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I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI and more to do wit

by jppope 1y ago

I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI and more to do with the revenue outlook or the growth outlook. Basically, they are "narrative shopping" to save face with the stock market... and IMO it might work. Just a basic sniff test though - If AI enables developer productivity that would translate to more revenue, reduced costs, reduced risk, etc. The bottom line numbers would get better. With more resources available your next move is to decrease spending on more productivity enhancements or revenue opportunities? They don't want more revenue? Doesn't add up. The better headline would be: "Amazon CEO Andy Jazzy faced with poor financial outlook tries to convince the public that downsizing is due to improvements in AI"

sahaj 1y ago
It has more to do with the workforce wage demands and their output. Imagine if we all think that AI will get rid of our job at some point. We will work harder and demand less money do that work. All large corps did huge coordinated cuts in workforce in 2022-2023, and now there's this narrative. They are simply trying to get us to do more work for less money.
- jppope 1y ago
  Even hiring people at minimum wage costs a lot of money... Maybe they are firing people so they can rehire at a lower cost, but thats a really expensive way to get people to work for less.
jchw 1y ago
Even though I can fathom a world where AI tools could somehow lead to reduced head count, I think this is the only reasonable interpretation right now. After all, tech companies have been beating the "downsizing due to AI" drum for a really long time now, and for almost the entire time it has been very blatantly obvious bullshit.
- another_twist 1y ago
  What amazes me is the vile shit directed towards software engineers. Remember that letter from the dickhead investor to Google demanding to know why engineers were paid 450k. Or just PMs beating the drum about how you don't need engineers ? My reaction to that was hey all the tools you love to throw into engineers faces were devtools. You know the dev part is important. Remember Bubble, their whole schtick was you dont need a technical cofounder and I have yet to see a unicorn Bubble app. Instead of talking about how we all can collaborate, people really are hating on engineers for nothing.
fsndz 1y ago
Klarna tried this narrative shopping strategy first and it backfired: https://fsndzomga.medium.com/i-have-no-confidence-in-klarna-e47ae563c00e?sk=26d4ae91f8ebb58b7abe1465356b4b55 https://fsndzomga.medium.com/i-have-no-confidence-in-klarna-...
whatever1 1y ago
In my case AI has boosted my productivity towards directions that are not on the critical path for a project, but nevertheless very nice to have. For example now I have a ton of graphs and interactive UI pages that interact with my code. Made everyone’s lives easier, but at least in my case it was not a dealbreaker not having these, and frankly nobody was willing to pay for them.
CharlesW 1y ago
> I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI… You can legitimately argue "far less to do with", but it's definitely not nothing. There are countless projects underway where AI will allow for 10% reductions with zero business impact in the short term, and 25-40% reductions (sometimes more) by 2030.
- another_twist 1y ago
  I am curious, where are these numbers from ?
  - CharlesW 1y ago
    These are realistic (IMHO, of course) projections based on studies I've helped with and conversations I've had with my network. Naturally, the impact will vary enormously based on roles, and the timelines won't be evenly distributed. But these kinds of projections aren't unusual at all — if you use the Deep Research capabilities of modern models to build a list of public projections for your own research, you'll see similar estimates. These reports will generally use the framing of "efficiency gains", where AI will "free-up employees from drudgery to focus on higher-value work", but my intuition is that a future where all individual contributors are elevated to Director of Agentic Workflows is probably not the most likely outcome.
    - diamond559 1y ago
      What studies? MIT estimates only 5% of the workforce can be replaced long term. What tasks are you employees using AI on, CMU shows the best llm only has a ~30% success rate for basic business tasks. Are you a vibe coding start up or something?
      - CharlesW 1y ago
        > MIT estimates only 5% of the workforce can be replaced long term. The model by MIT's Daron Acemoglu estimates that ~5% of U.S. tasks can be completely and profitably automated by AI within ten years. It was expressly not a head-count forecast, and didn't attempt to quantify the headcount reduction that AI augmentation could enable.
burnte 1y ago
True, however the pitch itself is telling. They're not saying "we're expecting AI to boost the productivity of our employees by 20% with no increase in labor costs." They're saying "we're going to spend less on humans" because investors are more ok with spending money on machines than people. That's the problem, they're not looking at how AI enhances people, they're looking at how it can eliminate people.
- thunky 1y ago
  Why would you expect different? Companies don't exist to benefit their employees (or their customers).
  - bredren 1y ago
    Boosting second sentence here, because I think it is a foundational problem for a company trying to behave like Apple. If the company was owned primarily by employees and customers I think it would be more likely to carry out its mission.
  - burnte 1y ago
    I would expect different because there are two major philosophies in business, and they indicate the direction a business will go. There is the philosophy of focus on profit/growth, or focus on costs/value-extraction. Before anyone straw mans "but you can do both", yes, you can, but only one can be the MAIN way you run a business. A focus on profit and growth will lead to seeing employees as strategic resources ready to be deployed to serve the business and generate revenue. One wants to enable those employees with the best matching tools that enable the employee to do more. In this case, a growth leader would say "AI can make our people 20% more productive without adding headcount, and lets us refocus another 10% of employees to more productive/profitable tasks, better utilizing the internal knowledge those employees have. These are the companies that tend to become more profitable and successful because leaders understand that good employees are an asset, not a liability. The other focus, on costs and value extraction, see the business as a zero sum game; in order to increase profits, we must decrease costs or find a way to extract more value from customers. These are the companies that will reduce service levels with no change in pricing to improve profits. They'll understaff a facility to see the "true minimum number of employees" (the bare minimum), depending on some employees to go "above and beyond" to get things done for no additional compensation. They'll get rid of expensive employees, settle for replacements employees who are 75% as good but will work for 65% of the money, and keep headcount the same; worse service, but proportionally lower costs. These are the companies that maybe be huge, but they're not market leaders, they're reactive and basically rent takers. When a leader begins to resent employees being paid to do their work, it's time for that leader to go, because they'll simply start that company on a decline. Basically, there are those who understand the difference between cost and value, and those who are too focused on cost to even understand value. If your first response to AI is "we can cut people" you're in the latter camp. Your first reaction is to cut costs, rather than to exploit the new tech for even higher profits. Eyes on the future instead of the past is how you grow and succeed. Employee success leads to company success. Employees are not a cost center.
crop_rotation 1y ago
> Just a basic sniff test though - If AI enables developer productivity that would translate to more revenue, reduced costs, reduced risk, etc. The bottom line numbers would get better. With more resources available your next move is to decrease spending on more productivity enhancements or revenue opportunities? They don't want more revenue? Doesn't add up. If that was true then the companies should never have been doing layoffs, as all these companies are generating tens of billions of dollars in revenue. > The better headline would be: "Amazon CEO Andy Jazzy faced with poor financial outlook tries to convince the public that downsizing is due to improvements in AI" This is assuming that companies have the capacity to keep increasing revenue by adding more workforce, which is just not true. At some point you hit diminishing returns with more workers. The same goes for Agent workers. To chase more revenue you need a lot more than just more SWEs and a lot of that is not currently similarly scalable.
conartist6 1y ago
Yes, your point about revenue is very astute
cyanydeez 1y ago
Reduce it further: they have a cudgel to manipulate lower salaries with. So it really doesnt matter whats realistic. They want cheaper workers to live in fear.

by jppope 1y ago

sahaj 1y ago

It has more to do with the workforce wage demands and their output. Imagine if we all think that AI will get rid of our job at some point. We will work harder and demand less money do that work. All large corps did huge coordinated cuts in workforce in 2022-2023, and now there's this narrative. They are simply trying to get us to do more work for less money.

jppope 1y ago
Even hiring people at minimum wage costs a lot of money... Maybe they are firing people so they can rehire at a lower cost, but thats a really expensive way to get people to work for less.

jchw 1y ago

Even though I can fathom a world where AI tools could somehow lead to reduced head count, I think this is the only reasonable interpretation right now. After all, tech companies have been beating the "downsizing due to AI" drum for a really long time now, and for almost the entire time it has been very blatantly obvious bullshit.

another_twist 1y ago
What amazes me is the vile shit directed towards software engineers. Remember that letter from the dickhead investor to Google demanding to know why engineers were paid 450k. Or just PMs beating the drum about how you don't need engineers ? My reaction to that was hey all the tools you love to throw into engineers faces were devtools. You know the dev part is important. Remember Bubble, their whole schtick was you dont need a technical cofounder and I have yet to see a unicorn Bubble app. Instead of talking about how we all can collaborate, people really are hating on engineers for nothing.

fsndz 1y ago

Klarna tried this narrative shopping strategy first and it backfired: https://fsndzomga.medium.com/i-have-no-confidence-in-klarna-e47ae563c00e?sk=26d4ae91f8ebb58b7abe1465356b4b55 https://fsndzomga.medium.com/i-have-no-confidence-in-klarna-...

whatever1 1y ago

In my case AI has boosted my productivity towards directions that are not on the critical path for a project, but nevertheless very nice to have. For example now I have a ton of graphs and interactive UI pages that interact with my code. Made everyone’s lives easier, but at least in my case it was not a dealbreaker not having these, and frankly nobody was willing to pay for them.

CharlesW 1y ago

> I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI… You can legitimately argue "far less to do with", but it's definitely not nothing. There are countless projects underway where AI will allow for 10% reductions with zero business impact in the short term, and 25-40% reductions (sometimes more) by 2030.

another_twist 1y ago
I am curious, where are these numbers from ?
- CharlesW 1y ago
  These are realistic (IMHO, of course) projections based on studies I've helped with and conversations I've had with my network. Naturally, the impact will vary enormously based on roles, and the timelines won't be evenly distributed. But these kinds of projections aren't unusual at all — if you use the Deep Research capabilities of modern models to build a list of public projections for your own research, you'll see similar estimates. These reports will generally use the framing of "efficiency gains", where AI will "free-up employees from drudgery to focus on higher-value work", but my intuition is that a future where all individual contributors are elevated to Director of Agentic Workflows is probably not the most likely outcome.
  - diamond559 1y ago
    What studies? MIT estimates only 5% of the workforce can be replaced long term. What tasks are you employees using AI on, CMU shows the best llm only has a ~30% success rate for basic business tasks. Are you a vibe coding start up or something?
    - CharlesW 1y ago
      > MIT estimates only 5% of the workforce can be replaced long term. The model by MIT's Daron Acemoglu estimates that ~5% of U.S. tasks can be completely and profitably automated by AI within ten years. It was expressly not a head-count forecast, and didn't attempt to quantify the headcount reduction that AI augmentation could enable.

burnte 1y ago

True, however the pitch itself is telling. They're not saying "we're expecting AI to boost the productivity of our employees by 20% with no increase in labor costs." They're saying "we're going to spend less on humans" because investors are more ok with spending money on machines than people. That's the problem, they're not looking at how AI enhances people, they're looking at how it can eliminate people.

thunky 1y ago
Why would you expect different? Companies don't exist to benefit their employees (or their customers).
- bredren 1y ago
  Boosting second sentence here, because I think it is a foundational problem for a company trying to behave like Apple. If the company was owned primarily by employees and customers I think it would be more likely to carry out its mission.
- burnte 1y ago
  I would expect different because there are two major philosophies in business, and they indicate the direction a business will go. There is the philosophy of focus on profit/growth, or focus on costs/value-extraction. Before anyone straw mans "but you can do both", yes, you can, but only one can be the MAIN way you run a business. A focus on profit and growth will lead to seeing employees as strategic resources ready to be deployed to serve the business and generate revenue. One wants to enable those employees with the best matching tools that enable the employee to do more. In this case, a growth leader would say "AI can make our people 20% more productive without adding headcount, and lets us refocus another 10% of employees to more productive/profitable tasks, better utilizing the internal knowledge those employees have. These are the companies that tend to become more profitable and successful because leaders understand that good employees are an asset, not a liability. The other focus, on costs and value extraction, see the business as a zero sum game; in order to increase profits, we must decrease costs or find a way to extract more value from customers. These are the companies that will reduce service levels with no change in pricing to improve profits. They'll understaff a facility to see the "true minimum number of employees" (the bare minimum), depending on some employees to go "above and beyond" to get things done for no additional compensation. They'll get rid of expensive employees, settle for replacements employees who are 75% as good but will work for 65% of the money, and keep headcount the same; worse service, but proportionally lower costs. These are the companies that maybe be huge, but they're not market leaders, they're reactive and basically rent takers. When a leader begins to resent employees being paid to do their work, it's time for that leader to go, because they'll simply start that company on a decline. Basically, there are those who understand the difference between cost and value, and those who are too focused on cost to even understand value. If your first response to AI is "we can cut people" you're in the latter camp. Your first reaction is to cut costs, rather than to exploit the new tech for even higher profits. Eyes on the future instead of the past is how you grow and succeed. Employee success leads to company success. Employees are not a cost center.

crop_rotation 1y ago

> Just a basic sniff test though - If AI enables developer productivity that would translate to more revenue, reduced costs, reduced risk, etc. The bottom line numbers would get better. With more resources available your next move is to decrease spending on more productivity enhancements or revenue opportunities? They don't want more revenue? Doesn't add up. If that was true then the companies should never have been doing layoffs, as all these companies are generating tens of billions of dollars in revenue. > The better headline would be: "Amazon CEO Andy Jazzy faced with poor financial outlook tries to convince the public that downsizing is due to improvements in AI" This is assuming that companies have the capacity to keep increasing revenue by adding more workforce, which is just not true. At some point you hit diminishing returns with more workers. The same goes for Agent workers. To chase more revenue you need a lot more than just more SWEs and a lot of that is not currently similarly scalable.

conartist6 1y ago

Yes, your point about revenue is very astute

cyanydeez 1y ago

Reduce it further: they have a cudgel to manipulate lower salaries with. So it really doesnt matter whats realistic. They want cheaper workers to live in fear.