Salesforce cut hundreds of employees Monday(cnbc.com)
cnbc.com
Salesforce cut hundreds of employees Monday
https://www.cnbc.com/2022/11/08/salesforce-cut-hundreds-of-employees-on-monday.html
46 comments
> many consumers without savings are at risk of financial ruin
Yes. This is the reason for having a better social safety net. There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.
Yes. This is the reason for having a better social safety net. There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.
While I agree that we should have a good social safety net, these cycles should in no way shape or form be normal. Something is obviously fundamentally broken.
What are you talking about? This cycle is well-known and follows a roughly 7 year pattern and has done so since the start of the industrial era 200 years ago. Even prior to that there were economic cycles in the years 1000-1700. Whether these cycles should leave ordinary people in financial ruin is a completely different matter.
Waxing and waning of economies is something that happened since civilization started. No one has fixed it yet, and people a lot smarter than you and I have tried. If the human race was more altruistic than greedy, it would probably be possible, but we aren't. Until that changes, this is just what happens.
Having no savings is not taking a risk?
It's absolutely taking a risk, but for many people it is an unavoidable risk, and thus would not be considered taking "excessive" risk, as OP mentioned.
It takes a _long_ time to save up enough to manage through a year of unemployment.
A social safety net is always there.
A social safety net is always there.
Don't victim blame. Not every person or family is able to save, think about it a bit deeper than your personal bubble...
The relative cost of health care and other benefits makes savings a lost cause for the unemployed. You live one trip to the ER away from bankruptcy and homelessness every minute of every day. It’s foolish to blame savings rates for that situation, almost no one make enough to save at a rate that prevents medical bankruptcy.
if you live in California, savings are a dream for so many people. skyrocketing rents, high taxes, skyrocketing gas prices, expensive health insurance, and so on.
it's really hard for a lot of people to build up savings here.
it's really hard for a lot of people to build up savings here.
Is it though? The social safety net usually doesn’t reach up to help people earning SV tech job salaries. I would prefer to see more friction when it comes to layoffs so we’d see less of tech giants doubling and halving their headcounts in a period of just a couple of years.
pulls out soapbox
> There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.
And this is why I get so frustrated when I hear things like "Well business owner(s) take all the risk so that's why they get all the reward (profits, or most of it)". Bullshit. For smaller companies this is more-so true but not even then is it always true. I'm not sure how many downturns or mistakes have to happen followed by layoffs for the general public to grasp this but I don't anticipate people wising up anytime soon. In a number of these layoffs we hear about "Well we misjudged the market" or "The trends didn't continue the way we thought and we over-hired". Instead of tightening their belts (less profit for owners/shareholders) the answer is always to just jettison people until the books "balance".
I own my own (side) business and I have family members who own full-time businesses, I'm well aware of the risk (and debt) we have taken on but for larger companies the top brass (and shareholders) seem nearly completely insulated from any pain. Compare that to places that have profit sharing with employees which can go down if there is a downturn/etc, this is a much better way to handle it. I'm fine sharing in the risk (which I'm doing just by working for someone, they could fire/lay me off tomorrow without warning, that's a risk) if I'm also sharing in the reward. I'm also fine with the "reward" (profit share) decreases in "bad" times versus laying off a bunch of people. Some companies do this much better than others but I really wish companies were either forced to share the rewards and/or actually feel some pain when they make bad decisions. I think we all know the people responsible for over-hiring don't actually face any repercussions for their mistakes, instead it's the people they hired then laid off. And no, paying severance or feeling bad about having to lay off people isn't really "pain" in my book.
Having a "better social safety net" is sort of a way to force "profit sharing" in a roundabout way and I would greatly appreciate it if losing a job didn't mean loss of healthcare and/or a way to put food on the table, pay rent, etc. I know from personal experience that having a good safety net (aka, my parents) makes a huge difference. Not that I play fast and loose with my money (I have an emergency fund that I could run on for 6-9+ months that I've built up) but you always have a little voice in the back of your head saying "You aren't going to end up on the streets". Not everyone has that and I'd love nothing more than for everyone to experience and have that confidence, it's what allows you to take risks (sane ones ideally, like starting your own business) knowing that failure will not ruin you.
puts up soapbox
> There's no reason a normal business cycle should "ruin" normal people that did not take excessive risks.
And this is why I get so frustrated when I hear things like "Well business owner(s) take all the risk so that's why they get all the reward (profits, or most of it)". Bullshit. For smaller companies this is more-so true but not even then is it always true. I'm not sure how many downturns or mistakes have to happen followed by layoffs for the general public to grasp this but I don't anticipate people wising up anytime soon. In a number of these layoffs we hear about "Well we misjudged the market" or "The trends didn't continue the way we thought and we over-hired". Instead of tightening their belts (less profit for owners/shareholders) the answer is always to just jettison people until the books "balance".
I own my own (side) business and I have family members who own full-time businesses, I'm well aware of the risk (and debt) we have taken on but for larger companies the top brass (and shareholders) seem nearly completely insulated from any pain. Compare that to places that have profit sharing with employees which can go down if there is a downturn/etc, this is a much better way to handle it. I'm fine sharing in the risk (which I'm doing just by working for someone, they could fire/lay me off tomorrow without warning, that's a risk) if I'm also sharing in the reward. I'm also fine with the "reward" (profit share) decreases in "bad" times versus laying off a bunch of people. Some companies do this much better than others but I really wish companies were either forced to share the rewards and/or actually feel some pain when they make bad decisions. I think we all know the people responsible for over-hiring don't actually face any repercussions for their mistakes, instead it's the people they hired then laid off. And no, paying severance or feeling bad about having to lay off people isn't really "pain" in my book.
Having a "better social safety net" is sort of a way to force "profit sharing" in a roundabout way and I would greatly appreciate it if losing a job didn't mean loss of healthcare and/or a way to put food on the table, pay rent, etc. I know from personal experience that having a good safety net (aka, my parents) makes a huge difference. Not that I play fast and loose with my money (I have an emergency fund that I could run on for 6-9+ months that I've built up) but you always have a little voice in the back of your head saying "You aren't going to end up on the streets". Not everyone has that and I'd love nothing more than for everyone to experience and have that confidence, it's what allows you to take risks (sane ones ideally, like starting your own business) knowing that failure will not ruin you.
puts up soapbox
So long as the safety nets don't prolong or worsen the recovery. Moving people out of the labor pool shrinks the economy for everyone - making it worse off for people with and without jobs. Bad policy can turn slumps into prolonged recessions.
Can anyone smarter than me explain why this is happening two years after the entire world shutdown? Is this completely unrelated to COVID?
Immediately following shutdowns, money was cheap and companies overinvested.
Right now, interest rates are squeezing the market.
We're seeing (hopefully) a correction to a more sustainable level of business.
Right now, interest rates are squeezing the market.
We're seeing (hopefully) a correction to a more sustainable level of business.
I'm not smarter by any means, but I do know a little bit about this.
As a response to the pandemic, the US Treasury spent ~$6T more than it collected in taxes: ~$3.2T during the Trump administration and ~$2.8T during the Biden administration,[a] and the US Federal Reserve reduced short-term rates and purchased $5T of treasury and agency bonds, flooding the market with liquidity and lowering long-term interest rates to their lowest level since WWII.[b]
As always and as ever, investors flooded with treasury checks and ultra-cheap money engaged in an orgy of speculation that would make even the most shameless drunken sailor blush. Crypto is perhaps the most prominent example of it. Trading in meme stonks would be another example. Pokemon Pikachu cards trading for $5M may be the silliest example. Or maybe the silliest example was all those smart people who came up with clever narratives to justify stock market valuations that otherwise look... unjustifiable.[c]
As the speculators threw money around while we all muddled through the pandemic, the world's supply chain system was hit with two massive shocks: (1) the pandemic, which is still limiting the availability of many items (e.g., iPhones made in China), and (2) Russia's war in Ukraine, which triggered a global food and energy crisis (e.g., there isn't enough grain being exported to feed the entire planet).
Both shocks are fueling inflation, prompting the US Treasury to cut spending and the Fed to increase rates and withdraw liquidity from financial markets. Increasing rates and withdrawing liquidity are very painful methods for reducing inflation, but they are the only methods that have been shown to work. As money started becoming less cheap to borrow and less easy to find, businesses and consumers started spending less -- first gradually, then "suddenly."
--
[a] https://fred.stlouisfed.org/graph/?g=WdPZ
[b] https://fred.stlouisfed.org/graph/?g=WdQ3
[c] https://www.multpl.com/shiller-pe
As a response to the pandemic, the US Treasury spent ~$6T more than it collected in taxes: ~$3.2T during the Trump administration and ~$2.8T during the Biden administration,[a] and the US Federal Reserve reduced short-term rates and purchased $5T of treasury and agency bonds, flooding the market with liquidity and lowering long-term interest rates to their lowest level since WWII.[b]
As always and as ever, investors flooded with treasury checks and ultra-cheap money engaged in an orgy of speculation that would make even the most shameless drunken sailor blush. Crypto is perhaps the most prominent example of it. Trading in meme stonks would be another example. Pokemon Pikachu cards trading for $5M may be the silliest example. Or maybe the silliest example was all those smart people who came up with clever narratives to justify stock market valuations that otherwise look... unjustifiable.[c]
As the speculators threw money around while we all muddled through the pandemic, the world's supply chain system was hit with two massive shocks: (1) the pandemic, which is still limiting the availability of many items (e.g., iPhones made in China), and (2) Russia's war in Ukraine, which triggered a global food and energy crisis (e.g., there isn't enough grain being exported to feed the entire planet).
Both shocks are fueling inflation, prompting the US Treasury to cut spending and the Fed to increase rates and withdraw liquidity from financial markets. Increasing rates and withdrawing liquidity are very painful methods for reducing inflation, but they are the only methods that have been shown to work. As money started becoming less cheap to borrow and less easy to find, businesses and consumers started spending less -- first gradually, then "suddenly."
--
[a] https://fred.stlouisfed.org/graph/?g=WdPZ
[b] https://fred.stlouisfed.org/graph/?g=WdQ3
[c] https://www.multpl.com/shiller-pe
The 2008 financial crisis just kinda happened. These things are hard to predict, but market economies tend to create situations where boom and bust are the most efficient for growth and happen every few decades.
In theory sure, but in practice a great deal of this is driven by earlier over investments by tech companies who saw a huge surge in profits during COVID lockdowns.
It wasn’t just online companies that benefited by changing consumer habits as people where stuck at home with little to do browsed social media and ordered food delivery etc. Setting up remote options across many industries had many similarities with the pre Y2K investments and a wave of modernization efforts. That followed by supply shortages which pushed massive investments to build more robust supply chains etc.
It wasn’t just online companies that benefited by changing consumer habits as people where stuck at home with little to do browsed social media and ordered food delivery etc. Setting up remote options across many industries had many similarities with the pre Y2K investments and a wave of modernization efforts. That followed by supply shortages which pushed massive investments to build more robust supply chains etc.
Although it will be endlessly debated, it doesn't matter that much how a recession got started, nor who deserves the most blame. Once the spending-slowdown spiral gets going, it can become self-sustaining on its own, beyond anyone's control, affecting both the guilty and the innocent.
Well - artificially inducing a recession to make people poorer so they can’t afford to buy things as a way of reducing shipping container rates and backlogs is a pretty ass backwards way to run a society.
Food prices are inflating, so if we get enough people unable to afford food, prices go down.
“Victory”
I think you can apportion blame for stuff like that. And the guilty are insulated from the consequences of their actions, so I don’t agree they share in the pain.
Food prices are inflating, so if we get enough people unable to afford food, prices go down.
“Victory”
I think you can apportion blame for stuff like that. And the guilty are insulated from the consequences of their actions, so I don’t agree they share in the pain.
> Well - artificially inducing a recession to make people poorer so they can’t afford to buy things as a way of reducing shipping container rates and backlogs is a pretty ass backwards way to run a society.
The fed isn't doing this because they want cheaper shit from china. They're doing it to keep inflation under control. A result of making money more expensive is lower shipping container rates, but that's not the primary goal. Do you have any better ideas for stopping inflation?
The fed isn't doing this because they want cheaper shit from china. They're doing it to keep inflation under control. A result of making money more expensive is lower shipping container rates, but that's not the primary goal. Do you have any better ideas for stopping inflation?
> Do you have any better ideas for stopping inflation?
Not only be concerned with it when it begins to impact wages.
Not only be concerned with it when it begins to impact wages.
Source for this assertion being true?
"So in principle, it seems as though, by moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that."
https://www.wsj.com/articles/transcript-fed-chief-powells-po...
Had a decade of asset inflation, that was fine. A quarter or two of wage inflation and everyone loses their minds.
https://www.wsj.com/articles/transcript-fed-chief-powells-po...
Had a decade of asset inflation, that was fine. A quarter or two of wage inflation and everyone loses their minds.
Yes. Increase shipping capacity and reduce gasoline costs. These frictionful costs make up the entirety of inflation at the moment. It’s not just cheaper shit from China - although cheaper stuff necessarily is deflationary. Food is a global commodity and it costs 4x more to ship it now than it did 3 years ago. That cost is passed to consumers.
Increasing the cost of borrowing decreases economic activity by essentially making everything more expensive on credit. Many businesses use credit facilities to finance ongoing operations throughout the year and their ability to afford to operate their business will go down, requiring them to employ less and attempt less business. This reduces inflation by pulling capital back from growth and investment as well as into savings facilities. But the other side is it induces a recession, increases unemployment, and decreases wages. This is worse than inflation IMO - if you make less money how is that different than things costing more? The supply of money might change the nominal price of something and hurts fixed income folks, but as wages are elastic as well as prices unless inflation is coupled with decreased wages and employment whats the relative difference? Further consumption based economies burn money supply down quickly if the economy is able to meet demand.
By reducing the cost of shipping and improving shipping capacities any excess cash would be consumed by having supply meet demand. That can be achieved by lowering interest rates which stimulates capital investment in supply side expansion and facilitated demand by lowering the marginal cost of credit facilities.
Increasing the cost of borrowing decreases economic activity by essentially making everything more expensive on credit. Many businesses use credit facilities to finance ongoing operations throughout the year and their ability to afford to operate their business will go down, requiring them to employ less and attempt less business. This reduces inflation by pulling capital back from growth and investment as well as into savings facilities. But the other side is it induces a recession, increases unemployment, and decreases wages. This is worse than inflation IMO - if you make less money how is that different than things costing more? The supply of money might change the nominal price of something and hurts fixed income folks, but as wages are elastic as well as prices unless inflation is coupled with decreased wages and employment whats the relative difference? Further consumption based economies burn money supply down quickly if the economy is able to meet demand.
By reducing the cost of shipping and improving shipping capacities any excess cash would be consumed by having supply meet demand. That can be achieved by lowering interest rates which stimulates capital investment in supply side expansion and facilitated demand by lowering the marginal cost of credit facilities.
>Yes. Increase shipping capacity and reduce gasoline costs.
Easier said than done. How do you do this without driving more inflation in the meantime? If supply chains are constrained, deploying a bunch of oil drilling equipment is going to make it worse.
>This is worse than inflation IMO - if you make less money how is that different than things costing more?
What's bad about inflation goes beyond just "inflation was 10% so people are 10% poorer". Inflation hinders trade and financing (why would you sign a 5 year contract when you don't know what prices will be in 5 years?), discourages saving/investment, and adds inefficiencies throughout the economy as everything has to be constantly repriced. Also, failing to contain inflation when there's an expectation of a certain inflation rate leads to higher borrowing costs (for both private and public lenders), because lenders don't want to be wiped out by inflation.
>That can be achieved by lowering interest rates which stimulates capital investment in supply side expansion and facilitated demand by lowering the marginal cost of credit facilities.
That's absolutely bonkers. There's already too much dollars chasing too few goods, and your solution is to unleash even more dollars?
Easier said than done. How do you do this without driving more inflation in the meantime? If supply chains are constrained, deploying a bunch of oil drilling equipment is going to make it worse.
>This is worse than inflation IMO - if you make less money how is that different than things costing more?
What's bad about inflation goes beyond just "inflation was 10% so people are 10% poorer". Inflation hinders trade and financing (why would you sign a 5 year contract when you don't know what prices will be in 5 years?), discourages saving/investment, and adds inefficiencies throughout the economy as everything has to be constantly repriced. Also, failing to contain inflation when there's an expectation of a certain inflation rate leads to higher borrowing costs (for both private and public lenders), because lenders don't want to be wiped out by inflation.
>That can be achieved by lowering interest rates which stimulates capital investment in supply side expansion and facilitated demand by lowering the marginal cost of credit facilities.
That's absolutely bonkers. There's already too much dollars chasing too few goods, and your solution is to unleash even more dollars?
Artificially inducing and propping up an economy with cheap cash led to this. Now we have no choice. Inflation hurts the poor just as much as this does.
If my income drops by $10 is that materially different than the price going up by $10 instead? In the end I have a $10 deficit. By letting supply and demand work itself out and making sure the friction for supply meeting demand is minimal (I.e., shipping and fuel costs low and capacity high), inflation would disappear as suppliers met the demand induced by any excess liquidity in the market. The world has an amazing capacity to produce, but it’s being bottlenecked by fuel costs and shipping capacity. That means if you can improve that bottleneck the excess cash you mention is consumed into production and capital investment to meet the demand. That’s expansive to the economy and generally good for everyone. The fed trying to lower shipping rates by making demand disappear is contracting the economy, is recessionary, and leads to widespread suffering. Neither path happens over night, and both inflation and a recession hurt - but the outcome of economic expansion is better for everyone than contraction.
Note I’m not saying don’t deal with inflation. I’m saying inflation is caused by bottlenecks in supply meeting demand. Stimulus increased demand, and that increased demand can be met by suppliers but the cost of shipping in all dimensions is very high historically. Removing bottlenecks and expanding economic throughput also solves the inflation we see without everyone being miserable.
Note I’m not saying don’t deal with inflation. I’m saying inflation is caused by bottlenecks in supply meeting demand. Stimulus increased demand, and that increased demand can be met by suppliers but the cost of shipping in all dimensions is very high historically. Removing bottlenecks and expanding economic throughput also solves the inflation we see without everyone being miserable.
I think the train that this is transitory has left the station. Demand is still high and inflation rates are not going down despite shipping costs plummeting in recent months.
Obviously the Fed can go overboard. But the economy is no longer based on fundamentals and an inflationary spiral would be a major problem. I can't blame the fed for taking the action they are.
Obviously the Fed can go overboard. But the economy is no longer based on fundamentals and an inflationary spiral would be a major problem. I can't blame the fed for taking the action they are.
The source of these layoffs makes a very big difference when considering if a recession is likely and how deep it becomes.
The overall economy is doing quite well right now and it’s not obvious if things will improve or tank over the next few months. Despite officially low unemployment rate the actually important employment rate is only ~60% demonstrating a reasonable but not excessive amount of slack in the labor market.
The overall economy is doing quite well right now and it’s not obvious if things will improve or tank over the next few months. Despite officially low unemployment rate the actually important employment rate is only ~60% demonstrating a reasonable but not excessive amount of slack in the labor market.
a lot of skilled workers enter the job market at a reduced price, they have the know how to compete in the same or adjacent sector, medium company can acquire the competences at a reduced price, their profit increase their spending, etc etc
economics is not a single company
this is the tail of feds interest rate raise cutting down investment. it will last a while, but the economy doesn't yet seem unhealthy (well except some specific bubbles, but those have been there a while and if they pop will pop because they were bubbles, not because the secondary trigger)
economics is not a single company
this is the tail of feds interest rate raise cutting down investment. it will last a while, but the economy doesn't yet seem unhealthy (well except some specific bubbles, but those have been there a while and if they pop will pop because they were bubbles, not because the secondary trigger)
Agree on everything :-)
The only thing I'm not so sure about is the health of the economy. While all macro stats look great so far, they don't yet reflect the wave of layoffs we're seeing in sector after sector.
We may be going through a mild recession overall and a brutal one in bubble-land. Regardless, it will feel horrible to anyone younger than 35, who has never experienced a recession since joining the workforce at most ~15 years ago.
The only thing I'm not so sure about is the health of the economy. While all macro stats look great so far, they don't yet reflect the wave of layoffs we're seeing in sector after sector.
We may be going through a mild recession overall and a brutal one in bubble-land. Regardless, it will feel horrible to anyone younger than 35, who has never experienced a recession since joining the workforce at most ~15 years ago.
well there was the subprime thing, it hit harshly on south europe. heck italy was still trying to climb out of that when covid hit, and it's like still down significant % from 2008 gdp levels
As many of these companies base their projections on a relatively small number of outside sources, it often strikes me as a bit of a self-fulfilling prophecy.
Big business and financial firms have been signaling a belief in a downturn for a while now -- including while posting about record profits.
Big business and financial firms have been signaling a belief in a downturn for a while now -- including while posting about record profits.
It's all related to taming inflation
Indeed! Such a strong case for more social systems like employment insurance.
Not to oversimplify but I find “government programs” to be a good answer to basically any “tragedy of the commons” problem such as spending less during a recession.
Not to oversimplify but I find “government programs” to be a good answer to basically any “tragedy of the commons” problem such as spending less during a recession.
Salesforce employee here. These were mostly the account executives who couldn't meet their quota. It's unfortunate that this is happening to AEs, who are usually the hardworking people at Salesforce struggling to close deals in a tough economy. It will be interesting to see what will happen to the random 'strategy', product and engineering folks who build over engineered, over priced, marketing bullock that doesn't sell.
> These were mostly the account executives who couldn't meet their quota.
> account executives
...you mean "sales", right?
> account executives
...you mean "sales", right?
Yes - Sales is a function/dept/team. Account executives are part of sales teams.
This is pretty small adjustment for a company their size and comes on the heels of several large acquisitions and a huge hiring spree. I'm not sure this is actually a headcount reduction or just a restructuring. They have over 3000 job openings listed on LinkedIn right now.
> Salesforce let go of fewer than 1,000 employees Monday, according to a person familiar with the move.
> At the end of January it employed 73,541 people.
“…employees Monday”,
“…January”
Is this grammatical? Is it coherent? Or was this generated with GPT-3?
> At the end of January it employed 73,541 people.
“…employees Monday”,
“…January”
Is this grammatical? Is it coherent? Or was this generated with GPT-3?
The author was last aware of the Salesforce headcount on or near January 31.
Yesterday, Salesforce reduced their headcount.
It doesn't seem difficult to parse at all.
Yesterday, Salesforce reduced their headcount.
It doesn't seem difficult to parse at all.
I'm not picking up on what you're implying is the confusing part.
I think JDEW's comment was generated by GPT3 and he's asking if his own comment was coherent?
They couldn't keep their sales force.
The people who lose their jobs, in turn, are forced to cut their spending, contributing even more to the ongoing revenue slowdown at companies that sell to consumers.
The service providers who see their billing examined with a microscope and who are told that new projects are now on hold, in turn, find themselves forced to cut their own spending on people, services, and facilities, contributing even more to the ongoing revenue slowdown at other companies.
The office buildings who are given notice of lease terminations, in turn, find themselves forced to cut their own spending, contributing as well to the ongoing revenue slowdown at other companies.
The more every company and consumer cuts spending, the less money all companies and consumers earn. This unpleasant state of affairs is called a "recession." When it's really bad, it's called a "depression." It's no fun. Many unprofitable companies and many consumers without savings are at risk of financial ruin.