Why So Many Tech Companies Are Laying People Off Right Now(theverge.com)
theverge.com
Why So Many Tech Companies Are Laying People Off Right Now
https://www.theverge.com/2023/1/26/23571659/tech-layoffs-facebook-google-amazon
44 comments
> And you can’t promote people anymore who aren’t women minorities, anymore. So then you have to clear cut middle management, especially if white and over 40.
JFC. Stop making minorities your foil. There are plenty of white guys in middle management. There are plenty of all people in middle management. Middle management is just the rut that everyone gets stuck at in the American Dream (tm).
Seeing non-white or male people get promoted doesn’t mean that white men aren’t getting their fair shake. At the scale of these major companies (tech and non-tech), trust me there are many getting promoted. You’re just hyper focused on minorities and women because that bothers you.
JFC. Stop making minorities your foil. There are plenty of white guys in middle management. There are plenty of all people in middle management. Middle management is just the rut that everyone gets stuck at in the American Dream (tm).
Seeing non-white or male people get promoted doesn’t mean that white men aren’t getting their fair shake. At the scale of these major companies (tech and non-tech), trust me there are many getting promoted. You’re just hyper focused on minorities and women because that bothers you.
They also left out how many of the diversity offices and related folks got fired in the recent layoffs.
Easy to signal when the money is good, but now the stock prices are tanking and you gotta cut fat.
Easy to signal when the money is good, but now the stock prices are tanking and you gotta cut fat.
I loved the part where you randomly blame minorities out of the blue. It reminds me of school, where I have seen classmates get visibly angry when a woman scored higher than them on exams.
Clearly there was “favoritism” and that was the reason why she scored higher. It completely escaped their mind that she studied while they were playing league of legends non-stop.
In my mind it proves that a small number of people really do try to use minorities as scapegoats for no good reason.
In my mind it proves that a small number of people really do try to use minorities as scapegoats for no good reason.
Your classmates may have been witnessing a well known psychological phenomenon: https://scitechdaily.com/wide-and-lasting-consequences-teach...
So, for this hypothesis to be true we'd expect to see
1. A disproportionate number of people who are laid off being middle managers.
2. A disproportionate number of people who are laid off being white men.
Rather than speculating, go find the data. You'd have a great lawsuit on your hands! Until then, this is just ridiculous speculation.
Nobody who isn't a member of a minority group can get promoted anymore? Come on. Like, we do promotions all the time. People can look around and just see that this is false.
1. A disproportionate number of people who are laid off being middle managers.
2. A disproportionate number of people who are laid off being white men.
Rather than speculating, go find the data. You'd have a great lawsuit on your hands! Until then, this is just ridiculous speculation.
Nobody who isn't a member of a minority group can get promoted anymore? Come on. Like, we do promotions all the time. People can look around and just see that this is false.
Its not just tech companies, its capitalism eating itself in hype cycles of bulls and bears.
>its capitalism
I see this type of comment and sentiment more and more in threads on tech companies, and I have to ask: what exactly is meant by it? Is the idea that cycles of cynical exploitation only exist in capitalism? That seems flatly false, on every level, when compared to the other options. Bureaucratic exploitation exists everywhere, always has, and always will.
I see this type of comment and sentiment more and more in threads on tech companies, and I have to ask: what exactly is meant by it? Is the idea that cycles of cynical exploitation only exist in capitalism? That seems flatly false, on every level, when compared to the other options. Bureaucratic exploitation exists everywhere, always has, and always will.
It's not intended as a comparison to other systems. It's calling out a failing of capitalism on its own, since capitalism is the system we live under.
Viewed more fully, the argument points out that capitalism tends to concentrate wealth. On the other end, people without cash reserves get pushed to subsistence living, since they can be pitted against each other to compete for the lowest salary. And you can expect middle managers to side with the people with the most money, since they'll receive rewards for helping them concentrate their wealth.
That doesn't claim that you can eliminate bureacracy. It just points out areas where capitalism itself is the problem, and you can consider other systems. Or improvements to this one, though analysis of capitalism suggests that most improvements will be co-opted in favor of those with money against those who don't.
So that's what the phrase means. There's still a lot to unpack, but that's enough to suggest that there's more to it than just a buzzword.
Viewed more fully, the argument points out that capitalism tends to concentrate wealth. On the other end, people without cash reserves get pushed to subsistence living, since they can be pitted against each other to compete for the lowest salary. And you can expect middle managers to side with the people with the most money, since they'll receive rewards for helping them concentrate their wealth.
That doesn't claim that you can eliminate bureacracy. It just points out areas where capitalism itself is the problem, and you can consider other systems. Or improvements to this one, though analysis of capitalism suggests that most improvements will be co-opted in favor of those with money against those who don't.
So that's what the phrase means. There's still a lot to unpack, but that's enough to suggest that there's more to it than just a buzzword.
[deleted]
This seems to be true. My friend and i talked about this yesterday. My Boss basically cut the entire old staff out of the loop and hired new staff, which he promised a lot of things. The old staff is very unmotivated because nearly nobody got what was promised three years ago. But the Boss got two Promotions in that time.
I have a growing pile of very different theories concerning the layoffs (actual cost cutting, irrational investor pressure, copycat behavior, systemic risk, AI risk, etc.etc.). The article wasn't particularly interesting, it basically argued hurr durr, big tech leadership is incompetent and is just winging it.
Your comment has a new angle, but it only says how, not why. To paraphrase, layoffs are a way to fire white people in middle management in favor of women minorities. But why is that so?
Your comment has a new angle, but it only says how, not why. To paraphrase, layoffs are a way to fire white people in middle management in favor of women minorities. But why is that so?
The corporate 4 stroke engine producing capital for the owners and burning people as fuel.
I'll repeat what I said in a similar, earlier thread: companies with a lot of cash, either piled up during the pandemic, or sourced in recent large investments, based on whatever "gotta be first" premises (blockchain/web3/CryptoCurrency/NFT/etc.), hired in high volume not because of truly obvious needs, but rather on a combination of "better hire than lose to others" and "let's put to use the funds". Truly lots of hiring.
>So why do layoffs at all if they don’t actually work? “People do all kinds of stupid things all the time,” Pfeffer says. “I don’t know why you’d expect managers to be any different.”
That's a pretty ridiculous non-answer. The people who initiated these layoffs are some of the most aggressive and sharp (not commenting on moral or intellectual side) in the world. They are different because they are on top of the world food chain and mostly got there through their own efforts (Satya, Zuck, Jassy, etc). They are absolutely not stupid and must have very specific reasons for doing this, which unfortunately the professor here failed to shine any meaningful light on.
That's a pretty ridiculous non-answer. The people who initiated these layoffs are some of the most aggressive and sharp (not commenting on moral or intellectual side) in the world. They are different because they are on top of the world food chain and mostly got there through their own efforts (Satya, Zuck, Jassy, etc). They are absolutely not stupid and must have very specific reasons for doing this, which unfortunately the professor here failed to shine any meaningful light on.
Many of those companies have been engaged in a race to appear to have the fastest growth in order to support sky-high valuations. One of the ways they did that was to hire for the sake of it and to over-inflate headcount.
Now that bubble has burst.
Now that bubble has burst.
Sometimes it is better to do tech at a non-tech company. For example, transit is in need of highly skilled tech workers, although government itself slows down progress. There are many places to go outside of tech companies.
This is the way. I was asked for predictions for 2023. Here's one of the relevant ones:
> The internet will continue to be integrated into our daily lives. Bold prediction: in 2023 you'll finally be able to book your dentist appointment without talking to a person.
There's so much more to do integrating the internet (particularly mobile internet) into our lives. So much.
We're in the middle of the deployment age, which favors incumbent companies who actually sell goods and services; not so much startups/tech providers. The latter are favored in the installation age.
(My thinking on this was informed by this masterful essay from 2015: https://reactionwheel.net/2015/10/the-deployment-age.html )
> The internet will continue to be integrated into our daily lives. Bold prediction: in 2023 you'll finally be able to book your dentist appointment without talking to a person.
There's so much more to do integrating the internet (particularly mobile internet) into our lives. So much.
We're in the middle of the deployment age, which favors incumbent companies who actually sell goods and services; not so much startups/tech providers. The latter are favored in the installation age.
(My thinking on this was informed by this masterful essay from 2015: https://reactionwheel.net/2015/10/the-deployment-age.html )
What a meme article. "Random professor says layoffs don't improve profitably"
Real reason:
Twitter cut half its staff and still works fine. Everyone said it would explode and the servers would shit the bed, but you don't need 7000 employees to maintain 5 features. As soon as it was clear half the employees were redundant, other companies realized they could lay off some of their useless people too. Companies had huge bloat and realized the core operations would be fine if you can some people, so they did.
Real reason:
Twitter cut half its staff and still works fine. Everyone said it would explode and the servers would shit the bed, but you don't need 7000 employees to maintain 5 features. As soon as it was clear half the employees were redundant, other companies realized they could lay off some of their useless people too. Companies had huge bloat and realized the core operations would be fine if you can some people, so they did.
Theres no indication that it's doing fine. In fact, Twitter has lost half of its top 100 advertisers recently (which is where most of its revenue is). Unfortunately Twitter is not a public company so we have no idea how much of it is being propped up right now.
https://www.npr.org/2022/11/25/1139180002/twitter-loses-50-t...
https://www.npr.org/2022/11/25/1139180002/twitter-loses-50-t...
factsarelolz(1)
The tech is fine, but Twitter is a total cesspool now. Maybe there's more to tech firms than just tech?
Twitter was doing amazing, until sold. You're thinking in traditional business, not silicon valley type. Twitters original investors got all their money back out of it. That was the goal. Not a service that was efficient or could live off of having less.
By having all those workers and features in the works, it prolonged their position and increased evaluation. Which as we can see worked amazingly. Usually they would have sold to a tech giant like Microsoft or Facebook. An entity that can eat the cost because they don't know what to do with themselves and don't care about profits.
Musk won't make back what they bought Twitter for, not even close, and neither would have the original investors if nobody bought it.
By having all those workers and features in the works, it prolonged their position and increased evaluation. Which as we can see worked amazingly. Usually they would have sold to a tech giant like Microsoft or Facebook. An entity that can eat the cost because they don't know what to do with themselves and don't care about profits.
Musk won't make back what they bought Twitter for, not even close, and neither would have the original investors if nobody bought it.
Features have been breaking in production, journalists have commented on “weird behaviors” in the app AKA consistency issues. I think long-term these small breakages will burn the engineering team out, in addition to the unnecessary drama they have been brought into.
More interestingly, I have a theory that the app has not had a large-scale breakage precisely because of the reason they had bloat.
Having a large org run on microservices makes it likely that you are running more infra than you require. But then failures tend to be self-contained in systems. This then means that on average, a failure will only affect one small part of the system rather than the whole.
It will be interesting to hear post-mortems from engineers once the spotlight dies down and people are ready to talk about what is happening internally.
More interestingly, I have a theory that the app has not had a large-scale breakage precisely because of the reason they had bloat.
Having a large org run on microservices makes it likely that you are running more infra than you require. But then failures tend to be self-contained in systems. This then means that on average, a failure will only affect one small part of the system rather than the whole.
It will be interesting to hear post-mortems from engineers once the spotlight dies down and people are ready to talk about what is happening internally.
What is not stated in the article: If the thesis put forth is valid, that "tech" companies are engaged in copycat behaviour, then the reason these people were hired as employees may also have been because other "tech" companies were hiring. If layoffs can be copycat behaviour then so too can hiring.
As for what questions this might raise about the perceived "value" of these people, those are left for the reader.
As for what questions this might raise about the perceived "value" of these people, those are left for the reader.
> If layoffs can be copycat behaviour then so too can hiring.
This is true, IMO. Lots of hiring happens because "Of course, you need a program manager!","Of course 3 QEs need a QE manager!", " Of course, a company our size needs an Innovations Lab!" etc.
This is true, IMO. Lots of hiring happens because "Of course, you need a program manager!","Of course 3 QEs need a QE manager!", " Of course, a company our size needs an Innovations Lab!" etc.
> Let’s be real, none of these companies are teetering on the edge of bankruptcy — in fact, they were recently minting money. That money did not evaporate.
> The answer is that investors have changed how they’re evaluating companies.
Correct. If your valuation shrinks 50%, your ability to obtain capital shrinks with it. This will drastically affect how you distribute your resources, particularly in R&D heavy endeavors.
> The answer is that investors have changed how they’re evaluating companies.
Correct. If your valuation shrinks 50%, your ability to obtain capital shrinks with it. This will drastically affect how you distribute your resources, particularly in R&D heavy endeavors.
It has nothing to do with being on the edge of bankruptcy or ability to obtain capital. For big tech and medium tech, it has everything to do with profit margins.
If your revenue is expected to shrink, your profit margin will likely shrink as well unless you lay off some workers.
For startups, it's about survival because their growth models are no longer valid under expected economic conditions and harder to get VC funding.
If your revenue is expected to shrink, your profit margin will likely shrink as well unless you lay off some workers.
For startups, it's about survival because their growth models are no longer valid under expected economic conditions and harder to get VC funding.
How often are these (big) companies actually raising capital though? I presume they have plenty of free cash flow to self fund
I think the better explanation is the quest for a return on spending. In a low interest rate environment, the bar to generating a return is low because the alternative is close to a 0% return. So any projects that anticipate a 1% or greater return justify the investment. In a higher interest rate environment (say 3%), the minimum threshold for return on spending suddenly made projects unviable. Big tech companies might be axing projects that no longer clear the new return hurdle, or they might be cutting heads that they anticipated would be needed for future projects that are no longer viable, or they might be inducing higher returns on existing projects by continuing with fewer people / less costs.
Also something to keep in mind is that other things in the environment are changing. Facebook was hurt by Apple privacy tightening. Consumer decisions and behavior may change as a result of widespread job cuts and higher borrowing costs. And politicians are ramping up pressure on the sector.
Lastly, for better or worse, investing in headcount is more forgiving than investing in heavy capital equipment because companies can make large scale job cuts relatively easily. It's easy to be upset about the downside, but the upside is that some large proportion of the time between economic cycles, large profitable tech companies might be willing to add headcount that isn't absolutely required.
Also something to keep in mind is that other things in the environment are changing. Facebook was hurt by Apple privacy tightening. Consumer decisions and behavior may change as a result of widespread job cuts and higher borrowing costs. And politicians are ramping up pressure on the sector.
Lastly, for better or worse, investing in headcount is more forgiving than investing in heavy capital equipment because companies can make large scale job cuts relatively easily. It's easy to be upset about the downside, but the upside is that some large proportion of the time between economic cycles, large profitable tech companies might be willing to add headcount that isn't absolutely required.
I sometimes get to talk to a founder CEO of a very successful fintech unicorn, recently public. They are doing pretty well so far (little affected by tech stock rout). He's pretty obsessive about what "investors" (i'm assuming public share holders by now) think and what they tell him. I was surprised because I wouldn't think that a public, seemingly independent money-maker would be paying so much attention to what a bunch of people effectively outside of the business say.
So while there is no need for a company with cash flow to raise money VC-style, I think they pay a lot of attention to how "investors have changed how they’re evaluating companies" for reasons like: having to struggle with the board and the largest shareholders (all the way up to the board firing the CEO if need be), potential activist investors picking up fights with something they dislike, or even a random outside analyst (or several) publishing a crappy outlook. Some of those seem tangential to the business, because CEO is closer to the operations and often knows better, yet it seems to be a factor.
So while there is no need for a company with cash flow to raise money VC-style, I think they pay a lot of attention to how "investors have changed how they’re evaluating companies" for reasons like: having to struggle with the board and the largest shareholders (all the way up to the board firing the CEO if need be), potential activist investors picking up fights with something they dislike, or even a random outside analyst (or several) publishing a crappy outlook. Some of those seem tangential to the business, because CEO is closer to the operations and often knows better, yet it seems to be a factor.
At every large company, especially after the growth period, there will be 10-15% of people which can absolutely be fired without any effect on operations.
It is difficult to let them go en masse because the people and the media will happily go with torches and forks to blame you with everything that’s wrong with capitalism. Unless everyone else in the market is also in the firing mood.
Big Tech views layoffs as an opportunity long overdue, and now it is the best time for them to execute without too much outcry.
It is difficult to let them go en masse because the people and the media will happily go with torches and forks to blame you with everything that’s wrong with capitalism. Unless everyone else in the market is also in the firing mood.
Big Tech views layoffs as an opportunity long overdue, and now it is the best time for them to execute without too much outcry.
Anecdotally, it's not just the lowest performers who are being laid off.
Also entrenched high performers with extremely high salaries (to be replaced with young enthusiasts at the beginning of their career cycles), also some random people too — just like a simulated annealing schedule for performance optimization.
I am not defending the moral side of these decisions, just saying that this is how all corporations aiming to maximize shareholders value work.
I am not defending the moral side of these decisions, just saying that this is how all corporations aiming to maximize shareholders value work.
Yes, you can be a good performer working on a failed product (stadia, HoloLens, ...). If the product is cut, you might be let go.
They rely on a constant influx of gullible, industrious and ambitious people willing to jump through hoops for a bit before they get averaged into the grey mass of middle management.
Middle management is a scam where you let your eager workers feel they got somewhere but then get stuck for 15 years going nowhere because it mathematically doesn’t work to keep promoting everyone.
And you can’t promote people anymore who aren’t women minorities, anymore.
So then you have to clear cut middle management, especially if white and over 40.
The layoffs are basically a cover to do exactly that.
Then they refill the buckets with new dumb industrious people and ring another 3 years before doing it again.
It’s a talent Ponzi scheme and works everyone. And it only works with regular layoffs.