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Meta has started its latest round of layoffs, focusing on business groups

156 points by mfiguiere 3y ago

Dudester230518 3y ago
[flagged]
curiousllama 3y ago
Context: this is the final phase of the layoffs announced a few months ago. Nothing new, except for those getting laid off.
- scrum-treats 3y ago
  Yes, except there's two waves of layoffs. The wave that is announced, like you mention, and the wave of smaller layoffs that does not have to be announced. This is to say, more people are being laid off than officially reported. This is true for Facebook and Amazon alike.
bratao 3y ago
I've got a burning question on my mind and I'd really appreciate some insights. From what I can tell, the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios. But if that's the case, are we basically still in the early innings of this crisis? Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right?
- matt-smith 3y ago
  I would agree. Interest rate hikes generally take a while to actually work through the economy. This current hiking cycle is the fastest we've raised rates, especially considering the interest payments required for our debt. I don't think it'll be a soft landing.
- tmpz22 3y ago
  Startups aren’t a great signal - especially if you’re only looking at Silicon Valley startups. For one they employ way fewer people (while garnering a disproportionate amount of tech headlines). For the bigger public companies their data is available through yearly SEC filings. Just look it up. They’re making record high revenues. Layoffs for them are an optimization not existential. They could’ve been fine laying off fewer people but it protects them from their growing competitors and longer term global trends. Doomsaying will always be popular but is often misguided. You’re basically relying on a broken clock being right twice a day.
- alberth 3y ago
  I’m no expert, but how I understand it - it seems the economy is very fragile at the moment. Things aren’t good, or bad. But all economic signals point to it potentially turning very bad, quickly.
- n4r9 3y ago
  I don't think it's necessarily so bleak. Another interpretation is that big tech companies had a recruitment drive over the pandemic when revenue was high. Now that revenue growth has slowed, they're trimming the fat.
  - WesolyKubeczek 3y ago
    Also: hey, those pesky coders and other white collars got way too expensive, let’s lay them off in droves to make it the employer’s market and rehire some back, but on our terms and not theirs (cheaper, no perks, but they will be glad to land a job anyway). Source: a little bird told me some companies do such rehiring, and for many H1B holders it is an offer they can’t refuse.
    - lucidone 3y ago
      Had a friend laid off and saw his job posted not a month later (with the stereotypical #hiring LinkedIn corpojargon). Many employees make a big hubbub of the org being employee-centric, people driven, blah blah blah. I almost joined their org because of how my friend talked it up last year. Despicable.
      - WesolyKubeczek 3y ago
        > Many employees make a big hubbub of the org being employee-centric, people driven, blah blah blah. It never is. If anything, tech corporations that have been hot startups two decades ago are shedding their larval teletubby skin and transform from sheltered colorful environments suited for men-children into... well, just your average run-of-the-mill ruthless capitalist businesses your boomer parents/grandparents know and loathe. The thing is, if they mention they are people-driven casually, they likely know the notion — you can expect some respect for employee rights (provided you do your own homework, can haggle like a used car salesperson, and can tell decision makers from HR personnel); if they emphasise it so much it reminds you of a cult, or if they don't mention it at all, but are instead brimming with descriptions of the company's grandeur, run — if you have anywhere to run these days.
- TexanFeller 3y ago
  I think you're right, I believe we're in a recession, just not all experiencing it at the same time. I'm planning for it to "trickle down" soon.
  - scrum-treats 3y ago
    Agreed. We're in a recession. It's is one of the only things that does "trickle down." Haha. We've all been experiencing recession since last year, when food and gas prices started to increase. While some regions are more impacted than others, the price of everything has increased. For those who make over a certain amount (i.e., $100K/year) it's less noticeable than for those making under that. Because budgeting. Bezos himself warned of this back in November 2022: https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-warning-people-about-what-not-to-buy/ar-AA149n3Q https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-.... When ultra-rich tell you it's going to be bad, probably best to plan for that. Also, where is the government in all this? Why are ultra-rich still not paying taxes? It's quite an alarming and vulnerable position for majority of people in the United States right now.
- specialp 3y ago
  Startup layoffs are very much related to the funding environment. I work for a startup that laid off half our staff. There have been very few series C and later this year. So if you are a startup you need to decrease burn now and get to having good MRR. You can't aggressively grow at a loss and expect to get more funding for that with few exceptions. When VC money was much more plentiful people hired a lot without the pressure to become more sustainable. For further funding rounds they had to show that they were growing in some way. SVB collapse was huge in the startup world not just due to the people who had deposits there. With larger companies like Meta, their multiples are also based on growth. So even though large tech shows no signs of being financially insolvent, they will have to still deliver growth in profit with flat to declining revenue. So the focus then is to decrease expenditures in lieu of revenue. There was a ton of hiring the last few year along with the tail wind of tons of money out there. Now it needs to rebalance.
- throw1234651234 3y ago
  Note that by the time "normal people" really felt the 2008-2009 recession, the stock market was already bottomed out and going back up. Just something I keep in mind.
  - jiveturkey42 3y ago
    What are "normal people"?
  - rchaud 3y ago
    In other words, the stock market went up when governments instituted ZIRP and the enormous multiplier effect of the bailouts kicked in.
- mark_l_watson 3y ago
  +1 for asking the correct questions! Of course leaders of companies understand the current economic downturn and they to some degree can predict future economic problems better than the average citizen. While hiking yesterday I was talking with a friend about history, and how all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view: USA, England, France, Middle Ages powers, Romans, etc. Just as elites in a declining power will naturally “loot” as much as they can to ensure the long term economic well being of their family, doesn’t it make sense that corporate leaders will cut staff, and generally extract as much profit as they can short term?
  - robertlagrant 3y ago
    > all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view What's the data? Be interested to read about this correlation.
    - mark_l_watson 3y ago
      I may have been in error on my opinion. I just did manual web search, and asked ChatGPT+Web and Bing+ChatGPT and could not find much to support my opinion. I will keep looking. Anyway, thanks for challenging my opinion - I am likely changing my mind on this.
      - robertlagrant 3y ago
        No worries. I am not a great student of history, but I have found a recent surprisingly strong wave of people appearing who are entirely cynical about the history of the West, and will believe any negative statement about it. Obviously some of the negative statements are true, but it's always worth a little prod to see :)
    - red-iron-pine 3y ago
      Imperialism, Colonialism, the Gilded Age, etc.
- neom 3y ago
  If the Fed raises rates too high or keeps them high for too long, it will push the economy into a deep deep recession. As we're always using lagging indicators, economists are generally unsure where we are in the cycle, some folks believe it's been pushed to far for too long, and further pushing is going to cause either a deep recession or, even worse, stagflation. I'd love to know what Volcker thinks about our current situation.
  - onlyrealcuzzo 3y ago
    > If the Fed raises rates too high or keeps them high for too long, it will push the economy into a deep deep recession. They'll just bring back out their bazooka and lower rates again and cause more inequality. Tale as old as time.
  - nstj 3y ago
    > I'd love to know what Volcker thinks about our current situation. Volcker is dead.[0] [0]: https://en.m.wikipedia.org/wiki/Paul_Volcker https://en.m.wikipedia.org/wiki/Paul_Volcker
    - neom 3y ago
      ... hence I can't know what he thinks.
  - tmaly 3y ago
    I they are only staring at lagging indicators, then it seems they would likely overshoot on keeping interest rates too high for too long. I am surprised they have not come up with better models given the technology and data available.
  - dahwolf 3y ago
    Don't know about the FED but the ECB has openly stated that they will keep raising rates as long as necessary to get inflation back to ~2%. It doesn't seem to be working, for very obvious reasons: demand for energy and food (main cause of inflation) isn't that elastic. Further, there's no unemployment, so people spending and will spend only more because of inflation itself. The one thing that could motivate people to stop spending, raising bank savings interest rates to something meaningful, is oddly not in the playbook.
- maxlamb 3y ago
  That’s just an excuse the CEO’s are using to avoid blame. They over-hired during 2020 and 2021 “because everyone was doing it” and now they realize they have 10’s of thousands of employees with nothing to do and huge salaries so it makes no sense to keep them.
  - evantbyrne 3y ago
    I can't speak for Meta specifically, but mass layoffs don't generally correlate with worker productivity. At the end of the day it is all about CEOs making shareholders happy so they get rewarded with juicy bonuses. Shareholders see their stonks going down so they want cost cutting. People making decisions are not always aligned with the long-term interests of the companies they manage.
    - specialist 3y ago
      Further Yes and: Cutting costs, versus investing, means the PHBs have decided the ride is over. In other words, the combo of layoffs and corporate buybacks is about profit taking (while they can). Every business, market, etc, has a lifecycle. Social media, and Meta in particular, has definitely entered the Computer Associates phase of its lifecycle. So now it's time to cut to the bone, extract as much blood as possible. Such is life. It was a fun grift while it lasted. Hopefully, adjacent malignancies such as digital advertising and freemium will plateau as well. That'll be a relief. They can join informercials, shopping networks, and supplements in the backwaters of human culture.
    - maxlamb 3y ago
      If it were as simple as “layoffs/cost cutting make stock go up” then CEO’s would have never had hiring surge during Covid. The CEO’s job is always to maximize long term profits. Layoffs make stock go up only when it’s clear profits won’t change much with the layoffs. And if layoffs won’t decrease profits, why were these employees there in the first place?
      - skinnymuch 3y ago
        During market growth stages, laying off would be something that would be a red flag. You only focused on a small part of the person’s comment. The comment also said when stock is going down, lay offs help. They likely aren’t talking in absolutes anyway Were there hiring surges for companies whose valuations were not going up?
- knallfrosch 3y ago
  The Economist says that the layed-off workers were bloat: "So far techies themselves have been mostly spared, observes Tim Herbert of the Computing Technology Industry Association, a trade body. Instead, the axe has fallen mainly on business functions such as sales and recruitment. These had grown steadily as a share of technology-industry employment in recent years, a telltale sign of bloat." https://www.economist.com/business/2023/03/27/where-have-all-the-laid-off-tech-workers-gone https://www.economist.com/business/2023/03/27/where-have-all... The reality is that noone knows whether there's going to be normal growth, stagnation, or a recession, but one thing is for sure: The tech boom of the pandemic has ended along with the pandemic. So these companies don't have proprietary magic insights and can reliably forecast a recession (as was your question), they're simply responding to the end of the boom and rising interest rates.
  - thethimble 3y ago
    A related point would be Meta is exposed to revenue risk as customers pull back from advertising in a recessionary environment. This appears clearly in Meta’s financials. An unrelated point would be that layoffs usually target the lowest-performing segment of the workforce and offer legal protection to the company against unlawful termination. Of course not all laid off workers are poor performers but there is obviously a correlation here.
- indymike 3y ago
  > But if that's the case, are we basically still in the early innings of this crisis? We might be, but more likely is that Meta is facing a reality that all huge companies eventually face: there isn't a play for megagrowth anymore once you are the size of big tech companies. You'll grow a little faster or slower than CAGR. So, since you can't grow the top line, you start looking at the bottom line and becoming more capital efficient. Laying off overpaid people is the start of the process.
- weare138 3y ago
  Wall St. is just a game of smoke and mirrors and all it takes is one crisis to expose this. They're not anticipating a crisis, they're not prepared for one. The system isn't built for long term stability, it's built to maximize short term gains. Wall St. has long since figured out there are no consequences to causing economic instability for short term gains because the government will just bail them out with our tax money anyways and they still get to keep their ill gotten gains. The consequences of their actions do not affect them and that is the problem.
- the_doctah 3y ago
  The "upcoming economic downturn" has been on the horizon for over a year now.
  - r3trohack3r 3y ago
    “The house can stay irrational longer than you can stay solvent”
- DebtDeflation 3y ago
  >the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios It's not just startups though. It's big tech. It's financial services. It's big and small non-tech non-financial companies as well. Everyone has been predicting a recession for well over a year now. We're living in a very unusual economic situation where some parts of the economy are getting crushed and others are doing fine. No one knows the answer to your question, but yes, one possible answer is that this is just the early phase of the downturn and it's just taking longer than usual to move to the next phase.
  - enriquec 3y ago
    what part of the economy is doing fine?
    - DebtDeflation 3y ago
      Most non-tech B2C stuff? GDP growth has slowed but it's still positive overall.
    - jonathankoren 3y ago
      Pretty much every part.
- laratied 3y ago
  I just found out the gym I go to is closing. The email said it was a lease dispute but there is no way it is just that. I suspect they remodeled and bought new equipment on variable rate credit and are getting absolutely squeezed with interest rates going up plus inflation plus lower demand post covid. Pretty sure we are in a slow moving car crash with the knock on effects of rates having gone from 0 to 5% just starting to slowly take effect in the broader economy.
  - dahwolf 3y ago
    The twisted thing is that this is the plan, it's intentional. The rapid rise of interest rates is to curve demand, which tames inflation. It's a really nice word for what is effectively targeted economic destruction. Job losses and bankruptcies are the casualties. And that's not all of it. In my country, aggressive plans to build lots of new homes are imploding. Buyers suddenly face an interest rate 5 times what it was before and opt-out. Builders stop building because nobody is buying.
- fairity 3y ago
  > Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right? Right, but there's a time lag effect between when capital dries up and companies go belly up. Many cash-guzzling companies had 12 months of runway. After layoffs and pivots to profitability, 12 months may get extended to 18-24 months, but ultimately, the traunch of businesses without real business fundamentals will shut down after cash runs out. The capital constriction really started in Q32022. Here's a graph: https://techcrunch.com/wp-content/uploads/2023/03/Screenshot-2023-03-28-at-9.06.04-AM.png https://techcrunch.com/wp-content/uploads/2023/03/Screenshot... So, my guess is a significant wave of startup bankruptcies will begin Q3 of this year, and peak several quarters later (assuming markets stabilize around current levels).
noahmbarr 3y ago
1st: This is awful for impacted employees. 2nd: When done well, this can lead to more nimble, faster, higher output organizations that get MORE done. Time will tell
- 1letterunixname 3y ago
  The problem is morale is in the tank with round-after-round of layoffs.
- 2023throwawayy 3y ago
  Or maybe, just maybe, don’t hire these people in the first place. Also if you think Meta is even capable of being nimble, I have quite a few pre-IPO bridges to sell you.
  - Aromasin 3y ago
    If your only measurable metric is how much the company grows, you hire for the economy you're in, not the one you're headed into. The grew massively in the pre and mid Covid boom, and shrunk massively since then. Only if you care about profitability and employee welfare do you put the brakes on hiring. The company in question is all about market cap. They've got enough money to bankrupt nations; the only metric the board care about is power.
apercu 3y ago
The capital class thinks that the serfs are getting too "uppity" with all this "pay me a living wage to help deal with insane inflation" and WFH. All the layoffs send signals so the working class has an existential dread. Also, there are very few exceptional leaders and there's some degree of copycatting here. But what do I know.
- monero-xmr 3y ago
  Or there are business lines that have no hope of ever being sustainable, and as a private business that has to earn a profit to survive, it makes sense to stop throwing money away.
  - contravariant 3y ago
    It probably doesn't help that the bar for sustainability was raised from 'generates any profit, ever' to 'generates a few % profit per USD invested each year, eventually'.
    - robertlagrant 3y ago
      > the bar for sustainability was raised from 'generates any profit, ever' to 'generates a few % profit per USD invested each year, eventually Those sound as though they overlap
      - contravariant 3y ago
        Well it's not as if it's changed massively, but it turns out quite a lot of stuff fit in the small gap between both definitions.
    - lotsofpulp 3y ago
      How much do you need your 401k/IRA to go up each year? How much does your city/state need its pension investments to go up each year? The productivity of the future (or now) has already been borrowed from, and it has to be delivered on, even if only nominally.
deleted 3y ago
[deleted]
drdrek 3y ago
Only correction is that the 100% share price pop is because of aggressive buybacks, not efficiency. They bought back 5% of the company last year. https://www.macrotrends.net/stocks/charts/META/meta-platforms/shares-outstanding https://www.macrotrends.net/stocks/charts/META/meta-platform...
- seldonnn 3y ago
  A 5% buyback does not explain a 100% increase in share price.
  - consp 3y ago
    Why doesn't it? You don't need to buy back everything to massively raise the price. Not everyone is selling all the time.
- melling 3y ago
  Completely wrong. We discussed META 6 months ago when the PE was 9. “The PE of 9 is low which is unusual for these companies. Apple is 24 and so is Microsoft” “Forward earnings suggests a P/E in the 20s in 2023” https://news.ycombinator.com/item?id=33366322 https://news.ycombinator.com/item?id=33366322
  - actuator 3y ago
    Stock price is forward looking. Meta does not pay dividends, so maybe it was the belief that the new initiatives won't work out and the old money sources will wither away.
idlewords 3y ago
The power move would be to conduct these layoffs in VR.
- mrguyorama 3y ago
  That would require the metaverse not to be a fucking joke.
- baby 3y ago
  I know it’s fun to hate on VR here but I wish more people would try it, get their mind blown, and shut up about it.
weare138 3y ago
The layoffs are part of Meta's so-called "year of efficiency," which CEO Mark Zuckerberg pitched as necessary for the company to slim down and become more nimble amid a challenging economy and weakened digital advertising market. When is our industry going to finally come to the realization the people running these companies don't actually seem to know what they're doing? Meta isn't hemorrhaging money because of a 'challenging economy' and 'weakened digital advertising market', Zuckerberg personally drove Meta into the ground with his misguided Metaverse pipe dream nobody really wanted to begin with.
- nova22033 3y ago
  When is our industry going to finally come to the realization the people running these companies don't actually seem to know what they're doing? Ugh...I hate sounding like a Meta/Zuck apologist but Meta is worth hundreds of billions of $$ and makes billions of $$ in profit every year...surely they know something about what they're doing..
  - robertlagrant 3y ago
    I just looked up the figures, and they're astonishing. Meta makes giant amounts of cash in ways I do not understand.
    - import_awesome 3y ago
      Meta's customers are advertisers. Their tools for advertisers are the best in the business. Facebook and Instagram users are the product.
    - mrguyorama 3y ago
      That box of cereal you buy at the grocery store for $5 does not cost $5 to manufacture, not even close. A shitload of money goes into advertising, and Google and Facebook own that entire industry nowadays, or near enough. They are basically collecting a tax on all commerce.
      - 3y ago
jiveturkey42 3y ago
I remember seeing some street interviews of fresh hired devs who were a cohort of 'just grind leetcode for 2 months and get a $200k+ job'. Were these people valuable contributors to building product?
- thebigwinning 3y ago
  This isn't related to the current article and sounds like a personal axe you want to grind.
debacle 3y ago
As a hiring manager, I know these roles are mostly non-technical, but right now hiring junior devs fresh out of college is easier than it has been in ~8 years. It seems like the kids with no skills being offered ~200k to sit around and learn are no longer being offered positions. This year we have postgrads applying for internship positions (paid), and our incredible intern from 2 years ago who went to Apple is taking a job with us soon.
- tokyolights2 3y ago
  I can see that. At my medium-sized company the management is taking the position of mostly hiring senior people right now, because we don't have many openings and they feel like they can be picky. I know my company isn't the only one with this mindset. That leaves a lot of arbitrage for people willing to bet on junior staff.
dangerwill 3y ago
While I do think it is tempting and broadly correct to have the discussion about these layoff rounds being partially social contagion among the C-suite class, needless RTO, and the end of 0% interest rates, we should also keep in mind that Facebook/Meta appears to be egregiously mismanaged. They burned billions of dollars and years of dev time on a product that was a bad joke at both the implementation and vision level, all while their mainstay products that actually make money are decaying in real time. Facebook is a product fully relegated to regurgitating content from meme pages to 40+ year olds + getting into extremely uninformed political arguments. It is a zombie product with no hope of revival. Instagram is better but is still showing shakiness in its business model and audience retention. And they can't monetize Whatsapp without ruining it. So they had to make a leap, but they chose an area (VR video games) that they had no pre-existing experience in and got nowhere in the 9 years since they bought Oculus. Oculus was the cutting edge in VR, so one must imagine that they also squandered that talent given the state Horizon Worlds is in.
standardUser 3y ago
Once again, I imagine the vast fortunes spent on finding, interviewing, more interviewing, MORE interviewing, onboarding and then firing all of these employees. Shouldn't dozens of high-ranking heads be rolling for such profound mismanagement and gargantuan waste of company resources?
- bricemo 3y ago
  Many managers and senior directors were also laid off.
- joncrane 3y ago
  No, it's the workers' fault for merely existing in a time of perceived economic downturn!
ausbah 3y ago
>In April, Meta reported first-quarter revenue rose 3% from $27.91 billion a year earlier, after three straight periods in which it declined. >Despite the cost cuts, Meta is still investing heavily into the nascent metaverse, and its Reality Labs unit, which is developing virtual reality and augmented reality technologies, logged a $3.99 billion operating loss while generating $339 million in sales in the first quarter. >Investors have praised Meta’s major cost-cutting, sending the social networking giant’s shares rising 180% to $246.74 since bottoming at under $89 in November. the company has money, management keeps investing in a dead end product & making workers pay the price for its lack of success, and the soulless ghouls who parts of the company make money off people losing their jobs this seems wrong
- folkrav 3y ago
  Completely obliviating the "human" part of what an employee is, reducing it down to a mere number on a balance sheet, will never sit right with me. In the end, what those companies are ultimately taking a risk on is people's livelihoods.
  - bazmattaz 3y ago
    I wonder if Meta will have a hard time finding quality talent after all these lay offs. Why should we trust Meta going forward? Same with Google and Amazon. They’re just not companies I trust to look after me as an employee and treat me like a human rather than a number on a balance sheet
    - stcroixx 3y ago
      That’s why they pay double what normal employers do, who will also fire you at any time.
      - saiya-jin 3y ago
        I see no tragedy here, everybody who actually cares sees the mission of this company clearly, and they are pretty open about it, so accepting that juicy paycheck comes with some baggage. Just another societal leech making the world worse one step at a time. Same as some high tech banking positions, you accept morally dubious work and get compensated adequately. I dont see people here complaining when ie Goldman Sachs fires 10% of the workforce either, rather some childish schadenfreude is not uncommon. Look at it this way - maybe those brilliant people will grok the life lesson and tune down their greed a bit and try to make the world a bit better place instead. Or go on. In any case, hardly something to get agitated about (unless folks write about themselves but then all above still stands)
1letterunixname 3y ago
Technical layoff from a Meta business group today. AMA.
- bazmattaz 3y ago
  What was the reason they gave? Can you post the comms/email you got?
- tomrod 3y ago
  No questions, just solidarity and a wish for your future successes.
sem000 3y ago
I definitely feel for the people getting laid off... But hear me out, I think this is going to be a good thing for those people and the economy. The achievers that are getting laid off now have the opportunity, or are forced, to take that risk to start their own thing and create tremendously more value to the world than they would have at Meta. Alternatively, they could take their tremendous skills to industries and sectors that could really use them and make transformative changes there.
- folkrav 3y ago
  > I think this is going to be a good thing for those people I want to see you say "You losing your job is actually freaking great!" to the face of one of to those 10k employees who now have to figure out how to pay the next couple of months' mortgage while they try to find a job in a now cautious market overflowing with laid off employees. And please, make sure to tell them it's good for the economy, that should make them even happier. You cannot seriously be saying you feel for them and tell them them losing their livelihood in this economy is good for them either. Not everyone wants to have a high impact transformative job or change the world. Tons of people - I'd say most - work to pay the bills.
  - pb7 3y ago
    >now have to figure out how to pay the next couple of months' mortgage If I had to guess, probably with the surplus of their previous massive compensations and extremely generous severance.
    - folkrav 3y ago
      Kind of missing the forest for the trees here. But okay, let's play that game. The 21k employees they laid off were _all_ high comp workers, really? The 150k employees that got laid off since the beginning of the year, just in tech? The slightly smaller amount from last year? All those workers from other industries? Come the F on.
      - 3y ago
nobodyandproud 3y ago
So reward a company by cutting their ability to innovate, over reining in the mismanagement and leadership disaster at the top which put the business into this position in the first place. I really despise the short-term thinking and lack of vision that the investment class and experts possess (or lack).

156 points by mfiguiere 3y ago

[flagged]

Context: this is the final phase of the layoffs announced a few months ago. Nothing new, except for those getting laid off.

scrum-treats 3y ago
Yes, except there's two waves of layoffs. The wave that is announced, like you mention, and the wave of smaller layoffs that does not have to be announced. This is to say, more people are being laid off than officially reported. This is true for Facebook and Amazon alike.

bratao 3y ago

I've got a burning question on my mind and I'd really appreciate some insights. From what I can tell, the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios. But if that's the case, are we basically still in the early innings of this crisis? Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right?

matt-smith 3y ago
I would agree. Interest rate hikes generally take a while to actually work through the economy. This current hiking cycle is the fastest we've raised rates, especially considering the interest payments required for our debt. I don't think it'll be a soft landing.
tmpz22 3y ago
Startups aren’t a great signal - especially if you’re only looking at Silicon Valley startups. For one they employ way fewer people (while garnering a disproportionate amount of tech headlines). For the bigger public companies their data is available through yearly SEC filings. Just look it up. They’re making record high revenues. Layoffs for them are an optimization not existential. They could’ve been fine laying off fewer people but it protects them from their growing competitors and longer term global trends. Doomsaying will always be popular but is often misguided. You’re basically relying on a broken clock being right twice a day.
alberth 3y ago
I’m no expert, but how I understand it - it seems the economy is very fragile at the moment. Things aren’t good, or bad. But all economic signals point to it potentially turning very bad, quickly.
n4r9 3y ago
I don't think it's necessarily so bleak. Another interpretation is that big tech companies had a recruitment drive over the pandemic when revenue was high. Now that revenue growth has slowed, they're trimming the fat.
- WesolyKubeczek 3y ago
  Also: hey, those pesky coders and other white collars got way too expensive, let’s lay them off in droves to make it the employer’s market and rehire some back, but on our terms and not theirs (cheaper, no perks, but they will be glad to land a job anyway). Source: a little bird told me some companies do such rehiring, and for many H1B holders it is an offer they can’t refuse.
  - lucidone 3y ago
    Had a friend laid off and saw his job posted not a month later (with the stereotypical #hiring LinkedIn corpojargon). Many employees make a big hubbub of the org being employee-centric, people driven, blah blah blah. I almost joined their org because of how my friend talked it up last year. Despicable.
    - WesolyKubeczek 3y ago
      > Many employees make a big hubbub of the org being employee-centric, people driven, blah blah blah. It never is. If anything, tech corporations that have been hot startups two decades ago are shedding their larval teletubby skin and transform from sheltered colorful environments suited for men-children into... well, just your average run-of-the-mill ruthless capitalist businesses your boomer parents/grandparents know and loathe. The thing is, if they mention they are people-driven casually, they likely know the notion — you can expect some respect for employee rights (provided you do your own homework, can haggle like a used car salesperson, and can tell decision makers from HR personnel); if they emphasise it so much it reminds you of a cult, or if they don't mention it at all, but are instead brimming with descriptions of the company's grandeur, run — if you have anywhere to run these days.
TexanFeller 3y ago
I think you're right, I believe we're in a recession, just not all experiencing it at the same time. I'm planning for it to "trickle down" soon.
- scrum-treats 3y ago
  Agreed. We're in a recession. It's is one of the only things that does "trickle down." Haha. We've all been experiencing recession since last year, when food and gas prices started to increase. While some regions are more impacted than others, the price of everything has increased. For those who make over a certain amount (i.e., $100K/year) it's less noticeable than for those making under that. Because budgeting. Bezos himself warned of this back in November 2022: https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-warning-people-about-what-not-to-buy/ar-AA149n3Q https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-.... When ultra-rich tell you it's going to be bad, probably best to plan for that. Also, where is the government in all this? Why are ultra-rich still not paying taxes? It's quite an alarming and vulnerable position for majority of people in the United States right now.
specialp 3y ago
Startup layoffs are very much related to the funding environment. I work for a startup that laid off half our staff. There have been very few series C and later this year. So if you are a startup you need to decrease burn now and get to having good MRR. You can't aggressively grow at a loss and expect to get more funding for that with few exceptions. When VC money was much more plentiful people hired a lot without the pressure to become more sustainable. For further funding rounds they had to show that they were growing in some way. SVB collapse was huge in the startup world not just due to the people who had deposits there. With larger companies like Meta, their multiples are also based on growth. So even though large tech shows no signs of being financially insolvent, they will have to still deliver growth in profit with flat to declining revenue. So the focus then is to decrease expenditures in lieu of revenue. There was a ton of hiring the last few year along with the tail wind of tons of money out there. Now it needs to rebalance.
throw1234651234 3y ago
Note that by the time "normal people" really felt the 2008-2009 recession, the stock market was already bottomed out and going back up. Just something I keep in mind.
- jiveturkey42 3y ago
  What are "normal people"?
- rchaud 3y ago
  In other words, the stock market went up when governments instituted ZIRP and the enormous multiplier effect of the bailouts kicked in.
mark_l_watson 3y ago
+1 for asking the correct questions! Of course leaders of companies understand the current economic downturn and they to some degree can predict future economic problems better than the average citizen. While hiking yesterday I was talking with a friend about history, and how all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view: USA, England, France, Middle Ages powers, Romans, etc. Just as elites in a declining power will naturally “loot” as much as they can to ensure the long term economic well being of their family, doesn’t it make sense that corporate leaders will cut staff, and generally extract as much profit as they can short term?
- robertlagrant 3y ago
  > all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view What's the data? Be interested to read about this correlation.
  - mark_l_watson 3y ago
    I may have been in error on my opinion. I just did manual web search, and asked ChatGPT+Web and Bing+ChatGPT and could not find much to support my opinion. I will keep looking. Anyway, thanks for challenging my opinion - I am likely changing my mind on this.
    - robertlagrant 3y ago
      No worries. I am not a great student of history, but I have found a recent surprisingly strong wave of people appearing who are entirely cynical about the history of the West, and will believe any negative statement about it. Obviously some of the negative statements are true, but it's always worth a little prod to see :)
  - red-iron-pine 3y ago
    Imperialism, Colonialism, the Gilded Age, etc.
neom 3y ago
If the Fed raises rates too high or keeps them high for too long, it will push the economy into a deep deep recession. As we're always using lagging indicators, economists are generally unsure where we are in the cycle, some folks believe it's been pushed to far for too long, and further pushing is going to cause either a deep recession or, even worse, stagflation. I'd love to know what Volcker thinks about our current situation.
- onlyrealcuzzo 3y ago
  > If the Fed raises rates too high or keeps them high for too long, it will push the economy into a deep deep recession. They'll just bring back out their bazooka and lower rates again and cause more inequality. Tale as old as time.
- nstj 3y ago
  > I'd love to know what Volcker thinks about our current situation. Volcker is dead.[0] [0]: https://en.m.wikipedia.org/wiki/Paul_Volcker https://en.m.wikipedia.org/wiki/Paul_Volcker
  - neom 3y ago
    ... hence I can't know what he thinks.
- tmaly 3y ago
  I they are only staring at lagging indicators, then it seems they would likely overshoot on keeping interest rates too high for too long. I am surprised they have not come up with better models given the technology and data available.
- dahwolf 3y ago
  Don't know about the FED but the ECB has openly stated that they will keep raising rates as long as necessary to get inflation back to ~2%. It doesn't seem to be working, for very obvious reasons: demand for energy and food (main cause of inflation) isn't that elastic. Further, there's no unemployment, so people spending and will spend only more because of inflation itself. The one thing that could motivate people to stop spending, raising bank savings interest rates to something meaningful, is oddly not in the playbook.
maxlamb 3y ago
That’s just an excuse the CEO’s are using to avoid blame. They over-hired during 2020 and 2021 “because everyone was doing it” and now they realize they have 10’s of thousands of employees with nothing to do and huge salaries so it makes no sense to keep them.
- evantbyrne 3y ago
  I can't speak for Meta specifically, but mass layoffs don't generally correlate with worker productivity. At the end of the day it is all about CEOs making shareholders happy so they get rewarded with juicy bonuses. Shareholders see their stonks going down so they want cost cutting. People making decisions are not always aligned with the long-term interests of the companies they manage.
  - specialist 3y ago
    Further Yes and: Cutting costs, versus investing, means the PHBs have decided the ride is over. In other words, the combo of layoffs and corporate buybacks is about profit taking (while they can). Every business, market, etc, has a lifecycle. Social media, and Meta in particular, has definitely entered the Computer Associates phase of its lifecycle. So now it's time to cut to the bone, extract as much blood as possible. Such is life. It was a fun grift while it lasted. Hopefully, adjacent malignancies such as digital advertising and freemium will plateau as well. That'll be a relief. They can join informercials, shopping networks, and supplements in the backwaters of human culture.
  - maxlamb 3y ago
    If it were as simple as “layoffs/cost cutting make stock go up” then CEO’s would have never had hiring surge during Covid. The CEO’s job is always to maximize long term profits. Layoffs make stock go up only when it’s clear profits won’t change much with the layoffs. And if layoffs won’t decrease profits, why were these employees there in the first place?
    - skinnymuch 3y ago
      During market growth stages, laying off would be something that would be a red flag. You only focused on a small part of the person’s comment. The comment also said when stock is going down, lay offs help. They likely aren’t talking in absolutes anyway Were there hiring surges for companies whose valuations were not going up?
knallfrosch 3y ago
The Economist says that the layed-off workers were bloat: "So far techies themselves have been mostly spared, observes Tim Herbert of the Computing Technology Industry Association, a trade body. Instead, the axe has fallen mainly on business functions such as sales and recruitment. These had grown steadily as a share of technology-industry employment in recent years, a telltale sign of bloat." https://www.economist.com/business/2023/03/27/where-have-all-the-laid-off-tech-workers-gone https://www.economist.com/business/2023/03/27/where-have-all... The reality is that noone knows whether there's going to be normal growth, stagnation, or a recession, but one thing is for sure: The tech boom of the pandemic has ended along with the pandemic. So these companies don't have proprietary magic insights and can reliably forecast a recession (as was your question), they're simply responding to the end of the boom and rising interest rates.
- thethimble 3y ago
  A related point would be Meta is exposed to revenue risk as customers pull back from advertising in a recessionary environment. This appears clearly in Meta’s financials. An unrelated point would be that layoffs usually target the lowest-performing segment of the workforce and offer legal protection to the company against unlawful termination. Of course not all laid off workers are poor performers but there is obviously a correlation here.
indymike 3y ago
> But if that's the case, are we basically still in the early innings of this crisis? We might be, but more likely is that Meta is facing a reality that all huge companies eventually face: there isn't a play for megagrowth anymore once you are the size of big tech companies. You'll grow a little faster or slower than CAGR. So, since you can't grow the top line, you start looking at the bottom line and becoming more capital efficient. Laying off overpaid people is the start of the process.
weare138 3y ago
Wall St. is just a game of smoke and mirrors and all it takes is one crisis to expose this. They're not anticipating a crisis, they're not prepared for one. The system isn't built for long term stability, it's built to maximize short term gains. Wall St. has long since figured out there are no consequences to causing economic instability for short term gains because the government will just bail them out with our tax money anyways and they still get to keep their ill gotten gains. The consequences of their actions do not affect them and that is the problem.
the_doctah 3y ago
The "upcoming economic downturn" has been on the horizon for over a year now.
- r3trohack3r 3y ago
  “The house can stay irrational longer than you can stay solvent”
DebtDeflation 3y ago
>the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios It's not just startups though. It's big tech. It's financial services. It's big and small non-tech non-financial companies as well. Everyone has been predicting a recession for well over a year now. We're living in a very unusual economic situation where some parts of the economy are getting crushed and others are doing fine. No one knows the answer to your question, but yes, one possible answer is that this is just the early phase of the downturn and it's just taking longer than usual to move to the next phase.
- enriquec 3y ago
  what part of the economy is doing fine?
  - DebtDeflation 3y ago
    Most non-tech B2C stuff? GDP growth has slowed but it's still positive overall.
  - jonathankoren 3y ago
    Pretty much every part.
laratied 3y ago
I just found out the gym I go to is closing. The email said it was a lease dispute but there is no way it is just that. I suspect they remodeled and bought new equipment on variable rate credit and are getting absolutely squeezed with interest rates going up plus inflation plus lower demand post covid. Pretty sure we are in a slow moving car crash with the knock on effects of rates having gone from 0 to 5% just starting to slowly take effect in the broader economy.
- dahwolf 3y ago
  The twisted thing is that this is the plan, it's intentional. The rapid rise of interest rates is to curve demand, which tames inflation. It's a really nice word for what is effectively targeted economic destruction. Job losses and bankruptcies are the casualties. And that's not all of it. In my country, aggressive plans to build lots of new homes are imploding. Buyers suddenly face an interest rate 5 times what it was before and opt-out. Builders stop building because nobody is buying.
fairity 3y ago
> Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right? Right, but there's a time lag effect between when capital dries up and companies go belly up. Many cash-guzzling companies had 12 months of runway. After layoffs and pivots to profitability, 12 months may get extended to 18-24 months, but ultimately, the traunch of businesses without real business fundamentals will shut down after cash runs out. The capital constriction really started in Q32022. Here's a graph: https://techcrunch.com/wp-content/uploads/2023/03/Screenshot-2023-03-28-at-9.06.04-AM.png https://techcrunch.com/wp-content/uploads/2023/03/Screenshot... So, my guess is a significant wave of startup bankruptcies will begin Q3 of this year, and peak several quarters later (assuming markets stabilize around current levels).

noahmbarr 3y ago

1st: This is awful for impacted employees. 2nd: When done well, this can lead to more nimble, faster, higher output organizations that get MORE done. Time will tell

1letterunixname 3y ago
The problem is morale is in the tank with round-after-round of layoffs.
2023throwawayy 3y ago
Or maybe, just maybe, don’t hire these people in the first place. Also if you think Meta is even capable of being nimble, I have quite a few pre-IPO bridges to sell you.
- Aromasin 3y ago
  If your only measurable metric is how much the company grows, you hire for the economy you're in, not the one you're headed into. The grew massively in the pre and mid Covid boom, and shrunk massively since then. Only if you care about profitability and employee welfare do you put the brakes on hiring. The company in question is all about market cap. They've got enough money to bankrupt nations; the only metric the board care about is power.

apercu 3y ago

The capital class thinks that the serfs are getting too "uppity" with all this "pay me a living wage to help deal with insane inflation" and WFH. All the layoffs send signals so the working class has an existential dread. Also, there are very few exceptional leaders and there's some degree of copycatting here. But what do I know.

monero-xmr 3y ago
Or there are business lines that have no hope of ever being sustainable, and as a private business that has to earn a profit to survive, it makes sense to stop throwing money away.
- contravariant 3y ago
  It probably doesn't help that the bar for sustainability was raised from 'generates any profit, ever' to 'generates a few % profit per USD invested each year, eventually'.
  - robertlagrant 3y ago
    > the bar for sustainability was raised from 'generates any profit, ever' to 'generates a few % profit per USD invested each year, eventually Those sound as though they overlap
    - contravariant 3y ago
      Well it's not as if it's changed massively, but it turns out quite a lot of stuff fit in the small gap between both definitions.
  - lotsofpulp 3y ago
    How much do you need your 401k/IRA to go up each year? How much does your city/state need its pension investments to go up each year? The productivity of the future (or now) has already been borrowed from, and it has to be delivered on, even if only nominally.

deleted 3y ago

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drdrek 3y ago

Only correction is that the 100% share price pop is because of aggressive buybacks, not efficiency. They bought back 5% of the company last year. https://www.macrotrends.net/stocks/charts/META/meta-platforms/shares-outstanding https://www.macrotrends.net/stocks/charts/META/meta-platform...

seldonnn 3y ago
A 5% buyback does not explain a 100% increase in share price.
- consp 3y ago
  Why doesn't it? You don't need to buy back everything to massively raise the price. Not everyone is selling all the time.
melling 3y ago
Completely wrong. We discussed META 6 months ago when the PE was 9. “The PE of 9 is low which is unusual for these companies. Apple is 24 and so is Microsoft” “Forward earnings suggests a P/E in the 20s in 2023” https://news.ycombinator.com/item?id=33366322 https://news.ycombinator.com/item?id=33366322
- actuator 3y ago
  Stock price is forward looking. Meta does not pay dividends, so maybe it was the belief that the new initiatives won't work out and the old money sources will wither away.

idlewords 3y ago

The power move would be to conduct these layoffs in VR.

mrguyorama 3y ago
That would require the metaverse not to be a fucking joke.
baby 3y ago
I know it’s fun to hate on VR here but I wish more people would try it, get their mind blown, and shut up about it.

weare138 3y ago

The layoffs are part of Meta's so-called "year of efficiency," which CEO Mark Zuckerberg pitched as necessary for the company to slim down and become more nimble amid a challenging economy and weakened digital advertising market. When is our industry going to finally come to the realization the people running these companies don't actually seem to know what they're doing? Meta isn't hemorrhaging money because of a 'challenging economy' and 'weakened digital advertising market', Zuckerberg personally drove Meta into the ground with his misguided Metaverse pipe dream nobody really wanted to begin with.

nova22033 3y ago
When is our industry going to finally come to the realization the people running these companies don't actually seem to know what they're doing? Ugh...I hate sounding like a Meta/Zuck apologist but Meta is worth hundreds of billions of $$ and makes billions of $$ in profit every year...surely they know something about what they're doing..
- robertlagrant 3y ago
  I just looked up the figures, and they're astonishing. Meta makes giant amounts of cash in ways I do not understand.
  - import_awesome 3y ago
    Meta's customers are advertisers. Their tools for advertisers are the best in the business. Facebook and Instagram users are the product.
  - mrguyorama 3y ago
    That box of cereal you buy at the grocery store for $5 does not cost $5 to manufacture, not even close. A shitload of money goes into advertising, and Google and Facebook own that entire industry nowadays, or near enough. They are basically collecting a tax on all commerce.
    - 3y ago

jiveturkey42 3y ago

I remember seeing some street interviews of fresh hired devs who were a cohort of 'just grind leetcode for 2 months and get a $200k+ job'. Were these people valuable contributors to building product?

thebigwinning 3y ago
This isn't related to the current article and sounds like a personal axe you want to grind.

debacle 3y ago

As a hiring manager, I know these roles are mostly non-technical, but right now hiring junior devs fresh out of college is easier than it has been in ~8 years. It seems like the kids with no skills being offered ~200k to sit around and learn are no longer being offered positions. This year we have postgrads applying for internship positions (paid), and our incredible intern from 2 years ago who went to Apple is taking a job with us soon.

tokyolights2 3y ago
I can see that. At my medium-sized company the management is taking the position of mostly hiring senior people right now, because we don't have many openings and they feel like they can be picky. I know my company isn't the only one with this mindset. That leaves a lot of arbitrage for people willing to bet on junior staff.

dangerwill 3y ago

While I do think it is tempting and broadly correct to have the discussion about these layoff rounds being partially social contagion among the C-suite class, needless RTO, and the end of 0% interest rates, we should also keep in mind that Facebook/Meta appears to be egregiously mismanaged. They burned billions of dollars and years of dev time on a product that was a bad joke at both the implementation and vision level, all while their mainstay products that actually make money are decaying in real time. Facebook is a product fully relegated to regurgitating content from meme pages to 40+ year olds + getting into extremely uninformed political arguments. It is a zombie product with no hope of revival. Instagram is better but is still showing shakiness in its business model and audience retention. And they can't monetize Whatsapp without ruining it. So they had to make a leap, but they chose an area (VR video games) that they had no pre-existing experience in and got nowhere in the 9 years since they bought Oculus. Oculus was the cutting edge in VR, so one must imagine that they also squandered that talent given the state Horizon Worlds is in.

standardUser 3y ago

Once again, I imagine the vast fortunes spent on finding, interviewing, more interviewing, MORE interviewing, onboarding and then firing all of these employees. Shouldn't dozens of high-ranking heads be rolling for such profound mismanagement and gargantuan waste of company resources?

bricemo 3y ago
Many managers and senior directors were also laid off.
joncrane 3y ago
No, it's the workers' fault for merely existing in a time of perceived economic downturn!

ausbah 3y ago

>In April, Meta reported first-quarter revenue rose 3% from $27.91 billion a year earlier, after three straight periods in which it declined. >Despite the cost cuts, Meta is still investing heavily into the nascent metaverse, and its Reality Labs unit, which is developing virtual reality and augmented reality technologies, logged a $3.99 billion operating loss while generating $339 million in sales in the first quarter. >Investors have praised Meta’s major cost-cutting, sending the social networking giant’s shares rising 180% to $246.74 since bottoming at under $89 in November. the company has money, management keeps investing in a dead end product & making workers pay the price for its lack of success, and the soulless ghouls who parts of the company make money off people losing their jobs this seems wrong

folkrav 3y ago
Completely obliviating the "human" part of what an employee is, reducing it down to a mere number on a balance sheet, will never sit right with me. In the end, what those companies are ultimately taking a risk on is people's livelihoods.
- bazmattaz 3y ago
  I wonder if Meta will have a hard time finding quality talent after all these lay offs. Why should we trust Meta going forward? Same with Google and Amazon. They’re just not companies I trust to look after me as an employee and treat me like a human rather than a number on a balance sheet
  - stcroixx 3y ago
    That’s why they pay double what normal employers do, who will also fire you at any time.
    - saiya-jin 3y ago
      I see no tragedy here, everybody who actually cares sees the mission of this company clearly, and they are pretty open about it, so accepting that juicy paycheck comes with some baggage. Just another societal leech making the world worse one step at a time. Same as some high tech banking positions, you accept morally dubious work and get compensated adequately. I dont see people here complaining when ie Goldman Sachs fires 10% of the workforce either, rather some childish schadenfreude is not uncommon. Look at it this way - maybe those brilliant people will grok the life lesson and tune down their greed a bit and try to make the world a bit better place instead. Or go on. In any case, hardly something to get agitated about (unless folks write about themselves but then all above still stands)

1letterunixname 3y ago

Technical layoff from a Meta business group today. AMA.

bazmattaz 3y ago
What was the reason they gave? Can you post the comms/email you got?
tomrod 3y ago
No questions, just solidarity and a wish for your future successes.

sem000 3y ago

I definitely feel for the people getting laid off... But hear me out, I think this is going to be a good thing for those people and the economy. The achievers that are getting laid off now have the opportunity, or are forced, to take that risk to start their own thing and create tremendously more value to the world than they would have at Meta. Alternatively, they could take their tremendous skills to industries and sectors that could really use them and make transformative changes there.

folkrav 3y ago
> I think this is going to be a good thing for those people I want to see you say "You losing your job is actually freaking great!" to the face of one of to those 10k employees who now have to figure out how to pay the next couple of months' mortgage while they try to find a job in a now cautious market overflowing with laid off employees. And please, make sure to tell them it's good for the economy, that should make them even happier. You cannot seriously be saying you feel for them and tell them them losing their livelihood in this economy is good for them either. Not everyone wants to have a high impact transformative job or change the world. Tons of people - I'd say most - work to pay the bills.
- pb7 3y ago
  >now have to figure out how to pay the next couple of months' mortgage If I had to guess, probably with the surplus of their previous massive compensations and extremely generous severance.
  - folkrav 3y ago
    Kind of missing the forest for the trees here. But okay, let's play that game. The 21k employees they laid off were _all_ high comp workers, really? The 150k employees that got laid off since the beginning of the year, just in tech? The slightly smaller amount from last year? All those workers from other industries? Come the F on.
    - 3y ago

nobodyandproud 3y ago

So reward a company by cutting their ability to innovate, over reining in the mismanagement and leadership disaster at the top which put the business into this position in the first place. I really despise the short-term thinking and lack of vision that the investment class and experts possess (or lack).