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De-scoping is also a commonly-cited result of higher interest rates. We recently lived through a prolonged episode of zero-interest-rate-policy (ZIRP), which en
by nickff 2y ago
De-scoping is also a commonly-cited result of higher interest rates. We recently lived through a prolonged episode of zero-interest-rate-policy (ZIRP), which encouraged long-term and risky projects. When interest rates go up, the minimum acceptable return-on-investment (ROI) required to lure investment money away from low-risk investments like government bonds also increases correspondingly.
- Bukhmanizer 2y agoYeah I think there are a bunch of different reasons that corporations are doing less, interest rates are a major factor, but the point is that it isn’t exactly the “AI is taking our jobs” narrative that people want it to be.
- nickff 2y agoAgreed! Uncertainty to do with short term economic issues, medium term geopolitical risk (Trump, China, Russia, etc.), and longer-term issues (national debt, Medicare, etc.) also shouldn’t be underestimated.
- UncleOxidant 2y agoIt seems like we're in kind of a lull that's being caused by expectations of what AI is about to be able to do. And these expectations could be completely wrong. But it's already causing changes in corporate planning and spending.
- walterbell 2y agoStarting in 2022, US companies could not deduct SWE salary expenses in the same year, only over 5 years like hardware CapEx. For big companies, this will roll over in 2027. Meanwhile, LLM expenses can be written off immediately as OpEx. https://news.ycombinator.com/item?id=37494601 https://news.ycombinator.com/item?id=37494601
- emgeee 2y agogreat point, thanks for sharing
- trollbridge 2y agoThis is probably the single dumbest aspect of US tax policy. If you hire Canadian software engineers, you can dodge this and deduct the expenses in your Canadian subsidiary. If you outsource software dev to another company you can usually get away with expensing it.
- __turbobrew__ 2y agoThat is a good point, my company recently expanded to Canada pretty aggressively and I wonder if this was a factor. Historically there has been a brain drain from Canada to the US, but if Canada can set up favourable policies for companies maybe they can start reversing that.
- walterbell 2y agoResearch outside the US = 15 years amortization? https://www.grantthornton.com/insights/alerts/tax/2023/flash/irs-guidance-clarifies-amortization-under-section https://www.grantthornton.com/insights/alerts/tax/2023/flash... The TCJA amended Section 174 by removing the option to expense SRE expenditures, instead requiring taxpayers to capitalize and amortize SRE expenditures over a period of five years (attributable to domestic research) or 15 years (attributable to foreign research)
- trollbridge 2y agoYou create an “arm’s length” Canadian subsidiary that then licences the software to you. The Canadian government also heavily subsidises this. Smart of them to do so.
- nickff 2y agoAFAIK the Canadian government’s ‘subsidy’ is to allow R&D expenses (but not investments) to be fully deducted in the year they are made. This seems analogous to the old rule in the USA.
- echelon 2y agoI'd be willing to bet that the biggest reason is that there hasn't been any antitrust action against the big tech companies. They just sit at the top, siphoning value from every other market in the world. If you need to use the internet in any way, FAANG taxes you. None of these big tech companies really need to grow bigger. The smartphone is essentially done. AWS just prints money. Social/consumer apps are "done". What more is for them to do but collect rent? The US government needs to break them all up. That'll oxygenate the entire tech sector, unlock value for investors, and kickstart the playing field for startups. Google, Apple, Amazon, Meta, and maybe Microsoft. Break them up.
- zombiwoof 2y agoMaybe Microsoft
- echelon 2y agoApart from their gaming department absorbing every big competitor, I can't think of ways Microsoft is abusing monopoly power like the rest of the mentioned companies.
- autoexec 2y agoHow about turning Windows into an advertising and data collection platform. Sucking up vast amounts of people's personal data, even corporate data, to leverage against their customers so that MS can take in more profit.
- globnomulous 2y agoI'm much less concerned about this -- as far as I'm aware, the data collection is standard telemetry that any software provider would want, and the stuff related to advertising is, I think, largely concerned with app recommendations in the Microsoft store -- than I am about anti-competitive bundling practices.
- 2y ago
- nicbou 2y agoAt the same time, ZIRP completely distorted the market and gave us multi-billion dollar companies that never had a workable business models, but filled offices all over the world with useless employees. I really enjoyed having a chief happiness officer, but I don't think the company needed it.
- coffeebeqn 2y agoIt’s easy to have happy employees when you have infinite money and no pressure to ever build a sustainable product. Personal experience. Things do take a very sudden and powerful turn when the bubble bursts
- nyarlathotep_ 2y agoYep. This is part of the core of the unspoken reality in this article--there were/are way too many people, even in nominally "technical" roles, for a well-adjusted market. A large portion of this employment is a direct result of the "prosperity" of the ZIRP era, which has now ended.
- jayd16 2y agoIt also feels like the investor class has lost the ability to make strong/informed bets after the decade of cheap slot pulls.