences as well This isn't how most large tech companies work. If someone causes an outage that costs the company 7 figures there are no consequences assuming it wasn't done maliciously. It is more about learning and figuring out what went wrong and how to avoid it in the future and it is not about punishing people.

vishnugupta 4y ago

Just about everyone understands that "full responsibility" is meaningless. One thing I've come to internalise is in a public (maybe most of private too) company CEO's fiduciary responsibility is to maximise shareholder value. From what I've learnt the switch from "profit" to "share holder value" occurred sometime in the 80s. So they'd do whatever it takes to reduce cost; outsourcing to 3rd world countries, financial engineering, wage suppression, hiring contractors and what not to ensure stock prices keep going up.

hintymad 4y ago

> Focus business People simply have different incentives during booming years. Companies want growth in marketshare, so they throw initiatives on the wall to see which ones stick. So, more hiring. Managers want more scope, and size of their teams is a good indicator. So, they hire more. Of course, I don't doubt their motives. They may genuinely believe the causes of their teams and diligently come up with initiatives. It's just that their initiatives may not get the same level of scrutiny when almost-free investment dries up. Again, more hiring.

sireat 4y ago

Whenever I see CEO taking "full responsibility" and staying put I am reminded of Gavin: https://www.youtube.com/watch?v=u48vYSLvKNQ https://www.youtube.com/watch?v=u48vYSLvKNQ Full responsibility that does not involve massive shakeup at the top is not full responsibility.

eightysixfour 4y ago

This isn't a service outage; it was investment that no longer make sense in the new fiscal environment. Google's revenue went from $38.3b (Q2FY20) to $69b (Q3FY22), are you suggesting they should not have hired during that kind of growth?

deleted 4y ago

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snotrockets 4y ago

> what could you have done to prevent this? realize it was too good to be true. Don't enter the rat race, be cautious about hiring. Focus business. Nothing could have been done, because nothing needed to be done. Is there a recession? Probably. Was valuation and market expectation inflated? Obviously. Did Google overhire? looks like it. But is that the cause for the firing? Of course not. Last quarter revenue was almost 69.1B, 6.1% Y/Y. That is still an offensive amount of money. Management decided to hurt people because other companies are doing it. Here's your root cause analysis: management is beholden to fads, not facts. Layoffs don't improve performance (https://www.careerusa.org/resources/career-files/158-resources/career-files/16-must-read-articles/372-lay-off-the-layoffs.html https://www.careerusa.org/resources/career-files/158-resourc...), but the market demands it, and nobody in the c-suite has the long term vision and spine to do what is right, rather than to appease short term fads.

KerrAvon 4y ago
Yes, but I would add that we're not in a recession currently. Really. There may be one coming, but it hasn't happened yet.
- snotrockets 4y ago
  That's just makes this decision more harmful, both to the people Pichai and Alphabet management just wrecked their lives, and to the long term prospects of Alphabet the company.
- draw_down 4y ago
  [dead]
- YokoZar 4y ago
  Planet Money had an episode this week showing a poll where literally 99% of CEOs responded that they thought a recession was going to happen in 2023.
  - snotrockets 4y ago

kaczordon 4y ago

Hindsight is 20/20(pun). Did you sell all your stocks at the top in Jan 2022? No one can predict a recession otherwise they’d be billionaires. How would you expect other people to predict that there would be a recession? IMO google tried to stave off layoffs for as long as possible.

andromeduck 4y ago
The bar for onsite got rediculoisly low at on point. It varied quite a bit by org but many new hires were clearly not the same caliber as previous years.
- kaczordon 4y ago
  THe BaR wAS HiGHeR WhEN i jOiNeD. Just kidding(a little bit). So many smart people at google though in general the average caliber IME was always really high compared to other places.
  - andromeduck 4y ago
    Yeah I think I still better than a lot of places is judging by some of the candidates I interview but I think its still true in general that as CS has become more of a established profession and path to high income job the types of person persuing it has changed and the demand for CS degrees has caused colleges to dilute their CS programs quite a bit - especially in terms of number and choice of electives.

rsj_hn 4y ago

Imagine you are running a restaurant and normally you get 100 people a night and you service that with 10 staff, and you know for the next year you will get 200 people a night and can support that business with 20 staff and then after it will go back down to 100 people. So you can choose to: 1. Refuse to hire the extra staff for a year and lose out on the profits of 100 customers a night for a year. 2. Go with the flow, expanding when demand increases and contracting when demand decreases. Most people will go with option 2 as that is what gets you more money and also allows the economy to respond to price signals in a rational way. This is particularly true of growth companies like Google. The idea of a growth company is not to maintain constant revenues and employment over time. People who go to work for Google should understand that Google will hire more staff when demand goes up. But then they should also understand that Google will cut staff when demand falls. That it's predictable that demand goes up and down does nothing to change this calculus. It's like people blaming the home builders in 2010 for expanding home building. I mean, when there is an increased demand for new housing, why wouldn't they expand home building?

SuperQue 4y ago

> "none, loyalty goes only one way and trust me when I tell you that no-one is safe" Yup, I know someone who had been there since 2006 that was laid off. Not even high scores on Perf will save you. I have no idea what methodology went into it. That's a whole postmortem on its own.

saos 4y ago

> I bet you that if/when we recover from this dip, the same hiring practices as before will re-submerge so that resiliency doesn't move and we see the same move in another 5/10y Of course I agree. It’s my mantra in the workplace now. My place of work is not my friend or family. I’m there to offer my skills and service for a certain time and then I’m out.