18 ms·

The current layoffs were orchestrated by hedge funds

169 points by davidgerard 4y ago

unmole 4y ago
This is a thoroughly vacuous take.
hunglee2 4y ago
indeed they are, but it should also be noted that the same investors were behind the hiring spree in 2021-2022 - FAANG massively expanded hiring (as it most of tech tbf) as we all raced for a bigger slice of that juicy globalised, digitised, remote first future we all thought was gonna be happening. Different world now, as we are in hostile de-globalisation, meaning smaller markets, increased costs, less trade - and therefore less investor return
- twelve40 4y ago
  yeah, like, where was that same guy a year ago? cheering on as they went on a hiring spree?
  - vt100 4y ago
    Hedge funds aren't married to the stocks they own. They'll buy and sell or even short depending on what the next short-term price move will be. As long as the price moves and they predicted it (possibly because they caused it), it's all good for them.
  - hunglee2 4y ago
    everyone was cheering, it was boom times. The reality is that Putin's war reset the table, and set the entire world down a different path. These lay offs - as tough as they are for the individuals concerned - are a part of that pivot
wodenokoto 4y ago
> Folks are treating the recent tech layoffs as something spontaneous. Letter is dated 20th of January. Not exactly a long time ago. If Alphabets firing were to be because of this letter, I'd call that crazy spontaneous.
- twelve40 4y ago
  if you read the letter, it says the layoff was the right first step and calls for more cuts up to 50k people total
CincinnatiMan 4y ago
That post sounds very confident in its take, extrapolating from one letter, but I’m curious how much sway this “hedge fund” really has. A Reddit comment said they have minimal investment in Alphabet and so what they ask for doesn’t really matter.
- vt100 4y ago
  Even if he did hold more than a trivial amount of Alphabet, there's nothing to stop him from taking profits and selling out as soon as the price temporarily moved up (if it even would)
dsq 4y ago
Every time the stock markets goes down I know there will be layoffs a while later. I think its psychological, a multi billionaire who has gone down from say, ten billion to seven billion doesn't say to himself “I still have seven”. He feels he has lost three bullion and he wants it back.
- sph 4y ago
  > Every time the stock markets goes down I know there will be layoffs a while later. I mean, isn't that obvious? Our global economy isn't just global in a geographical sense. "Economy" goes down, everybody pays. The average person is out of a job, the landlord has to increase rents, the billionaire is ejected from the Three Commas Club. It's traumatic to everyone.
  - grugagag 4y ago
    Why does the landlord HAVE to increase rents?
    - throwaway85950 4y ago
      Because the average landlord is paying mortgage with interest rates which just went way up.
      - gruez 4y ago
        That's close, but not quite right. Rentals don't exist within a vacuum. They compete against the option of buying outright. If buying outright suddenly got more expensive (because mortgage rates went up), then rentals suddenly has less competition and therefore they can raise prices.
        cjbgkagh 4y ago
        There are other options, like moving in with parents, group housing, van life, or even going homeless. So long as people can afford it they’ll usually avoid those options but once they’re tapped out they are no longer able to. There is a limit for how much rent can be raised even if buying becomes more difficult to finance. I don’t think we’ve ever hit that limit in the US in recent history. Landlords not being able to raise rent to cover mortgage payments would be a new thing they probably haven’t planned on.
nunez 4y ago
Is TCI Fund even a hedge fund?
- noisy_boy 4y ago
  > The Children’s Investment Fund Management (UK) LLP (TCI) is a London‐based hedge fund management firm founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund.... In January 2022, TCI was named by the Guardian as the world's top-performing hedge fund. https://en.wikipedia.org/wiki/The_Children%27s_Investment_Fund_Management https://en.wikipedia.org/wiki/The_Children%27s_Investment_Fu...
- sudosysgen 4y ago
  It's an old-school hedge fund basically driven by a few people deciding which stocks to buy and how to put pressure to make then more valuable. These generally tend to fail spectacularly, and aren't particularly good at hedging.
pydry 4y ago
It surprises me how many people are so sanguine at how synchronized the layoffs were. "Oh, they all over hired and now they all have to cut back" Why all? The fact that they are marching in lockstep is suspicious. It points to collusion to lower wages, something that has happened before.
- yucky 4y ago
  There is one economy, likely heading into recession. There is one war that was supposed to be over quick, but is now looking as though it will spread and go in an unknown direction. The fact that many companies see this and are preparing for harder times does not require collusion. It simply requires common sense.
  - pydry 4y ago
    If, perhaps: * The tech layoffs were more spread out over the last year of the war instead of heavily concentrated. * They were more aligned with the general economy rather than each other * They were weren't concentrated in very profitable companies that have consolidated their position in the wider economy. * They hadn't been caught colluding to lower wages before. I'd be less suspicious. None of these are the case though.
    - theonlybutlet 4y ago
      It's likely opportunistic. Sentiment is important for stakeholders. When others in the market are doing it and improving ratios, shareholders are going to ask questions if you aren't doing the same. It's also the ideal time as your employees that stay do not blame the company but rather the market and you can maintain a positive culture, the staff you want to keep are also less likely to jump ship as they presume others are not hiring in this market. Big organisations scenario plan and it's likely they had an emergency retrenchment plan up their sleeves in case they needed it, which can explain how they were able to execute so fast. It also explains why there are some strange decisions taken.
  - noisy_boy 4y ago
noisy_boy 4y ago
Relevant thread yesterday: https://news.ycombinator.com/item?id=34476909 https://news.ycombinator.com/item?id=34476909
Havoc 4y ago
I would have thought that only the big passive funds like black rock would have enough sway to do a sector wide move like this. And perhaps the really big hedge funds like citadel Some random hedge fund nobody has heard about? Doubtful
- gruez 4y ago
  But if they're passive, are are they supposed to influence behavior? They can't dump the stock, because they're obligated to hold that stock to track a particular index.
  - Havoc 4y ago
    Sorta. They have power by virtue of aggregated votes. The vast majority of people don’t submit their preference for proxy so the passives end up with these huge voting blocks. They either end up rolling with whatever majority they did get on the patchy submissions they got or they make a judgement call So yeah on paper they are just conduits but they are not as powerless as they would have you believe. Anyone sitting on billions has some power even if they don’t actively move it
- kasey_junk 4y ago
  Citadels hedge fund has ~50B AUM, TCI has ~35B. They are in the same class of size. My personal opinion is that the idea that hedge funds started the tech layoffs is bunk, boards get activist letters all the time and they are mostly noise. But TCI has the power to influence board decisions if any hedge fund does.
  - sudosysgen 4y ago
    Unlike Citadel, TCI has a history of forcing the board's hand using litigation. Hardly noise. Also, TCI's AUM is now only 28B. They've had a harsh last few months. Another thing is that Citadel is far more leveraged, and it has a discretionary AUM of around 285B, while TCI seems to have little to no leverage. So Citadel controls around 10 times more capital than TCI
rmeertens 4y ago
You might think "who is Christopher Hohn, and what is the TCI Fund", but this guy has a history of making money in weird ways. Just before the banking chrisis, in 2007, he managed to force one of the biggest banks of the the Netherlands (ABN Amro) to either be taken over or to be split up. He has a history of suing the boards of companies if he thinks they can be worth more to investors in some way or another. You can read more about what happened with the ABN Amro bank back in the days in the super thick book "The Pray" (https://www.amazon.com/Perfect-Prey-Wrong-Banking-Industry/dp/1849162689 https://www.amazon.com/Perfect-Prey-Wrong-Banking-Industry/d...). I read it last summer and it is surprisingly interesting for a book which follows the board of a big bank...
- unmole 4y ago
  > He has a history of suing the boards of companies if he thinks they can be worth more to investors in some way or another. An activist investor. I'm not sure why that is particularly noteworthy.
  - altacc 4y ago
    Activist investors are individuals with significant power who seek to enrich themselves by making life much worse for large numbers of people, without recourse, election or accountability. They are one of the significant negatives of capitalism that would benefit the rest of us if they were greatly reduced or removed.
    - unmole 4y ago
      Activist investors pressure management to improve. Most activists are funds and are accountable to their investors. The investors and ultimate beneficiaries are institions such as the Public School Employees’ Retirement System.
      - altacc 4y ago
        Activist investors pressure management to deliver more profits to investors. That's a narrow definition of "improvement". Doesn't matter who they represent, robbing Peter to pay Paul doesn't make you right.
credit_guy 4y ago
This November '22 letter [1] from TCI has even more details. Their argument sounds quite compelling, to be honest: As detailed in Alphabet's Schedule 14A filing, median compensation totaled $295,884 in 2021. An analysis by S&P Global illustrates that median compensation at Alphabet was 67% higher than at Microsoft and 153% higher than the 20 largest listed technology companies in the US. There is no justification for this enormous disparity. We acknowledge that Alphabet employs some of the most talented and brightest computer scientists and engineers, but these represent only a fraction of the employee base. Many employees are performing general sales, marketing and administrative jobs, who should be compensated in-line with other technology companies. [1] https://www.tcifund.com/files/corporateengageement/alphabet/15th%20November%202022.pdf https://www.tcifund.com/files/corporateengageement/alphabet/...
- Overtonwindow 4y ago
  If I'm reading this correctly, it seems they are saying Google has overpaid its employees, particularly those whose market competitiveness does not match their salary. I find it hard to feel sad about anyone working in Silicon Valley, not after two decades of Silicon Valley decadence.
  - deleted 4y ago
    [deleted]
- sudosysgen 4y ago
  Of course there is a justification for the disparity. Google has a higher standard for the talent of it's engineers than MS and definitely over the rest of the industry. This gives Google a large competitive advantage as they can respond better to threats and because they can deny some top talent to competitors. You can make a good argument that Google isn't making good use of this talent, which is a result of management problems with Google we all know about. And as it is, Google is as profitable as it ever was, so there is no urgency in firing people, either. The obvious good long term play is to fix the organizational issues to be able to make better use of existing talent. Chris Hohn knows this, of course. He just wants Google to buy back more stocks so he can sell his Google position. His interest isn't the long term well-being of the company, his interest is a predictable short term peak in valuation. Chaining short term profits is how these funds get outsized returns and it's how they can make any argument to their investors that they are at all better than a leveraged long position in the general market.
eightysixfour 4y ago
> Over the last five years, Alphabet more than doubled its headcount Uh, over the last five year Alphabet also went from $28b ($33b inflation adjusted) in revenue to $69b in revenue. Seems reasonable to me.
- adventured 4y ago
  > Uh, over the last five year Alphabet also went from $28b ($33b inflation adjusted) in revenue to $69b in revenue. Seems reasonable to me. Alphabet's revenue is $282 billion as of the last four quarters. $69b was just the September quarter. For anyone interested in their historical revenue growth, here you go: 2021: $257.64b | 2020: $182.53b | 2019: $161.86b | 2018: $136.8b | 2017: $109.65b | 2016: $89.46b | 2015: $74.54b | 2014: $65.674b | 2013: $55.51b | 2012: $46.04b | 2011: $37.91b | 2010: $29.32b | 2009: $23.65b | 2008: $21.8b | 2007: $16.59b | 2006: $10.6b | 2005: $6.14b | 2004: $3.19b | 2003: $1.47b | 2002: $439m | 2001: $86m | 2000: $19m
  - jassyr 4y ago
    2000: $19M 2021: $257B I just can't over how big this company is. $19M would be considered a successful company by most measures, but a quarter Trillion hits different.
  - MuffinFlavored 4y ago
    can you post this adjusted for inflation?
  - eightysixfour 4y ago
    Thanks for adding the clarification, I intended to say quarterly revenue but missed it.
LatteLazy 4y ago
Google isn't a growth stock. So you cannot spend like a growth stock. You need to be efficient. Hardly rocket science...
- theGnuMe 4y ago
  AI is about to literally rewrite everything...
  - LatteLazy 4y ago
    When you're a growth company, you innovate around issues. When you're a mega corp (like any FAANG) you buy someone who already did that. When AI becomes an issue, Google can just buy it out. The same applies to 1001 other imminent, world changing, breakthroughs (remember last year when we were all about to get quantum computers? Or everything was going onto the blockchain?). When you're small you are nimble, when you're big you just sort of steam-roller along. As far as I can tell, this is just the corporate lifecycle. Congrats to Google on reaching middle age.
bedhead 4y ago
Folks, if it wasn't shareholders accelerating this process, it was gonna be the inevitable economic realities of mismanagement and losses. Shareholders are doing not only other shareholders but also these companies a favor by telling them to fix their problems before they get really bad. The cold reality is that the people getting laid off never should've been hired in the first place, the amount of waste at these companies is unfathomable...all the result of the bubble of dysfunctional managerial cultures (ie "Not making money is super awesome, yay!") and way too much money floating around. A dose of reality is much deserved and was gonna happen eventually anyway.
- jopsen 4y ago
  The amount of waste may be unfathomable, but is layoffs really going to correct it? Instead a culture shift to be more frugal might work better. The criticism is that most of these companies will go right back to hiring tomorrow.
  - voisin 4y ago
    How do you accomplish that culture shift? It’s easily said that cultures can just be shifted, but layoffs are the way to send the message and get that rolling.
    - AnIdiotOnTheNet 4y ago
      You start by not doubling down on the status quo.
  - ccn0p 4y ago
    Why not both? Companies are large complex systems that require pruning over time just like any other complex system. Sure you can move a few people around or ask them to spend a little less, but ultimately it would become nearly impossible to respond to market conditions, or even just your own business changes/learnings, without laying people off.
    - 4y ago
cavisne 4y ago
Blaming hedge funds is a misdirection. Google and Facebook have dual classes of shares and all shareholder governance is controlled by the founders.
justapassenger 4y ago
It’s like saying that toddler pointing out at the plane and telling it to land caused airplane to land. Having your costs grow faster than revenue, in uncertain economic situation and responding to it with cutting costs (including layoffs) isn’t brand new invention.
- polygamous_bat 4y ago
  Unless the toddler has a long history of suing the board of the airline company and making their life generally difficult for not doing what they are told, I don't think they are equivalent.
  - justapassenger 4y ago
    Yes, toddlers can be annoying. But that doesn’t make them masterminds of the operation.
esotericimpl 4y ago
[dead]
anonreeeeplor 4y ago
[flagged]
- Fauntleroy 4y ago
  Well, it would help if hedge funds weren't organizations built by the wealthy to continue keeping them wealthy
- whamlastxmas 4y ago
  I’ve seen a hundred takes on the reasons by a hundred qualified people. You don’t provide any sources and even if you did, sources are wrong all the time. Because of this I think it’s unfair to call anyone dumb here. Misinformed, sure, but misinformation is everywhere these days
incomingpain 4y ago
>This hedge fund demanded that the big tech companies lay people off because they were being paid too much. https://finance.yahoo.com/quote/GOOG/holders?p=GOOG https://finance.yahoo.com/quote/GOOG/holders?p=GOOG TCI doesn't even register here... why would Alphabet care at all about some random hedge fund? How would their argument impact all the other tech companies doing layoffs? How about a better explanation? Did you know >80% of the layoffs are targeting Asian immigrants? Mostly, but not just Chinese nationals. https://pandaily.com/chinese-tech-community-in-silicon-valley-faces-dark-cloud-of-layoffs/ https://pandaily.com/chinese-tech-community-in-silicon-valle... Not exactly a huge prediction: https://qz.com/1029860/more-silicon-valley-tech-workers-were-born-outside-the-us-than-in-it https://qz.com/1029860/more-silicon-valley-tech-workers-were... Why is the US government banning Tiktok? Why is the USA in a war with china? Why are mostly innocent chinese immigrants getting laid off? Well it's better than internment camps?
- EVa5I7bHFq9mnYK 4y ago
  >> Did you know >80% of the layoffs are targeting Asian immigrants? Aren't 80% of Google engineers Asian immigrants?
deleted 4y ago
[deleted]
joshka 4y ago
Serious question. How would acting on this advice be different to collusion between employers to depress salaries? (Given an assumption that TCI also owns shares in other tech companies).

169 points by davidgerard 4y ago

This is a thoroughly vacuous take.

indeed they are, but it should also be noted that the same investors were behind the hiring spree in 2021-2022 - FAANG massively expanded hiring (as it most of tech tbf) as we all raced for a bigger slice of that juicy globalised, digitised, remote first future we all thought was gonna be happening. Different world now, as we are in hostile de-globalisation, meaning smaller markets, increased costs, less trade - and therefore less investor return

twelve40 4y ago
yeah, like, where was that same guy a year ago? cheering on as they went on a hiring spree?
- vt100 4y ago
  Hedge funds aren't married to the stocks they own. They'll buy and sell or even short depending on what the next short-term price move will be. As long as the price moves and they predicted it (possibly because they caused it), it's all good for them.
- hunglee2 4y ago
  everyone was cheering, it was boom times. The reality is that Putin's war reset the table, and set the entire world down a different path. These lay offs - as tough as they are for the individuals concerned - are a part of that pivot

wodenokoto 4y ago

> Folks are treating the recent tech layoffs as something spontaneous. Letter is dated 20th of January. Not exactly a long time ago. If Alphabets firing were to be because of this letter, I'd call that crazy spontaneous.

twelve40 4y ago
if you read the letter, it says the layoff was the right first step and calls for more cuts up to 50k people total

CincinnatiMan 4y ago

That post sounds very confident in its take, extrapolating from one letter, but I’m curious how much sway this “hedge fund” really has. A Reddit comment said they have minimal investment in Alphabet and so what they ask for doesn’t really matter.

vt100 4y ago
Even if he did hold more than a trivial amount of Alphabet, there's nothing to stop him from taking profits and selling out as soon as the price temporarily moved up (if it even would)

dsq 4y ago

Every time the stock markets goes down I know there will be layoffs a while later. I think its psychological, a multi billionaire who has gone down from say, ten billion to seven billion doesn't say to himself “I still have seven”. He feels he has lost three bullion and he wants it back.

sph 4y ago
> Every time the stock markets goes down I know there will be layoffs a while later. I mean, isn't that obvious? Our global economy isn't just global in a geographical sense. "Economy" goes down, everybody pays. The average person is out of a job, the landlord has to increase rents, the billionaire is ejected from the Three Commas Club. It's traumatic to everyone.
- grugagag 4y ago
  Why does the landlord HAVE to increase rents?
  - throwaway85950 4y ago
    Because the average landlord is paying mortgage with interest rates which just went way up.
    - gruez 4y ago
      That's close, but not quite right. Rentals don't exist within a vacuum. They compete against the option of buying outright. If buying outright suddenly got more expensive (because mortgage rates went up), then rentals suddenly has less competition and therefore they can raise prices.
      - cjbgkagh 4y ago
        There are other options, like moving in with parents, group housing, van life, or even going homeless. So long as people can afford it they’ll usually avoid those options but once they’re tapped out they are no longer able to. There is a limit for how much rent can be raised even if buying becomes more difficult to finance. I don’t think we’ve ever hit that limit in the US in recent history. Landlords not being able to raise rent to cover mortgage payments would be a new thing they probably haven’t planned on.

nunez 4y ago

Is TCI Fund even a hedge fund?

noisy_boy 4y ago
> The Children’s Investment Fund Management (UK) LLP (TCI) is a London‐based hedge fund management firm founded by Chris Hohn in 2003 which manages The Children’s Investment Master Fund.... In January 2022, TCI was named by the Guardian as the world's top-performing hedge fund. https://en.wikipedia.org/wiki/The_Children%27s_Investment_Fund_Management https://en.wikipedia.org/wiki/The_Children%27s_Investment_Fu...
sudosysgen 4y ago
It's an old-school hedge fund basically driven by a few people deciding which stocks to buy and how to put pressure to make then more valuable. These generally tend to fail spectacularly, and aren't particularly good at hedging.

pydry 4y ago

It surprises me how many people are so sanguine at how synchronized the layoffs were. "Oh, they all over hired and now they all have to cut back" Why all? The fact that they are marching in lockstep is suspicious. It points to collusion to lower wages, something that has happened before.

yucky 4y ago
There is one economy, likely heading into recession. There is one war that was supposed to be over quick, but is now looking as though it will spread and go in an unknown direction. The fact that many companies see this and are preparing for harder times does not require collusion. It simply requires common sense.
- pydry 4y ago
  If, perhaps: * The tech layoffs were more spread out over the last year of the war instead of heavily concentrated. * They were more aligned with the general economy rather than each other * They were weren't concentrated in very profitable companies that have consolidated their position in the wider economy. * They hadn't been caught colluding to lower wages before. I'd be less suspicious. None of these are the case though.
  - theonlybutlet 4y ago
    It's likely opportunistic. Sentiment is important for stakeholders. When others in the market are doing it and improving ratios, shareholders are going to ask questions if you aren't doing the same. It's also the ideal time as your employees that stay do not blame the company but rather the market and you can maintain a positive culture, the staff you want to keep are also less likely to jump ship as they presume others are not hiring in this market. Big organisations scenario plan and it's likely they had an emergency retrenchment plan up their sleeves in case they needed it, which can explain how they were able to execute so fast. It also explains why there are some strange decisions taken.
- noisy_boy 4y ago

noisy_boy 4y ago

Relevant thread yesterday: https://news.ycombinator.com/item?id=34476909 https://news.ycombinator.com/item?id=34476909

Havoc 4y ago

I would have thought that only the big passive funds like black rock would have enough sway to do a sector wide move like this. And perhaps the really big hedge funds like citadel Some random hedge fund nobody has heard about? Doubtful

gruez 4y ago
But if they're passive, are are they supposed to influence behavior? They can't dump the stock, because they're obligated to hold that stock to track a particular index.
- Havoc 4y ago
  Sorta. They have power by virtue of aggregated votes. The vast majority of people don’t submit their preference for proxy so the passives end up with these huge voting blocks. They either end up rolling with whatever majority they did get on the patchy submissions they got or they make a judgement call So yeah on paper they are just conduits but they are not as powerless as they would have you believe. Anyone sitting on billions has some power even if they don’t actively move it
kasey_junk 4y ago
Citadels hedge fund has ~50B AUM, TCI has ~35B. They are in the same class of size. My personal opinion is that the idea that hedge funds started the tech layoffs is bunk, boards get activist letters all the time and they are mostly noise. But TCI has the power to influence board decisions if any hedge fund does.
- sudosysgen 4y ago
  Unlike Citadel, TCI has a history of forcing the board's hand using litigation. Hardly noise. Also, TCI's AUM is now only 28B. They've had a harsh last few months. Another thing is that Citadel is far more leveraged, and it has a discretionary AUM of around 285B, while TCI seems to have little to no leverage. So Citadel controls around 10 times more capital than TCI

rmeertens 4y ago

You might think "who is Christopher Hohn, and what is the TCI Fund", but this guy has a history of making money in weird ways. Just before the banking chrisis, in 2007, he managed to force one of the biggest banks of the the Netherlands (ABN Amro) to either be taken over or to be split up. He has a history of suing the boards of companies if he thinks they can be worth more to investors in some way or another. You can read more about what happened with the ABN Amro bank back in the days in the super thick book "The Pray" (https://www.amazon.com/Perfect-Prey-Wrong-Banking-Industry/dp/1849162689 https://www.amazon.com/Perfect-Prey-Wrong-Banking-Industry/d...). I read it last summer and it is surprisingly interesting for a book which follows the board of a big bank...

unmole 4y ago
> He has a history of suing the boards of companies if he thinks they can be worth more to investors in some way or another. An activist investor. I'm not sure why that is particularly noteworthy.
- altacc 4y ago
  Activist investors are individuals with significant power who seek to enrich themselves by making life much worse for large numbers of people, without recourse, election or accountability. They are one of the significant negatives of capitalism that would benefit the rest of us if they were greatly reduced or removed.
  - unmole 4y ago
    Activist investors pressure management to improve. Most activists are funds and are accountable to their investors. The investors and ultimate beneficiaries are institions such as the Public School Employees’ Retirement System.
    - altacc 4y ago
      Activist investors pressure management to deliver more profits to investors. That's a narrow definition of "improvement". Doesn't matter who they represent, robbing Peter to pay Paul doesn't make you right.

credit_guy 4y ago

This November '22 letter [1] from TCI has even more details. Their argument sounds quite compelling, to be honest: As detailed in Alphabet's Schedule 14A filing, median compensation totaled $295,884 in 2021. An analysis by S&P Global illustrates that median compensation at Alphabet was 67% higher than at Microsoft and 153% higher than the 20 largest listed technology companies in the US. There is no justification for this enormous disparity. We acknowledge that Alphabet employs some of the most talented and brightest computer scientists and engineers, but these represent only a fraction of the employee base. Many employees are performing general sales, marketing and administrative jobs, who should be compensated in-line with other technology companies. [1] https://www.tcifund.com/files/corporateengageement/alphabet/15th%20November%202022.pdf https://www.tcifund.com/files/corporateengageement/alphabet/...

Overtonwindow 4y ago
If I'm reading this correctly, it seems they are saying Google has overpaid its employees, particularly those whose market competitiveness does not match their salary. I find it hard to feel sad about anyone working in Silicon Valley, not after two decades of Silicon Valley decadence.
- deleted 4y ago
  [deleted]
sudosysgen 4y ago
Of course there is a justification for the disparity. Google has a higher standard for the talent of it's engineers than MS and definitely over the rest of the industry. This gives Google a large competitive advantage as they can respond better to threats and because they can deny some top talent to competitors. You can make a good argument that Google isn't making good use of this talent, which is a result of management problems with Google we all know about. And as it is, Google is as profitable as it ever was, so there is no urgency in firing people, either. The obvious good long term play is to fix the organizational issues to be able to make better use of existing talent. Chris Hohn knows this, of course. He just wants Google to buy back more stocks so he can sell his Google position. His interest isn't the long term well-being of the company, his interest is a predictable short term peak in valuation. Chaining short term profits is how these funds get outsized returns and it's how they can make any argument to their investors that they are at all better than a leveraged long position in the general market.

eightysixfour 4y ago

> Over the last five years, Alphabet more than doubled its headcount Uh, over the last five year Alphabet also went from $28b ($33b inflation adjusted) in revenue to $69b in revenue. Seems reasonable to me.

adventured 4y ago
> Uh, over the last five year Alphabet also went from $28b ($33b inflation adjusted) in revenue to $69b in revenue. Seems reasonable to me. Alphabet's revenue is $282 billion as of the last four quarters. $69b was just the September quarter. For anyone interested in their historical revenue growth, here you go: 2021: $257.64b | 2020: $182.53b | 2019: $161.86b | 2018: $136.8b | 2017: $109.65b | 2016: $89.46b | 2015: $74.54b | 2014: $65.674b | 2013: $55.51b | 2012: $46.04b | 2011: $37.91b | 2010: $29.32b | 2009: $23.65b | 2008: $21.8b | 2007: $16.59b | 2006: $10.6b | 2005: $6.14b | 2004: $3.19b | 2003: $1.47b | 2002: $439m | 2001: $86m | 2000: $19m
- jassyr 4y ago
  2000: $19M 2021: $257B I just can't over how big this company is. $19M would be considered a successful company by most measures, but a quarter Trillion hits different.
- MuffinFlavored 4y ago
  can you post this adjusted for inflation?
- eightysixfour 4y ago
  Thanks for adding the clarification, I intended to say quarterly revenue but missed it.

LatteLazy 4y ago

Google isn't a growth stock. So you cannot spend like a growth stock. You need to be efficient. Hardly rocket science...

theGnuMe 4y ago
AI is about to literally rewrite everything...
- LatteLazy 4y ago
  When you're a growth company, you innovate around issues. When you're a mega corp (like any FAANG) you buy someone who already did that. When AI becomes an issue, Google can just buy it out. The same applies to 1001 other imminent, world changing, breakthroughs (remember last year when we were all about to get quantum computers? Or everything was going onto the blockchain?). When you're small you are nimble, when you're big you just sort of steam-roller along. As far as I can tell, this is just the corporate lifecycle. Congrats to Google on reaching middle age.

bedhead 4y ago

Folks, if it wasn't shareholders accelerating this process, it was gonna be the inevitable economic realities of mismanagement and losses. Shareholders are doing not only other shareholders but also these companies a favor by telling them to fix their problems before they get really bad. The cold reality is that the people getting laid off never should've been hired in the first place, the amount of waste at these companies is unfathomable...all the result of the bubble of dysfunctional managerial cultures (ie "Not making money is super awesome, yay!") and way too much money floating around. A dose of reality is much deserved and was gonna happen eventually anyway.

jopsen 4y ago
The amount of waste may be unfathomable, but is layoffs really going to correct it? Instead a culture shift to be more frugal might work better. The criticism is that most of these companies will go right back to hiring tomorrow.
- voisin 4y ago
  How do you accomplish that culture shift? It’s easily said that cultures can just be shifted, but layoffs are the way to send the message and get that rolling.
  - AnIdiotOnTheNet 4y ago
    You start by not doubling down on the status quo.
- ccn0p 4y ago
  Why not both? Companies are large complex systems that require pruning over time just like any other complex system. Sure you can move a few people around or ask them to spend a little less, but ultimately it would become nearly impossible to respond to market conditions, or even just your own business changes/learnings, without laying people off.
  - 4y ago

cavisne 4y ago

Blaming hedge funds is a misdirection. Google and Facebook have dual classes of shares and all shareholder governance is controlled by the founders.

justapassenger 4y ago

It’s like saying that toddler pointing out at the plane and telling it to land caused airplane to land. Having your costs grow faster than revenue, in uncertain economic situation and responding to it with cutting costs (including layoffs) isn’t brand new invention.

polygamous_bat 4y ago
Unless the toddler has a long history of suing the board of the airline company and making their life generally difficult for not doing what they are told, I don't think they are equivalent.
- justapassenger 4y ago
  Yes, toddlers can be annoying. But that doesn’t make them masterminds of the operation.

esotericimpl 4y ago

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anonreeeeplor 4y ago

[flagged]

Fauntleroy 4y ago
Well, it would help if hedge funds weren't organizations built by the wealthy to continue keeping them wealthy
whamlastxmas 4y ago
I’ve seen a hundred takes on the reasons by a hundred qualified people. You don’t provide any sources and even if you did, sources are wrong all the time. Because of this I think it’s unfair to call anyone dumb here. Misinformed, sure, but misinformation is everywhere these days

incomingpain 4y ago

>This hedge fund demanded that the big tech companies lay people off because they were being paid too much. https://finance.yahoo.com/quote/GOOG/holders?p=GOOG https://finance.yahoo.com/quote/GOOG/holders?p=GOOG TCI doesn't even register here... why would Alphabet care at all about some random hedge fund? How would their argument impact all the other tech companies doing layoffs? How about a better explanation? Did you know >80% of the layoffs are targeting Asian immigrants? Mostly, but not just Chinese nationals. https://pandaily.com/chinese-tech-community-in-silicon-valley-faces-dark-cloud-of-layoffs/ https://pandaily.com/chinese-tech-community-in-silicon-valle... Not exactly a huge prediction: https://qz.com/1029860/more-silicon-valley-tech-workers-were-born-outside-the-us-than-in-it https://qz.com/1029860/more-silicon-valley-tech-workers-were... Why is the US government banning Tiktok? Why is the USA in a war with china? Why are mostly innocent chinese immigrants getting laid off? Well it's better than internment camps?

EVa5I7bHFq9mnYK 4y ago
>> Did you know >80% of the layoffs are targeting Asian immigrants? Aren't 80% of Google engineers Asian immigrants?

deleted 4y ago

[deleted]

joshka 4y ago

Serious question. How would acting on this advice be different to collusion between employers to depress salaries? (Given an assumption that TCI also owns shares in other tech companies).