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The tech market is fundamentally fucked up and AI is just a scapegoat

bayramovanar.substack.com

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Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#121

Post by brk »

Bayramovanar wrote: post #88
j05ev1f3 wrote: post #52

Earlier quoted context omitted.

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

Factory overhiring can happen easily by adding speculative 2nd and 3rd shifts. No need for extra equipment, tooling, or physical capacity.

Lines with specialty equipment and tooling can also often be sped up. That can allow for other jobs to be added to all the functions that support the processes involved before and after the specialty equipment.

New employees also often require training and some apprenticeship time, meaning they can get hired ahead of actual demand.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#122

Post by micik »

kypro wrote: post #106

Personally I think all these posts miss 50% of the issue... I agree it's not AI, but I suspect it's only partially an interest rate story. Tech changed a lot from 2010 to 2020. Prior to 2010 almost everything built required a huge amount of development effort, and in 2010 there was still a huge amount of useful stuff to be built. Remember – prior to 2010 a lot of major companies didn't even have basic e-commerce stor…

Great comment. I’m thinking along similar lines — what is there in tech to build? And the answer is, not much for the current cohort of services.

Big product companies with big products are solved problems in their respective fields. Building an Amazon or a Facebook is quite a lot of work. Maintaining it is much less work.

For a while the industry has done a thing where you do e.g. infrastructure in five different ways across ten different teams across three departments. It created a lot of “work” but it didn’t create much additional value.

Another instance of this was myriad “internal products” with the idea that some of them will be blockbusters because Paul Buchheit built Gmail as a 20% project in days of yore. That didn’t go so well, either.

You get the feeling that all this merry but ultimately futile kerfuffle was done to fuel the hype of growth but the actual job positions were completely uncoupled from revenue growth. For a time this was hard to see while global expansion was happening. Revenue was growing rapidly and so was headcount. It seemed to check out, arithmetically, but it’s not sensible. It doesn’t take twice as many workers to service twice as many employees in this industry.

When the global expansion didn’t have anywhere else to expand to and revenue stopped growing, the workforce-sustaining illusion fell apart. Now those companies are unloading everyone but the skeleton crew it takes to maintain the products. That’s a lot of people.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#123

Post by Propelloni »

Bayramovanar wrote: post #88
j05ev1f3 wrote: post #52

Earlier quoted context omitted.

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

This only holds for companies that do not have to comply with some regulation or standard, e.g. ISO 27001, to do business. Especially infrastructure, banking, and defense tech have high compliance requirements that also, and sometimes esp. cover software development.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#125

Post by lumost »

j05ev1f3 wrote: post #52
jasode wrote: post #15

>In traditional industries like manufacturing you don’t hire 500 factory workers unless you have a production line that needs them. You don’t over-hire based on a guess. Traditional factories do make wrong guesses about the future and overhire all the time. Example: https://www.google.com/search?q=Ford+f150+lightning+laid+off...

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

Tech companies also benefit from over hiring. It gives them slack to absorb crises, and Fast Fuel to move quickly on new growth. Eliminating the fear of layoffs allows employees to take more risks and explore.

The current crop of tech companies cutting staff is going to lead to a large number of dead giants. The staff who services the layoffs will be risk averse, and defensible in a job cut situation. You see this in legacy firms where it takes 10 people to make a change because each person has a small slice of permissions required to effect the change. This pattern is by design as laying of any of the ten people on different teams would kill dozens of critical business processes.

This is not how you make high growth firms.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#126

Post by AnimalMuppet »

Bayramovanar wrote: post #88
j05ev1f3 wrote: post #52

Earlier quoted context omitted.

The whole article rests on this false economic claim, that traditional industries don’t overhire based on expectations. They absolutely do, ALL THE TIME. Manufacturing, automotive, airlines, energy etc. all of them make demand bets and lay people off when those bets fail. Cheap money amplified this cycle, but this isn’t a tech specific "failure", it’s just how forecasting under uncertainty work. It’s incredible how s…

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

What's the cost of a programmer-quality laptop, with two large monitors, plus licenses for all the software that they need? That's 2-3K.

Does anyone know what the typical tool cost is for a factory worker?

(And the tool cost for a factory worker can be zero if you're hiring for a second shift - they would use the same tools as the first shift, just at different times. In contrast, I don't think there are very many places that ask programmers to use the same laptop in shifts.)

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#127

Post by Bayramovanar »

brk wrote: post #121
Bayramovanar wrote: post #88

Earlier quoted context omitted.

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

Factory overhiring can happen easily by adding speculative 2nd and 3rd shifts. No need for extra equipment, tooling, or physical capacity. Lines with specialty equipment and tooling can also often be sped up. That can allow for other jobs to be added to all the functions that support the processes involved before and after the specialty equipment. New employees also often require training and some apprenticeship time…

I am really not debating whether over hiring is possible in factories.

in tech cost of hiring is lower which makes headcount a much easier speculative bet and layoffs a much easier reset when the bet fails.

Re: The tech market is fundamentally fucked up and AI is just a scapegoat

#129

Post by Bayramovanar »

AnimalMuppet wrote: post #126
Bayramovanar wrote: post #88

Earlier quoted context omitted.

I will avoid getting into a “who understands economics better” debate. But factory workers usually require specialized machinery, tooling, and physical capacity, which makes overhiring slower, harder and more constrained. Those investments force more deliberate planning. By contrast, engineers mostly require a laptop and company hoodie... That low marginal cost makes it far easier to hire aggressively on expectations…

What's the cost of a programmer-quality laptop, with two large monitors, plus licenses for all the software that they need? That's 2-3K. Does anyone know what the typical tool cost is for a factory worker? (And the tool cost for a factory worker can be zero if you're hiring for a second shift - they would use the same tools as the first shift, just at different times. In contrast, I don't think there are very many pl…

they even cut costs by leasing the computers...
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