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There's just not a ton of innovation happening outside of AI and LLMs at the moment, IMO.
If a company foresees all of the future revenue being aligned in one direction -- whether it will work out that way or not -- then why not re-align and focus on that direction (AI, LLMs)?
Riding interest rates causing investors to demand more stock returns or they will seek returns in treasuries.
In free money era, companies created too many processes and incentive structures that are wasteful. These processes are too expensive when money is expensive. E.g. too many managers whose time is filled with calibration, stack ranking, agile processes instead of true engineering and product leadership.
Ultimately, growth cannot be endless and current crop of companies are not set up for difficult times.
You are a company. The system we have demands growth. Even very stable and reliable profits are seen as failure. There must be growth.
The people who run a company can not press a magic button to increase revenues. They can't just pull a successful new project out of nowhere. Anything like that is going to be a risk, and will probably fail. It will also take time.
The one thing they can always do is cut costs. Projects can be cancelled. Divisions can be sold off. The biggest cost at most companies is labor, and labor can be let go.
When someone controls a company, they own a lot of shares in that company. Their bosses are all shareholders who only care that the stock price goes up. Nothing the company is doing is generating huge new revenue streams. Time for layoffs.
And when some people do layoffs, everyone does them. They're all subject to the same market pressures in the same industry. One company doing them gives all the other companies in the sector permission to do likewise. If a company doesn't follow suit the market might even start to question why.
You may have seen some news that Microsoft passed Apple briefly in terms of most valuable company on Earth. You may have also noticed that Apple is much more restrained in its layoffs than the others. Not doing as many layoffs, not doing as well in the market. These things are not unrelated.
Many companies over-hired and now are trying to lean up to balance their books. With some betting if they over-fire they can hire new talent at a lower rate.
That is now gone and companies must tighten belts. There really is no greater mystery here.
The same thing that always drives layoffs. You are a company. The system we have demands growth. Even very stable and reliable profits are seen as failure. There must be growth. The people who run a company can not press a magic button to increase revenues. They can't just pull a successful new project out of nowhere. Anything like that is going to be a risk, and will probably fail. It will also take time. The one th…
Because of inflation, stable is actually shrinking. If you raise prices perfectly in lock step with inflation, trends and tastes of your customers still change, necessitating innovation if only to maintain the exact same level.
In reality, you have to grow to ensure when the ground shifts from under you, there is still some buffer. Growth is insurance against an ever changing, unpredictable world.
The people who think things never change are people without imagination. They want safety and security, but that is an illusion.
> An IRS tax code change in Section 174. This change eliminates the ability for businesses to deduct R&D as an expense.
> Hear of lots of layoffs directly because of this, as a start.
[1] https://twitter.com/GergelyOrosz/status/1735030983173230944?...
The quality of your average tech worker has completely nosedived in the last 10-15 years.
All these huge companies wanted more products, more marketshare, more money, etc. They needed more people to pull this off. They started lowering hiring standards across the board because there just weren't enough people in tech.
Simultaneously, a huge portion of the world saw tech salaries and wanted in on it so they started taking every quick certification, bootcamp, degree, etc to get into tech.
It turns out that compared to the dedicated nerds of the previous generation, most new people just don't care that much about tech and don't want to go deeper than the bare minimum required by their job.
So I think tech overhired by a LOT, then they realized all these new people are actually net negatives on the company, and we are slowly correcting.
I think a solid 50% of people in tech are still on the chopping block. You can do much more with tools + really smart people in the year 2024 than you could before.
> We were allowed to expense all employee compensation tied to software or R&D in the year in which we paid it. Now we can only expense a small fraction of that because we have to capitalize the expense. That means if you paid and developer $100 to develop a piece of software then sold subscriptions totaling $100 you now have a profit. The old model you have zero dollars in profit the new model says you have something like $80 in profit that you know have to pay taxes on… with what cash?
Additional "finger in the wind context": this change was brought about through the Trump Tax Cuts. My best guess is that Trump wanted the 174 change as a negotiation token to prod tech to make a deal. Mind you and me, this was all pre-pandemic. The financial world was pretty stable and this was going to be a 'great way' to make people work together, if desired. After the pandemic financial response, all bets were off.
Soloprenuers are the only one's somewhat immune. I'm thankful my companies needed to downsize before this.
Final context, there will be a whole new industry to define the useful life for a piece of software given the advancements in AI. This is going to be great fun.
[edit] One more thing, this change was thought to be “repeal-able” with new legislation. Since it no longer looks to be the case, to avoid “everything is securities fraud” (Matt Levine term), everyone has to adjust their public statements and accounting for this new change. Sure many of the big players will still make profit, but analysts only care about “beats and misses.” And since the legislation hasn’t passed to put the old rules back in place, accounting has to make these forecasts more permanent with less wiggle room - aka misses and forecasts down. Now, there is a huge op to trade the rules changing back - which would be a huge tailwind (made headcount cuts and get favorable tax treatment)