9 ms·

I really get the feeling that many companies are just blindly doing whatever other companies do. One starts large layoffs, and suddenly everybody is doing it. A

by mcv 4y ago

I really get the feeling that many companies are just blindly doing whatever other companies do. One starts large layoffs, and suddenly everybody is doing it. At other times, when one goes on a hiring spree, they all go. One tries to reduce salaries, they all do. One pays enormous bonuses, and they all do. It's like CEOs aren't really thinking for themselves, just copying whatever the market does.

BaseballPhysics 4y ago
Absolutely. The 4Q22 numbers are out. US GDP increased nearly 3%. The job market remains super tight for many classes of workers. There's simply no evidence of a broader recession. Are there headwinds? Sure! Household debt is up, consumer spending is down as a consequence--but this is relative to a previous year when we were still feeling the effects of the COVID stimulus--and interest rates are up which will drive down debt-funded investment. But, companies are cutting because 1) some got bloated during the COVID hiring surge and now need to cut back, 2) some always wanted to cut headcount but they didn't want to do it without air cover, and 3) some just follow the leader.
mtnygard 4y ago
I can’t comment on whether this is blind following or not. But it’s a real fact that the market will punish you less for layoffs when others are doing it too. It’s like how the best time to reveal a scandal is after someone else has revealed a bigger scandal.
- WhatsName 4y ago
  That's wrong. If everyone is doing something irrational that is a big inefficiency in the market and whoever does the opposite eg. hiring will get better outcomes as opposed doing it when all do.
  - vasco 4y ago
    Yeah but in general if you're trying to minimise disaster instead of maximising being the winner, you opt for doing things that avoid revealing you as the being the only wrong one. Being wrong in a crowd is fine. Being the only one wrong is a big deal, "what were they thinking, they knew better than everyone else?!". If everyone does the same mistake, it's just shrugged off as "honest mistake, everyone was doing it." Plus either way you're cutting expenses and maybe getting rid of some under performers.
    - hbrn 4y ago
      Being wrong alone means you had a flawed thought process. Being wrong in a crowd means you have no thought process at all. All the big companies doing layoffs are in the stagnation phase. "minimise disaster instead of maximising being the winner" is exactly that.
  - pjc50 4y ago
    Market values aren't driven by outcomes, those are in the future; they're driven by beliefs about outcomes.
- slantedview 4y ago
  It's not just that the market will punish you less. Companies are hoping that the market will actually reward them for layoffs. Unfortunately, these moves can and will be damaging to long term prospects at some companies. But long term thinking isn't something markets generally care about. It's up to companies to push back against market pressure to maintain long term progress, but it's a tough balancing act to do that while avoiding being punished by investors.
  - criley2 4y ago
    Honestly, I don't think these layoffs (broadly speaking) are dangerous long term. In fact, and this may be unpopular, I think they will be greatly beneficial long term. Consider: - These companies grew at greatly-expanded rates over the past few years. Google notoriously added 20% per year for 7 years straight, doubling their staff from 2017-2023. After layoffs, Google will still be right near ALL-TIME-HIGHS in staffing. Same with most of these firms. Small layoffs following the fastest growth period in their history isn't some catastrophe for their business - Most roles being reduced at most companies are not product-creating but administrative. Lots of HR, hiring, marketing, middle managers, getting axed. If companies predict less hiring or lower ad budgets... then reducing those divisions makes sense. If you doubled your hiring team while you were hiring 20% per year, but now you expect to stay steady and only replace attrition ... what would you do with all that hiring staff? The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem.
    - danwee 4y ago
      > The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem. So, the real damage was the people who ordered to over hire (usually top-level executives). If any, they should be lay off to actually mitigate long-term damage.
    - jrumbut 4y ago
      I think this is all basically true, but what is interesting to me is that these incumbent tech companies were greedy when everyone was greedy and in so doing they created an opening for someone who is greedy when others are fearful to come and eat their cake.
jmathai 4y ago
This post agrees that it’s essentially copycat behavior. https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/ https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
- myth_drannon 4y ago
  Viral contagion. Code RED. Put all the CEOs in lockdown. Disable internet access.
TremendousJudge 4y ago
Yeah, this CEO technology is interesting but ultimately going nowhere, it's only remixing existing decisions and not having any original innovations. Plus, as CEO decisions get fed back into the models, it's going to get even worse, like a photocopy of a photocopy.
bombcar 4y ago
The CEO answers to the board, and the board is usually of the type to at least ask the question "Everyone is jumping off a bridge, why aren't we?" And sadly the easiest answer is "we ARE jumping off the bridge, see?"
- ajkjk 4y ago
  Is it inconceivable that layoffs are the right choice for a business?
  - mcv 4y ago
    It's not inconceivable, but it's weird that everybody is doing it at the same time even when the company is perfectly healthy.
    - aliqot 4y ago
      patagonia see, patagonia do. I blame the boards.
    - enriquec 4y ago
      Is it weird at all given the market, inflation, and debt?
    - bennyelv 4y ago
      It could be because they're all planning for market conditions predicted by the same forecasts. Also if your strategy is to hire as many engineers as you can possibly afford so that you can keep up with or beat the competition, then if the competition starts downsizing it means you can do the same, and maybe you see an economic contraction as a bigger risk. Conjecture of course, but plausible I think.
    - lotsofpulp 4y ago
      Do not play to where the ball is, play to where the ball will (might) be.
  - hallarempt 4y ago
tetrep 4y ago
I think it's less blindly doing and more seeing your attractive friends dieting and becoming more self-conscious about your own weight. I don't want to give reactionary CEOs too much credit, but I dont think it's fair to describe it as blind.
scyzoryk_xyz 4y ago
I would venture that word of mouth is spreading among the elites who are on the boards of all these companies - a storm is coming so everything needs to get tied down - so the CEO’s as captains of the ships are following the advice. Whether the storm actually hits, what gets wrecked, what doesn’t. That is a completely separate issue to these people.
- claytonjy 4y ago
  What is the storm they're worried about, if not mass layoffs concentrated within an industry? Inflation is almost down to normal, employment is still high and will remain so as long as the construction sector avoids layoffs due to the coming cash infusion from federal spending bills. Seems to me the only storm coming is the one created by these same execs, though I understand each of them is incentivized to follow the crowd.
  - scyzoryk_xyz 4y ago
    I’m not one of those elites. So I would not know what the real forecast is. I’m just stating a hypothesis on the perspective of, say such CEO’s. To them it’s not pack behavior based on hearsay.
  - spaceman_2020 4y ago
    > Inflation is almost down to normal Huh? Normal inflation in the US is 2% - that's the Fed's target. Last month, inflation was 6.5%. Being 250% above target is not "normal".
    - claytonjy 4y ago
      That's an unweighted trailing average where the bulk of the increase came from earlier months. Instantaneous inflation in December 2022 annualizes to 2%.
      - spaceman_2020 4y ago
        "The index for all items less food and energy rose 0.3 percent in December, following a 0.2-percent increase in November. The shelter index continued to increase, rising 0.8 percent over the month." Food inflation increased over November. Shelter index increased at an annualized rate of nearly 10%. Sometimes, you have to dig deeper than the headline. Source: https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf
equalsione 4y ago
From November, 2022 "Activist investor TCI Fund Management is calling on Google's parent Alphabet to pursue aggressive cost cutting on the back of a hiring spree during the pandemic, claiming the business could be more efficiently run." - https://www.theregister.com/2022/11/16/tci_fund_google_cut_costs_waymo_compensation/ https://www.theregister.com/2022/11/16/tci_fund_google_cut_c... I would assume Google was no the only one to receive such a letter, nor were TCI Fund Management the only investment fund sending out such letters
thor123rt 4y ago
Market forces are behind it. Luckily it is very simple to fix. Just bring the interest rates to zero
- malfist 4y ago
  But then the poors get paid too much and we can't have that. Interest rates rise because the 1% want a larger part of the pie.
jay-barronville 4y ago
To quote HN user @badhombres from the original thread: > Not surprising. Every company is going to take the opportunity to trim costs when it doesn't affect their PR as much as it would any other time. I'm pretty sure this is really what's going on here. These CEO's are killing all of these jobs while they can (seemingly without any repercussions). I was talking with my dad about these layoffs and one of the interesting things we talked about is how different the loyalty formula is nowadays. My dad grew up during a time when folks happily worked for, and were loyal to, one company sometimes for decades. Nowadays, sadly, it's not smart to trust any of these companies for more than a few years. These layoffs prove that. Whether it's companies laying off folks who've been at the company for 20 years (see: Google) or companies laying off new hires, any loyalty seems to be one-sided.
- eweise 4y ago
  Yep. Vest and move on.
- netfortius 4y ago
  A lot of this is sourced in the 2021-2022 job seekers market, when everybody and his brother could get a job. There were hiring sprees not because there was an obvious need for a/that particular level of skills and experience, but because there were a lot of companies thinking "if we don't get this guy/gal now, someone else, maybe even a competitor, may". I've witnessed it especially in the blockchain/web3/cryptoBS areas. I know of a company which had a target of min 25 hires/week, and kept that pace for three-four months. When I tried to insert a cost analysis process in their Infra organization, part of an operational model meant to get them to a more mature level than forever startup, I was told that "money was no object", so I should focus my advice in other areas. Of course I left them, soon thereafter, and now I see them in the news, alongside all others, letting people go. Oh, well...
BizarreByte 4y ago
> I really get the feeling that many companies are just blindly doing whatever other companies do. A social contagion if you will. It doesn’t seem rational at all at this point. Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.
- bluefirebrand 4y ago
  Lets give some good companies credit, they value their employees more. They would hold out for at least a dollar before killing you.
- EMM_386 4y ago
  > It doesn’t seem rational at all at this point. Layoffs are rational and are common in downward cycles. I get the feeling that a lot of the shock and awe here is due to age and a lot of people starting their careers during an extended boom period, particularly in tech which was getting absurd. The last few years in particular were far from rational. Now the Fed is raising interest rates, housing is cooling, cheap money is no more ... and as a result you get a downward business cycle resulting in layoffs. I don't see anything new here that hasn't happened over and over again ... but I've been in the industry for decades with multiple companies and sectors. These companies aren't charities, they aren't meant to retain jobs just because they are profitable, and they definetly aren't your friend. Many of them are publically traded, which at the end of the day are beholden to one and one thing only, the shareholders.
  - taeric 4y ago
    I'm curious why you are calling them rational? They will lead to reduced morale. And will lead to more attrition afterwards. And probably won't lead to any sort of increased income. So, what makes them any more rational than going straight to bankruptcy?
  - snozolli 4y ago
    Layoffs are rational and are common in downward cycles. What downward cycle? All I'm hearing is panic and hand-wringing about the economy, but I don't see what the problem is. We had a "recession" in Q1 and Q2 of 2022. GDP dropped from 20,006 to a low of 19,895, then it went right back to its previous growth path. Inflation is high, but it's dropping. It maxed out at 9.1% in June of 2022. Now it's down to 6.5% and expected to drop in the upcoming update (Feb 14). We weathered a global pandemic, subsequent supply chain issues, and a war on the other side of the world that disrupted the energy economy. We're doing great, but people are fretting like it's 2008.
ravenstine 4y ago
Could be blind, but could also be that laying off when everyone else is laying off protects a company from being the odd one out and distributes the blame.
deeg 4y ago
Is there any chance that we're dealing with a form of confirmation bias? In an economy as large as the US's there will always be companies laying off workers. Current unemployment is low so I'm not sure if there's any major, new trend other than reporting it on HN.
- rtkwe 4y ago
  I don't think so there's been a string of tech layoff's right here in a row totaling 40,000+ just from the ones at Amazon, Microsoft, Meta, and Google. These are companies that don't generally shed huge numbers of employees all at once.
rtkwe 4y ago
There's a lot of performance in hiring and firing, even outside a supposed 'recession' CEO's are rewarded for 'cutting the fat' through firing via stock bumps because at the very least it's going to temporarily cut some costs in a very surface level analysis. Couple that with the constant recession talk that never seems to materialize and boards and shareholders are looking at companies thinking they need to trim down some for the recession that's seemingly been just around the bend for a whole year now.
ketchupdebugger 4y ago
I get why public companies like google, meta or even confluent is doing layoffs when the stock price falls 50-75%, the employees are unhappy and the shareholders are unhappy. Layoffs is a way to tell shareholders that the leadership is doing something to curb the costs and try to increase profit. But there are also pre-ipo private companies laying people off, that part I don't quite understand, since they have no shareholder pressure.
- Infinitesimus 4y ago
  Those companies don't have public shareholder pressure but they do have investor pressure. The market downtown and cost of raising money changes investment calculus
danwee 4y ago
Indeed. - FAANG started to offer free drinks in the office? Every startup begins to do the same - Agile coaches are hired at FAANG? Every damn startup needs their own Agile coaches as well - "Think customer first" was coined by... and then every startup made it its core value - Staff, Principal, VP engineer levels are introduced at FAANG... you know the drill - Microservices... Every tech company out there dies to be Google or Facebook or Apple. They will copy every single thing from them.
dangerboysteve 4y ago
I don't think this is the case at all. Companies are rethinking the future a bit and forecasting a downward trend more than initially thought. This means preserving cash and reducing burn. This has a trickle-down effect with other tech companies, as they will cut back on saas subscriptions.
siggen 4y ago
> I really get the feeling that many companies are just blindly doing whatever other companies do. They’d all have had to collude in December for this to happen. Laying off people in large companies takes a sufficient amount of planning, and isn’t accomplished in days. They need to hire external consultants to help, even.
lbotos 4y ago
I'm constantly amazed at how people fail to see that in B2B if your clients are downsizing, well, you should expect less money coming your way. Yes, there is a "follow on effect" as one should expect. If Confluent was building out new product features and "investing in growth" hoping to sell those features to expand customer uptake, should they just blindly keep going? Sure, there are probably some 20 something CEOs right now running startups that are like OMG I guess we should lay off too, but it's such a naive take. CEOs can't just will the market to bear whatever their vision is, they have to "make something people want". And if there are less people to sell to, well, you're gonna make less money...
jterrys 4y ago
...I'm surprised this shit wasn't apparent to HN when everyone literally uses the same leetcode interview process despite the fact that it makes no fucking sense.
AlwaysRock 4y ago
Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too? It seems much more likely to me that many companies over hired and/or have 2-4% of their staff they were planning on letting go anyway and now that so many other companies are doing layoffs it allowed them to cut other low performers without being the only company in the news. We talk all the time about large company bloat. This just seems like normal annual pruning + a little extra from over hiring during covid + a chance to cut xyz projects that havent worked out or someone doesnt like or whatever without catching as much bad pr as they normally would.
- claytonjy 4y ago
  > sending off emails to someone saying hey we need to do layoffs too? This is absolutely happening, and if not from the C Suite then from the board and other investors. Yes, virtually all companies have plenty of bloat that can be trimmed, but trimming it a year ago would be a negative signal to investors. Now it's a positive signal, so layoffs are happening. They will continue to happen until companies are punished for it rather than being rewarded for it.
- snotrockets 4y ago
  > Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too? that would be illegal.
PragmaticPulp 4y ago
I don't know about Confluent, but I can tell you that sales (and therefore revenue) have seen significant drops in most industries. This is wholly expected in a rising rate environment. When sales drop, revenue also falls. When revenue falls, models get re-evaluated and numbers get re-calculated. Reducing expenses becomes a priority. When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. So I don't think this is blind trend-following, I think this is a rational response to a rapidly changing market. A company can be profitable and it can still make sense to lay off certain employees. In-house recruiter positions are some of the first to be cut right now because companies are pulling back on hiring. If you have a hiring freeze and very low hiring forecasts for the next year, why would you continue to employee a lot of recruiters? Market conditions change. Companies adapt to the change. When you have people in positions that are seeing less demand for the coming year, it doesn't make sense to keep them on the payroll and have them sit idle. It's rational to readjust the workforce. Nobody likes getting laid off, but no position is truly permanent.
- philipwhiuk 4y ago
  On a macro-economic level though this is a negative doom loop.
- ramesh31 4y ago
  >When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. This has been a long time coming. Some of the numbers I have been seeing for these contracts are truly mindblowing for the value delivered. The days of gouging enterprise on these random non-critical SaaS integrations is probably over. The one that still really gets me is Slack. Even medium sized companies are paying millions per year for a glorified IRC client. It just doesn't add up.
  - claytonjy 4y ago
    Slack is an interesting one. Suppose you're a company spending a lot on it, too much. What are your options? Replacing slack with a comparable like Teams or Gchat is at least a step back in user-friendliness that will be grumbled about by engineers and others, and if you use a lot of integrations there might be significant switching costs. Moving away from instant messaging as a communication pattern sounds great to me, but good luck convincing folks to change company culture that significantly.
giaour 4y ago
I'm sure there is a "monkey see, monkey do" peer pressure aspect to the current wave of layoffs, but don't forget that hedge funds and activist investors have been actively lobbying for these job cuts: https://www.marketwatch.com/story/hedge-fund-billionaire-google-owner-alphabet-needs-to-cut-more-than-12-000-overpaid-jobs-11674484497 https://www.marketwatch.com/story/hedge-fund-billionaire-goo...
reaperducer 4y ago
I really get the feeling that many companies are just blindly doing whatever other companies do. You are correct. And for some reason they call themselves "leadership."
iKevinShah 4y ago
Possible, but it could also be that they see / foresee / know that upcoming quarters are just down (in terms of revenue or whatever their respective KPIs are). The reality however,could be somewhere in the middle as always, IMO.
fullshark 4y ago
It's not just here, but "we need to have a blockchain division / we need to have an AI powered product / We need to have a cloud services strategy / We need to etc" All these companies have no vision, and are run by people only interested in saving their jobs and/or preparing for their next one.
frontman1988 4y ago
The dominoes started falling with Elon laying off half the company without much problems. Copycat managers thought if Elon can lay off half the company, they can surely get away with 10% layoffs.
- cvhashim04 4y ago
  You’re giving him too much credit. Also there we large cuts at tech companies like Twilio, Coinbase and Snapchat etc in the summer.
frabjoused 4y ago
I would say a large part of it is that layoffs are terrible for PR, so many companies are jumping on the layoff bandwagon while it's "acceptable". Being one of 40 large companies doing mass layoffs is much better than being an isolated incident on the news curve at some other point.
debarshri 4y ago
People where hiring because their valuations were large. All the organisations now had to grow into that valuation. Expansion and contraction of head count is a normal thing in an orgs life-cycle that reflects the economy. CEO's job is to think about the stakeholders first and then employees. There are not many levers to play with to adjust the net revenue, growth and valuations. Growth have become stagnant or even lower, revenues are impacted and valuations are down. Only lever that is in control is head count others are dictated by external forces. PS. No one employee was complaining when these companies were in a hiring spree and could see it was not sustainable. Startup had a hard time competing with the salaries offered by these orgs.
chadash 4y ago
I disagree that CEOs aren't thinking for themselves. In many cases, they are thinking perfectly rationally. Companies don't live in a vacuum. If everyone else is raising salaries, it's to attract and retail talent. If you don't do the same, you will lose current employees and not attract new ones. If everyone else is doing layoffs, then it's a good time to do layoffs that perhaps you were considering anyway. Say you've been wanting to close down an unproductive division and let go of low-performing employees in other divisions for a few years now. You sure as hell weren't going to do that in early 2022, when you'd risk a lot of other employees jumping ship at the first signs of cracks in the house. But in 2023, you can do layoffs and get away with it.
pokstad 4y ago
A financial stampede
actionablefiber 4y ago
There exists a contingent of people who insist that whenever a big company does something it is because they have gotten all the smartest people to do all the research and run all the numbers and they have determined with absolute confidence that it is the most profitable thing to do. I think about those people sometimes.
JakeAl 4y ago
This is silly. If a business is sustainable there's no reason for layoffs. Simple math. If they rely on investment or loans and only have money to get down the runway but not takeoff without coming back to investors or banks, they aren't sustainable and will fail when the economy fails. The economy is currently failing big time. Expect a major culling of companies that rely on investment and growth because there's no speculative investment in growth for the foreseeable future.
RC_ITR 4y ago
>I really get the feeling that many companies are just blindly doing whatever other companies do. Alternatively, we are in a unique window where cutting underperforming projects whole-cloth can be done with almost no signaling risk (had this happened in 2021, people would assume the worst), so CEO's are cutting everything they don't like now, assuming they won't be able to do it as easily later.
bagacrap 4y ago
You likely have to go on a hiring spree and pay large bonuses to stay competitive when others are doing the same. Without the benefit of hindsight it was not obvious that the free money era would end so abruptly. Even the Fed did not expect to raise rates until 2023. It has been about the length of one finance professional's career since the Fed was last forced to hike into a growth slowdown, so few have experienced this environment. Apple stands out as the contrarian that didn't panic hire. They will probably come out ahead at the end of all this as their reward.
Simon_O_Rourke 4y ago
> I really get the feeling that many companies are just blindly doing whatever other companies do. You're not on your own with that idea. It's the blind leading the blind.
nxmnxm99 4y ago
To be honest, most executives wish they could fire 10% of their staff. Once you get to even 30-40 people, 10% of your staff are almost inevitably dead weight. Unfortunately you can't mass cull without causing morale issues. This period is just giving us a chance to shed those people without cultural ramifications.
ccn0p 4y ago
0) Macroeconomics is macro. Everything is connected. 1) we just came out of a very long period of "easy money" that inflated valuations and gave founders/boards a sense that money would always be there 2) when your customers are laying off / reducing spend, your revenues usually go down 3) the future is very uncertain Take all of these things together and boards are asking teams to be as prudent as possible which unfortunately means, bringing costs down.
- mathverse 4y ago
  Bunch of horse…excrements. You are trying to find logical explanation where there is none. My company laid off hundreds of people during corona while knowing the business will recover and receiving incredible amount of money. 5 months after the lay offs they bought bunch of companies and restarted hiring in different locations. These companies dont know more than you and I. They are acting in panic and in a bad faith towards their employees.
misterbwong 4y ago
Reading these comments reminds me of how old (and jaded?) I am. We saw the same thing in previous recession-type environments (2000, 2008, etc). Layoffs suck-they hurt everyone involved (except maybe for the shareholders?) and are a big big deal for each individual that it affects. That being said, it doesn't take a genius to see that they are very useful from a company perspective. Given how difficult it is to fire underperformers, layoffs allow them to cut a huge swathe of underperformers (and, realistically, people they don't like) without opening themselves up to endless litigation. Yes, the justification can be as simple as "the economy looks like there is an economic downturn and see? the other companies in our industry are doing it too." Smart companies treat it as a tool and use it sparingly, dumb companies over use it and kneecap themselves for the future.
- deleted 4y ago
  [deleted]
e40 4y ago
If you think about it, CEOs are just people that are influenced by events like the rest of us. They are also a group that usually socialize with other CEOs and I have noticed this time the mantra of "preserve cash" has been a strong signal being shared in that group. The thing is, in a lot of the cases, the companies preserving cash by laying off workers aren't really saving a significant amount of cash, compared to the amount they have on hand. So, it turns into some sort of lemming behavior.

by mcv 4y ago

BaseballPhysics 4y ago

Absolutely. The 4Q22 numbers are out. US GDP increased nearly 3%. The job market remains super tight for many classes of workers. There's simply no evidence of a broader recession. Are there headwinds? Sure! Household debt is up, consumer spending is down as a consequence--but this is relative to a previous year when we were still feeling the effects of the COVID stimulus--and interest rates are up which will drive down debt-funded investment. But, companies are cutting because 1) some got bloated during the COVID hiring surge and now need to cut back, 2) some always wanted to cut headcount but they didn't want to do it without air cover, and 3) some just follow the leader.

mtnygard 4y ago

I can’t comment on whether this is blind following or not. But it’s a real fact that the market will punish you less for layoffs when others are doing it too. It’s like how the best time to reveal a scandal is after someone else has revealed a bigger scandal.

WhatsName 4y ago
That's wrong. If everyone is doing something irrational that is a big inefficiency in the market and whoever does the opposite eg. hiring will get better outcomes as opposed doing it when all do.
- vasco 4y ago
  Yeah but in general if you're trying to minimise disaster instead of maximising being the winner, you opt for doing things that avoid revealing you as the being the only wrong one. Being wrong in a crowd is fine. Being the only one wrong is a big deal, "what were they thinking, they knew better than everyone else?!". If everyone does the same mistake, it's just shrugged off as "honest mistake, everyone was doing it." Plus either way you're cutting expenses and maybe getting rid of some under performers.
  - hbrn 4y ago
    Being wrong alone means you had a flawed thought process. Being wrong in a crowd means you have no thought process at all. All the big companies doing layoffs are in the stagnation phase. "minimise disaster instead of maximising being the winner" is exactly that.
- pjc50 4y ago
  Market values aren't driven by outcomes, those are in the future; they're driven by beliefs about outcomes.
slantedview 4y ago
It's not just that the market will punish you less. Companies are hoping that the market will actually reward them for layoffs. Unfortunately, these moves can and will be damaging to long term prospects at some companies. But long term thinking isn't something markets generally care about. It's up to companies to push back against market pressure to maintain long term progress, but it's a tough balancing act to do that while avoiding being punished by investors.
- criley2 4y ago
  Honestly, I don't think these layoffs (broadly speaking) are dangerous long term. In fact, and this may be unpopular, I think they will be greatly beneficial long term. Consider: - These companies grew at greatly-expanded rates over the past few years. Google notoriously added 20% per year for 7 years straight, doubling their staff from 2017-2023. After layoffs, Google will still be right near ALL-TIME-HIGHS in staffing. Same with most of these firms. Small layoffs following the fastest growth period in their history isn't some catastrophe for their business - Most roles being reduced at most companies are not product-creating but administrative. Lots of HR, hiring, marketing, middle managers, getting axed. If companies predict less hiring or lower ad budgets... then reducing those divisions makes sense. If you doubled your hiring team while you were hiring 20% per year, but now you expect to stay steady and only replace attrition ... what would you do with all that hiring staff? The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem.
  - danwee 4y ago
    > The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem. So, the real damage was the people who ordered to over hire (usually top-level executives). If any, they should be lay off to actually mitigate long-term damage.
  - jrumbut 4y ago
    I think this is all basically true, but what is interesting to me is that these incumbent tech companies were greedy when everyone was greedy and in so doing they created an opening for someone who is greedy when others are fearful to come and eat their cake.

jmathai 4y ago

This post agrees that it’s essentially copycat behavior. https://news.stanford.edu/2022/12/05/explains-recent-tech-layoffs-worried/ https://news.stanford.edu/2022/12/05/explains-recent-tech-la...

myth_drannon 4y ago
Viral contagion. Code RED. Put all the CEOs in lockdown. Disable internet access.

TremendousJudge 4y ago

Yeah, this CEO technology is interesting but ultimately going nowhere, it's only remixing existing decisions and not having any original innovations. Plus, as CEO decisions get fed back into the models, it's going to get even worse, like a photocopy of a photocopy.

bombcar 4y ago

The CEO answers to the board, and the board is usually of the type to at least ask the question "Everyone is jumping off a bridge, why aren't we?" And sadly the easiest answer is "we ARE jumping off the bridge, see?"

ajkjk 4y ago
Is it inconceivable that layoffs are the right choice for a business?
- mcv 4y ago
  It's not inconceivable, but it's weird that everybody is doing it at the same time even when the company is perfectly healthy.
  - aliqot 4y ago
    patagonia see, patagonia do. I blame the boards.
  - enriquec 4y ago
    Is it weird at all given the market, inflation, and debt?
  - bennyelv 4y ago
    It could be because they're all planning for market conditions predicted by the same forecasts. Also if your strategy is to hire as many engineers as you can possibly afford so that you can keep up with or beat the competition, then if the competition starts downsizing it means you can do the same, and maybe you see an economic contraction as a bigger risk. Conjecture of course, but plausible I think.
  - lotsofpulp 4y ago
    Do not play to where the ball is, play to where the ball will (might) be.
- hallarempt 4y ago

tetrep 4y ago

I think it's less blindly doing and more seeing your attractive friends dieting and becoming more self-conscious about your own weight. I don't want to give reactionary CEOs too much credit, but I dont think it's fair to describe it as blind.

scyzoryk_xyz 4y ago

I would venture that word of mouth is spreading among the elites who are on the boards of all these companies - a storm is coming so everything needs to get tied down - so the CEO’s as captains of the ships are following the advice. Whether the storm actually hits, what gets wrecked, what doesn’t. That is a completely separate issue to these people.

claytonjy 4y ago
What is the storm they're worried about, if not mass layoffs concentrated within an industry? Inflation is almost down to normal, employment is still high and will remain so as long as the construction sector avoids layoffs due to the coming cash infusion from federal spending bills. Seems to me the only storm coming is the one created by these same execs, though I understand each of them is incentivized to follow the crowd.
- scyzoryk_xyz 4y ago
  I’m not one of those elites. So I would not know what the real forecast is. I’m just stating a hypothesis on the perspective of, say such CEO’s. To them it’s not pack behavior based on hearsay.
- spaceman_2020 4y ago
  > Inflation is almost down to normal Huh? Normal inflation in the US is 2% - that's the Fed's target. Last month, inflation was 6.5%. Being 250% above target is not "normal".
  - claytonjy 4y ago
    That's an unweighted trailing average where the bulk of the increase came from earlier months. Instantaneous inflation in December 2022 annualizes to 2%.
    - spaceman_2020 4y ago
      "The index for all items less food and energy rose 0.3 percent in December, following a 0.2-percent increase in November. The shelter index continued to increase, rising 0.8 percent over the month." Food inflation increased over November. Shelter index increased at an annualized rate of nearly 10%. Sometimes, you have to dig deeper than the headline. Source: https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf

equalsione 4y ago

From November, 2022 "Activist investor TCI Fund Management is calling on Google's parent Alphabet to pursue aggressive cost cutting on the back of a hiring spree during the pandemic, claiming the business could be more efficiently run." - https://www.theregister.com/2022/11/16/tci_fund_google_cut_costs_waymo_compensation/ https://www.theregister.com/2022/11/16/tci_fund_google_cut_c... I would assume Google was no the only one to receive such a letter, nor were TCI Fund Management the only investment fund sending out such letters

thor123rt 4y ago

Market forces are behind it. Luckily it is very simple to fix. Just bring the interest rates to zero

malfist 4y ago
But then the poors get paid too much and we can't have that. Interest rates rise because the 1% want a larger part of the pie.

jay-barronville 4y ago

To quote HN user @badhombres from the original thread: > Not surprising. Every company is going to take the opportunity to trim costs when it doesn't affect their PR as much as it would any other time. I'm pretty sure this is really what's going on here. These CEO's are killing all of these jobs while they can (seemingly without any repercussions). I was talking with my dad about these layoffs and one of the interesting things we talked about is how different the loyalty formula is nowadays. My dad grew up during a time when folks happily worked for, and were loyal to, one company sometimes for decades. Nowadays, sadly, it's not smart to trust any of these companies for more than a few years. These layoffs prove that. Whether it's companies laying off folks who've been at the company for 20 years (see: Google) or companies laying off new hires, any loyalty seems to be one-sided.

eweise 4y ago
Yep. Vest and move on.
netfortius 4y ago
A lot of this is sourced in the 2021-2022 job seekers market, when everybody and his brother could get a job. There were hiring sprees not because there was an obvious need for a/that particular level of skills and experience, but because there were a lot of companies thinking "if we don't get this guy/gal now, someone else, maybe even a competitor, may". I've witnessed it especially in the blockchain/web3/cryptoBS areas. I know of a company which had a target of min 25 hires/week, and kept that pace for three-four months. When I tried to insert a cost analysis process in their Infra organization, part of an operational model meant to get them to a more mature level than forever startup, I was told that "money was no object", so I should focus my advice in other areas. Of course I left them, soon thereafter, and now I see them in the news, alongside all others, letting people go. Oh, well...

BizarreByte 4y ago

> I really get the feeling that many companies are just blindly doing whatever other companies do. A social contagion if you will. It doesn’t seem rational at all at this point. Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.

bluefirebrand 4y ago
Lets give some good companies credit, they value their employees more. They would hold out for at least a dollar before killing you.
EMM_386 4y ago
> It doesn’t seem rational at all at this point. Layoffs are rational and are common in downward cycles. I get the feeling that a lot of the shock and awe here is due to age and a lot of people starting their careers during an extended boom period, particularly in tech which was getting absurd. The last few years in particular were far from rational. Now the Fed is raising interest rates, housing is cooling, cheap money is no more ... and as a result you get a downward business cycle resulting in layoffs. I don't see anything new here that hasn't happened over and over again ... but I've been in the industry for decades with multiple companies and sectors. These companies aren't charities, they aren't meant to retain jobs just because they are profitable, and they definetly aren't your friend. Many of them are publically traded, which at the end of the day are beholden to one and one thing only, the shareholders.
- taeric 4y ago
  I'm curious why you are calling them rational? They will lead to reduced morale. And will lead to more attrition afterwards. And probably won't lead to any sort of increased income. So, what makes them any more rational than going straight to bankruptcy?
- snozolli 4y ago
  Layoffs are rational and are common in downward cycles. What downward cycle? All I'm hearing is panic and hand-wringing about the economy, but I don't see what the problem is. We had a "recession" in Q1 and Q2 of 2022. GDP dropped from 20,006 to a low of 19,895, then it went right back to its previous growth path. Inflation is high, but it's dropping. It maxed out at 9.1% in June of 2022. Now it's down to 6.5% and expected to drop in the upcoming update (Feb 14). We weathered a global pandemic, subsequent supply chain issues, and a war on the other side of the world that disrupted the energy economy. We're doing great, but people are fretting like it's 2008.

ravenstine 4y ago

Could be blind, but could also be that laying off when everyone else is laying off protects a company from being the odd one out and distributes the blame.

deeg 4y ago

Is there any chance that we're dealing with a form of confirmation bias? In an economy as large as the US's there will always be companies laying off workers. Current unemployment is low so I'm not sure if there's any major, new trend other than reporting it on HN.

rtkwe 4y ago
I don't think so there's been a string of tech layoff's right here in a row totaling 40,000+ just from the ones at Amazon, Microsoft, Meta, and Google. These are companies that don't generally shed huge numbers of employees all at once.

rtkwe 4y ago

There's a lot of performance in hiring and firing, even outside a supposed 'recession' CEO's are rewarded for 'cutting the fat' through firing via stock bumps because at the very least it's going to temporarily cut some costs in a very surface level analysis. Couple that with the constant recession talk that never seems to materialize and boards and shareholders are looking at companies thinking they need to trim down some for the recession that's seemingly been just around the bend for a whole year now.

ketchupdebugger 4y ago

I get why public companies like google, meta or even confluent is doing layoffs when the stock price falls 50-75%, the employees are unhappy and the shareholders are unhappy. Layoffs is a way to tell shareholders that the leadership is doing something to curb the costs and try to increase profit. But there are also pre-ipo private companies laying people off, that part I don't quite understand, since they have no shareholder pressure.

Infinitesimus 4y ago
Those companies don't have public shareholder pressure but they do have investor pressure. The market downtown and cost of raising money changes investment calculus

danwee 4y ago

Indeed. - FAANG started to offer free drinks in the office? Every startup begins to do the same - Agile coaches are hired at FAANG? Every damn startup needs their own Agile coaches as well - "Think customer first" was coined by... and then every startup made it its core value - Staff, Principal, VP engineer levels are introduced at FAANG... you know the drill - Microservices... Every tech company out there dies to be Google or Facebook or Apple. They will copy every single thing from them.

dangerboysteve 4y ago

I don't think this is the case at all. Companies are rethinking the future a bit and forecasting a downward trend more than initially thought. This means preserving cash and reducing burn. This has a trickle-down effect with other tech companies, as they will cut back on saas subscriptions.

siggen 4y ago

> I really get the feeling that many companies are just blindly doing whatever other companies do. They’d all have had to collude in December for this to happen. Laying off people in large companies takes a sufficient amount of planning, and isn’t accomplished in days. They need to hire external consultants to help, even.

lbotos 4y ago

I'm constantly amazed at how people fail to see that in B2B if your clients are downsizing, well, you should expect less money coming your way. Yes, there is a "follow on effect" as one should expect. If Confluent was building out new product features and "investing in growth" hoping to sell those features to expand customer uptake, should they just blindly keep going? Sure, there are probably some 20 something CEOs right now running startups that are like OMG I guess we should lay off too, but it's such a naive take. CEOs can't just will the market to bear whatever their vision is, they have to "make something people want". And if there are less people to sell to, well, you're gonna make less money...

jterrys 4y ago

...I'm surprised this shit wasn't apparent to HN when everyone literally uses the same leetcode interview process despite the fact that it makes no fucking sense.

AlwaysRock 4y ago

Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too? It seems much more likely to me that many companies over hired and/or have 2-4% of their staff they were planning on letting go anyway and now that so many other companies are doing layoffs it allowed them to cut other low performers without being the only company in the news. We talk all the time about large company bloat. This just seems like normal annual pruning + a little extra from over hiring during covid + a chance to cut xyz projects that havent worked out or someone doesnt like or whatever without catching as much bad pr as they normally would.

claytonjy 4y ago
> sending off emails to someone saying hey we need to do layoffs too? This is absolutely happening, and if not from the C Suite then from the board and other investors. Yes, virtually all companies have plenty of bloat that can be trimmed, but trimming it a year ago would be a negative signal to investors. Now it's a positive signal, so layoffs are happening. They will continue to happen until companies are punished for it rather than being rewarded for it.
snotrockets 4y ago
> Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too? that would be illegal.

PragmaticPulp 4y ago

I don't know about Confluent, but I can tell you that sales (and therefore revenue) have seen significant drops in most industries. This is wholly expected in a rising rate environment. When sales drop, revenue also falls. When revenue falls, models get re-evaluated and numbers get re-calculated. Reducing expenses becomes a priority. When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. So I don't think this is blind trend-following, I think this is a rational response to a rapidly changing market. A company can be profitable and it can still make sense to lay off certain employees. In-house recruiter positions are some of the first to be cut right now because companies are pulling back on hiring. If you have a hiring freeze and very low hiring forecasts for the next year, why would you continue to employee a lot of recruiters? Market conditions change. Companies adapt to the change. When you have people in positions that are seeing less demand for the coming year, it doesn't make sense to keep them on the payroll and have them sit idle. It's rational to readjust the workforce. Nobody likes getting laid off, but no position is truly permanent.

philipwhiuk 4y ago
On a macro-economic level though this is a negative doom loop.
ramesh31 4y ago
>When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. This has been a long time coming. Some of the numbers I have been seeing for these contracts are truly mindblowing for the value delivered. The days of gouging enterprise on these random non-critical SaaS integrations is probably over. The one that still really gets me is Slack. Even medium sized companies are paying millions per year for a glorified IRC client. It just doesn't add up.
- claytonjy 4y ago
  Slack is an interesting one. Suppose you're a company spending a lot on it, too much. What are your options? Replacing slack with a comparable like Teams or Gchat is at least a step back in user-friendliness that will be grumbled about by engineers and others, and if you use a lot of integrations there might be significant switching costs. Moving away from instant messaging as a communication pattern sounds great to me, but good luck convincing folks to change company culture that significantly.

giaour 4y ago

I'm sure there is a "monkey see, monkey do" peer pressure aspect to the current wave of layoffs, but don't forget that hedge funds and activist investors have been actively lobbying for these job cuts: https://www.marketwatch.com/story/hedge-fund-billionaire-google-owner-alphabet-needs-to-cut-more-than-12-000-overpaid-jobs-11674484497 https://www.marketwatch.com/story/hedge-fund-billionaire-goo...

reaperducer 4y ago

I really get the feeling that many companies are just blindly doing whatever other companies do. You are correct. And for some reason they call themselves "leadership."

iKevinShah 4y ago

Possible, but it could also be that they see / foresee / know that upcoming quarters are just down (in terms of revenue or whatever their respective KPIs are). The reality however,could be somewhere in the middle as always, IMO.

fullshark 4y ago

It's not just here, but "we need to have a blockchain division / we need to have an AI powered product / We need to have a cloud services strategy / We need to etc" All these companies have no vision, and are run by people only interested in saving their jobs and/or preparing for their next one.

frontman1988 4y ago

The dominoes started falling with Elon laying off half the company without much problems. Copycat managers thought if Elon can lay off half the company, they can surely get away with 10% layoffs.

cvhashim04 4y ago
You’re giving him too much credit. Also there we large cuts at tech companies like Twilio, Coinbase and Snapchat etc in the summer.

frabjoused 4y ago

I would say a large part of it is that layoffs are terrible for PR, so many companies are jumping on the layoff bandwagon while it's "acceptable". Being one of 40 large companies doing mass layoffs is much better than being an isolated incident on the news curve at some other point.

debarshri 4y ago

People where hiring because their valuations were large. All the organisations now had to grow into that valuation. Expansion and contraction of head count is a normal thing in an orgs life-cycle that reflects the economy. CEO's job is to think about the stakeholders first and then employees. There are not many levers to play with to adjust the net revenue, growth and valuations. Growth have become stagnant or even lower, revenues are impacted and valuations are down. Only lever that is in control is head count others are dictated by external forces. PS. No one employee was complaining when these companies were in a hiring spree and could see it was not sustainable. Startup had a hard time competing with the salaries offered by these orgs.

chadash 4y ago

I disagree that CEOs aren't thinking for themselves. In many cases, they are thinking perfectly rationally. Companies don't live in a vacuum. If everyone else is raising salaries, it's to attract and retail talent. If you don't do the same, you will lose current employees and not attract new ones. If everyone else is doing layoffs, then it's a good time to do layoffs that perhaps you were considering anyway. Say you've been wanting to close down an unproductive division and let go of low-performing employees in other divisions for a few years now. You sure as hell weren't going to do that in early 2022, when you'd risk a lot of other employees jumping ship at the first signs of cracks in the house. But in 2023, you can do layoffs and get away with it.

pokstad 4y ago

A financial stampede

actionablefiber 4y ago

There exists a contingent of people who insist that whenever a big company does something it is because they have gotten all the smartest people to do all the research and run all the numbers and they have determined with absolute confidence that it is the most profitable thing to do. I think about those people sometimes.

JakeAl 4y ago

This is silly. If a business is sustainable there's no reason for layoffs. Simple math. If they rely on investment or loans and only have money to get down the runway but not takeoff without coming back to investors or banks, they aren't sustainable and will fail when the economy fails. The economy is currently failing big time. Expect a major culling of companies that rely on investment and growth because there's no speculative investment in growth for the foreseeable future.

RC_ITR 4y ago

>I really get the feeling that many companies are just blindly doing whatever other companies do. Alternatively, we are in a unique window where cutting underperforming projects whole-cloth can be done with almost no signaling risk (had this happened in 2021, people would assume the worst), so CEO's are cutting everything they don't like now, assuming they won't be able to do it as easily later.

bagacrap 4y ago

You likely have to go on a hiring spree and pay large bonuses to stay competitive when others are doing the same. Without the benefit of hindsight it was not obvious that the free money era would end so abruptly. Even the Fed did not expect to raise rates until 2023. It has been about the length of one finance professional's career since the Fed was last forced to hike into a growth slowdown, so few have experienced this environment. Apple stands out as the contrarian that didn't panic hire. They will probably come out ahead at the end of all this as their reward.

Simon_O_Rourke 4y ago

> I really get the feeling that many companies are just blindly doing whatever other companies do. You're not on your own with that idea. It's the blind leading the blind.

nxmnxm99 4y ago

To be honest, most executives wish they could fire 10% of their staff. Once you get to even 30-40 people, 10% of your staff are almost inevitably dead weight. Unfortunately you can't mass cull without causing morale issues. This period is just giving us a chance to shed those people without cultural ramifications.

ccn0p 4y ago

0) Macroeconomics is macro. Everything is connected. 1) we just came out of a very long period of "easy money" that inflated valuations and gave founders/boards a sense that money would always be there 2) when your customers are laying off / reducing spend, your revenues usually go down 3) the future is very uncertain Take all of these things together and boards are asking teams to be as prudent as possible which unfortunately means, bringing costs down.

mathverse 4y ago
Bunch of horse…excrements. You are trying to find logical explanation where there is none. My company laid off hundreds of people during corona while knowing the business will recover and receiving incredible amount of money. 5 months after the lay offs they bought bunch of companies and restarted hiring in different locations. These companies dont know more than you and I. They are acting in panic and in a bad faith towards their employees.

misterbwong 4y ago

Reading these comments reminds me of how old (and jaded?) I am. We saw the same thing in previous recession-type environments (2000, 2008, etc). Layoffs suck-they hurt everyone involved (except maybe for the shareholders?) and are a big big deal for each individual that it affects. That being said, it doesn't take a genius to see that they are very useful from a company perspective. Given how difficult it is to fire underperformers, layoffs allow them to cut a huge swathe of underperformers (and, realistically, people they don't like) without opening themselves up to endless litigation. Yes, the justification can be as simple as "the economy looks like there is an economic downturn and see? the other companies in our industry are doing it too." Smart companies treat it as a tool and use it sparingly, dumb companies over use it and kneecap themselves for the future.

deleted 4y ago
[deleted]

e40 4y ago

If you think about it, CEOs are just people that are influenced by events like the rest of us. They are also a group that usually socialize with other CEOs and I have noticed this time the mantra of "preserve cash" has been a strong signal being shared in that group. The thing is, in a lot of the cases, the companies preserving cash by laying off workers aren't really saving a significant amount of cash, compared to the amount they have on hand. So, it turns into some sort of lemming behavior.