11 ms·

Ask HN: Why is everybody copying layoffs?

79 points by indus 4y ago

Google: 12000 Microsoft: 10000 Amazon: 18000 Meta: 11000 Twitter: 4000 Salesforce: 8000 200,000+ laid off in tech since the beginning of 2022.

hgsgm 4y ago
"Conpanies overhired during the pandemic." Where did all those people come from? Was there huge unemployment before?
snbitne 4y ago
Growth stage startup CEO here. At the end of last year our board meeting was a pitch from outside investor director to founders recommending a 50-75% layoff, despite several years of runway. The capital class is despondent that the stock market has melted, and the solution is to pull the ladder up and nurse wounds. In my opinion, companies are all responding with their own values informed version of what their financial stakeholders have been urging them increasingly to do.
- moneywoes 4y ago
  How big is your startup
- indus 4y ago
  So if you have to do, would it be 10% a few quarters or go for the full blow in a single shot
  - codazoda 4y ago
    I’m not op, but I say do it all in one shot. I worked at Iomega in the 90’s and it felt like they had a layoff every quarter, which was toxic. The company was on fire, however, so maybe that’s different.
    - indus 4y ago
      iomega reminds me of those lovely diskettes
- lostcolony 4y ago
  Exactly. The financials aren't actually telling these companies to lay people off; the shareholders are. The macroeconomic climate is very different than the microeconomic climate; the microeconomic climate for most of these companies is "slow expansion", not "contract". In fact, many of them are still hiring even as they're laying people off because of that. But the shareholders are very much concerned, and so this is much more of a response to that.
  - candiodari 4y ago
    Not really. The shareholders are being forced by the FED. None of the investments they made make sense at this interest rate level, so they want out. However ... The theory behind the moves of the FED is that they want inflation down. How? By firing people (people will only pay prices they can afford). The FED can't fire much people. So if shareholders want the FED to back down ... they need enough people fired. And that doesn't really work because we are fundamentally tight on the labor market for 4+ years now. Nobody fired is going to have trouble finding a new job. Maybe not the same, but they won't exactly be unemployed (although given the wages offered unemployment might be the preferable option). It's not shareholders, it's Jerome Powell. It's also just not going to last. The Federal government is looking at two options, in ~1.5 years. Cutting spending by 4% (and one year after that, >10%) with LESS income. Or convincing "independent" Jerome Powell to lower interest rates back to 0%. So we'll have, let's call it 2 years of this. The FED will be as effective as an inflatable dart board, but they only have ONE tool and goddammit, they will make it work!
- drunkenmagician 4y ago
  Another anecdote, a company i used to work for (200+) employees, in high growth mode but not yet profitable got told the same by their investors. “Save cash, layoff staff, raising is going to be more difficult” So they terminated 40% of their staff despite the growth basically because investors are very pessimistic.
  - bsg75 4y ago
    Was that company able to continue growing post layoffs?
- jacknews 4y ago
  Yes this is another instance of the financial tail wagging the economic dog. Our economy has become completely over-financialized, and in this situation the fed have decided that inflation needs to be contained, and are inducing a recession to do it. They can do this quite reliably because of the level of financialization, companies are in debt to the hilt even if they don't need to be (it's because shareholder value), etc.
- ggwp99 4y ago
  Bull markets and a strong financial situation usually pushes companies to overhire or over estimate the number of employees they do actually need. I have seen clients I worked with and we have advised 75% layoffs multiple of times. This is especially true in the dev teams.
ac2u 4y ago
It's rather memetic in a way, everyone thinks everyone else knows best when it happens. Then the mimeses becomes a self fulfilling prophecy and private liquidity starts to tighten up even further than the tightening because of interest rates. I'm guessing the decision makers here are sometimes aware of the irrationality of the snowball effect, but bet on it being irrational not to copy it before the market reality hits them and they have to make even deeper cuts in future.
- ghaff 4y ago
  Betting you're not the smartest guy in the room is not routinely wrong--especially if the action of all other other "smartest guys in the room" affects the outcome.
- jhatemyjob 4y ago
  Yep. It's the Rene Girard Peter Thiel mimetic desire. The first outside investor in Facebook. Stanford professor. Critic of the critics of Western Culture. Jesus Christ is the one true role model. These layoffs are the apocalypse. The laid off employees are now Gods. Zero to One by Blake Masters. National Conservatism. One cut on this I always have is, these things are always over-determined.
groffee 4y ago
[flagged]
- fl0ps 4y ago
  I think more than "dead weight", Musk was trying to get rid of what he deemed a culture problem. Using the dead weight as an excuse he did multiple rounds of purges, with "useful" (productive+culture matching) engineers also getting purged in the process as an acceptible loss, only perhaps seeing that as a bit too far later on (recall there were engineers being asked to come back on an individual basis). The purging wasn't a surprise from my perspective of , in the past, seeing CEOs agressively weed out employees who only slightly disagree with them, let alone the "actively plotting"(?) Twitter employees who, you may recall, Musk was pouring over internal conversation logs to find, it seems. And to expound on the main topic, I think what we're seeing is a confluence of the above: using downturn, etc. as an excuse to shed perhaps individuals or groups that are in opposition to the culture the board thinks is useful, drowned out by a total also comprised of some amount of acceptible loss in employees the company wouldn't mind keeping. Watch as some individuals from all of the above are individually asked to rejoin with a pay bump. My two cents.
- thdc 4y ago
  I definitely agree on big tech company bloat, but do not agree with those percentages (or at least on average). I also don't think he properly sorted engineers between slackers and non-slackers due to reasons like the speed at which cutting occurred and the rehiring into firing to fix whatever random issues. Industry wide layoffs are a nice cover to cut inefficient workers, although I don't know how well they can be sussed out in large companies. My own company with only a few hundred employees cut some people and I can say that, of the ones I was familiar with, they were mostly slackers or low performers.
  - indus 4y ago
    > My own company with only a few hundred employees cut some people and I can say that, of the ones I was familiar with, they were mostly slackers or low performers. Is that true across the board?
amalgamated_inc 4y ago
Cause recession? Money is suddenly tight?
- indus 4y ago
  But google, Microsoft, etc have $200bn on their balance sheets!
  - NegativeLatency 4y ago
    Rule of Acquisition #10: Greed is eternal. [1] The shareholders always want growth and profits. [1]: https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition
  - amalgamated_inc 4y ago
    And? You think they want to lose that?
ssgodderidge 4y ago
Many tech companies made the same assumptions in the last two years (e.g. online transactions/ecommerce will stay at COVID levels). Those assumptions turned out to not be true, so they are course correcting to match the current economic climate.
- indus 4y ago
  Microsoft added 70,000 new employees in the last 3 years. How much of this is course correction vs sheer cluelessness?
  - ssgodderidge 4y ago
    Yeah Microsoft is an interesting case, since they aren’t as impacted by ecommerce spending. As far as I know, they haven’t launched a completely new service/offering that would require that many people. That might be a case of them cutting the costs to prop up the stock price so they can make acquisitions? Time will tell
    - ytdytvhxgydvhh 4y ago
      Seems like “cloud” and all that goes with that. Their Azure cloud and related services, government/defense cloud business, Office in the cloud, etc.
- redtriumph 4y ago
  There are couple of factors at play here. a. With cheap money, placing and chasing risky bets was risk almost-free. Although, this has been the case for past 4years, 2021/2022 was where it eclipsed new highs. b. Wag-wars: In 2020, 2021, 2022, in SV, I have seen people getting insane offers. Sometimes accompanied by multiple expansion of stock (TSLA, NVDA). This eventually meant that if you don't pay top-dollar, someone else will and you will have to keep hiring belt burning. [presume that prospective employer finds you worthy enough] I also find hard to believe that decision makers believed that pace of growth/expansion in 2020, 2021 was sustainable. There were signs that it isn't and cheap money kept flowing. Some would also criticize the stimulus checks but in my view, it helped folks who needed it the most but it also went on to chase risky or unproductive things like NFT etc. /end-of-rant
tekla 4y ago
Who is everyone? Why do companies that are known for being overly bloated mean anything for the rest of the economy?
- jonny_eh 4y ago
  Google, Microsoft, Amazon, Meta, Twitter, Salesforce For large US software companies, it's basically everyone.
  - indus 4y ago
    copy the celebrity.
dboreham 4y ago
Because they are all owned by the same rich people with the same world view.
- monero-xmr 4y ago
  Yes like CALPERS and Norway sovereign wealth fund that have to provide retirements to millions of average people. And index funds that tens of millions invest for their 401k. A falling stock market isn’t good for the average person
  - ulfw 4y ago
    Google is a growth, not a value stock. They don't pay dividends. You don't grow with fewer people who can put out fewer products.
- ytdytvhxgydvhh 4y ago
  Well they’re certainly run by lots of the same people. Article is a few years old but I’m sure the story remains the same: https://www.visualcapitalist.com/50-largest-u-s-companies-board-members/ https://www.visualcapitalist.com/50-largest-u-s-companies-bo...
andrewstuart 4y ago
When everyone is doing it, companies see it as an opportunity to trim down the fat they have accumulated during the good times. There's no stigma for them doing it if everyone else is. If they lay people off in good times, then that is a serious indication of trouble at the company. If they lay people off in bad times then that is an indication of wisdom and prudence. I've seen it in multiple recessions.
- myko 4y ago
  > I've seen it in multiple recessions. What's interesting here is that, in the face of all the fears about a recession, no recession actually seems to be happening
  - andrewstuart 4y ago
    yep. It's just a bunch of lemmings.
    - indus 4y ago
      Or companies that did not do performance related reduction are finding now is the time
  - causality0 4y ago
    The more removed the financial and tech world is from the rest of the economy the more they cloud reality by distorting GDP figures. We may not be in a recession but everyone I know has more difficulty paying for things and a more negative economic outlook than they ever did in '09.
  - pid-1 4y ago
    While some economic indicators are bad already, the real issue is core inflation not giving up. The Fed has already signaled it will keep hiking rates until the economy slows down and inflation is controlled. As an entrepreneur/CFO, would you bet against the Fed?
    - 4y ago
awacs 4y ago
Love him or hate him (I'm more the latter at this point) Elon showed you could trim 70% of the workforce from Twitter and it's still up and running. So with that logic, that being on the extreme side, trimming some smaller % is a no brainer to the boards of most companies now.
- dvngnt_ 4y ago
  twitter is an order of magnitude less than FAANG. at the end of the day, they're mostly a text-based feed. also aren't they not paying rent
  - sangupta 4y ago
    They have been sued for not paying rent, for going back on severance package, just sold office equipment to make for the losses.
- sangupta 4y ago
  Twitter still runs due to fear in others of losing their job in these tough times. If the market was as great as before, no Twitter employee would agree to work 10+ hours or weekends, or sleep in office.
- birdyrooster 4y ago
  Counting eggs before they hatch are we?
- ElijahLynn 4y ago
  How much of the remaining workforce at Twitter is held hostage by a work visa? (I don't know, I am asking the hive though)
  - MrOwnPut 4y ago
    So companies that offer work visas are kidnappers? The people that want to come over and accept the job offer are aiding in their own kidnapping? I don't get it, you don't support work visas or you think Twitter is abusing them, or...? I have so many questions about your statement.
joshe 4y ago
It's interest rates. Capital is becoming more expensive. If you are a good CFO, you say: "Hey remember how we want 5 years of cash, well i just looked at selling bonds and getting cash now is expensive." For tech companies the biggest expense is salaries, so saving cash means firing people. For the smaller companies they aren't getting investments as easily or at all. They will also need to save cash. The next few years are going to be different. Interest rates: https://fred.stlouisfed.org/graph/?g=Z12V https://fred.stlouisfed.org/graph/?g=Z12V.
- indus 4y ago
  But majority of high tech raised equity capital and not debt.
  - morgango 4y ago
    True, but valuations are based on future earnings potential. If the market looks down, then there is the idea that there is less revenue coming in the future, and the company has less capability to sustain a workforce. It really is interest rates.
    - indus 4y ago
      fair point.
  - metaphor 4y ago
    I wonder how many of those tech companies that you're alluding to have evergreen provisions baked into their capital structure, and what that means from a cost of equity perspective at the prevailing risk-free rate.
  - refurb 4y ago
    Maybe smaller companies, but large ones carry a lot of debt because it’s cheap. Google has $28B in debt.
    - ulfw 4y ago
300bps 4y ago
Imagine you have a money printing machine. And the more people you have to turn the cranks on that money printing machine, the more money you'll make. Then imagine the Federal Reserve comes along and says, "How would you like a bunch of almost free money?" The logical thing to do would be to get a bunch of that almost free money and then hire people to crank the heck out of that money printing machine. So that's what they did. And then the Federal Reserve says, "Party's Over!" and stops giving out the almost-free money. You lay off the bottom performing x% of your entire workforce. Almost Free Money Party Starts https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-the-biggest-companies-bonds-raising-questions-over-why.html https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-th... Almost Free Money Party Ends https://www.bloomberg.com/news/articles/2022-03-09/fed-s-biggest-ever-bond-buying-binge-is-drawing-to-a-close https://www.bloomberg.com/news/articles/2022-03-09/fed-s-big...
this_steve_j 4y ago
A) To optimize the company’s stock price, earnings, and/or C-suite bonuses. B) To liberate the workers from wage slavery. C) It feels good to do this in your soul. D) There’s no such thing as bad publicity. I’m leaning towards A?
- dhuk_2018 4y ago
  All of the above, plus: E) We f*cked up and hired too many so we'll blame it on the economy.
Zaheer 4y ago
There's comfort in the crowd. There's little to no reputation hit for a company to do layoffs now.
pid-1 4y ago
At this moment central banks worldwide are increasing interest rates to slow down economies and fight inflation caused by money printing during COVID (different countries might be in different parts of their tightening cycles tho). As a company, if you believe there will be less economic activity in the future, you must cut costs to ensure survival. Of course one could bet central banks will fail, but historically this sort of bet has held nothing but pain and suffering.
throwawaystack 4y ago
Some companies are really in financial trouble, but the others are stack ranking in their shadows: https://en.wikipedia.org/wiki/Vitality_curve https://en.wikipedia.org/wiki/Vitality_curve The theory by a certain Jack Welch being that the bottom 10% are "non-producers". Since they don't produce, they can simply be fired without affecting the output of the company. And since some startups had legit trouble and laid off people because they really couldn't survive otherwise (but then typically laid off >10% or had multiple rounds of layoffs), the others can now do it without taking a reputation hit (again, in theory). VCs seem to be pushing this heavily. Personally, not a fan. Yes, it's legally not as easy to fire someone for low performance like it is to fire 10% because "the economy!!1", but it's also not impossible. No need to use scorched earth tactics...
birdyrooster 4y ago
Let’s see 5.5 million workers in tech and 200k get laid off that makes less than 4% of jobs lost. Considering securities took a way bigger haircut, I don’t see what the concern is about.
- Our_Benefactors 4y ago
  Losing your job is a binary event, you have the job or you don’t. It’s not much of a comfort to someone who has been laid off that stocks are doing worse.
human 4y ago
The size of these layoffs are minimal in comparison with the hires they have done during the pandemic. I see this as normalization more than anything else.
- indus 4y ago
  Hoarding of talent!
- birdymcbird 4y ago
  english not me main language but it not mean me stupid. i was at two big tech company for over past 10 year. this a massive GRIFT..saw armies of new hires. Now people on HN and LinkedIn say, "So hard to recruit this level talent. Will need to re-hire them." Oh really? Let me tell you. i saw: - original founders, execs, and they proteges leave, to be replaced by "Professional Managers" - professional managers have no vision or direction. - professional manager cares nothing for customer, product, or value. - professional manager driven by prestige of being at big tech and ego - only goal is to increase HC, fight territory battles, and grow empire. - main incentive was PROMOTION. - how to achieve promotion? Managers: empire building. IC: invent complexity, build solution to problem that not real. launch it, get promoted, go to next team. great, now we need to spend even more $$ to support some piece of shit services because critical stuff taking dependency on it. manager, Sr. Mmnager collude across organization to show big impact and get unnecessary thing entranced deep in tech stack. But hey, now we write document in promotion portfolio so sr. manager can become director.. sr. engineer become staff level.. - 20% of company provide value that pays the other 80% salary. - Many people work on stupid thing that have no meaning for customer. let me pick a random big tech co: you tell me what huge improvement in amazon shopping, how alexa better, how kindle better, how fire (junk) any better? What big innovation even from aws in past 7 year? oh let me tell you – lets steal some open source project, give no credit or contribution back to main project, and sell as managed service and eat our customer in data transport cost alone. this grift went on long time enable by cheap borrow policy. and in silicon valley, it at level of Ponzi scheme. I invest in company x,y,z, and c. i force c to use shitty SaaS products from x,y,z or some other company my friend invest in. it literally same dollar moving from x to y to z to c. entitled grifters.
MrYellowP 4y ago
Because of the global economic meltdown, which we're in the early stage of. Why don't you know this?
MrOwnPut 4y ago
Another user said it best in the M$ thread. They're coordinating to lower salaries. Most employees will be hired back into the industry, probably swapped between these companies... at a lower salary. That... and culling, getting ready for the economic shitstorm.
- kderbyma 4y ago
  Lawsuits will be needed. the amount of collusion is truly illegal
  - thunkshift1 4y ago
    What do you have to sue for? Nothing atm. Only long term solution is a steady job + freelancing or side hustle
algog 4y ago
Beginning of 2022 or 2023?
htkibar 4y ago
Increased shareholder pressure. Chance to reset salaries within the company without losing out much on the market (doing layoffs in a similar time frame with others will pretty much leave you with options when you all start hiring again) Showing the whip to their remaining work force, as the power dynamic becoming even slightly more equal is unthinkable.
smoyer 4y ago
The most famous tech companies are constantly trying to outdo each other so when one is forced to do cuts, the others try to have a bigger cut. Midsize companies see this and realize that, while they can't play at the same scale, they can look cool too by following suit. Small companies look at this and realize it's an opportunity to finally get the staff that wasn't available before. And while the process is disruptive to lives and productivity, those small companies grow just a bit more competitive with their bigger brethren.
__derek__ 4y ago
Mimetic desire
TradingPlaces 4y ago
Because they added too many people. From end of 2019 they added Google (through September 2022): 68k Microsoft (through June 2022): 77k Amazon (through December 2021): 310k Meta (through September 2022): 52k Salesforce (through January 2022): 39k Most of the layoffs in these places is coming in HR and sales.
sys_64738 4y ago
The Street expects companies to cut costs in a bear economy and there is no greater saving to this than a RIF.
yucky 4y ago
So it's some grand conspiracy that companies are doing mass layoffs as their stock prices drop, but not when they do mass hiring as their stock prices artificially inflated? What happened to basic logic here?
graymatters 4y ago
But the number of H1B visas is NOT decreasing and the big tech companies that own the advertising platforms continue to whine about talent shortage. It’s a farce to reduce their costs by flooding the market with cheap labor.
chrismcb 4y ago
One is because they can. Personally I think many are using the economic downturn to fix over zealous hiring during and after COVID.
jbirer 4y ago
I suspect that it's an attempt to spread panic and get the "good employees" to accept a salary / benefits reduction in fear of going jobless. VCs demand more profit so a new way to reduce salaries must be found.
v3ss0n 4y ago
senior management gonna hire ChatGpt?
v3ss0n 4y ago
senior management being replaced by ChatGpt?
throwawa2342u32 4y ago
the white collar labor market is being shorted in real time
TigerTeamX 4y ago
A lot of different explanations here and they're probably all true as it is a combination: 1. Interests going up means less economic activity (at least how our current financial system is setup) 2. Everyone else does it, so you can trim down without stigma. 3. We are hitting an economic recession and the companies remember how bad times can go so they want to prepare. A more cynical thing is, as we are hitting this economic troubles ahead, things will most likely get cheaper. If Google have more money they can buy more of their competitors and ensure to bigger marketshare for cheaper.
- lamontcg 4y ago
  Interest rates going up means higher interest rates on debt service. As commercial loans hit their maturity dates and those interest rates hike up the entities which have been barely skating by on low short term rates will be pushed into liquidation. Those failures will spill over into risk of contagion in the financial markets as we find out who has been underwriting bad loans this time. And yes "crisis brings opportunity" and its likely going to be a very good buying time for those with cash on hand near the bottom. Those who have burned up their cash will not get a seat when the music stops.
  - TigerTeamX 4y ago
    Exactly my thoughts but said a lot more eloquently.
MuffinFlavored 4y ago
I think the better question is if you look at pre-2020 mass hiring spree headcounts how many more layoffs approximately need to be done until we’re normalized? 1 mass 10k layoff at 5-7% of workforce: not terrible 1 mass 10k layoff every quarter for the next 4 quarters: probable or not?
ggwp99 4y ago
This layoff in my opinion will create one of the biggest startup revolutions (similar to 2008) in history. This number is just huge and we will see the effect in 2024 IMO.
abirch 4y ago
I think the Salesforce number is the number from 2023 and excludes the 1000 from 2022 https://www.cnbc.com/2022/11/08/salesforce-cut-hundreds-of-employees-on-monday.html https://www.cnbc.com/2022/11/08/salesforce-cut-hundreds-of-e...

79 points by indus 4y ago

Google: 12000 Microsoft: 10000 Amazon: 18000 Meta: 11000 Twitter: 4000 Salesforce: 8000 200,000+ laid off in tech since the beginning of 2022.

hgsgm 4y ago

"Conpanies overhired during the pandemic." Where did all those people come from? Was there huge unemployment before?

snbitne 4y ago

Growth stage startup CEO here. At the end of last year our board meeting was a pitch from outside investor director to founders recommending a 50-75% layoff, despite several years of runway. The capital class is despondent that the stock market has melted, and the solution is to pull the ladder up and nurse wounds. In my opinion, companies are all responding with their own values informed version of what their financial stakeholders have been urging them increasingly to do.

moneywoes 4y ago
How big is your startup
indus 4y ago
So if you have to do, would it be 10% a few quarters or go for the full blow in a single shot
- codazoda 4y ago
  I’m not op, but I say do it all in one shot. I worked at Iomega in the 90’s and it felt like they had a layoff every quarter, which was toxic. The company was on fire, however, so maybe that’s different.
  - indus 4y ago
    iomega reminds me of those lovely diskettes
lostcolony 4y ago
Exactly. The financials aren't actually telling these companies to lay people off; the shareholders are. The macroeconomic climate is very different than the microeconomic climate; the microeconomic climate for most of these companies is "slow expansion", not "contract". In fact, many of them are still hiring even as they're laying people off because of that. But the shareholders are very much concerned, and so this is much more of a response to that.
- candiodari 4y ago
  Not really. The shareholders are being forced by the FED. None of the investments they made make sense at this interest rate level, so they want out. However ... The theory behind the moves of the FED is that they want inflation down. How? By firing people (people will only pay prices they can afford). The FED can't fire much people. So if shareholders want the FED to back down ... they need enough people fired. And that doesn't really work because we are fundamentally tight on the labor market for 4+ years now. Nobody fired is going to have trouble finding a new job. Maybe not the same, but they won't exactly be unemployed (although given the wages offered unemployment might be the preferable option). It's not shareholders, it's Jerome Powell. It's also just not going to last. The Federal government is looking at two options, in ~1.5 years. Cutting spending by 4% (and one year after that, >10%) with LESS income. Or convincing "independent" Jerome Powell to lower interest rates back to 0%. So we'll have, let's call it 2 years of this. The FED will be as effective as an inflatable dart board, but they only have ONE tool and goddammit, they will make it work!
drunkenmagician 4y ago
Another anecdote, a company i used to work for (200+) employees, in high growth mode but not yet profitable got told the same by their investors. “Save cash, layoff staff, raising is going to be more difficult” So they terminated 40% of their staff despite the growth basically because investors are very pessimistic.
- bsg75 4y ago
  Was that company able to continue growing post layoffs?
jacknews 4y ago
Yes this is another instance of the financial tail wagging the economic dog. Our economy has become completely over-financialized, and in this situation the fed have decided that inflation needs to be contained, and are inducing a recession to do it. They can do this quite reliably because of the level of financialization, companies are in debt to the hilt even if they don't need to be (it's because shareholder value), etc.
ggwp99 4y ago
Bull markets and a strong financial situation usually pushes companies to overhire or over estimate the number of employees they do actually need. I have seen clients I worked with and we have advised 75% layoffs multiple of times. This is especially true in the dev teams.

ac2u 4y ago

It's rather memetic in a way, everyone thinks everyone else knows best when it happens. Then the mimeses becomes a self fulfilling prophecy and private liquidity starts to tighten up even further than the tightening because of interest rates. I'm guessing the decision makers here are sometimes aware of the irrationality of the snowball effect, but bet on it being irrational not to copy it before the market reality hits them and they have to make even deeper cuts in future.

ghaff 4y ago
Betting you're not the smartest guy in the room is not routinely wrong--especially if the action of all other other "smartest guys in the room" affects the outcome.
jhatemyjob 4y ago
Yep. It's the Rene Girard Peter Thiel mimetic desire. The first outside investor in Facebook. Stanford professor. Critic of the critics of Western Culture. Jesus Christ is the one true role model. These layoffs are the apocalypse. The laid off employees are now Gods. Zero to One by Blake Masters. National Conservatism. One cut on this I always have is, these things are always over-determined.

groffee 4y ago

[flagged]

fl0ps 4y ago
I think more than "dead weight", Musk was trying to get rid of what he deemed a culture problem. Using the dead weight as an excuse he did multiple rounds of purges, with "useful" (productive+culture matching) engineers also getting purged in the process as an acceptible loss, only perhaps seeing that as a bit too far later on (recall there were engineers being asked to come back on an individual basis). The purging wasn't a surprise from my perspective of , in the past, seeing CEOs agressively weed out employees who only slightly disagree with them, let alone the "actively plotting"(?) Twitter employees who, you may recall, Musk was pouring over internal conversation logs to find, it seems. And to expound on the main topic, I think what we're seeing is a confluence of the above: using downturn, etc. as an excuse to shed perhaps individuals or groups that are in opposition to the culture the board thinks is useful, drowned out by a total also comprised of some amount of acceptible loss in employees the company wouldn't mind keeping. Watch as some individuals from all of the above are individually asked to rejoin with a pay bump. My two cents.
thdc 4y ago
I definitely agree on big tech company bloat, but do not agree with those percentages (or at least on average). I also don't think he properly sorted engineers between slackers and non-slackers due to reasons like the speed at which cutting occurred and the rehiring into firing to fix whatever random issues. Industry wide layoffs are a nice cover to cut inefficient workers, although I don't know how well they can be sussed out in large companies. My own company with only a few hundred employees cut some people and I can say that, of the ones I was familiar with, they were mostly slackers or low performers.
- indus 4y ago
  > My own company with only a few hundred employees cut some people and I can say that, of the ones I was familiar with, they were mostly slackers or low performers. Is that true across the board?

amalgamated_inc 4y ago

Cause recession? Money is suddenly tight?

indus 4y ago
But google, Microsoft, etc have $200bn on their balance sheets!
- NegativeLatency 4y ago
  Rule of Acquisition #10: Greed is eternal. [1] The shareholders always want growth and profits. [1]: https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition https://memory-alpha.fandom.com/wiki/Rules_of_Acquisition
- amalgamated_inc 4y ago
  And? You think they want to lose that?

ssgodderidge 4y ago

Many tech companies made the same assumptions in the last two years (e.g. online transactions/ecommerce will stay at COVID levels). Those assumptions turned out to not be true, so they are course correcting to match the current economic climate.

indus 4y ago
Microsoft added 70,000 new employees in the last 3 years. How much of this is course correction vs sheer cluelessness?
- ssgodderidge 4y ago
  Yeah Microsoft is an interesting case, since they aren’t as impacted by ecommerce spending. As far as I know, they haven’t launched a completely new service/offering that would require that many people. That might be a case of them cutting the costs to prop up the stock price so they can make acquisitions? Time will tell
  - ytdytvhxgydvhh 4y ago
    Seems like “cloud” and all that goes with that. Their Azure cloud and related services, government/defense cloud business, Office in the cloud, etc.
redtriumph 4y ago
There are couple of factors at play here. a. With cheap money, placing and chasing risky bets was risk almost-free. Although, this has been the case for past 4years, 2021/2022 was where it eclipsed new highs. b. Wag-wars: In 2020, 2021, 2022, in SV, I have seen people getting insane offers. Sometimes accompanied by multiple expansion of stock (TSLA, NVDA). This eventually meant that if you don't pay top-dollar, someone else will and you will have to keep hiring belt burning. [presume that prospective employer finds you worthy enough] I also find hard to believe that decision makers believed that pace of growth/expansion in 2020, 2021 was sustainable. There were signs that it isn't and cheap money kept flowing. Some would also criticize the stimulus checks but in my view, it helped folks who needed it the most but it also went on to chase risky or unproductive things like NFT etc. /end-of-rant

tekla 4y ago

Who is everyone? Why do companies that are known for being overly bloated mean anything for the rest of the economy?

jonny_eh 4y ago
Google, Microsoft, Amazon, Meta, Twitter, Salesforce For large US software companies, it's basically everyone.
- indus 4y ago
  copy the celebrity.

dboreham 4y ago

Because they are all owned by the same rich people with the same world view.

monero-xmr 4y ago
Yes like CALPERS and Norway sovereign wealth fund that have to provide retirements to millions of average people. And index funds that tens of millions invest for their 401k. A falling stock market isn’t good for the average person
- ulfw 4y ago
  Google is a growth, not a value stock. They don't pay dividends. You don't grow with fewer people who can put out fewer products.
ytdytvhxgydvhh 4y ago
Well they’re certainly run by lots of the same people. Article is a few years old but I’m sure the story remains the same: https://www.visualcapitalist.com/50-largest-u-s-companies-board-members/ https://www.visualcapitalist.com/50-largest-u-s-companies-bo...

andrewstuart 4y ago

When everyone is doing it, companies see it as an opportunity to trim down the fat they have accumulated during the good times. There's no stigma for them doing it if everyone else is. If they lay people off in good times, then that is a serious indication of trouble at the company. If they lay people off in bad times then that is an indication of wisdom and prudence. I've seen it in multiple recessions.

myko 4y ago
> I've seen it in multiple recessions. What's interesting here is that, in the face of all the fears about a recession, no recession actually seems to be happening
- andrewstuart 4y ago
  yep. It's just a bunch of lemmings.
  - indus 4y ago
    Or companies that did not do performance related reduction are finding now is the time
- causality0 4y ago
  The more removed the financial and tech world is from the rest of the economy the more they cloud reality by distorting GDP figures. We may not be in a recession but everyone I know has more difficulty paying for things and a more negative economic outlook than they ever did in '09.
- pid-1 4y ago
  While some economic indicators are bad already, the real issue is core inflation not giving up. The Fed has already signaled it will keep hiking rates until the economy slows down and inflation is controlled. As an entrepreneur/CFO, would you bet against the Fed?
  - 4y ago

awacs 4y ago

Love him or hate him (I'm more the latter at this point) Elon showed you could trim 70% of the workforce from Twitter and it's still up and running. So with that logic, that being on the extreme side, trimming some smaller % is a no brainer to the boards of most companies now.

dvngnt_ 4y ago
twitter is an order of magnitude less than FAANG. at the end of the day, they're mostly a text-based feed. also aren't they not paying rent
- sangupta 4y ago
  They have been sued for not paying rent, for going back on severance package, just sold office equipment to make for the losses.
sangupta 4y ago
Twitter still runs due to fear in others of losing their job in these tough times. If the market was as great as before, no Twitter employee would agree to work 10+ hours or weekends, or sleep in office.
birdyrooster 4y ago
Counting eggs before they hatch are we?
ElijahLynn 4y ago
How much of the remaining workforce at Twitter is held hostage by a work visa? (I don't know, I am asking the hive though)
- MrOwnPut 4y ago
  So companies that offer work visas are kidnappers? The people that want to come over and accept the job offer are aiding in their own kidnapping? I don't get it, you don't support work visas or you think Twitter is abusing them, or...? I have so many questions about your statement.

joshe 4y ago

It's interest rates. Capital is becoming more expensive. If you are a good CFO, you say: "Hey remember how we want 5 years of cash, well i just looked at selling bonds and getting cash now is expensive." For tech companies the biggest expense is salaries, so saving cash means firing people. For the smaller companies they aren't getting investments as easily or at all. They will also need to save cash. The next few years are going to be different. Interest rates: https://fred.stlouisfed.org/graph/?g=Z12V https://fred.stlouisfed.org/graph/?g=Z12V.

indus 4y ago
But majority of high tech raised equity capital and not debt.
- morgango 4y ago
  True, but valuations are based on future earnings potential. If the market looks down, then there is the idea that there is less revenue coming in the future, and the company has less capability to sustain a workforce. It really is interest rates.
  - indus 4y ago
    fair point.
- metaphor 4y ago
  I wonder how many of those tech companies that you're alluding to have evergreen provisions baked into their capital structure, and what that means from a cost of equity perspective at the prevailing risk-free rate.
- refurb 4y ago
  Maybe smaller companies, but large ones carry a lot of debt because it’s cheap. Google has $28B in debt.
  - ulfw 4y ago

300bps 4y ago

Imagine you have a money printing machine. And the more people you have to turn the cranks on that money printing machine, the more money you'll make. Then imagine the Federal Reserve comes along and says, "How would you like a bunch of almost free money?" The logical thing to do would be to get a bunch of that almost free money and then hire people to crank the heck out of that money printing machine. So that's what they did. And then the Federal Reserve says, "Party's Over!" and stops giving out the almost-free money. You lay off the bottom performing x% of your entire workforce. Almost Free Money Party Starts https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-the-biggest-companies-bonds-raising-questions-over-why.html https://www.cnbc.com/2020/06/29/the-fed-is-buying-some-of-th... Almost Free Money Party Ends https://www.bloomberg.com/news/articles/2022-03-09/fed-s-biggest-ever-bond-buying-binge-is-drawing-to-a-close https://www.bloomberg.com/news/articles/2022-03-09/fed-s-big...

this_steve_j 4y ago

A) To optimize the company’s stock price, earnings, and/or C-suite bonuses. B) To liberate the workers from wage slavery. C) It feels good to do this in your soul. D) There’s no such thing as bad publicity. I’m leaning towards A?

dhuk_2018 4y ago
All of the above, plus: E) We f*cked up and hired too many so we'll blame it on the economy.

Zaheer 4y ago

There's comfort in the crowd. There's little to no reputation hit for a company to do layoffs now.

pid-1 4y ago

At this moment central banks worldwide are increasing interest rates to slow down economies and fight inflation caused by money printing during COVID (different countries might be in different parts of their tightening cycles tho). As a company, if you believe there will be less economic activity in the future, you must cut costs to ensure survival. Of course one could bet central banks will fail, but historically this sort of bet has held nothing but pain and suffering.

throwawaystack 4y ago

Some companies are really in financial trouble, but the others are stack ranking in their shadows: https://en.wikipedia.org/wiki/Vitality_curve https://en.wikipedia.org/wiki/Vitality_curve The theory by a certain Jack Welch being that the bottom 10% are "non-producers". Since they don't produce, they can simply be fired without affecting the output of the company. And since some startups had legit trouble and laid off people because they really couldn't survive otherwise (but then typically laid off >10% or had multiple rounds of layoffs), the others can now do it without taking a reputation hit (again, in theory). VCs seem to be pushing this heavily. Personally, not a fan. Yes, it's legally not as easy to fire someone for low performance like it is to fire 10% because "the economy!!1", but it's also not impossible. No need to use scorched earth tactics...

birdyrooster 4y ago

Let’s see 5.5 million workers in tech and 200k get laid off that makes less than 4% of jobs lost. Considering securities took a way bigger haircut, I don’t see what the concern is about.

Our_Benefactors 4y ago
Losing your job is a binary event, you have the job or you don’t. It’s not much of a comfort to someone who has been laid off that stocks are doing worse.

human 4y ago

The size of these layoffs are minimal in comparison with the hires they have done during the pandemic. I see this as normalization more than anything else.

indus 4y ago
Hoarding of talent!
birdymcbird 4y ago
english not me main language but it not mean me stupid. i was at two big tech company for over past 10 year. this a massive GRIFT..saw armies of new hires. Now people on HN and LinkedIn say, "So hard to recruit this level talent. Will need to re-hire them." Oh really? Let me tell you. i saw: - original founders, execs, and they proteges leave, to be replaced by "Professional Managers" - professional managers have no vision or direction. - professional manager cares nothing for customer, product, or value. - professional manager driven by prestige of being at big tech and ego - only goal is to increase HC, fight territory battles, and grow empire. - main incentive was PROMOTION. - how to achieve promotion? Managers: empire building. IC: invent complexity, build solution to problem that not real. launch it, get promoted, go to next team. great, now we need to spend even more $$ to support some piece of shit services because critical stuff taking dependency on it. manager, Sr. Mmnager collude across organization to show big impact and get unnecessary thing entranced deep in tech stack. But hey, now we write document in promotion portfolio so sr. manager can become director.. sr. engineer become staff level.. - 20% of company provide value that pays the other 80% salary. - Many people work on stupid thing that have no meaning for customer. let me pick a random big tech co: you tell me what huge improvement in amazon shopping, how alexa better, how kindle better, how fire (junk) any better? What big innovation even from aws in past 7 year? oh let me tell you – lets steal some open source project, give no credit or contribution back to main project, and sell as managed service and eat our customer in data transport cost alone. this grift went on long time enable by cheap borrow policy. and in silicon valley, it at level of Ponzi scheme. I invest in company x,y,z, and c. i force c to use shitty SaaS products from x,y,z or some other company my friend invest in. it literally same dollar moving from x to y to z to c. entitled grifters.

MrYellowP 4y ago

Because of the global economic meltdown, which we're in the early stage of. Why don't you know this?

MrOwnPut 4y ago

Another user said it best in the M$ thread. They're coordinating to lower salaries. Most employees will be hired back into the industry, probably swapped between these companies... at a lower salary. That... and culling, getting ready for the economic shitstorm.

kderbyma 4y ago
Lawsuits will be needed. the amount of collusion is truly illegal
- thunkshift1 4y ago
  What do you have to sue for? Nothing atm. Only long term solution is a steady job + freelancing or side hustle

algog 4y ago

Beginning of 2022 or 2023?

htkibar 4y ago

Increased shareholder pressure. Chance to reset salaries within the company without losing out much on the market (doing layoffs in a similar time frame with others will pretty much leave you with options when you all start hiring again) Showing the whip to their remaining work force, as the power dynamic becoming even slightly more equal is unthinkable.

smoyer 4y ago

The most famous tech companies are constantly trying to outdo each other so when one is forced to do cuts, the others try to have a bigger cut. Midsize companies see this and realize that, while they can't play at the same scale, they can look cool too by following suit. Small companies look at this and realize it's an opportunity to finally get the staff that wasn't available before. And while the process is disruptive to lives and productivity, those small companies grow just a bit more competitive with their bigger brethren.

__derek__ 4y ago

Mimetic desire

TradingPlaces 4y ago

Because they added too many people. From end of 2019 they added Google (through September 2022): 68k Microsoft (through June 2022): 77k Amazon (through December 2021): 310k Meta (through September 2022): 52k Salesforce (through January 2022): 39k Most of the layoffs in these places is coming in HR and sales.

sys_64738 4y ago

The Street expects companies to cut costs in a bear economy and there is no greater saving to this than a RIF.

yucky 4y ago

So it's some grand conspiracy that companies are doing mass layoffs as their stock prices drop, but not when they do mass hiring as their stock prices artificially inflated? What happened to basic logic here?

graymatters 4y ago

But the number of H1B visas is NOT decreasing and the big tech companies that own the advertising platforms continue to whine about talent shortage. It’s a farce to reduce their costs by flooding the market with cheap labor.

chrismcb 4y ago

One is because they can. Personally I think many are using the economic downturn to fix over zealous hiring during and after COVID.

jbirer 4y ago

I suspect that it's an attempt to spread panic and get the "good employees" to accept a salary / benefits reduction in fear of going jobless. VCs demand more profit so a new way to reduce salaries must be found.

v3ss0n 4y ago

senior management gonna hire ChatGpt?

v3ss0n 4y ago

senior management being replaced by ChatGpt?

throwawa2342u32 4y ago

the white collar labor market is being shorted in real time

TigerTeamX 4y ago

A lot of different explanations here and they're probably all true as it is a combination: 1. Interests going up means less economic activity (at least how our current financial system is setup) 2. Everyone else does it, so you can trim down without stigma. 3. We are hitting an economic recession and the companies remember how bad times can go so they want to prepare. A more cynical thing is, as we are hitting this economic troubles ahead, things will most likely get cheaper. If Google have more money they can buy more of their competitors and ensure to bigger marketshare for cheaper.

lamontcg 4y ago
Interest rates going up means higher interest rates on debt service. As commercial loans hit their maturity dates and those interest rates hike up the entities which have been barely skating by on low short term rates will be pushed into liquidation. Those failures will spill over into risk of contagion in the financial markets as we find out who has been underwriting bad loans this time. And yes "crisis brings opportunity" and its likely going to be a very good buying time for those with cash on hand near the bottom. Those who have burned up their cash will not get a seat when the music stops.
- TigerTeamX 4y ago
  Exactly my thoughts but said a lot more eloquently.

MuffinFlavored 4y ago

I think the better question is if you look at pre-2020 mass hiring spree headcounts how many more layoffs approximately need to be done until we’re normalized? 1 mass 10k layoff at 5-7% of workforce: not terrible 1 mass 10k layoff every quarter for the next 4 quarters: probable or not?

ggwp99 4y ago

This layoff in my opinion will create one of the biggest startup revolutions (similar to 2008) in history. This number is just huge and we will see the effect in 2024 IMO.

abirch 4y ago

I think the Salesforce number is the number from 2023 and excludes the 1000 from 2022 https://www.cnbc.com/2022/11/08/salesforce-cut-hundreds-of-employees-on-monday.html https://www.cnbc.com/2022/11/08/salesforce-cut-hundreds-of-e...