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> 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 Rese

> 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.
        theGnuMe 4y ago
        There are like 46k Xooglers or something.. +12k Xooglers now. That is like startup gold. So much opportunity if these folks self-organize.
- notyourday 4y ago
  > Problem is that this is not how this is unravelling. Large lay-offs like that cull entire departments, not the lower performers. Companies like Google are overstaffed by the lazy, entitled Prima Donnas. You can see it all over HN in its advice: "Don't go to a startup! You would need to work. Rather get a job at FAANG, get paid a very large salary, leave on the dot, don't ever be on call. Also, best part, you will get at least a few hours a day to play around on the internet. Also, remember, you have a power of pocket veto! If you do not like something, just don't do it. What are they going to do? Fire you? You will get another job in a jiffy!" With the zero interest rate environment gone the culling is inevitable.
  - cmrdporcupine 4y ago
    Advice on HN not to go to a startup is because 99% of startups have bullshit equity options these days. They're not worth the risk and stress because the VCs and founders are keeping potential payouts to themselves but pushing a huge amount of the financial risk and work stress onto their staff. Unless you're a cofounder or maybe a founding engineer, payout from a reasonable sale of a startup these days -- if it fluked out and actually happened -- ends up being little more than the annual comp at one of these BigCorps. TLDR, you don't get a job at a FAANG because you're lazy, you get that job because you're looking out for yourself and your family and you'd prefer not to be someone's plaything. That said I got sick of Google and went and shopped around last year and now I'm working at a smaller, series B funded company now and love it. But I ain't hoping to get rich, just job satisfaction. When VCs and founders get their shit together on equity agreements, early stage startups will be more attractive again. EDIT: Also hate to burst your bubble, but on-call rotation is a part of plenty of Google SWE teams, not just SRE. But they do pay a handsome bonus for the time you're on-call.
    - grepfru_it 4y ago
      My buddy and I were just talking about this. A company we were modeling received $4.2M in VC funding and had 20 employees at time of purchase. The purchase price was never advertised, but we assumed a 7x multiple on last known value and assumed the sale price at $25M. $25M turns out to be a little over $1M per employee after 4 years (company started 2012 and was bought in 2016). I asked out loud "why would you do this when you could just go to Microsoft or Apple, do less work, and make the same money in the same amount of time". Now this price is skewed towards the investors and very early employees, but the point still stands. You will very clearly make more money working for an established corp than a startup.
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.

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.
      - theGnuMe 4y ago
        There are like 46k Xooglers or something.. +12k Xooglers now. That is like startup gold. So much opportunity if these folks self-organize.
notyourday 4y ago
> Problem is that this is not how this is unravelling. Large lay-offs like that cull entire departments, not the lower performers. Companies like Google are overstaffed by the lazy, entitled Prima Donnas. You can see it all over HN in its advice: "Don't go to a startup! You would need to work. Rather get a job at FAANG, get paid a very large salary, leave on the dot, don't ever be on call. Also, best part, you will get at least a few hours a day to play around on the internet. Also, remember, you have a power of pocket veto! If you do not like something, just don't do it. What are they going to do? Fire you? You will get another job in a jiffy!" With the zero interest rate environment gone the culling is inevitable.
- cmrdporcupine 4y ago
  Advice on HN not to go to a startup is because 99% of startups have bullshit equity options these days. They're not worth the risk and stress because the VCs and founders are keeping potential payouts to themselves but pushing a huge amount of the financial risk and work stress onto their staff. Unless you're a cofounder or maybe a founding engineer, payout from a reasonable sale of a startup these days -- if it fluked out and actually happened -- ends up being little more than the annual comp at one of these BigCorps. TLDR, you don't get a job at a FAANG because you're lazy, you get that job because you're looking out for yourself and your family and you'd prefer not to be someone's plaything. That said I got sick of Google and went and shopped around last year and now I'm working at a smaller, series B funded company now and love it. But I ain't hoping to get rich, just job satisfaction. When VCs and founders get their shit together on equity agreements, early stage startups will be more attractive again. EDIT: Also hate to burst your bubble, but on-call rotation is a part of plenty of Google SWE teams, not just SRE. But they do pay a handsome bonus for the time you're on-call.
  - grepfru_it 4y ago
    My buddy and I were just talking about this. A company we were modeling received $4.2M in VC funding and had 20 employees at time of purchase. The purchase price was never advertised, but we assumed a 7x multiple on last known value and assumed the sale price at $25M. $25M turns out to be a little over $1M per employee after 4 years (company started 2012 and was bought in 2016). I asked out loud "why would you do this when you could just go to Microsoft or Apple, do less work, and make the same money in the same amount of time". Now this price is skewed towards the investors and very early employees, but the point still stands. You will very clearly make more money working for an established corp than a startup.

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.