If you do this unilaterally your best employees will rightly interpret the layoff as a sign the good times are over and will jump ship. However, if you do this at the same time as everybody else then your best employees will be less likely to jump ship.
Ask HN: Why are big tech companies having mass layoffs?
51–60 of 94 posts
Re: Ask HN: Why are big tech companies having mass layoffs?
#52Amazon, 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…
The truth is that everyone takes the money when it's available.
Even if you "knew" a recession was coming and that you were overhiring/overspending, you get far less flak overall for riding the gravy train to the end, then making cuts along with everyone else, than for appearing to be overly conservative and not growing as fast as you could during the boom.
Taking the money and spending it while you can is the equivalent of buying IBM. No one else in your circle will fault you for it when things go south, because they all did the same.
Re: Ask HN: Why are big tech companies having mass layoffs?
#53Because it is more expensive to borrow money. Think of it like this, if it costs 1% to borrow money and you can use it to generate a 4% return with a less than efficient operation, the equation makes sense. However when that money is now 4% to borrow, you are forced to increase the efficiency of the operation or shut it down completely.
^^ POTD. Roughly 50% of all US dollars in circulation were printed in 2020 and 2021 -- the status quo became simply unsustainable. On top of that add Baby Boomer retirement capital going low-risk (i.e. out of tech).
On top of the end of cheap money, add increased operating cost due to Baby Boomers leaving the work force (~400k net loss of workers), passed-down costs of reshoring supply chains, and a burgeoning energy crunch due to the war in Eurasia.
Roughly speaking, "tech" investments are riding the tip of the bullwhip here. I expect that not-yet-profitable startups are the most vulnerable, but the sea change pervades anywhere that 2023 dollars are being spent chasing payoffs that are "many" years out and even mildly at risk.
Re: Ask HN: Why are big tech companies having mass layoffs?
#54This is all really pathetic because these companies are laying off, likely thousands of, H-1B workers who will have a tough time finding work willing to sponsor in the 60 day deadline. Likely many will be forced to return to their home country.
Trump's policies during COVID had the same effect, and many foreign workers returned to their home country either by choice or because of visa bans.
All of this seems overly shortsighted for the U.S. to throw away top foreign talent.
Re: Ask HN: Why are big tech companies having mass layoffs?
#55Re: Ask HN: Why are big tech companies having mass layoffs?
#56That 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.
It'd be socially unacceptable for me to criticize participants in the special olympics, but I'm pretty sure that they don't control me.
That quote is from a neonazi who wanted to argue that jewish people secretly controlled the world because antisemitism is no longer socially acceptable in most circles.
Re: Ask HN: Why are big tech companies having mass layoffs?
#57Amazon, 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 comment OP explained it pretty well.
It's less of groupthink, and more of betting on this side is the optimal choice.
Bet on permanent growth - growth is permanent: You're a hero - growth is temporary: Sucks, but you just do some layoffs
Bet on temporary growth - growth is permanent: You're fired - growth is temporary: You're righ! But so what?
Re: Ask HN: Why are big tech companies having mass layoffs?
#58Irrespective 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…
I don't see how you think those two facts are related to each other at all. What does cash on hand have to do with if a company truly believes in recession?
Re: Ask HN: Why are big tech companies having mass layoffs?
#59Irrespective 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…
For big tech it's 100% about managing cashflows to keep investors happy.
While big tech companies can technically afford to over hire they are seeing slowing growth and a hit to their margins which investors have not and will not view favourably if unaddressed - just take a look at Facebook (META)'s stock.
With the exception of Apple the big tech companies make most of their money from ads and cloud services. A lot of those ad dollars come from smaller business who are now struggling with higher rates and higher costs. Equally cloud services is taking a hit with many of the smaller tech companies who use their services cutting back in light of higher costs of capital and declining market valuations.
While they might all have the cash to weather the storm, why would they when they can just cut some of the fat? I don't like seeing these layoff announcements, but I think if we're honest companies like Facebook and Google have been over hiring for years and have accumulated teams and employees who aren't adding much productive value.
Twitter probably isn't the exception in tech. I'd guess most tech companies could cut 50% of their workforce without much of an impact. And even in the average software development team I'd guess that 20% of the workers are contributing 50% of the value.
If there's no incentive to keep these people around anymore, why would they?
Re: Ask HN: Why are big tech companies having mass layoffs?
#60Irrespective 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…
What is the distinction between excuse and justification for a public company? We always know their motive, which is to maximize profit. If they believe growth is going to slow/end, then it makes sense to slash some people. An occasional culling seems like a healthy thing for a huge company to do. If we knew how to predict future needs perfectly and how to hire quality people perfectly, then sure we could avoid this,…
Can we acknowledge that predicting the future is impossible, AND that the over-hiring and over-confidence in the moves "a huge company" makes is unsustainable and ultimately makes these places less desirable to work at?
I sure as hell am not applying to anywhere that had layoffs - I don't want to reward those places with my labor.