Irrational investor expectations in a self-reinforcing feedback loop with economic policy decisions driven by core underlying beliefs that speculation can't destroy productive growth (i.e. if you create a bubble that pops, you'll still be net-positive compared to before the bubble) and that speculation is the best way to create growth in a population-constrained market.
Ask HN: Why are big tech companies having mass layoffs?
31–40 of 94 posts
Re: Ask HN: Why are big tech companies having mass layoffs?
#32Amazon, Shopify, Wayfair, Google, Meta: all of these companies make money because e-commerce exists. The higher the proportion of all sales taking place on e-commerce, the more valuable the companies are. For Google and Meta, it's the advertising portion, but it's still impactful. If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, l…
> They all bet that this was a permanent 5-year jump-ahead. They were wrong This is the part that really needs explanation. How was every CEO of every major tech company wrong? Why aren't we having a big tech CEO layoff for massive wrongness? It certainly feels like there's a lot of groupthink here in any case. The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end u…
I agree, think it was also a ripe time for empire building further within these companies. I’ve been at one of these companies for many years and the shift in hiring dramatically changed in the years leading up to covid. Covid just put things into overdrive until reality hit that this kind of growth isn't sustainable or permanent.
Re: Ask HN: Why are big tech companies having mass layoffs?
#33Irrespective of the real reason, I don't buy the argument that these companies are preempting a recession. Facebook, Amazon, Alphabet, Apple, Microsoft have an insane volume of cash reserves to the tune of hundreds of billions each company. Unless their are predicting a decade long crisis there is no way this is the real reason staff is getting trimmed, feels more like an excuse rather than a justificatíon at this po…
Big public companies need an excuse to fire as many people as they would "naturally" want to fire given 1. just how many people they hire, 2. how often those people turn out to be duds, and 3. how often they pivot strategies internally that no longer necessitate even better-performing people.
They can't normally fire as many people as they want to fire, without looking bad / "appearing weak" and therefore losing stock value.
But if "everyone's doing it", then they won't look bad/weak.
See also: raising prices. If one company does it, they just lose market-share. But if they do it because "everyone is doing it", then margins can go up vertical-wide without anyone having to explicitly collude in an anti-trust sense.
Re: Ask HN: Why are big tech companies having mass layoffs?
#34Because the capitalist system we have built demands constant growth. Even a very stable solidly profitable business is no good. A time comes when revenues go down and/or costs go up, that inhibits growth. The companies are so big they could weather the storm. Even if they kept all the employees and increased compensation, they would still be profitable. But if they did that, they wouldn't be growing. The stock price…
There are many class groups that have a potential grievance against capitalism. But pretty sure that FAANG engineers are not one of them.
Re: Ask HN: Why are big tech companies having mass layoffs?
#35Are the workers here on temporary worker visas like H1B the first to go? Or are companies taking extra steps to retain them and layoff people without immigration challenges?
Re: Ask HN: Why are big tech companies having mass layoffs?
#36Notice how badly the share prices of most such tech firms have fallen in the past year. Investors, Wall Street, and Boards of Directors are for-sure putting loads of pressure on tech firm CEO's to Do Something to fight that trend. Slashing some of the (supposed) payroll bloat that was built up "back when the living was easy" is a great way for a CEO to look like he's Doing Something.
This honestly seems like the more plausible explanation when a bunch of people laid off at Microsoft were working on highly profitable games.
Which game?
Re: Ask HN: Why are big tech companies having mass layoffs?
#37That some orgs overhired is not in question. What is _insane_ to me is that everyone being let go seems to be an engineer, while the DEI teams remain untouched. That section of the office sure seems to have a lot of free time, between shaming the rest of the company. Shows the power hierarchy I suppose. Wild world.
I literally just saw a DEI employee post in my LinkedIn feed about being laid off in one of these recent rounds.
> everyone being let go seems to be an engineer
An article about the most recent Amazon layoffs says "Amazon’s human resources and stores divisions are likely to be among the organizations most severely impacted by the job cuts."
Re: Ask HN: Why are big tech companies having mass layoffs?
#38Amazon, Shopify, Wayfair, Google, Meta: all of these companies make money because e-commerce exists. The higher the proportion of all sales taking place on e-commerce, the more valuable the companies are. For Google and Meta, it's the advertising portion, but it's still impactful. If we track online sales as a proportion of all sales over the last 20 years, there's a pretty stable trend of increase. Then COVID hit, l…
> They all bet that this was a permanent 5-year jump-ahead. They were wrong This is the part that really needs explanation. How was every CEO of every major tech company wrong? Why aren't we having a big tech CEO layoff for massive wrongness? It certainly feels like there's a lot of groupthink here in any case. The Google severance looks pretty generous? That plus the last couple years of overhiring is going to end u…
I think the answer is in OP:
> Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.
CEOs answer to shareholders, not employees. From the shareholders' perspective, the risk of losing out on market share was much greater than the risk of having to pay a few months' severance for the 5-10% of the workforce you trimmed.
Re: Ask HN: Why are big tech companies having mass layoffs?
#39That some orgs overhired is not in question. What is _insane_ to me is that everyone being let go seems to be an engineer, while the DEI teams remain untouched. That section of the office sure seems to have a lot of free time, between shaming the rest of the company. Shows the power hierarchy I suppose. Wild world.
If you want to find out who controls you, think about whom you cannot criticize.
Why are you quoting a neonazi in a thread about people being employed to do DEI work?
Re: Ask HN: Why are big tech companies having mass layoffs?
#40Because they're publicly traded companies and the largest shareholders feel technology companies:
1) Are capable of "doing more with less"
2) Have too much headcount
2) Overpay engineers by 2-3x
These views are not unique to Wallstreet shareholders; they are shared by a growing number of tech VCs and "thought leaders" (most notable a16z). The next phase will likely be longer hours for less pay.
The halcyon days are over.