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The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. Since most of the compan

The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. Since most of the companies doing 6-8% layoffs are concurrently reporting revenue growth, it isn't clear why they feel their future revenue is going to suddenly decline. It also isn't clear why, if they truly expect a decline, they'd continue to buy back shares or issue dividends. Seems like they'd want to keep that cash on hand, if they actually had concerns about the future, and weren't just using the social contagion as an excuse.

rkangel 4y ago
> The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. This is clearly not true, although it is probably the most important thing. Interest rates matter if a company financed expansion using debt. Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Changes in these areas can change a company whose books add up to one that doesn't.
- idontpost 4y ago
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- pwinnski 4y ago
  > Interest rates matter if a company financed expansion using debt. I haven't personally seen companies taking out operating loans using adjustable rates. Have you? If rates are fixed, then a company's expansion plans may need to slow or stop, but that's not the same as the company contracting. > Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Which does apply in Gitlab's case, I think, but does not apply in most of the cases we have been seeing of 6-8% layoffs made at profitable companies, many of which are concurrently doing expensive stock buybacks or issuing dividends. If your business model depends entirely on 0% interest rates, then a 7% layoff is probably not enough, you have a dead company walking. But 6-8% is what's popular, so that's what we get.
  - junofan 4y ago
    Venture debt is typical variable. So like most big startups.

rkangel 4y ago

> The only economic conditions that matter to any company is whether they will be able to continue earning money the way they have been. This is clearly not true, although it is probably the most important thing. Interest rates matter if a company financed expansion using debt. Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Changes in these areas can change a company whose books add up to one that doesn't.

idontpost 4y ago
[dead]
pwinnski 4y ago
> Interest rates matter if a company financed expansion using debt. I haven't personally seen companies taking out operating loans using adjustable rates. Have you? If rates are fixed, then a company's expansion plans may need to slow or stop, but that's not the same as the company contracting. > Cost of capital matters if your plan is to grow through VC and you're not yet profitable. Which does apply in Gitlab's case, I think, but does not apply in most of the cases we have been seeing of 6-8% layoffs made at profitable companies, many of which are concurrently doing expensive stock buybacks or issuing dividends. If your business model depends entirely on 0% interest rates, then a 7% layoff is probably not enough, you have a dead company walking. But 6-8% is what's popular, so that's what we get.
- junofan 4y ago
  Venture debt is typical variable. So like most big startups.