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Layoffs because of AI make no sense to me. Imagine you own a company that is paid to deliver packages. You use horses and differentiate by delivering quicker t

Layoffs because of AI make no sense to me. Imagine you own a company that is paid to deliver packages. You use horses and differentiate by delivering quicker than everyone else. Then cars are invented and everyone starts delivering packages faster. In what world does a healthy growing business react to this by laying off couriers "in a pivot to automotive transportation". Would a healthy business not switch everyone to driving cars and deliver even more packages?

falcor84 7mo ago
You need a very different skill set and culture for driving and maintaining cars than for driving and maintaining horses. I honestly think that for big changes like this (if you are willing to accept that AI is such), looking at it from the portfolio management angle, it makes more sense to just nuke the current operation and start a greenfield one.
- mempko 7mo ago
  Senior engineers have been 'vibe coding' for over a decade before AI. Think what they do, they look at PRs all day and comment. Magically the code change reflecting their comments. It's the same thing now but machines are doing it, not humans. The issue is that junior engineers have no experience working like senior engineers. The reality is that it's not that hard to work in this way. There is no excuse for software companies not being able to re-train their more junior engineers to work this way.
  - falcor84 7mo ago
    That's a very nice analogy. I agree and thinking about my previous comment, I suppose I just lashed out because I really dislike Jira the product and don't think that it can be salvaged, but I don't have anything against the engineers working there, and agree that they can be mentored and reassigned to a product where they'd be able to create something good.
- selcuka 7mo ago
  > it makes more sense to just nuke the current operation and start a greenfield one Why? What was wrong with the 1600 people they sacked? Do they have a magical 1600-person hire pool with the AI skills they want?
itomato 7mo ago
They just announced GA of agentic assignees. It suggests a year or more of maturation. Rovo Dev has already been a thing. The Java products are almost EOL. They have already been assigning JAC tickets to Rovo and $TEAM is down. What else should be done with the surplus headcount?
- stingraycharles 7mo ago
  Are you making the argument that Atlassian’s products are basically done, no more development needed?
  - gib444 7mo ago
    Right! There is more performance to be taken away yet! They're nearly there but plenty is left. Jira can be made "let's go brew coffee and come back" slow if the really tried
  - itomato 7mo ago
    The Java ones have been done since version 6 or so. We’re up to what, 11? Stagnant, yes. Mature also.
- MeetingsBrowser 7mo ago
  My point exactly. This implies atlassian is not a healthy growing business, but a stagnant or even shrinking one. Layoffs have little to do with AI, and more akin to fuel being jettisoned to stay in the air longer.
  - itomato 7mo ago
    Prioritization and workforce realignment. Old hat. Replacing headcount with technology? Also old hat. If the cuts ate into the good parts of the business, I will worry. I doubt that happened.
  - recursive 7mo ago
    Must a business grow to be healthy? What about stability and longevity?
laughing_man 7mo ago
It makes quite a bit of sense if the size of your market doesn't expand along with the new technology and you don't have a competitive advantage. Just because you have the capability to deliver more packages doesn't necessarily mean you'll have customers willing to pay you to deliver more packages.
- MeetingsBrowser 7mo ago
  > your market doesn't expand along with the new technology and you don't have a competitive advantage. a.k.a the real reason for the layoffs. The underlying business is stagnant and unable to take advantage of the additional resources. Strong businesses aim to grow revenue. Struggling businesses aim to cut costs.
Refreeze5224 7mo ago
You're mixing up what AI is for compared to horses and cars. Horses/cars enable people to be more efficient. AI enables companies to fire people. Horses/cars improve productivity. AI reduces payroll costs. That's the whole game here.
- dozerly 7mo ago
  The assumption behind this comment is that AI is more productive than Human + AI at this point in time, and I don’t think we’ve seen that be true yet.
  - Refreeze5224 7mo ago
    No, the assumption is that companies are more interested in cutting labor costs than productivity. Even if you screw up and need to hire back 50% of those you fired, you still cut the labor costs of the 50% still fired. And you can pretend to be a cool, thought-leading, "AI-native" company, which might be enough to juice your share price enough to offset any actual productivity loss. Capital will always be in opposition to the cost of labor and want to make it as close to zero as possible, and AI is a plausible story for attempting that, regardless of the reality of AI efficiency.
    - SoftTalker 7mo ago
      Henry Ford (allegedly a Capitalist) thought he should pay his employees enough that they could afford to buy the cars his company produced. Businesses ultimately need customers. In a world where AI does all the work, there will be no buyers.
      - heavyset_go 7mo ago
        Read Citigroup's plutonomy paper: https://www.sourcewatch.org/images/b/bc/CITIGROUP-MARCH-5-2006-PLUTONOMY-MEMO_.pdf https://www.sourcewatch.org/images/b/bc/CITIGROUP-MARCH-5-20... The strategy for institutional investors is to invest in servicing the needs of the already rich, at the expense of investing in companies that serve working people. The former is much more profitable than the latter, and the latter is becoming less profitable over time.
dfxm12 7mo ago
It's more about looking good for Wall Street. For example, Block was just rewarded for a similar move: https://finance.yahoo.com/news/block-stock-explodes-jack-dorsey-201300073.html https://finance.yahoo.com/news/block-stock-explodes-jack-dor...
jarjoura 7mo ago
It’s not that they believe AI tools are replacing workers, it’s using the new free cash flow allows them to invest in AI. They are betting that their AI business will be profitable, and need to cut costs to invest in it.
- themafia 7mo ago
  > are betting that their AI business will be profitable It could be. The idea that a business built on this framework won't immediately be picked apart by every competitor under the sun is entirely beyond me. > and need to cut costs to invest in it. If I'm right then this is just slashing your own throat so you can be the first to the bottom.
- neonstatic 7mo ago
  > They are betting that their AI business will be profitable, and need to cut costs to invest in it. I think AI is a wonderful excuse for many. You can now lay off as many people as you want without standing out in a negative way. "Everyone is doing it" and "everyone knows why it's happening".
mbesto 7mo ago
> Layoffs because of AI make no sense to me. That's because these layoffs aren't about AI. They're about firms that overhired and Wall St is (finally) having a sobering moment of their (profit) growth potential.
- estimator7292 7mo ago
  This line has been repeated ad nauseum for years at this point. How long does a "sobering moment" last? Two years? Five? Ten?
  - oblio 7mo ago
    The beating will continue until morale improves. On a more serious note, at this rate, probably 10 years. I guess it's similar to drinking. You can get drunk in 10 minutes and be hung over for much longer than that. It turns out that org charts are VERY resistant to letting people go, even when the executives push very hard.
  - mbesto 7mo ago
    A decision to cut 1600 jobs doesn't happen overnight.
NoPicklez 7mo ago
In a world where you don't need 10 horses to do the job of 5 cars, because your business doesn't have a market for 10 cars.
- MeetingsBrowser 7mo ago
  Then you are not laying off because of cars. You are laying off because there is no market for what you are selling and you are not able to find new customers. In other words, the business is not doing well
  - NoPicklez 7mo ago
    I'm not saying Atlassian is or isn't doing well, but your market isn't going to infinitely expand, nor expand at the rate you need to keep up with your costs. If you build cars and you replace people with robots, you might fire those people because those robots allow you to keep up with demand with less people. Your business is doing fine and well but you just need less people to do the same output. Better yet those robots might even produce more than what your demand is and therefore even if demand increases your ability to supply with less people still exists. Businesses will always look to do the same output or more with less cost irrespective of whether the company is doing well or not. This is why we have also seen "AI layoffs" across companies that have had very good financial positions or even record sales. The proof is in the pudding if AI actually improves productivity of those left over to justify it. But sometimes simple analogies can be rebutted by other simple analogies.
    - MeetingsBrowser 7mo ago
      > your market isn't going to infinitely expand, nor expand at the rate you need to keep up with your costs. The costs don't change. They were already paying those people. They just need to take advantage of the slight bump in productivity LLMs provide, not infinitely expand their market. > Better yet those robots might even produce more than what your demand is You are repeating the same idea from your original comment. The problem is that the demand is low. You are making something no one wants to buy. > Businesses will always look to do the same output or more with less cost this is not an accurate in general, but especially not in this situation. There is a magic box that makes all of your employees get 50% more work done. You are an early adopter of the magic box in your industry, though others will likely follow soon. Do you A) do 50% more work for free and get an early leg up or B) fire staff until you are achieving the same output as before, at a slightly lower cost. Which seems the more logical option in the long term? The only reason option B makes sense is if business is not going well and you can't afford to keep paying everyone.
jjmarr 7mo ago
> In what world does a healthy growing business react to this by laying off couriers "in a pivot to automotive transportation". Millions of horses got shipped to the glue factory. And many more farriers and stablemasters got laid off.
lelanthran 7mo ago
In your analogy they aren't laying off the drivers, they laying off the horses. Iow, humans are the horses in this analogy.
freefaler 7mo ago
Not really. You have 1000 packages per day (your market share). You need 100 horses each making 10 deliveries or 20 cars each doing 50 deliveries. So 80 horse riders are out. You can't scale linearly, market is not supply bound usually, it's demand bound.
chrisjj 7mo ago
> Would a healthy business not switch everyone to driving cars and deliver even more packages? Not unless there were more packages to deliver.
ilaksh 7mo ago
Because they are now self-driving cats and continue to need less and less monitoring and intervention.
tavavex 7mo ago
You have a package delivery business. The business is stable and optimized, serving all houses in your city. Each courier has a route planned out that they follow each day. They take 8 hours to complete the route and deliver to each house along the way. Now, cars come along. With the new efficiencies, you find that now a courier takes only 6 hours to do their route. The number of buildings in the city has not increased, there's a cap to how much service you need to provide after which there's no longer any additional benefits. So, do you cut everyone's work day to 6 hours, or do you fire 25% of all couriers and re-route the rest so they now do 8 hour days on longer routes using cars? Your solution assumes that the extra workforce immediately translates into free growth, but the growth of many businesses is constrained by outside factors. Here it would be the population of your served area.
ptak_dev 7mo ago
[flagged]

falcor84 7mo ago

You need a very different skill set and culture for driving and maintaining cars than for driving and maintaining horses. I honestly think that for big changes like this (if you are willing to accept that AI is such), looking at it from the portfolio management angle, it makes more sense to just nuke the current operation and start a greenfield one.

mempko 7mo ago
Senior engineers have been 'vibe coding' for over a decade before AI. Think what they do, they look at PRs all day and comment. Magically the code change reflecting their comments. It's the same thing now but machines are doing it, not humans. The issue is that junior engineers have no experience working like senior engineers. The reality is that it's not that hard to work in this way. There is no excuse for software companies not being able to re-train their more junior engineers to work this way.
- falcor84 7mo ago
  That's a very nice analogy. I agree and thinking about my previous comment, I suppose I just lashed out because I really dislike Jira the product and don't think that it can be salvaged, but I don't have anything against the engineers working there, and agree that they can be mentored and reassigned to a product where they'd be able to create something good.
selcuka 7mo ago
> it makes more sense to just nuke the current operation and start a greenfield one Why? What was wrong with the 1600 people they sacked? Do they have a magical 1600-person hire pool with the AI skills they want?

itomato 7mo ago

They just announced GA of agentic assignees. It suggests a year or more of maturation. Rovo Dev has already been a thing. The Java products are almost EOL. They have already been assigning JAC tickets to Rovo and $TEAM is down. What else should be done with the surplus headcount?

stingraycharles 7mo ago
Are you making the argument that Atlassian’s products are basically done, no more development needed?
- gib444 7mo ago
  Right! There is more performance to be taken away yet! They're nearly there but plenty is left. Jira can be made "let's go brew coffee and come back" slow if the really tried
- itomato 7mo ago
  The Java ones have been done since version 6 or so. We’re up to what, 11? Stagnant, yes. Mature also.
MeetingsBrowser 7mo ago
My point exactly. This implies atlassian is not a healthy growing business, but a stagnant or even shrinking one. Layoffs have little to do with AI, and more akin to fuel being jettisoned to stay in the air longer.
- itomato 7mo ago
  Prioritization and workforce realignment. Old hat. Replacing headcount with technology? Also old hat. If the cuts ate into the good parts of the business, I will worry. I doubt that happened.
- recursive 7mo ago
  Must a business grow to be healthy? What about stability and longevity?

laughing_man 7mo ago

It makes quite a bit of sense if the size of your market doesn't expand along with the new technology and you don't have a competitive advantage. Just because you have the capability to deliver more packages doesn't necessarily mean you'll have customers willing to pay you to deliver more packages.

MeetingsBrowser 7mo ago
> your market doesn't expand along with the new technology and you don't have a competitive advantage. a.k.a the real reason for the layoffs. The underlying business is stagnant and unable to take advantage of the additional resources. Strong businesses aim to grow revenue. Struggling businesses aim to cut costs.

Refreeze5224 7mo ago

You're mixing up what AI is for compared to horses and cars. Horses/cars enable people to be more efficient. AI enables companies to fire people. Horses/cars improve productivity. AI reduces payroll costs. That's the whole game here.

dozerly 7mo ago
The assumption behind this comment is that AI is more productive than Human + AI at this point in time, and I don’t think we’ve seen that be true yet.
- Refreeze5224 7mo ago
  No, the assumption is that companies are more interested in cutting labor costs than productivity. Even if you screw up and need to hire back 50% of those you fired, you still cut the labor costs of the 50% still fired. And you can pretend to be a cool, thought-leading, "AI-native" company, which might be enough to juice your share price enough to offset any actual productivity loss. Capital will always be in opposition to the cost of labor and want to make it as close to zero as possible, and AI is a plausible story for attempting that, regardless of the reality of AI efficiency.
  - SoftTalker 7mo ago
    Henry Ford (allegedly a Capitalist) thought he should pay his employees enough that they could afford to buy the cars his company produced. Businesses ultimately need customers. In a world where AI does all the work, there will be no buyers.
    - heavyset_go 7mo ago
      Read Citigroup's plutonomy paper: https://www.sourcewatch.org/images/b/bc/CITIGROUP-MARCH-5-2006-PLUTONOMY-MEMO_.pdf https://www.sourcewatch.org/images/b/bc/CITIGROUP-MARCH-5-20... The strategy for institutional investors is to invest in servicing the needs of the already rich, at the expense of investing in companies that serve working people. The former is much more profitable than the latter, and the latter is becoming less profitable over time.

dfxm12 7mo ago

It's more about looking good for Wall Street. For example, Block was just rewarded for a similar move: https://finance.yahoo.com/news/block-stock-explodes-jack-dorsey-201300073.html https://finance.yahoo.com/news/block-stock-explodes-jack-dor...

jarjoura 7mo ago

It’s not that they believe AI tools are replacing workers, it’s using the new free cash flow allows them to invest in AI. They are betting that their AI business will be profitable, and need to cut costs to invest in it.

themafia 7mo ago
> are betting that their AI business will be profitable It could be. The idea that a business built on this framework won't immediately be picked apart by every competitor under the sun is entirely beyond me. > and need to cut costs to invest in it. If I'm right then this is just slashing your own throat so you can be the first to the bottom.
neonstatic 7mo ago
> They are betting that their AI business will be profitable, and need to cut costs to invest in it. I think AI is a wonderful excuse for many. You can now lay off as many people as you want without standing out in a negative way. "Everyone is doing it" and "everyone knows why it's happening".

mbesto 7mo ago

> Layoffs because of AI make no sense to me. That's because these layoffs aren't about AI. They're about firms that overhired and Wall St is (finally) having a sobering moment of their (profit) growth potential.

estimator7292 7mo ago
This line has been repeated ad nauseum for years at this point. How long does a "sobering moment" last? Two years? Five? Ten?
- oblio 7mo ago
  The beating will continue until morale improves. On a more serious note, at this rate, probably 10 years. I guess it's similar to drinking. You can get drunk in 10 minutes and be hung over for much longer than that. It turns out that org charts are VERY resistant to letting people go, even when the executives push very hard.
- mbesto 7mo ago
  A decision to cut 1600 jobs doesn't happen overnight.

NoPicklez 7mo ago

In a world where you don't need 10 horses to do the job of 5 cars, because your business doesn't have a market for 10 cars.

MeetingsBrowser 7mo ago
Then you are not laying off because of cars. You are laying off because there is no market for what you are selling and you are not able to find new customers. In other words, the business is not doing well
- NoPicklez 7mo ago
  I'm not saying Atlassian is or isn't doing well, but your market isn't going to infinitely expand, nor expand at the rate you need to keep up with your costs. If you build cars and you replace people with robots, you might fire those people because those robots allow you to keep up with demand with less people. Your business is doing fine and well but you just need less people to do the same output. Better yet those robots might even produce more than what your demand is and therefore even if demand increases your ability to supply with less people still exists. Businesses will always look to do the same output or more with less cost irrespective of whether the company is doing well or not. This is why we have also seen "AI layoffs" across companies that have had very good financial positions or even record sales. The proof is in the pudding if AI actually improves productivity of those left over to justify it. But sometimes simple analogies can be rebutted by other simple analogies.
  - MeetingsBrowser 7mo ago
    > your market isn't going to infinitely expand, nor expand at the rate you need to keep up with your costs. The costs don't change. They were already paying those people. They just need to take advantage of the slight bump in productivity LLMs provide, not infinitely expand their market. > Better yet those robots might even produce more than what your demand is You are repeating the same idea from your original comment. The problem is that the demand is low. You are making something no one wants to buy. > Businesses will always look to do the same output or more with less cost this is not an accurate in general, but especially not in this situation. There is a magic box that makes all of your employees get 50% more work done. You are an early adopter of the magic box in your industry, though others will likely follow soon. Do you A) do 50% more work for free and get an early leg up or B) fire staff until you are achieving the same output as before, at a slightly lower cost. Which seems the more logical option in the long term? The only reason option B makes sense is if business is not going well and you can't afford to keep paying everyone.

jjmarr 7mo ago

> In what world does a healthy growing business react to this by laying off couriers "in a pivot to automotive transportation". Millions of horses got shipped to the glue factory. And many more farriers and stablemasters got laid off.

lelanthran 7mo ago

In your analogy they aren't laying off the drivers, they laying off the horses. Iow, humans are the horses in this analogy.

freefaler 7mo ago

Not really. You have 1000 packages per day (your market share). You need 100 horses each making 10 deliveries or 20 cars each doing 50 deliveries. So 80 horse riders are out. You can't scale linearly, market is not supply bound usually, it's demand bound.

chrisjj 7mo ago

> Would a healthy business not switch everyone to driving cars and deliver even more packages? Not unless there were more packages to deliver.

ilaksh 7mo ago

Because they are now self-driving cats and continue to need less and less monitoring and intervention.

tavavex 7mo ago

You have a package delivery business. The business is stable and optimized, serving all houses in your city. Each courier has a route planned out that they follow each day. They take 8 hours to complete the route and deliver to each house along the way. Now, cars come along. With the new efficiencies, you find that now a courier takes only 6 hours to do their route. The number of buildings in the city has not increased, there's a cap to how much service you need to provide after which there's no longer any additional benefits. So, do you cut everyone's work day to 6 hours, or do you fire 25% of all couriers and re-route the rest so they now do 8 hour days on longer routes using cars? Your solution assumes that the extra workforce immediately translates into free growth, but the growth of many businesses is constrained by outside factors. Here it would be the population of your served area.

ptak_dev 7mo ago

[flagged]