Gitlab to lay off 7% of staff • Hacker News Board

Re: Gitlab to lay off 7% of staff

#181

Post by atomicnumber3 » Thu, Feb 09, 2023, 3:24 PM UTC

whatever1 wrote: post #151

softwaredoug wrote: post #63

Listened to a great podcast about layoffs yesterday ( https://hbr.org/podcast/2023/02/why-many-companies-get-layof... ) The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).

It takes long time for the layoff effects to hit the company. The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years. The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these…

I worked at a bigco that followed this approach. I think the alleged fungibility of programmers is surface-level.

Sure - ~any decent programmer can jump into ~any codebase and do your JIRA tickets. But there's a more holistic ownership you miss out on that's going to be the difference between a system aging gracefully and a system becoming a giant hunk of butchered junk that's been one-small-jira-ticket-ed to death over a decade and now needs a very costly and distracting replacement/rewrite.

I worked at a different company that did the opposite of this. Programmers were expected to stay either 1 year or 10 years, and you'd be compensated according to which bucket you were falling into. They had excellent retention rates, and the dev team was small, never rewrote systems. They had owners who had either written them, or been handed off apprenticeship-style over the course of a year or two from the former master to the new master.

Place 1 was a fucking mess of tech debt and had constant incidents that made high value customers mad, execs mad, and oncall engineers mad. One of my coworkers literally went into his first oncall shift, got paged at night three times in two days, and resigned the next morning when he found out that yeah this is just kind of normal and good luck convincing leadership to let us fix it.

Place 2 literally never had tech incidents. The worst oopsies were generally related to (it was a trading shop) other people in the market fucking up and resulting in trade breaks that we had to clean up after hours, or exchanges having problems and sending us garbage data that we had to resolve by calling someone from the exchange to confirm order statuses and so on.

I only left place 2 because I was moving across the country and they didn't do remote (and still don't, even post covid). I was laid off from place 1.

Re: Gitlab to lay off 7% of staff

#182

Post by tsvetkov » Thu, Feb 09, 2023, 3:24 PM UTC

gerhardhaering wrote: post #32

Ok, 7%. With all the cost, I wonder if just stopping hiring and letting normal attrition rate play out would have had almost the same effect.

The fun thing is that their R&D cost is dwarfed by expenses on Sales&Marketing and General&Administrative. So, if I understand their financial statements for 2022FY correctly, a 7% cut on R&D could lower their total expenses by 2% at best https://ir.gitlab.com/news-releases/news-release-details/git... Even cutting their R&D 100% would not make GitLab profitable, if other expenses are kept the same, so economics is clearly not the reason for layoffs.

Re: Gitlab to lay off 7% of staff

#183

Post by isodev » Thu, Feb 09, 2023, 3:24 PM UTC

trentnix wrote: post #144

isodev wrote: post #106

I don’t get this - did every single company hire hundreds of people for no good reason? A global event forcing folks to temporarily use more online services is, well, temporary. I just don’t get the mindset that triggered all these companies to mismanage their teams so badly.

It's quite simple: If you don't follow the herd, you risk being blamed if you fail. But if you follow the herd and do what everyone else is doing, even if the herd runs off of a cliff, nobody points any fingers. You'd think somewhere, in at least one of these larger tech companies, there would be a leader boldly proclaiming "this is our time to increase our investments and beat our competitors!" But it turns out ther…

It makes me sad. These are actual human beings losing their jobs. I guess they don't include “human cost” or “how much pain we inflicted” as a column in financial reports.

Re: Gitlab to lay off 7% of staff

#184

Post by ptero » Thu, Feb 09, 2023, 3:24 PM UTC

whatever1 wrote: post #151

softwaredoug wrote: post #63

Listened to a great podcast about layoffs yesterday ( https://hbr.org/podcast/2023/02/why-many-companies-get-layof... ) The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).

It takes long time for the layoff effects to hit the company. The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years. The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these…

I am not sure about this (not disagreeing, just not sure). First, 10% of top performers out in 2 years is a normal attrition rate for a 20 year tenure. And I suspect mean time at the company is much lower.

But even more important, I think most top performers understand and accept the risk that their employment may end. For example, the company can fold. It is easier for top engineers to accept that because they likely have better connections and can pretty easily find a good job elsewhere. My 2c.

Re: Gitlab to lay off 7% of staff

#185

Post by ww-picard-do » Thu, Feb 09, 2023, 3:25 PM UTC

maxsilver wrote: post #113

ww-picard-do wrote: post #95

Earlier quoted context omitted.

So, let me understand your argument. The CEO choose to lay people off in order to scare the remaining employees? To what end? Also, if the intention was to "instill fear". Why give good severance? Why not give nothing?

> Why give good severance? Why not give nothing? You lay off hard to instill fear and legally-depress everyone's wages, but you give good severance so that when you inevitably want to hire people in the next two months (as GitLab is likely to do), they're aren't too terrified to accept your offer because of all the layoffs you just did. 7% of staff as "layoffs" comes out to about 150-ish? people, but they are also cu…

None of what you have said is evidence that the intention is to "instill fear".

Also, I am not sure how confidently you can assess the health of Gitlab. Those open positions my not actually be "open". While their revenue was up four months ago, much has changed since then. Their next quarter might be down and they are adjusting now.

> isn't anywhere close to a recession

No one knows where the economy is headed.

> It's a pretty transparent process, frankly.

Except that it is not. Perhaps you are correct, but you really have no evidence their decisions were to maliciously "instill fear". It is equally plausible that they are doing what they think is best for the company and the remaining employees.

Re: Gitlab to lay off 7% of staff

#186

Post by softwaredoug » Thu, Feb 09, 2023, 3:25 PM UTC

whatever1 wrote: post #151

softwaredoug wrote: post #63

Listened to a great podcast about layoffs yesterday ( https://hbr.org/podcast/2023/02/why-many-companies-get-layof... ) The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).

It takes long time for the layoff effects to hit the company. The main effect is that you lose the trust of the top performers. These will be the in the lookout for new opportunities the day after the layoffs are done. If you cut 10%, expect 10% from the top to flee within a couple of years. The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these…

> The second effect is related to the fact that companies usually target older people with expensive jobs. In an a big org these are the wizards who have the unwritten cookbooks in their brains. When they leave en masse, a lot of the organizational memory is gone, and expensive operational mistakes of the past are forgotten. These have longer effects that will haunt the company for many years.

Is this true this round? I have noticed a few things:

* On the hiring front, much more demand for senior, staff, principal devs, less demand on the junior / intern front.

* (Anecdotally) A LOT of junior / new people laid off. It seems in this round companies want a small but elite force, rather than opting for junior people.

Re: Gitlab to lay off 7% of staff

#187

Post by katbyte » Thu, Feb 09, 2023, 3:25 PM UTC

jackcviers3 wrote: post #149

teeray wrote: post #118

Earlier quoted context omitted.

> they make shareholders rich In that regard, I wonder if it becomes a Wall Street meme--layoffs for the sake of doing layoffs. Companies that performed layoffs made shareholders rich, so therefore if your company isn't doing layoffs in a layoff climate it's assumed that shareholders are better off putting their dollars somewhere else.

It's also what the fed wants to slow inflation.

And keep wages down during a period of historical low unemployment.

Re: Gitlab to lay off 7% of staff

#188

Post by cgearhart » Thu, Feb 09, 2023, 3:31 PM UTC

msm_ wrote: post #98

softwaredoug wrote: post #63

Listened to a great podcast about layoffs yesterday ( https://hbr.org/podcast/2023/02/why-many-companies-get-layof... ) The takeaway is that layoffs are extremely trust destroying for employees NOT laid off, and in the end not clear they're a financial net positive. Both with direct and indirect costs (lack of engagement from employees, etc).

My issue with analyses like this is they argue that layoffs are a bad idea and it's just companies shooting themselves in a foot. That's what people want to hear, so it gets a lot of clicks and citations. But, this also means that all the big companies (and that's a lot of them) that just announced layoffs made a obviously bad move. Are they all stupid? I find it hard to believe. It's more plausible, that yeah, layof…

Part of the problem is that it’s very difficult to quantify the higher order effects of layoffs. It’s easy for an exec to understand “if we fire a bunch of people then our labor costs will go down”. It’s much harder to anticipate the effects of “if we fire a bunch of people then those who remain will be demoralized, will lose trust in us, may leave on their own, may be too distracted to work effectively for awhile, etc.” That means the risk assessment is a comparison between a sure thing and a bunch of possibilities—and there’s a long history of companies surviving after layoffs. It seems perfectly rational.

I have a couple observations from going through layoffs at a growth stage startup. If you have to do layoffs then you shouldn’t worry too much about protecting top performers—a noticeable percentage of them (10-20% maybe) will leave on their own _after_ the layoffs. You have broken trust with these folks, and they almost surely have other options. The people who stay either deeply and firmly believe in the company (good!) or for some reason feel like they don’t have other options (less good). Secondly, layoffs don’t end with the pink slips—your company is choosing to go down a long, slow path of rebuilding until almost anyone who remembers the layoffs is gone anyway. It will be harder to recruit top talent at standard market rates for awhile because folks will want to price in a risk premium to hedge against continued future instability, so replacing the fired folks may actually be more expensive in the long run.

Re: Gitlab to lay off 7% of staff

#189

Post by FollowingTheDao » Thu, Feb 09, 2023, 3:31 PM UTC

waboremo wrote: post #140

FollowingTheDao wrote: post #92

Earlier quoted context omitted.

> tech companies are doing this because it's the trendy thing to do, No, they are doing this because we are in a recession and businesses are always the first to know and labor is the last to know.

It's not purely about the recession. If it was, they would halt hiring, keep talent, trim executive bonuses, and be precise about where dead weight exists. Not 5%+ layoffs of major teams and roles. You see other industries, they're laying people off sure, but we're not talking 5%+. They're doing the above, being more precise about their spending. Like Blackrock, huge losses, and still "only" let go of 500/16000, ~3%.…

Well, I am glad top see so many people deluded and thinking we are not in a recession. The only reason it doe snot look like a recession yet is because inflation is still higher then the Fed Rate. This is why the Industrials are not layoff as many people yet.

> You will not see tech companies balloon to the same number of employees ever again

I remember people sating this in 1999.

> both of those reasons are amplifiers

Nope, they are canaries in the coal mine.

Re: Gitlab to lay off 7% of staff

#190

Post by jlmorton » Thu, Feb 09, 2023, 3:31 PM UTC

> The current macroeconomic environment is tough

No, it isn't, and it's embarrassing at this point to continue insisting this. The macroeconomic environment is good, particularly in the United States. Business investment is growing at 3% a quarter (annualized), which is better than the average over the past decade. Employment is growing rapidly. Inflation has been tame over the past six months. And wages are growing steadily, but not rapidly in a wage-inflation spiral. In the US, the stock market is down about 10% over the past 12 months, but it's up over the past six months, and corporate earnings have been high.

Everywhere you look, the economic indicators are solid.

I do not have insight into Gitlab's customers, or the current state of Gitlab's business. But it is simply not true that the macroeconomic environment is tough. It is not. If there are problems, they are Gitlab problems, not macroeconomic problems.