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Tell HN: DigitalOcean is doing layoffs

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Re: Tell HN: DigitalOcean is doing layoffs

#101

Post by smallbluedot »

der-erlkonig wrote: post #48

Hearing that a lot of Community teams were let go, including the teams responsible for tutorials. Seems obvious DigitalOcean doesn't care about developers anymore. But this has been obvious for a while now. I guess their value "Our Community is bigger than just us" only matters when profits are up. Pour one out for DigitalOcean. It's the end of an era.

This is a mistake. I'm a designer by trade but do a lot of development in my free time. I use DO for serving all my projects. The reason I initially selected them is because their tutorials are so good. Besides price, it was a huge factor in my decision to host with them.

Eliminating teams that create technical content is going to backfire.

Re: Tell HN: DigitalOcean is doing layoffs

#102

Post by [deleted] »

siwatanejo wrote: post #92
version_five wrote: post #84

Earlier quoted context omitted.

That doesn't address the point in the comment you replied to. He is talking about returns. The question is what return they made on invested capital. It might still be very good, I have no idea, but it's not the same as margin.

Wait, doesn't the invested capital equal the revenue minus the profits? That is, the expenses.

[deleted]

Re: Tell HN: DigitalOcean is doing layoffs

#103

Post by unilynx »

siwatanejo wrote: post #92
version_five wrote: post #84

Earlier quoted context omitted.

That doesn't address the point in the comment you replied to. He is talking about returns. The question is what return they made on invested capital. It might still be very good, I have no idea, but it's not the same as margin.

Wait, doesn't the invested capital equal the revenue minus the profits? That is, the expenses.

No, those have nothing to do with each other (except on the very long term..)

As an extreme example, a SPAC that hasn't acquired anything yet has near-zero revenue, profit and expenses, but a lot of capital

Re: Tell HN: DigitalOcean is doing layoffs

#104

Post by yamtaddle »

tjpnz wrote: post #61
hotpotamus wrote: post #28

Earlier quoted context omitted.

I mean, I don't want this to be the "kicking them while they're down thread", but I always wondered how a little guy is supposed to compete with AWS. I say that as someone who was there firsthand to watch Rackspace get crushed by them.

IMO what DO had going for them was simplicity. If I was in the market for a no-nonsense VPS I could see myself going with them over AWS.

I have now, twice, with a distance of a decade between the experiences, seen a VPS provider's simplicity and ability to easily scale stop mattering at high-ish but not extremely high levels of traffic—in both cases, because their network couldn't keep up with traffic, such that we were finding ourselves network-bound even on pretty weak VMs, everywhere. Apparently poor inter-connects or peering agreements or something (not sure) leading to consistently terrible performance for people in some regions, heavier public traffic hitting a wall long before a smallish VM was starting to sweat, that kind of thing.

First time it was Rackspace, second time it was DO. First time we fixed it by leasing bare metal somewhere (I forget where) and running our own libvirt/KVM VMs, second time we fixed it by switching to AWS. In both cases, that fixed all the network issues.

AWS has a separate problem that they have these vague classifications for network quality and it's hard (at least, it was for us) to feel certain the network was the problem, but at least it's not that hard to spin up a VM with a better-rated network to trial-and-error one's way to the right setting.

Re: Tell HN: DigitalOcean is doing layoffs

#105

Post by mattgreenrocks »

contravariant wrote: post #83
MonkeyMalarky wrote: post #35

Earlier quoted context omitted.

Wild to think a country can have both too much employment and millions living below the poverty line.

Too much employment is a weird problem description to begin with. The more I think about it the weirder it gets.

Yes, it is extremely weird, especially alongside the overt contempt for employees being so prominent. Really makes you wonder who the economy is meant to actually work for.

My friend mentioned something similar on the topic of wages being 'too high': "it's pretty screwed up that the economy essentially needs a significant portion of workers to be two paychecks away from financial disaster to be sustainable."

Re: Tell HN: DigitalOcean is doing layoffs

#106

Post by jeremyjh »

taylodl wrote: post #98
AFriendlyBeagle wrote: post #56

Earlier quoted context omitted.

Increasing interest rates can discourage investment by making it more expensive to borrow money, and by increasing the yield of savings relative to available investment targets. Corporations seeking investment in this climate might try to attract it by increasing the expected return on investment, which would involve committing fewer resources or achieving greater returns - being "more efficient". Labour costs are ty…

You are absolutely correct and I wish more people understood this: poverty is a feature of the system. People who tell poor people to just "get a job" don't understand how this system works. Also, there's no point in trying to figure out how to "fix" the system, i.e. eliminate poverty, because we've found no alternative that works save for one: social safety nets to ensure the poor are at least housed, clothed, and f…

I don't think poverty is necessary, that problem could be solved by redistributing these returns, e.g. through a higher corporate tax and UBI. The alternative to monetary policy is a cycle of boom and bust that is much larger and more disruptive. Fundamentally though, we do not want people to be employeed in jobs that produce little value, and when interest rates are too low a lot of that starts to happen.

Re: Tell HN: DigitalOcean is doing layoffs

#107

Post by hn_throwaway_99 »

version_five wrote: post #84
onion2k wrote: post #79

Earlier quoted context omitted.

layoffs will continue until companies are much more efficient DO made a profit of a little over $250m in 2022, on revenue of $428.6m. That's a 60% margin. How much efficiency does a company need? EDIT: Correction.. those are the 2021 numbers. The latest numbers on the DO website for Q3 2022 state; " Gross profit of $97.6 million or 64% of revenue, an increase of 300 basis points year-over-year, and adjusted gross pro…

That doesn't address the point in the comment you replied to. He is talking about returns. The question is what return they made on invested capital. It might still be very good, I have no idea, but it's not the same as margin.

Thanks for posting this. I see so many comments that fundamentally misunderstand the relationship between rising interest rates and layoffs, e.g. "Many of these companies have very low debt and don't need to borrow right now, so why do they need to do layoffs?"

Interest rates are the key parameter for calculating the present value of future cash flows, which is (theoretically) how companies are valued. When interest rates go up, those present values go way down, to the point where they're no longer competitive with risk-free investment options.

Re: Tell HN: DigitalOcean is doing layoffs

#108

Post by do_poopoo »

kmshultz wrote: post #72
der-erlkonig wrote: post #48

Hearing that a lot of Community teams were let go, including the teams responsible for tutorials. Seems obvious DigitalOcean doesn't care about developers anymore. But this has been obvious for a while now. I guess their value "Our Community is bigger than just us" only matters when profits are up. Pour one out for DigitalOcean. It's the end of an era.

Yes, I was a technical writer on the content team. I am hearing that our entire team was laid off. It just isn't a big money-maker in these trying times. More of a cost center, I suspect. It's too bad, as DO tutorials and content have been respected for so many years by developers and sysadmins. The end of an era.

fwiw their decision is foolish and shortsighted imo; the only reason i ever used do was because they hooked me in with their tutorials and guides

Re: Tell HN: DigitalOcean is doing layoffs

#109

Post by monero-xmr »

schnitzelstoat wrote: post #19
monero-xmr wrote: post #8

When interest rates are 0%, any amount of growth compounded over years is attractive. When you can get a 5% risk-free return from treasuries, even 7% rate of return is unattractive when compared to the safest asset on earth returning 5%. My point is, layoffs will continue until companies are much more efficient, or interest rates go down.

But we aren't seeing major layoffs in other industries, unemployment is low and job growth is relatively high. It seems like the low interest rates were helping sustain a bubble in tech and that bubble is now deflating.

I don't think you have been reading the same news I have. Maybe you are only reading tech-news like HN

Disney https://www.cnbc.com/2023/02/08/disney-reorganization.html

3M https://www.cbsnews.com/minnesota/news/3m-to-lay-off-about-2...

GE https://www.cnbc.com/2022/10/06/ge-layoff-20percent-of-onsho...

Dow Chemical https://cen.acs.org/business/finance/Dow-rolls-layoffs-profi...

Ford https://wraltechwire.com/2023/02/14/layoff-watch-ford-cuttin...

I can keep going, but this is much broader than tech

Re: Tell HN: DigitalOcean is doing layoffs

#110

Post by alephnerd »

fleddr wrote: post #93
alephnerd wrote: post #16

Earlier quoted context omitted.

To combat inflation in the housing market. A subset of White collar professionals (such as those in Tech, Real Estate, Finance) ended up earning so much that housing became unaffordable as a small but significant minority began buying multiple investment properties https://www.politico.com/news/2021/11/10/rent-inflation-bide... https://www.politico.com/news/2022/12/31/labor-market-high-i... “Tech and finance are taki…

Sounds more like a personal frustration. Rates are hiked to combat a high CPI. Housing costs, with the exception of home-related taxes, are not even included in the CPI.

Home prices rose a blistering 18.8 percent in 2021, and rent has climbed 17.6 percent nationwide over the last year, industry data shows. But those prices, the result of a severe supply shortage fueled by municipal government restrictions across the country, haven’t fully shown up in inflation figures because leases are typically annual.

“The housing shortage is going to push up the overall [consumer price index] to uncomfortable positions for the Federal Reserve,” National Association of Realtors chief economist Lawrence Yun said. “Consequently, this high inflation that we have is certainly not transitory, and it’s going to remain stubbornly high through the end of the year.”

https://www.politico.com/news/2022/03/18/housing-costs-infla...

Also, the CPI DOES include cost of housing - https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...

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