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Twitch.tv Lays of 400 Employees
- seanhunter 4y agoThere's a typo in the headline. Should be "lays off".
- ccity88 4y agoFor context, this is part of a wider layoff at Amazon, with over 9000 job losses: https://twitter.com/zachbussey/status/1637826120216195075 https://twitter.com/zachbussey/status/1637826120216195075
- gtirloni 4y ago> Like many companies, our business has been impacted by the current macroeconomic environment I must be living under a rock because, outside big tech self-inflicted wounds, I don't know what they are talking about. Is it Ukraine? SVB? Chinese housing market?
- mdavidn 4y agoThe "macroeconomic environment" is the evaporation of available VC funding because higher interest rates provide more lucrative investments elsewhere.
- runnerup 4y agoWhy would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale. Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.
- gretch 4y agoBecause their income comes from advertising. Because the economy sucks in general, companies in all industries are being more careful with where they spend their marketing budget. You can see this reflected in the revenue of other advertising companies as well such as google and meta.
- aaomidi 4y agohttps://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... https://www.macrotrends.net/stocks/charts/META/meta-platforms/revenue https://www.macrotrends.net/stocks/charts/META/meta-platform... Is it?
- gretch 4y agouh yeah it literally is? click into your own links? Google has their 3rd worst quarter for YoY Quarterly growth out of the last 12 years. Facebook has 3 consecutive quarters of negative yoy growth
- slg 4y ago>Because the economy sucks in general But to be clear the economy does not currently "suck in general" hence the confusion over blaming "the current macroeconomic environment". These companies (including advertisers) are trying to get out in front of an economic downturn that hasn't yet materialized. And if it does materialize, all these companies will have a hand in causing it due to their reduced spending and layoffs which we know has potential to cause an economic slowdown.
- jcfrei 4y agoAmazon (like every other big company) has raised billions with bonds that they will eventually need to refinance at higher rates.
- louison11 4y agoIf they laid off 400 employees, it’s probably because they could afford to (nice way of saying: they were not necessary to keep the business functioning), likely a bet on innovation. As the economy struggles and the prospects of such innovation happening seem far, it makes sense that even a big company like Amazon may choose to cut their losses.
- coredog64 4y agoAmazon needs to provide attractive returns to shareholders just like a unicorn. If you $AMZN is not up 5% YoY, then sell it and park it in a 6 month T-bill or I series bond. And as holder of $AMZN, I can tell you that they are definitely not up 5% YoY, let alone the 15% that they generally try to get to.
- TylerE 4y agoMYbe it’s time for them to realize there is a point where you have all of the customers, and it’s ok to be boring and just pay a dividend instead of constant growthgrowthgrowthgrowth.
- rossdavidh 4y agoThe owner of Amazon was the prime beneficiary of VC funding to tech companies, because oftentimes a large chunk of that went for AWS. In that gold rush, Amazon was the one selling shovels. The gold rush is now over, for a while at least, so Amazon is probably seeing a lot of their big AWS customers cutting back, or in some cases disappearing. Essentially, AWS is in the same position as SVBank. If your money comes from lots of tech startups that don't want to have their own infrastructure, and didn't used to need to worry about cutting costs, but now they do, then you can see big "outflows" (except unlike SVB it's more decreasing revenue).
- fma 4y agoWhy do you say "probably seeing a lot of their big AWS vueomters cutting back" when it can be verified. AWS grew at 20% in Q4 2022. Grew less than forecasted but still not "disappearing". https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022.html https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022....
- jacooper 4y agoBut Twitch is owned by Amazon? They don't need VCs?
- re-thc 4y agoThe users that use and pay Twitch do? (Not VC but capital in general)
- umeshunni 4y agoTheir source of revenue (i.e. advertisers) are often startups and DTC brands that were kept alive by VC money.
- djent 4y agoI have never seen an advertisement for a startup on Twitch.
- TylerE 4y agoYou mean they aren’t flooded with meal kit and mattress ads like every other form of media?
- AraceliHarker 4y agoSmall businesses like startups would rather pay streamers directly to promote their products than advertise on Twitch.
- ryanSrich 4y agoHuh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?
- vineyardmike 4y agoBonds are essentially the "free" rate of return. Assuming you trust the government, there's no reason to earn anything less. That means that everything needs to return something above the bond rate. That goes for debt too, why would you write a riskier loan to someone at a lower rate than the government? LPs looking to put their money somewhere (or many somewheres) will reconsider as rates change. It might not be "vc or bond" but it will cause every part of the financial system to re-calibrate. Maybe a rich person takes out debt against their assets to invest in a VC fund in 2020, but now that the rates rose and stock values fell, the interest rate on that (or comparable) debt is too expensive. For example, Elon's loans for twitter range from 6% to 11%, and would likely be higher if written today. TLDR Interest rates don't need to compare 1:1 to a VC fund's returns to have an affect on the decision by LPs to invest in it.
- vkou 4y agoThe macroeconomic trend is 'the stock price went down because the fed stopped printing money'.
- runnerup 4y agoI don’t understand how this is affecting AMZN’s cash flow though. Seems like both their costs and revenues would scale similarly with inflationary effects, leaving a similar profit margin %.
- nonethewiser 4y agoI think it’s more about expectation for growth being lower, not present cash flow.
- kneebonian 4y agoOnce you realize that sometime in the past 10-20 years the economy started having nothing to do with actual goods and services and instead turned into some sort of weird game played by the powerful and the rich it makes more sense. Personally I peg it happening sometime around 2008 when it became clear the rules didn't matter, consequences were for the poor and party hearty. Explain how else a company like Uber that was losing money on every ride was able to raise billions in VC funding. Think of it like that and it makes more sense.
- paulryanrogers 4y agoVCs want to capture markets. That's why they pour money into launching what could be the next market leader, even if the model won't work at predatory prices. Because once they own the market they can raise the prices to whatever they want.
- this_user 4y agoAll of that is a direct consequence of low interest rates. If money is cheap and easy to borrow, there is less pressure on a business like Uber to turn an actual profit. Instead, investors will encourage them to grow aggressively in the hopes of capturing the market. Once liquidity dries up, there will be more pressure to actually make money. But the economy is working as intended and it's actors are merely reacting to incentives. The question is whether the wrong incentives have been set that have created large sectors of the economy that are completely dependent on permanently low interest rates.
- jacooper 4y agoIts the investors.
- nonethewiser 4y agoI assumed rising interest rates primarily.
- gretch 4y agoFederal reserve interest rates. When interest rates are low, money flows more freely. When interests rates are up, it's harder to lend/borrow, money flows less freely, and the economy cinches up as a whole. This is a major simplification to a very complex system, but it happens because e.g. as someone with money, you'd rather just put it into a government bond that will for sure pay you 4%, rather than chasing speculative investments. When that same bond is only paying out 1%, you might be more inclined to put your money in a start up and see what happens.
- Aperocky 4y agoNot just your money, renting money is so much cheaper when you only need to pay 0.25% per year against the firehose known as the Fed.
- mym1990 4y agoIf this is the case, why are layoffs currently mostly in the tech sector and not everywhere? Unemployment budged .2% from Jan - Feb but this is hardly indicative of anything.
- coredog64 4y agoThe tech sector is doubly impacted. First, a lot of these ZIRP jobs are in technology as that’s where the returns are. Second, there’s another class of tech jobs that are themselves dependent on tech companies (Cloud providers, managed SaaS products, etc.)
- yieldcrv 4y agobecause tech was was the biggest beneficiary of monetary expansion, at least by percentage gains in a sector, and would have to be a close second in absolute dollar amounts if not first. basically TINA principle: there is no alternative, which means that an infinite amount of money was created for a finite amount of assets, people that are paranoid about beating a couple months of high inflation didn’t know where to put the money established industries with clear revenue trends already had stretched and unattractive valuations real estate already went to unconscionable price levels government bonds at record prices and lowest yields, in Europe people would accept negative interest rates literally willing to pay the government instead of investing in unproven businesses but between the unproven entrepreneur there was still lots of big tech that was the recipient of cheap money and high valuations. now people are rebalancing. new money isn't being created and existing money is purchasing treasuries at 5%
- sanderjd 4y agoI don't know for sure, but it seems to me that advertising spend must be way down, due to interest rates and (related) the expectation that consumer spending will / should be pulling back over the next X months. All the biggest layoffs seem downstream from consumer spending in some way or another.
- tinus_hn 4y agoTwitch grew very quickly during lockdown and shrank very quickly when it was over.
- ryanSrich 4y agoSVB as an excuse for any company turmoil is criminal. Literally nothing happened. Everyone got all of their money. If any company uses SVB as an excuse they must be named and ridiculed for lying.
- karmasimida 4y agoI guess Twitch still hardly making any money
- chii 4y agodespite the huge number of ads being shoved into the user's faces.
- andreimackenzie 4y agoAdvertisers not spending as much
- Rastonbury 4y agoAdvertising, which is how twitch makes money, look at GOOG, FB, Snap revenues, companies are bracing for a recession so have dialed back ad budgets. Enterprise tech spend and consulting/professional services budgets are also being put on hold, it's not the whole economy but the slowdown is clear and obvious in these industries
- PurpleRamen 4y agoIn case of twitch it's more simple: pandemia is ending, people move back to their normal life outside of twitch. Revenue in the last months has been shrinking for streamers, and thus also for twitch. Their business was blowing up in the last 2-3 years, when so many viewers were at home. And this also resulted in Twitch hiring many new people, like so many other tech-companies. And like so many others, they are now shrinking again, adapting to the new situation.
- ubercore 4y agoA bit unfortunate that their blog format has "In other news" in giant letters right under their announcement about laying off 400 people. Maybe a blog isn't the right place to make news like this public.
- saos 4y agoWhat type of roles are they cutting?
- tecc501 4y agoNot Poggers
- dathinab 4y agobest comment on HN today (through due to satire will probably down voted into oblivion).
- deleted 4y ago[deleted]
- greenyoda 4y agoEarlier discussion: https://news.ycombinator.com/item?id=35235579 https://news.ycombinator.com/item?id=35235579
- 1B05H1N 4y ago"Only 8,600 more to go" - Amazon HR rep probably
- moneywoes 4y agoDoes twitch follow the same pip policies as Amazon?
- ipsum2 4y agoThe CEO and founder of Twitch announced a week ago that he was leaving the company. It's admirable to see a captain going down with his ship. https://news.ycombinator.com/item?id=35184011 https://news.ycombinator.com/item?id=35184011
- gretch 4y agoThere is something romantic about it, but make sure you don't accidentally admire it more than the captain who keeps their ship safe and thus neither of them go down at all. All those captains out there who are faceless/nameless because their ship didn't get blown to pieces.
- deleted 4y ago[deleted]
- calderknight 4y agoThat's the opposite of going down with the ship.
- varunjain99 4y agoOr more like transferring ships while the ship goes down :)
- wahnfrieden 4y agoYou meant to write "to see a captain jump ship"
- iepathos 4y agoIs it admirable if that same captain steered the ship into a rock leading it to go down in the first place? I don't think so.
- wolfgang000 4y agoWhat do you mean? he just appointed a new capitan while he deployed his lifeboat
- PurpleRamen 4y agoIt was known for a while that he will leave, so it's not like he left because the company has problems. I mean, they are also "only" firing 3-4% of their workforce, which in my understanding is a pretty low number for a mass layoff. And it's mostly a reaction to their massive growth and hirings in the pandemia, which is now over as the company is shrinking back to a normal size.
- joshe 4y agoLike rain, interest rates raises fall on the just and the unjust alike.
- squarefoot 4y agoI'd be curious to see how the sudden surge of available workforce is affecting the average salaries in the IT, compared to other fields that weren't touched so badly by the layoff wave.
- dathinab 4y agoThere had been a huge deficit of qualified worker due to SV/FANG/.. sponging them up. So we likely won't go to a oversupply situation. But as under-supply decreases and in turn saleries should fall. But then salaries had been in some contexts so high that most startups couldn't afford paying it, so just by accepting this salaries without them falling the average would fall. So I don't expect the salaries for mid to high qualified IT workers to fall too much outside of SV, and especially outside of the US. Like it still will be a pretty well paying job, just not necessary through the moon high salaries. Through it might get a bit harder for low qualified IT workers, much harder if they are unlucky wrt. current AI development.
- brwck 4y agoThere's a theory in economics called "sticky wages". Salaries don't decline due to layoffs or temporary economic downturns.
- maerF0x0 4y agoTwitch is an amazon property. This is likely simply an extension of the amazon layoffs.
- dathinab 4y agounlikely as AFIK Amazone hasn't fully folded Twitch into it's structures additionally: Firstly Twitch due to historic reason is less likely to have any personal bloat. Secondly running a streaming platform isn't cheap (media live cross decoding, high data transfer, more requirements for the data transfer due to less buffering, still moderation and copyright detection, some licenses with big copyright holders etc.) and from why I have heard twitch isn't doing that well (through not terrible). Thirdly there was a influx of live streaming usage during COVID which now likely is receding. Fourthly it relies a lot on people not just subscribing but "gifting" money (bits, subs) to streamers for little return besides bragging rights, a thanks maybe some emotes and feeling good because of the gift. In a economy which feels more unstable people are less likely to want to spend money this way, or can't even if they want to. I would guess Twitch has more reasons for cost cutting then Amazone, but at the same time I would guess in different to Amazone Twitch is more likely to be negatively affected by the layoffs.
- odux 4y agoIt is part of the larger Amazon layoffs announced today though: https://www.aboutamazon.com/news/company-news/update-from-ceo-andy-jassy-on-amazons-operating-plan-and-additional-role-eliminations https://www.aboutamazon.com/news/company-news/update-from-ce...
- amrb 4y agoBut how will I get my quote of hot-tub streamers??
- ryandrake 4y ago> Like many companies, our business has been impacted by the current macroeconomic environment, and user and revenue growth has not kept pace with our expectations. In order to run our business sustainably, we’ve made the very difficult decision to shrink the size of our workforce. Let's just take a moment to admire this paragraph. > "our business has been impacted by the current macroeconomic environment" There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity. > "user and revenue growth has not kept pace with our expectations" So, they are growing, but not growing faster than some [arbitrary] goal? > "In order to run our business sustainably" Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line. > "we’ve made the very difficult decision to shrink the size of our workforce" This is what I don't get about all of these layoff letters. It's always the same thing: We're growing, our revenue is growing, and [usually unsaid] our costs are growing. So why not just arrest the cost growth? Stop the bleeding, don't start amputating limbs. I can understand layoffs when your business is running at a loss, not when it's growing.
- arrty88 4y agoThey were staffed for 10x and only seeing 2x. Probably shutting down a lot of growth projects that aren’t showing promise.
- misssocrates 4y ago"Those who thought it was free money are now discovering that they have to pay for it retrospectively." -Nassim Taleb
- _alex_ 4y agoZero growth or negative growth (real or nominal) are both cases that not keep pace with expectations. What about that paragraph makes you think things are gangbusters but they have to lay people off?
- throw8383833jj 4y agoJack welsh school of management: you've got to reward the top 20% and layoff the bottom 10%, about once a year. this is very much possible when there's an oversupply of labor.
- 2-718-281-828 4y agothey streamed 400 of their employees getting laid? o.0 ... that's outrageous!
- iepathos 4y agoFor some perspective, twitch generated $2.6 billion in revenue in 2021 and $2.8 billion in 2022. They've seen nothing but increased revenue over time.
- throwawayinvi 4y agoIncreased revenue tells nothing. What are the profits?
- pcthrowaway 4y agoSo they took in an extra 200 million $ in revenue in 2022, great. Though that doesn't necessarily mean they'll continue to take in more revenue given that 2022 was the year lockdowns pretty much disappeared everywhere and I'm guessing Twitch's model benefits from people being stuck at home. But let's ignore that, and say they'll keep making that 2.8 billion. Did they hire 1000 new employees between 2021 and 2022? Because if so, that probably means they're making less profit even with an additional 200 million $ in revenue. Assuming the fully loaded cost per employee is ~200K/year, which according to Levels is on the low end (their L4s make 209K, L5s and up make much more) Couple that with investors now clamouring for returns, and from the business side you can see why reducing their cash out-flows is at least appealing.
- PurpleRamen 4y agoAnd 2023, most likely this will go down hard. Revenue for streamers has already been down the last months, more than usually around this time of the year. 2021 and 2022, Twitch had a massive growth because of the pandemia, so many working from home and not being able to spend the money on other things like events or travel. This is now over, and their revenue is shrinking.
- pcorsaro 4y agoEvery one of these companies doing layoffs says something like what's in this update: "user and revenue growth has not kept pace with our expectations." I find it really hard to believe that all of these companies assumed that growth during Covid was sustainable and would just continue into eternity. I have a small restaurant supply business. Our revenue was up almost 50% above our best year ever. We knew there was no way it was going to last forever. All of these companies just sound so disingenuous when they say their growth didn't keep up with their expectations. They knew this day would eventually have to come, they just don't want to come out and say that.
- Rastonbury 4y agoI'm curious if you own any stocks, did you own then sell any tech companies or after covid up to mid 2022?
- pcorsaro 4y agoJust index funds for the most part. I don't attempt to time the market really. I assume you're implying that if I had known things were going to slow down I should have made a fortune trading stocks. I'm not saying anyone had a crystal ball for when the market was going to slow down. I think that's kind of a fools errand for most retail investors. All I'm saying is these companies keep making statements saying that growth didn't meet expectations. It just feels really disingenuous to me is all I'm saying.
- thret 4y ago'Lays of 400 Employees' has a different meaning to 'Lays off 400 Employees'.
- jboydyhacker 4y agoAre they keeping their headquarters in downtown SF? It has not been used for a while and fairly nice
- rvz 4y ago"Engineers hopefully not affected" - HN
- benjamoon 4y agoIf I was more suspicious I’d be wondering if the sudden huge rise in ai was at all linked to the sudden huge waves of layoffs. Maybe all these big tech companies have seen something before the rest of us?
- xyst 4y agoProbably getting forced to trim the fat by their parent company, Amazon.
- hammon 4y ago[dead]
- steakscience 4y agoI don't see how "macroeconomic conditions" impacts Twitch viewership. It's not selling anything to any consumer or business. If anything, people are watching more Twitch.