Bloat is real, but there's another labor market dynamic in play here.
There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a "shortage," remember. Some of it is genuine growth in the sector, some of it was definitely "labor hoarding" by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)
While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that's discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.
The "war for talent" quickly turns to the "war on talent."
You're describing a monopolized labor market. Sure, there may not be felonious collusion, but many of the illegal elements of a monopoly are very much present.. as you essentially point out. I'm also not sure why you would be surprised to learn there is collusion, the size and timing of these blocks are certainly curious, and I think further investigation would reveal quite a bit more than you're imagining here.
I also wouldn't describe it as a "war on talent" when it is actually a "war on wages." This is is also the reason I wouldn't be surprised to find actual collusion here.
That's a good point. Few people realize that a big part of fighting inflation is getting wages down. Jerome Powell said as much in an interview in May of last year:
> 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. [0]
To be fair, much of the wage inflation (particularly in FAANG) was also led by an easy money policy.
I take issue with heavy handed manipulation of the money supply that leads to these weird dynamics. I've written about it before [1] that a big risk is ever growing Fed power in the form of heavier regulation or a digital currency. Imagine someone can flip a switch and decide that everyone earning above $X will take a pay cut to fight inflation, all without any oversight or judicial proceeding.
Not just Powell, every Fed kept talking about "we don't want to repeat history". What they meant is 1970-1979, when they were beating down the economy for a decade and when they decided to let the pressure go, inflation went right back where it was before the beating. Because the wages were still up and with the power of the unions it was very difficult to bring them down.
At least that's how it was explained to me by a stock market expert.
So until we give up our fat checks from FAANG they will keep beating FAANG down. I dunno, fuck them maybe? But the same expert told me many times: do not play against the Fed.
The top end company stock prices are just like real estate, the money experts always use them to reduce the entire economy to simple terms and over-generalize.
If our only two options are the Fed or FAANG winning I choose neither.
The macro market (and their truthsayers) are obsessed with reducing things to the [current price] of public companies. Even though there is never ending increasing disconnect between their stock prices and the long term value they generate for the broader markets. The more we gamble on those small sets of metrics being the "truth" from which to guide society the more we (see: gov and media) will adapt to protect and push them higher.
> The top end company stock prices are just like real estate, the money experts
Anyone celebrating expensive real estate is celebrating destruction of our economy.
Real estate is an economic input, same as food and fuel.
When those get expensive, it is understood that it will lead to widespread misery and poverty.
The people that make money off sitting on real contribute nothong, they should be treated the same way. assomeone who'd make money from hoarding canned tuna.
> the size and timing of these blocks are certainly curious
The timing of the layoffs was exactly "as soon as all investors decided to stop their long-term deals". It's really not an evidence of collusion, except maybe of the investors. (But they too had an explanation.)
People are confused here because MS doesn't care about investors timing, but they had a clear trend to jump into.
That said, other evidence may be more revealing. This is strictly about timing.
No conspiracy needed just raise interest rates with this much debt, turn money printing into QT and cause a recession. Thin wedge is the most speculative areas: i.e tech.
There's no reason to view it as a pure tech-only thing. Every single company has hoarded talent in the past two years owing to the tight labor market. And it only needs some folks to signal before the flood gates open.
Finance is beginning now but a lot of layoffs will follow in H1 2023 IMO.
I don't attach any positive or negative moral value beyond everyone just working in their own self interest.
These layoffs are precisely intended to suppress tech employee wages, which like any other sector, have remained fairly stagnant for the last 5 years.
> collusion is not needed
It's not explicitly needed. However, rest assured there's a mutual understanding among all big tech executives that the next few years are going to be incredibly profitable for them.
Think about it. They can do layoffs as many times as they want. This forces lower wages. They can still use inflation, the pandemic, the recession, and war as an excuse to keep raises low (or non existent). They can keep current employees in fear for several years.
Hey, you're right -- this is a bargaining chip for BigCo, but the "invisible" factor here is that the economy is clearly in freefall and no one is ready to call the emperor naked. Everyone's cutting their losses, and in sectors as important as tech and with companies as big as MSFT, there's always some government support and "insider insight" into these events. If BigTech comes out of this on the other side, I fully expect one big company to be absorbed / dependent upon another. If not, this is prime time for underdogs to really show what they are capable of.
As soon as the dust clears the hiring spree will ramp up again. This is a colluded (public collusion, probably a better term for it that I don't know) wage reset.
I'm wondering what data really drives the back-and-forth at big tech. We've seen google, amazon, microsoft, meta, etc.. do hiring freezes, then layoffs. Hiring freeze, then back open, or layoffs then more layoffs later.
I would expect a longer term plan than just looking forward or backwards one quarter which seems like what has been happening the last year. I would assume they had better information and insights than common investors, but the activity out of these companies in relation to hiring and layoffs has seemed to be as sudden as people changing their stock allocations.
Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork. It's advantageous to have regular rolling layoffs because of this if you can justify them by economic conditions.
There's also an effect of wanting to do smaller, pulsating layoffs over the course of many months or even years rather than one massive layoff of the size you actually need, because ultimately no one knows exactly how the machine of a corporation works, and you have to be careful not to cut so deep that you go beyond cutting out fat and start to damage critical systems.
A rapid, 90% loss of workforce like what happened at Twitter might be what the company ultimately needed, but cutting that fast and deep is an insanely risky operation that could lead to a company hobbling along in a compensatory state until it finally falls to decompensatory systems collapse that you can't recover from.
> Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork. It's advantageous to have regular rolling layoffs because of this if you can justify them by economic conditions.
I've heard people say this, but it seems contrary to how layoffs are run in practice:
• entire teams or divisions are often laid off with no eye towards individual employees' tenure, experience or skills
• decisions happen on a condensed time scale by higher-level executives—not exactly conducive to a nuanced view of individual employees' performance, which companies struggle to assess effectively at the best of times
The "common knowledge" about what layoffs accomplish and why they're necessary really doesn't match what happens on the ground.
I've never seen a cold and calculated layoff. It's always been exasperated irrational arm-waving risk mitigation. The "good" people aren't kept - instead it's the ones that can navigate the political waters.
For every one competent executive there seems to be 3 deluded narcissistic idiots who will slash and burn people who are overqualified and under-utilized for the positions they've been incompetently assigned.
Now before you think I'm a victim of layoffs, I'm actually the political navigator. I constantly survive layoffs as I see the most talented people get let go and the best teams get broken up and reassigned, it's nuts.
One of the best techniques is to get yourself into what I call a "management island" - essentially you have either 0 or many bosses, just not 1. The next one is to be associated with a small bet - essentially a cheap investment that may yield a great long-term payoff, preferably related to the company cash cow. A third technique is to not attend too many events. Vagueness works in your favor. People should know generally but not specifically what you do. With details comes critiques so keep it ambiguous by staying quiet.
If you survive a layoff then you must not let a good crisis go to waste. Use the fog of the firing and the power vacuum to resituate yourself into this political dynamic as the dust settles. Of course these techniques only work at large companies.
I learned all of these techniques from years in management. There's more but that's a good start
Great write up and very useful in an industry where a lot of people seem to think "doing a good job" is enough to get recognised, lots of money and continuous promotions. The transition from IC into Management really needs a head shift and I think a lot of software engineers aren't prepared for the machinations of modern corps.
I've gone in between both roles. I can be a CTO of a $50 million company and just another senior engineer at a $5 billion one.
Probably the most approachable explanation of this phenomena is in Reid Hoffman's blitzscaling. I was looking for the diagram and I found it on some random blog
https://miro.medium.com/max/1400/0*LDHDNGnfy2IJmIWE
Anyway, if we extend this analogy, I could be say, an important member of a village, but within a nation, I'm just another worker. His book is fine btw, get it used. He's just summarizing other authors who said things in more nuanced ways, whatever.
I think this is totally reasonable for people who are not egoists. I can handle about a $10 million budget, but a billion dollar one, I don't look at with envy. Excuse my french, but fuck that level of responsibility. I'm only human.
That's how you can know intuitively that the people who take it on are kinda special, and usually not in a good way.
I've had to deal with lots of capital management and investment groups in my startup days and people that are senior execs at large firms. There's a couple brilliant ones but most are what I could best describe as neurodivergent. Understanding how they process information is crucial in securing that round of financing (unless you're lucky and in a hot industry) and in being on the safe side of their executive decisions.
No. Most layoffs are done by the managers being given either quotas or burn rate caps and tasked with producing lists of people to layoff.
The point of "many bosses" is if your manager knows you work on other projects, it's easier to leave you off the list.
The point of "no bosses" is no manager is tasked with considering you. You're not on anyone's books. There's numerous ways of doing this if you're interested.
If you have to play the one boss game it's harder. Some managers will want to keep their most talented people, other managers are looking for team cohesion and want the most friendly while others will break their project into roles and then assign people on a sheet of paper into those roles and get rid of what they consider redundant.
Some bosses will want to get rid of the most talented people on the logic that they probably have one foot out the door anyway and there's always a resignation aftershock after a layoff so might as well be seen as the one bold enough to do the cost cutting.
Some bosses will want to get rid of their most expensive people on the logic that they'll have the easiest time finding other work or maybe they'll have to get rid of fewer when they're more expensive, while others might want to get rid of their cheapest with the logic that they'll be easier to replace in the future.
There's really no silver bullet way to survive that. You have to know who is making the decision and somehow guess how they'll do it well in advance of the event so you can occupy a safe position in the mind of the decision maker.
Almost nobody acts based on some objective logic, instead they have predictable patterns of behavior and varying modalities. That's why you need to shake the org structure and get out of that situation.
If you want to insulate yourself from consideration, that's where the small bet team is in play. Preferably this is associated with the company cash cow. Let's say you work for Uber. A small bets team might be optimizing the UI using some behavioral techniques to nudge the users into picking higher margin options.
The point here is the managers of managers will have a list of projects which will be sorted by some metric. You want to be at the bottom of that list and so even in the one boss model, your team may never be subject to layoffs.
Being a small bet makes it subject to the rational choice theory paradox of the dollar auction: https://en.m.wikipedia.org/wiki/Dollar_auction ... The manager of managers will hang on to the project using a sunk cost, but not a money pit, fallacy. (https://en.m.wikipedia.org/wiki/Sunk_cost) you want to be in a grey middle where you're not a cost of concern.
At least in my circle, I've found (for mass company wide layoffs)
1. Lower level managers usually find out them at the same time as IC's
2. Managers and directors can be part of the layoffs.
3. If a manager/director is part of the layoff, they are even less likely to be consulted in the process.
Sure. That's because the org chart isn't ever the real chart. I mention elsewhere the real chart looks more like the Habsburg family tree especially the higher up you go - a bunch of surprising actual plays.
The rule of thumb is if they can't fire you they aren't really your boss.
For instance, at a previous firm, the COO, which ostensibly can be fired by the CEO was actually the brother of executor of the chief investment in the last round so the COO has a direct board connection and so he could actually fire the CEO with enough effort. Underneath the COO was a finance guy who had just come from a possible acquirer so really that guy could probably get them both fired if it meant a good payout for an acquire.
The tendrils are wacky which is why when a room of those people have to do actual work, it's not some shrewd rational calculated execution but instead just some hot mess
> The point of "no bosses" is no manager is tasked with considering you. You're not on anyone's books. There's numerous ways of doing this if you're interested.
Can you speak more to this? I don't know that I've ever seen this somewhere I worked.
You can be entrusted to work on your own little bet project for somebody in a C suite and you become so low on the priority that you're out of mind.
During a power vacuum, you can play teams off each other in a multiple bosses strategy and appeal upstream in the org chart. The exploit here is the company hierarchy in practice is closer to the Habsburg monarchy than some binary tree.
The multiple boss play can get you to a no boss play in this situation because each one will assume you're doing important things on other projects.
All of this requires a keen skill at social engineering. I worked at a place where I didn't have a meeting with anybody for about a year. I played the meetings off each other at first and they all slowly became optional and eventually I got them off my calendar.
I should probably use my time doing better things but I'm really lazy.
I've only heard of this happening during really large mergers or situations where you are managed by someone so high up in the organization, you're effectively on your own.
> Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork. It's advantageous to have regular rolling layoffs because of this if you can justify them by economic conditions.
Yeah, unfortunately, this is believed by so many low level employees that it hurts their confidence, if they ever are part of layoffs. I wish organizations really educated employees how layoffs work.
I was part of layoffs in 2008 in which my whole department was eliminated, including managers and their managers. The developers who were hurt the most, were the smartest ones who could not believe that C-level executives didn't see their contributions. Their egos were bruised and some even switched from development to other fields.
I have an alternative theory. In bad times consumers no longer want to pay for a cherry on top. So you go back to basics and lay off the people putting it there.
Why are we spreading the “poor performers are the ones let go” trope that hurts anyone laid off? That’s a very dangerous assumption to be spreading around blindly.
It's simply not true and very observable if you've ever been at a company that does layoffs. Plenty of good teams get let go or entire groups in the company from management down are let go, it just doesn't make sense that they would all be "low-performers". Some low-performers will be caught up in layoffs, sure, but plenty will remain at the company too.
Might be conflating groups with individuals. The teams/orgs that tend to be hit the hardest tend to be not the most productive/cutting edge except when they're research teams way out on the horizon.
> Mass layoffs give you the opportunity to quickly purge poor performers without as much paperwork
This is repeated a lot but having lived through 3 layoffs (and survived 2) in my career, that has never been the case. Every time it seemed random, one in particular where EMs were upset that they didn't have the chance to pick their faves.
Yeah, 5% is a small, manageable number. Small enough that if you find you accidentally cut important people or roles, you can quickly get them back.
The point in my second paragraph is that if the company actually needs a 15% layoff to maintain itself long term, it would be safest to do it in three smaller 5% waves rather than one fell swoop. After each layoff, you let the system settle and recover, making sure that the body is still generally healthy before continuing with the next operation.
Part of the second and third wave can take the form of a hiring freeze or slowdown. People who quit are not replaced and soon you have a 5% reduction in headcount
Only the best (or the dauntless, but they are a minority) quit in the present climate, soon the corporation will have a 3-5% reduction in their best performers.
I think it really depends on the overall health and strength of the corporate body and the external environmental conditions it's struggling to survive in. Sometimes ripping off the bandaid quickly is the best of many bad options.
However, you also have to consider that seeing a larger percentage of your teammates cut loose might be more psychologically damaging than just that one guy who everyone kind of knew was a poor performer anyway.
> Mass layoffs give you the opportunity to quickly purge poor performers
That would be true for poor performing projects. Try a bunch of projects; many don't take off; cut the chaff all at once.
What I've seen in various companies were cuts of all kinds of employees, regardless of their individual performance. Large cuts weren't about the employees but about the projects or teams. I've also lived through a cut which was basically reducing headcount across all teams. Cutting 11k employees isn't a micro-management thing; individual performers get hit all the same.
The fallback of some such cuts was that it took years to later re-acquire competent employees, especially since they were offering work conditions average for the market.
TLDR don't stay too long on projects or teams which aren't lucrative for the company, unless they are fun and you don't mind getting ejected from the company when cut comes.
Why? What's wrong with firing people during other economic conditions?
Why would the paperwork be any different, whether it's a small layoff or a big payoff? Ctrl-C/Ctrl-V is cheap, Microsoft implemented it many times in many products.
It can be tedious to fire people. I know a manager at MS that has been struggling with a terrible performer for over a year. They are just now getting to the point of going through the processes (first gotta do RCA and try to fix etc) and having a paper trail down with HR to be able to fire them.
> What's wrong with firing people during other economic conditions?
Layoffs have a huge psychological impact on the people who didn't get cut. If you do layoffs at a time when the economy is booming and jobs are easy to find, you risk losing your best performers who don't want to be at a company that fires friends of theirs.
It's easier to fire people when jobs are scarce and people are already spooked and disinclined to try to switch jobs.
Firing IC's at large corporations usually involves some sort of a individual coaching/PIP plan. This takes time for managers and HR to write and implement, takes N weeks of observation, and creates nervousness in coworkers who think they might be next.
Much easier to do a Thanos-style snap and get rid of X% all at once, with no pre-warning or reasons required besides "challenging economic conditions".
Humans fire other humans. Layoffs allow for severance and unemployment, which can make the pain of firing someone and all the externalities that come with it far easier for a boss to swallow.
If you heard Microsoft just did 11k layoffs and then you got a job offer from them how does that sound to you ? To me it sounds like I could be in the next round if I get hired on the wrong team.
I imagine it's three things. First and foremost, interest rates are up. Some development opportunities only make sense when loans are basically free. Second, the market's down, firing a bunch of people is a good way to boost stock prices in the short term, and people making these decisions are often primarily motivated by short term stock price gains. Third, big tech executives are heavily influenced by trends, they all talk to each other, and layoffs are trendy right now.
Layoffs are probably a bad idea, in general, given how expensive it is to hire new devs and bring them up to speed, but on the other hand, it's probably a pretty good way to eliminate orgs you wanted to get rid of anyway while blaming the economy. I'm sure it's not a coincidence that so many of Amazon's layoffs came from Alexa.
Because every time you want to build a new product you risk that no one ends up wanting the product, or not enough people to justify keeping it going. Alternately once you have depleted all of your current ideas you don't have anything productive for those people to do.
I think people over focus on poor performers when in reality layoffs are a great chance to get rid of teams and departments that don't make economic sense anymore.
I've been privy to execs sharing the "why" for stacked ranking, open plan, layoffs, and various other decisions. If you had some naive belief in the efficacy of capitalism or the idea that CEOs are highly paid because of their brilliance you'd be very disappointed to discover how often the answer is "we're doing this because other companies like us are doing this", or "because an analyst told us we should do this".
I think the overall spirit of your argument is true, but I think you define brilliance too narrowly with saying it primarily applies to mathematicians.
Just last week MSFT nixed the accrual PTO benefit employees enjoyed and opted for the rouse of 'unlimited' PTO. Effectively, ending a liability/cash outlay they would pay when folks quit, or get fired. I hope those who were affected today receive severance that makes up for them losing this benefit.
They lost it going forward, and also lost any kind of arbitrage when paired with salary increases. Eg my accrued vacation is “worth” 10% more after a 10% salary bump than before it.
It also serves as a nice buffer when you are switching jobs - you can take the PTO and still be employed (& so covered by health insurance for a bit longer, and stocks are still vesting), making for a nice break from work.
When my company switched from accrued to unlimited PTO, the way they did it was to tell everyone that until their balance got down to zero, they needed to report their time off. So if you quit before you got your balance down to zero, you had it paid out, but most people probably just burned through their balance within a year or so and the liability was gone.
Wow, that’s shitty. Because you could simply have taken the same time off under unlimited PTO as by burning down the accrual, the company effectively zeroed out accrued vacation time. I’d be pissed that happened to me.
I mean, in real terms, I've come out way ahead since I get a lot more PTO now and probably wouldn't have cashed much (if any) out when quitting regardless. If the alternate was to keep my measly PTO allowance but still get the possibility of cashing it out someday when I quit, I am definitely happier this way.
I had a friend who actually took the “unlimited PTO” thing at face value when he was fresh out of college and joined a cool tech company. He was literally traveling every 2-3 weeks and bragging about it. He was let go for performance reasons within 6 months lol.
payout will be in April's paycheck. I was a little surprised about the difference on when the accrual stops (mid Jan) and when balance will be paid out - in April. Laying off people before April payout explains some of this difference (maybe all?).
Presumably they still need to make the payout because it's an accrued employee benefit on the books. Not doing so would be illegal--at least in a lot of places.
> Effectively, ending a liability/cash outlay they would pay when folks quit, or get fired
This was effective yesterday, and they paid off any remaining pto balance. I initially thought this would be an employee retention effort in the midst of low promotions and raises, but in was probably wrong. I don't know what gives.
Now add in part time workers, contractors, and contracted-out workers like cleaning staff that are still required, just not counted as FTE. Would be interested to know those numbers too, and... are any of them being affected as well (assuming so, but it'll be accounted for in various other ledgers).
So this looks like true profit-per-employee ratio, the OP is revenue-per-employee ratio. I would expect companies to rank differently based on how profitable they are vs how much total money they are making.
E.g. one big outlier is Amazon, huge revenue income from retail, but close to zero profits.
11,000 people - let's say an average loaded cost of $250k/yr. That's... ~$3b/yr these folks cost MSFT. Granted, it's per year, but ... keeping these people on for another 3 years would cost ~$10b.
MSFT currently have $100b cash on hand. It's gotta be a little... frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me.
That said, I don't know what severance packages people are being offered. That might help soften the blow for some folks.
EDIT: re one reply about people earning $250k. I indicated 'loaded cost' - health insurance, likely some cost of options/stock, retirement matching, FICA and more. I possibly could have removed 'average'. I suspect many of the folks being cut have on paper salaries (well?) below $200k. Is the 11k number global or US only? Round the number down to $200k. It's closed to $2.2b/year then.
It's silly to mention the cash on the balance sheet without also mentioning the debt of $77B. In reality, the net cash position is on the order of magnitude of $30B which puts a much tighter perspective on the impact of this cut. 40% of all public companies created since market inception in 1871 have gone bankrupt including many of the bluest of the blue chips. Complacent thinking like this is often the reason. Additionally, if you've ever worked at a large company, you can see first hand at how much bloat there is.
It's a trap companies can easily find themselves in. If you're looking to cut costs, the first thing the C-Suite will look at is all the workers that aren't adding immediate business value, so you cut them first; simple and easy. Then as tech debt and issues pile up, you, as management, figure that your first approach to figuring out what's going wrong is to hire managers and consultants to understand why your workers aren't as productive as before. Unfortunately all of these middle managers just create more burden on workers as they are micromanaged and sent to meetings more by managers looking to justify their existence. Of course these managers will say whatever the C-Suite wants to hear to keep their jobs, so more blame is pushed onto the lowest level, more managers are hired to try to make them more productive, and a vicious cycle continues.
That's fantastic debt though, at presumably low interest rates. A dollar in my pocket today is worth way more than a dollar in debt at 3.0% interest or less. You can't subtract debt from cash on hand and get a usable value, they're different types.
Could you clarify what you mean about the dollar in your pocket worth more than debt at 3% interest?
In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.
Now since most of MSFT’s long term debt matures in 2027 or after, you could argue that there is not much cash need for debt repayments in the near term. On the other hand, cash flow from operations was down year over year in their last reported quarter so belt tightening is probably needed to reverse that trend.
> In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.
I'm not a financier, but isn't "available cash" the amount left over after subtracting the amount needed to service (rather than clear) the debt?
The cash available on an ongoing basis to be re-invested or returned to investors is what you might call levered free cash flow [0], which I think is what you are referring to.
My comment about "available" cash is more like available for big one-time investments like a big acquisition, a special dividend, or something like that.
Not really, it's financing 101. If the cost of borrowing money is low then it's worth taking on debt to finance your growth. Once the rates rise you can service that debt (likely at ~1.5%) and reap the rewards on extend yourself with those low interest rates.
You don't even need to be an MBA so see that value, even your dentist probably does it. If they can borrow 150k and increase the size of their clinic, they can then get more money from providing their services to more people.
If you comment was more aimed at the amount, $77B, then keep in mind that it's far from a bad ratio considering the assets of MSFT at 107B that's 0.7 which is high but not abnormally high considering that we are coming out of historically low rates.
Finally, there is such a thing as carrying too little debt, which is unsurprisingly a bad thing because it hinders your growth. Think about what MSFT did with that money. They hired people and developed new products to fight AWS and GCP if they hadn't done that, their rate of innovation would be lower and they would have fallen behind, slowing their future growth. Without cheap debt they likely wouldn't have given a ton of compute to OpenAI for ChatGPT which is now making MSFT look much better compared to Google and Amazon.
> would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame
Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)
There are other exits besides bankruptcy, I think a lot of companies kind of whimper into near bankruptcy and then sell to others or just cease operation without bankruptcy, would need to get actual data, but that is my speculation.
Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.
Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".
They wanted 11,000 extra heads when the market was rewarding growth.
Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore.
It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring.
The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it.
For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing.
Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.
Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue.
If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost.
There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.
The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment.
In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
There's definitely a recession, however it's hiding behind inflation and rising interest rates. The two trillion in reverse repos are why the recession is having a softer introduction than you may be used to seeing. Companies are both responding too and getting ahead of the equities crunch. The economy crashed and the recession started in full form in March of 2021. But reverse repos have allowed the fed to inject two trillion into equity markets behind the scenes and without the directed action that requires fund managers to rebalance.
> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent
Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping.
Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending.
There are tons of people at these companies that can be let go.
I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important.
We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
> Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent
Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.
> many companies have adopted a policy of just generally not firing anyone for performance reasons
Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism.
The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.
> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?
I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.
However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community.
It's deplorable how a company can toy with someone's life like that just because some exec feels like it.
This is an uncharitable take. The ability to fire at-will is the reason companies in the US are able to hire and pay as high as they do. As a dual-national Brazilian-American who has also spent years living in Europe, the social contracts are very different, and different people might value different things, but I'll take the downside layoff risk in exchange for upside in pay and mobility.
> This is an uncharitable take. The ability to fire at-will is the reason companies in the US are able to hire and pay as high as they do.
I feel there is no rational basis for this belief, and it's mostly guided by wishful thinking to fool yourself into believing that all this penance leads to some kind of salvation.
It doesn't.
There are highly paid professionals in other countries who benefit from higher worke protection laws and even public services like working national health services and free education. Virtually all European countries ensure greater workers protection and half have a higher human development index than the US, and FANG salaries in Europe often lead to far greater disposable income. Heck, I personally know a FANG who was forced to pay overtime for oncalls in europe while US workers only get the pager app and the shaft.
Also, being subjected to abuse is not a requirement for mobility. Mobility only requires that you can quit your job and apply for other positions. There is no piece in the equation that requires abusive revolving door hiring practices.
People should shed their victim mentality and stop fooling themselves on how the path to riches is through suffering. It isn't. Basic human decency doesn't need to be thrown out of the window. That's only a requirement to screw over workers out of their rights and livelihood.
I'm not sure why this represents a victim mentality or some kind of penance. I don't see it that way at all. It's simply risk/reward and understanding how the economic incentives work independent of moral judgements.
As a founder it's crystal clear: you quit your job, you start building a company with no salary, you get some traction, get some investment, and if you work hard and have a good dose of luck along the way you can be very successful (far more than any salaried employee), or you might fail and earn nothing.
Now you add employees, they are expensive and you don't really know what the business climate will look like over time. You know you need some to fulfill your growth potential, but where is the point of diminishing returns? There's no way to know. The Silicon Valley VC model is: if you get a whiff of product-market fit and think you have a potential category-defining product, pour as much money in as you can to maximize scaling—even if it is wasteful or risks flaming out, you do it anyway because otherwise someone else may do it and win.
Now, if you are in a country like France, worker protections mean that if you over-hire, you risk killing the entire company because you overshot your mark and you can't do layoffs. This absolutely plays into hiring plans, and if you don't acknowledge this then it is you who are engaged in wishful thinking.
Note that I don't have anything against worker protections, I liked living in Europe and there are a lot of things that are preferable to the States, but economic upside for programmers like me is not one of them. FAANG definitely broke through the old glass ceilings for tech folks, but A) that competition was introduced by American capitalism and B) even for FAANG it's still significantly higher total comp stateside.
Perhaps the best of both worlds is American mobility coupled with European public services, as the other post mentioned- "working national health services and free education." Not having to stress over lack of health insurance or ability to pay off student debut (and medical debt!) would go a long way towards making American layoffs less existential.
>Heck, I personally know a FANG who was forced to pay overtime for oncalls in europe while US workers only get the pager app and the shaft.
It does not follow that it leads to greater disposable income. Retail workers in the US also get paid overtime yet their disposable income is nowhere close to that of exempt (no overtime) programmers. Basically, with the tax rates in most of Europe, one's disposable income would be less even if the nominal income had been as same as in the US but it is not even close so you are, at best, misinformed when you think you get greater disposable income.
> It does not follow that it leads to greater disposable income.
It wasn't supposed to. It was suppose to point out a concrete example of how stronger worker protection leads to being paid fairly for the work you do, while US workers are not.
Meanwhile, feel free to check how any FANG salary for software engineers in places like Seattle compares with the cost of living, and how the salaries for equivalent positions in European cities like Amsterdam, which also has a notoriously high real estate, lead to higher disposable income.
As someone who's always heard that US pays much better but never verified it, this was interesting to look into.
According to levels.fyi, 90th percentile in the Greater Seattle area [0] is $344-363k USD while 90th percentile in the Greater Amsterdam area is $162-170k USD [1]. Taking the mid point of both ranges, you make 2.13 times more in Seattle before tax. After tax, you get $244,933 in Seattle [2] and $118,078.95 in Amsterdam (with requisite conversions from/to USD when using the linked tool) [3], bringing the difference to 2.07x more take-home in the US.
The next step is to compare cost of living. I don't know which source is most reliable, and not all sources include international cities, but a Reddit comment suggested Numbeo so that's what I went with [4]. It reports that local purchasing power in Amsterdam is 18.1% lower than Seattle, while categorized prices in Amsterdam are anywhere from 18.8% (restaurants) to 39.3% (groceries) lower in Amsterdam. So it seems you would need to have to be paid quite a bit more than 50% of your US total compensation to achieve the same standards of living.
I'll spare the details because I didn't look too deeply, but I also did look into the cost of major purchases that people value - houses (3 beds) and cars (specifically the Polestar 2, which is an EV more on the luxury side). These things are definitely not half as expensive in Amsterdam as in Seattle.
So, I can only conclude that US workers do end up with higher purchasing powers despite less worker protection. While European workers do get a lot of benefits, many I probably don't even know about as I don't live there, Big N-tier companies (besides Amazon) usually have generous benefits like employer-paid health insurance that lessen the gap in benefits somewhat.
> it's mostly guided by wishful thinking to fool yourself into believing that all this penance leads to some kind of salvation.
Something similar leads to russian people to support Putin. They know that they are wrong, but the thought that they are wrong and all the suffering was for nothing is too terrifying for their subconcience to even ankowledge.
> I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.
The only reason Neofeudalism didn't quite arrive is that its difficult to get rid of unprofitable serfs. A lord was actually sort of responsible for his territory.
Here you can dump unwantes on the state and voila, no responsebility!
Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).
I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.
Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too.
We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news.
Is the implication that some but not all kinds of capitalist societies would encourage or cause people to view many "normal" things (not just inherently or clearly transactional things) as transactional?
What would be the kinds of capitalism that would or would not cause a transactional mindset to seep into all parts of life?
The linked article gives no more information than "Sky news reported this, citing sources."
Microsoft employs a wide variety of people, not just developers, and a lot of those jobs aren't making nearly as much as $250k/yr, nor are they so easily rehired into a job somewhere else.
I added an edit to round down. Again, I used $250k as a loaded cost - benefits, stock options, IRA matching, etc. Someone on $125k year might still 'cost' an extra $40k, and ... the $250k was possibly on the high side - round down to... $200k, and the argument is now... $2b/year instead of $3b. And yeah, many of these folks may have a harder time finding an equivalent paying engagement (perhaps you'll have to move? hard on people with families, etc).
Fwiw, unless cash on hand already accounts for it (I don't think it does), then $70B of that is tied up in the Activision acquisition. Thus we really only have $30B cash on hand, which in a higher than previous interest rate environment is probably not great (though afaict Apple has $48B). Likewise, our cash on hand has been drastically dwindling the last few years, making the $30B total seem a bit more precarious.
I have suspicions that the Activision acquisition is a huge part of the hiring freeze at Microsoft and the source of a lot of budget concerns and constraints. It's pretty frustrating watching all the freezes seemingly because of this one acquisition (as an employee without any inside knowledge about this).
They haven't said so yet -- perhaps they'll clarify on the call tomorrow -- but they'll probably take down new debt to make this happen; it's a good time to go to the markets, and a lot of their cash is parked overseas. Fitch recently announced they're withdrawing their ratings for MSFT debt, so that's probably an indication they expect a significant amount of the purchase price to come from new issuances.
I had seen someplace else that there's... $107b as of last quarter, but it was down 17% from year before same quarter, so yeah, it's draining some. But are they really putting $70b down in cash for Activision?
In this context, "all-cash transaction" means that the Activision shareholders get cash for their shares and not some combination of cash and MSFT shares.
Where and how MS got that cash is not being addressed.
Interesting. Still, large parts of that cash could be financed. I doubt Microsoft would just spend 70% of their war chest on a single transaction like this.
Also pretty disconcerting that they're doing this at the same time that they're pumping billions into OpenAI (a company with near zero revenue) at a $30 billion valuation.
This is..not a bad idea? I know several people that kept paying their cleaning people during COVID despite them not being able to come, because they were remote workers and could easily afford it.
It's called noblesse oblige. People with means in their daily lives constantly make financially unsound decisions out of a sense of duty and responsibility.
That microsoft is cutthroat here, sure, it is the nature of transactional corporate relations, but it would be a sad, ugly world if individuals internalized this same dehumanizing ethos in their personal dealings.
I paid our cleaners during the first months of covid despite them not coming over... we've been using the same few people for almost a decade now. All the restrictions our governments created really fucked over people like them.
I don't uber/lyft, and I don't have cleaning staff. I do keep the lawn company coming, without too much respect to the amount of savings I have. There was a time when I didn't, but... if keeping these extra services amounts to less than a single percent of my cash on hand, I'll likely keep them going.
Re: the "loaded cost", back when I worked for MSFT in the early 2000's, the rule of thumb for management was $250k per person total cost. This is when $125k was considered a pretty good SDE salary. So I'd double your $3b.
Yes exactly. There is much more than just "benefits". Cost of office space, computer equipment, office supplies, electricity, janitorial costs, heating, security, servers, IT overhead, etc. When you take ALL these costs and spread them over the company, the loaded cost of an employee is not "mostly" salary.
There's no shame in working hard at your job or getting a sense of satisfaction from writing programs to move 0s and 1s around, but I sometimes forget that my employer at the end of the day really does not personally care about me.
Lol, EVERY last company I've worked for talks about how we are their 'family'. When layoffs come it looks a whole lot different. They talk family when they are trying to get a few more off the book hours out of you.
The steady paycheck is the obvious first motivation, but really, I do it for two more things: 1) the sense of accomplishment, and 2) the occasional batshit-enormous award. Yes, they've used this lever to hoodwink me into working hard just for the possibility, but the legendary microsoft "gold star" award is no joke.
that's absolutely un-true in nearly every field, even CS ones.
I don't even get the premise.
Your best effort doesn't require more .... effort ?
What kind of work is it that you do? I'd love to join.
If sitting around idly at low-paying jobs watching paint dry wasn't an easier way to achieve a paycheck than the hard work that the employer would prefer you to do then it wouldn't be the world's most common trope.
> frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me.
nobody is entitled to be an employee, the purpose of corporations isn't to print employment numbers, these observations you made should be unrelated
A three year savings of $10B would be equal to their stated investment into OpenAI. Assume there is a global slowdown, and a corresponding decline in revenues; layoffs may be the way they've decided to free up cash flow to pay for the investment.
It makes me wonder if they ever allocated money on a as-needed basis. Are they hiring across the board the way they are laying off across the board? Because then their hiring practice makes about as much sense as their firing practice.
They must be looking at the recruitment cycle as a cyclical process.
You are also forgetting these people arent sitting on their asses! On average they are at least making the company that much in revenue no? Being unable to deploy them to good use is truly a leadership incompetence!
In aggregate, employees make a company money. That much is trivially true. At the individual level, one can be a net gain, net loss, or breakeven. I often wonder how skewed this distribution is at some companies. Ideally you trim the ones that are a net loss and thus on average aren't making the company money. Whether or not it's obvious who those people are isn't known to me. Anyway, I don't think it's a good assumption that the people being laid off are making the company money on average.
MSFT seems to be willing to invest $10B in OpenAI. It's not clear how they'll make that money back as OpenAI hasn't done much to monetize things like chatGPT.
Microsoft, Apple and Alphabet are sitting on extremely profitable businesses and huge piles of cash. (Other megacaps like NVDA, Meta, NFLX, maybe less so.)
So far we have not seen much in the way of the highly-anticipated earnings decline, and the current projection for Q4 GDP is around 4% growth, which suggests to me that Q4 earnings should be better than anticipated by the pessimists out there.
I would see this as a relatively painless opportunity to cut out low performers. Sure it sucks for those who are being cut, but my experience working at a FAANG tells me there are a lot more than 10% who contribute very little.
Corporate excellence programmes are about removing the bottom 10% of performers. However most mass lay-offs aren’t about that kind of performance, they are the answer to the question asked by the buy-side analyst:
“If companyX spends 5% on areaY, and you spend 7%, where’s should I look for the benefit delivered in your results, because I’m not seeing it.”
I’ve been there.
Indeed. What is also not understood, company performance is not a result of individual performance, any more than efficiency of your car is a result of quality of steel used to build the body of the car.
Incorrect organisation and priorities will absolutely waste the best individual performers, and lead them to depression to boot. Correct organisation can deliver results even from a mediocore team.
So one 1 out of 20 are getting let go. Looking around near 50 employee company I work for I easily see 2.5 employees I would let go just because they're near useless. Hell, I'd say it's at least 5.
I'd say unless you've got a good manager, really good hiring, and are keeping close tabs on the technical people (just to make clear, I'm one of them those technical people) I figure you've at least got 1 our of 20 you should just be sacking on principle.
This logic has a nice way of being used against you. I think the employees you feel are useless would sack you if they could.
Focusing on productivity is of course the right metric, but the metric that gets used in practice is “Which of you helped advance your manager’s career?” After all, your manager is the one who decides who goes, and there’s no incentive to keep someone that does nothing for them over someone who helps them look good to the VP — which is who decides whether your manager goes. Same rule applies recursively.
Eventually you'll run out of bad ones to sack and then the that's when the good ones leave because they don't want to play the ladder game.
You're left with middling who might have a hard time finding other jobs but could play the ladder game well enough - potentially with devastating consequence for health of the technical stack as more "features" get developed.
In my experience you’re right that the best devs don’t care to play the ladder game, but they’re generally pretty okay at it. It’s not that much of a distraction from your regular work to think about “How can I help my manager look good to their manager?” which is all the ladder game is.
The skills one develops on the job and the skills one needs to actually perform well at a job are not really tested well by the standard big tech interview loop (startups can be innovative here, but it can go either way).
Generally the competent folks reluctantly acquire the silly skills required to pass through the gatekeepers though.
I have a feeling Apple will be next - CEO announces he will be taking a huge pay cut in compensation was maybe an effort for him to preemptively show he is 'sharing the pain' (though 'only' 50M comp is not really much pain)
True, but didn't the amount of stock he took versus cash actually increase?
Could be wrong, probably am, but I thought I saw that his base pay dropped significantly but his stock options and grants were virtually untouched if not raised.
These layoff articles are incomplete without mentioning how many they hired and when. This brings Microsoft back to their staffing levels of when exactly? March 2021?
Because if they hired for instance 30 000 people the last two years, 11 000 brings them back a year or so. If however 11 000 is the headcount they've grown the last 10 years, it's a much more dramatic sign.
If your friend told you they lost $10,000 in the stock market today, would you feel bad for them? What if they then told you that they're up $500,000 over the past year? How about then?
This is a curious decision. Microsoft shows a ~73 billion dollar net income [0] and it's probably reasonable to assume their shareholders are enjoying a robust, growing business. I wonder what they believe this reduction in staff is meant to provide? Will this really and meaningfully move their bottom line or will it better tighten the performance characteristics of the staff?
By your analogy, the 11k laid off would need to be costing the company over $1.5m per employee on average. If we instead assume it's 300k per employee, it's more like a $40/mo gym membership.
> I wonder what they believe this reduction in staff is meant to provide?
An increase in profitability most likely?
If we can agree "you need to have + pay employees in order to deliver projects which grow revenue", I don't know how they expect to grow with "less employees" delivering on less growth projects?
> it's probably reasonable to assume their shareholders are enjoying a robust, growing business
I don't know what you mean by enjoy here, but shareholders generally enjoy it when stock price appreciates, which is not what's been happening the last 12-14 months.
Not to offend anyone affected, but considering the cost/profit structure of those big companies has not really changed that much (except, maybe, Meta), I get the feeling, that this round of layoffs is in some ways welcomed by those companies.
In many cases, they are basically returning to pre-pandemic levels and instead of an actual financial need, these layoffs are probably a result of the fact that you cannot effectively incorporate an headcount increase of 20% in a high-tech company within 1-2 years. It seems like they hired to please investors because everyone else was also hiring like mad. Since the shareholder expectations have reversed, the companies are using the "opportunity" to return to manageable numbers of engineers and administrators.
This isn't a moral justification, but isn't laying off workers when other companies have layoffs a simple supply and demand response? That is, the demand curve is the same for these workers but the supply curve shifts to the right and prices for the same job drops. They're betting that the people hired in a recession will perform better per dollar than the people let go.
A layoff of ~5%, especially if it is the first one in a while, is usually (at large corporations) just a way to get rid of (perceived to be) non-performing staff without having to do as much paperwork as actually firing someone. This isn't to say they are correct about those 5% not performing, and even if they are it may not have been that person's fault, but the real motivation for a layoff of this type (first one in a while, less than 1 in 10) is usually just to get rid of people it would otherwise be too stressful/legally fraught to get rid of.
You’d wish, but in my experience individual performance is only a small factor in layoffs. In one layoff I survived, our GM (with 1000+ people) was told who was being let go a day before the event. That involved 100+ people. People with above average performance ratings were let go, some with below average ratings stayed. As best we can tell, HR went with laying off senior/expensive employees based on the lack of certain technologies on their internal resume. Of course, your best employees don’t update their their internal resume much, because they are busy with all the work being thrown at them. It was chaos.
I’ve also seen companies do layoffs by cutting entire teams. Top performer on a misaligned team? You are also laid off.
How old is your data on this? This is repeated multiple times in this thread, but my experience with layoffs hasn't shown that poor performers are cut. It's random or it's entire teams/orgs.
If you’re laid off from anywhere, are in a position to join a very early startup, love Texas Hold’em, and have technical or design experience, drop me a note.
What sort of system exists for these monster layoffs that they can just (relatively) quickly patch the hole left by removing 11,000 people? I can't comprehend what that looks like logistically.
My understanding is that this is a ~5% decrease in employees? Pretty easy to imagine losing 1 person in your 20 person department. Really depends on the "who", which tends to get lost in headlines consisting of large numbers.
Im not sure I follow your thought process. Are you suggesting these employees would make Microsoft more profit YoY than laying them off when they are deemed as a cost center vs profit center?
It seems like they are just taking advantage of the climate. All of these companies are going to be "trimming the fat" while the news cycle is used to this category of headline.
They make a lot of money selling services to companies that are on shakey ground or pulling back their finances and spending. This means that instability eventually bubbles up to Microsoft and other companies depending on their customers to keep spending and buying services.
Coincidentally, the acronym you came up with can be pronounced in the same way as 我慢 [1], which, in modern parlance, is the Japanese equivalent of "grin and bear it".
MSFT is more diversified and has a lot of sticky B2B customers while AAPL is mostly B2C. Sure, they are selling to businesses too, but MacBooks can be easily replaced, unlike MS Office and its like.
Indeed. We are all-in on using .NET6+ for building software for our customers. This locks us into VS/Azure/Windows subscriptions as a side-effect. Our clients sign 5+ year contracts, so we aren't leaving this area any time soon.
There are certainly less expensive ways we could run our business and deliver our product, but the amount of risk associated with those options is far beyond what our investors, leadership and customers would tolerate.
Biggest reason we are stuck on windows is because we use some windows-specific dependencies. If we dedicated ~6 months we could consider cross platform, but that would just be the beginning of the conversation. The 3rd party hosting/licensing costs on a per-customer basis don't even approach 1% of the total cost of the solution.
Granted that there are definitely people there resting and vesting and not contributing much. I get it. This still does not explain why all these big tech companies went on hiring spree when clearly they did not need that many people. And now they all: ops sorry, we did not know ...
I would like to see top managers bonuses/refreshes and so on trimmed and maybe fired as well.
That's just the first wave out of three. The first one are with the most severance usually as there is still more cash in the bank, so even though it sucks to get laid off you can look at the glass half full. Be strong everyone there!
Both. Teams that haven't gotten exec buy-in just get axed (with lots of good people) and then every Director is required to sacrifice a few people (in this section, most of the people laid off are low performers, but definitely some good performers who have made the wrong enemies or haven't made the right friends).
Member when Carly Fiorina shut down HPs calculator division because it wasn't PROFITABLE enough? Pepperidge Farms remembers. It's not enough you make a company profit, it depends on the quality of that profit to the stock to determine if you are worth keeping around. There are some seriously broken things about that and about our modern economy.
Just some initial Googling shows they had roughly 144K employees in 2019 and ~221K in 2022. If you take out 11k, they still added 66K jobs in 3 years. I'd be curious to know the breakdown of the kinds of jobs they added vs the ones they're now eliminating. The article says this cut affects mostly HR and engineering, but doesn't give exact numbers, and it is hard to tell the breakdown for jobs added (unless someone smarter than me can find the info in the public filings).
I would guess there's some correlation to a boom in O365 because of the pandemic. Companies that only gave licenses to some employees expanding it to all employees to handle remote work, company-wide events, etc. And now a plateau in that reached sooner than MS expected.
I was wondering to which year of employment level will all the lay-off roll back. For instance, FB has the same number of employees as they did back in Jan 2022 after the laid-off. Let's say the employment level went back to 2018 for the tech industry, would it be a bad thing? The packages back in 2018 were still pretty cushy.
"There are three ways to make a living in this business; be first, be smarter, or cheat. Now, I don't cheat. And, although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first."
On a seven person team just merged into a 200 engineer company and we’re responsible for a third of the revenue, I’ve never felt so safe. (Shame that also means everything else about the new company sucks.)
Is it the staff of the Teams team? Worst product ever. One can't even as a logged in user click on search results within the app without going into login hell.
Yes, Teams sucks. But (from my anecdotal observations) it's pretty popular. And in my opinion that's mainly because many companies decide: "meh, it's good enough, and it's easier (for accounting dept) and safer (for risk dept) to go with Microsoft, than to go with Slack / Zoom". Plus I'd say quite a few companies migrate to Teams from WebEx, which sucks way more, so hey, it's all relative.
So, in conclusion, Teams is probably a decent revenue earner for Microsoft at the moment, therefore I doubt that the Teams team will be hit too hard by this round of layoffs.
1. Too many humans - decision-making is slowed down & and it's expensive
Cut half - faster decisions, more money. Will you have more problems, Yes. But you'll never know how bloated you were till you get lean again.
2. Too expensive humans
Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.
> Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.
Software companies have been trying this for 30 years and it has never worked.
It's hard not to read some of these stories and not think that somehow some of these companies are free-riding on the ability to do some firings with minimal pushback because of the "well, look at what everyone else is doing!" climate that exists now. I'm having a hard time teasing out how much of this is driven by some sort of fundamental analysis of the economy, some collective BigCo CEO shared thinking, or, at my most cynical, an Overton window that's been pushed outwards by Elon firing an extremely significant quantity of the (comparably tiny) workforce of Twitter with seeming negligible external-facing impact on the core product.
> with seeming negligible external-facing impact on the core product.
Twitter is said to have lost $2.5 Billion/year in advertiser money, largely because Twitter's sales teams have not been returning emails from worried Advertisers. That's a pretty huge impact on Twitter's #1 revenue stream (estimated to be $5 Billion in 2021).
Twitter's core product is advertisements. Without sales staff to keep the advertisers, they're clearly losing a ton of money.
Advertising was always degenerating. I know that over the past year, I've been seeing more and more pornographic material in Twitter, and I'm pretty sure advertisers don't like that kind of stuff. But instead of having teams working out those kinks (pun intended), those teams have been simply fired.
So advertisers know that there's no hope for these issues to be fixed anymore, and are now leaving the platform. There's simply not enough developers left to change Twitter or combat the rise of unsavory material.
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There's been many a blogpost about "Airline advertiser didn't want to have its ads appear next to Airline disasters". (Ex: Southwest's shutdowns cause thousands of flight cancellations, it will be talked about on Twitter... does Southwest want its advertisements being shown next to that??).
These are the kinds of things that Twitter's teams worked to prevent. You know, mundane issues but require _constant_ coding to identify as news events cause a rapid change to the online discussion. And its fair: there's no reason why Southwest's advertisements should be shown in a negative light... or for Southwest to be paying for that kind of negative publicity.
Anecdotally, over the past few weeks the quality of ads I see on Twitter has deteriorated sharply. I used to primarily get ads from well known brands, but now I'm seeing ads for random products like rat traps.
rat traps: me too. the bucket with the trick plate dropping them down?
over the past 2 to 3 weeks the ads shown to me have gotten more and more small fish, bottom of barrel, and wildly unfitting for me. and weird.
its easy to predict the ones I'm seeing are by advertisers bidding much lower $ than the previous average. reasonable to extrapolate and predict Twitter's advertising income has likely crashed. I've heard from enough other people all experiencing the same shift over the same period
> So advertisers know that there's no hope for these issues to be fixed anymore, and are now leaving the platform.
Having worked in adtech for a while the more likely scenario is that lots of companies have turned off their ad spend. That isn’t “leaving”, ad spend is volatile coming and going with many motivations is not uncommon. Pausing your campaigns because the ad publisher is a bit broken isn’t permanent.
And whatever is “said” isn’t to be trusted, you won’t get real numbers from a private company and rumors. No doubt there was a big dip around the takeover, but the only thing I’ve heard is a few people complaining about the increased number of ads.
Probably some advertiser tools were broken and the people who’d been talking to those advertisers had been fired, but those are all temporary. Advertisers aren’t going to take some great moral stand unless there’s a clear reason that can be traced back to customers, disliking elon isn’t one of those things.
> “Probably some advertiser tools were broken and the people who’d been talking to those advertisers had been fired, but those are all temporary.”
How is that temporary if — as it appears — the new management has fired the engineering teams which developed the ad tools, and also has no intentions of hiring more people to replace those ad sales teams?
Are you suggesting that Twitter is not going to have developers work on ad tools any longer? Are you suggesting that sales and customer relations for advertisers are just no longer going to be jobs that anyone does and Twitter is going to just hope and pray they get ad money?
Yes lots of reorganization happens, lots of jobs were lost, but, duh, the work is still going to be done, even if there is a re-org gap.
> Are you suggesting that Twitter is not going to have developers work on ad tools any longer?
Hum... I'm not the GP, but pretty much that. Yes.
If they have been broken by weeks, the team working on it was fired, no replacement has been brought yet, and it's the one big interface with the people paying money to the company, then it's a good bet that management either doesn't care about money or can't fix the problem.
And when do you think that’s going to happen? The new owner seems fundamentally uninterested in selling ads or hiring anyone who knows how that world works. Instead he’s hoping to turn it into a subscription service that also gets a cut of user-to-user payments made on the platform.
Advertising revenue fell because of Elon's new "extreme right wing beyond conspiracy theories" stance. It is not because of the sales staff not responding to emails.
Doubtful. Especially when large clients of twitter have publicly stated the reason for their reduced ad budget is lack of support and bad, for brand, content next to their ads.
> Elon's new "extreme right wing beyond conspiracy theories" stance
wow that sounds insane? I wish you would have had a source attached to this (an actual source btw, not some online journalist writing an opinion piece)
You are asking for the impossible. It would take a fiscal quarter for a source that isn’t an opinion. Perhaps the OP should not include Elon’s insane approach to content moderation as a new stance but simple negligence by the adtech strategy they’ve devised. In either case Elon’s going to need to adjust in some capacity or adopt the chum ad approach to monetize his content.
Just read his Twitter feed. He has repeatedly retweeted (source: his own Twitter account) not only right-wing memes like QAnon stuff, but antisemitic ones. I will then direct you to Popehat's Rule of Goats should you need it.
> there's no reason why Southwest's advertisements should be shown in a negative light..
So basically there's been a team suppressing any really bad news about any company who advertises on Twitter? Am I reading that right? And you want them back?
That's not what your parent said: they said when there's any really bad news about a company who advertises on Twitter, that company doesn't want its ads shown right next to that news.
I don't think it's that necessarily; instead, you could pause Southwest advertisements until the next news cycle for example, or look for keywords in tweets and avoid showing SW ads near such tweets (e.g. normally you want a SW ad near tweets with "airport" but for the next 5 days you want the opposite approach)
No, I don’t think you read that correctly. The thing that’s removed is the advertisement, not the news. Eg if I tweeted “HackerNews sucks”, they would not want to pay to advertise on or near my tweet. They would rather advertise in a more neutral or positive space. Someone else could fill that advertising slot (eg. McDonald’s).
I mean you are very clearly not reading it right since the commenter's comment had nothing to do with suppressing news and only had to do with where paid advertisements are placed.
You have it the wrong way around. The advertiser will ask for the ads to be suppressed or removed from negative contexts, because that's part of the service they pay for.
But not the features that retain advertisers. Which were the silent issues that no one talked about before.
And indeed, advertisers aren't talking about it now. They're just leaving the platform in droves. There's no one _to_ talk about it with. Entire teams (including high ranking executives) that kept relationships with advertisers have been fired.
Twitter doesn't even have anyone answering / categorizing the complaints anymore.
> Don't think Twitter's revenue issues have anything to do with sales staff. Advertising channels/campaigns can and should be 100% automated.
You can't automate news. News is constantly changing. Advertisers _constantly_ are complaining about "X is being shown next to Y news event. Please stop that", and its impossible to predict X, or Y.
> Advertisers _constantly_ are complaining about "X is being shown next to Y news event. Please stop that", and its impossible to predict X, or Y.
It would be interesting to have a UI that lets them say that they don't want to be next to X, or they do want to be next to Y, and they pay different prices to appear next to more/less popular things.
Internally they probably are, it's just a question of whether the advertiser or agency or platform is pushing the buttons. For obvious reasons the platform owner can usually push them fastest, and can earn more money for doing so, so why shouldn't they do it?
Advertisers dropped spending because they don't like Elon/his behavior. Not because sales staff were laid off. It's quite obvious to anybody looking at the situation objectively.
Twitter has functioned fine after massive layoffs, and feature velocity has only accelerated. Too many developers have an inflated sense of self importance
There's plenty of advertisers who have blogged about "My emails to Twitter stopped getting answered" around the time of the 75% layoffs. This is well documented.
What do you want the advertisers to do? To just keep giving money to Twitter even when all their contacts have disappeared? There's some pretty basic behaviors that have nothing to do with politics here that Twitter is failing at.
If I were an advertiser (and I have in the past), I would look at the metrics of engagement for my ads to assess their efficacy, not talk to a representative. Either you're happy with the revenue lift or you're not.
To say that ad sales has to be a manual, high touch channel is simply wrong. Perhaps you have staff on hand for large accounts, but why would e-commerce drop shipping headphone company #7 need to talk to a human?
I'm talking about the $100+ Million advertisers, not small ones like you.
Disney is most interested in making sure that Mickey Mouse / Winnie the Pooh / Zootopia is not accidentally shown next to furry porn. Southwest doesn't want its ads shown next to airplane disasters. Kellogs doesn't want "Itsssss GREAT" being shown next to the Ukrainian War.
As I said before: you can't predict the "X is being shown next to Y, please stop that" problem. Its impossible to predict X, its impossible to predict Y. You just gotta have email lines with these big companies and promptly issue your programmers / machine learning / data scientists the new algorithms to keep advertisers happy.
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Twitter is 100% the grounds where furry porn, Airplane Disasters, and Ukrainian War disasters are constantly being discussed and shared. Advertisers want protection of their brand, despite the online discourse.
Twitter didn't have a keyword list to exclude after being in the business for like 20 years? They needed ad buyers to manually contact them and then needed someone to add that with a developer?
IIRC, those tools were in an incomplete state before the takeover... but at least they were somewhat working and Twitter's executives were prompt in responding to any issues. But the APIs have been degenerating rapidly after the takeover.
When the tools aren't working as expected, the advertisers then emailed Twitter's API teams. All of those teams have been dismantled, the executives have been fired. With no one left to contact, the advertisers have begun to leave.
That's wild. Why is ad buying such a mess? Google's setup felt extremely outdated last I had to work with it. Is it just largely ignored because it's assumed that most buyers will work with some agency / platform that will integrate with the API and provide a better UI?
... and has driven away, or may drive away, many of the core content providers for their network effects. People who buy a third party client for twitter are generally not casual users. I reached out to a few friends I would consider 'posters' a couple of journos, a couple of 'personal brand' advertiser types... all of their twitter engagement is way down .. from both sides of the conversation. Two of them are now in a 'mostly I just post now' mode. Having conversations has become to hard. The other two are struggling along but they've had to cut way back, one said 'It was like I was building a house with a nailgun, but it got taken away and someone handed me a rock.'
It took me two days without tweetbot to realize it was was one of the only things that kept me actually using twitter. Finally causing me to mothball my account and throw up a personal mastodon install and start re-finding my personal follows there (I'm at about 50% of my list, but i'm finding that mostly what I'm missing is retweets from a few degrees out). My feed's incoming posts per hour are certainly down from twitter by about 60% but I was honestly expecting much lower numbers.
Onboarding is a PITA. With Twitter ceding the ground, this could be a real differentiator. Hell, you could build a licensing component paid to the servers.
> Advertisers dropped spending because they don't like Elon/his behavior.
I mean, yeah? If someone fired all my contacts at a company and didn’t return my emails as my revenue dropped as a result of their changes I would also stop paying them?
And Twitter needs advertisers more than advertisers need Twitter. Maybe there are exceptions but I can't imagine Twitter is this uniquely wonderful channel for the vast bulk of advertisers.
It seems like playing chicken with "Don't make me pay this hugely overinflated price I promised or I'll crash the company." as your strategy maybe wasn't such a smart idea. Now he's out the money and has literally nothing to show for it. Meanwhile his other ego stock, which he somehow had manipulated into a wild overvaluation, is now crashing because everyone can plainly see that he's just kinda a dumb motherfucker.
They also put back the "for you" tab to force people into algorithmic timelines, which they already tried once and pulled back since everyone hated it.
This is "obviously" based on... no communication whatsoever from the company yet.
Another comment of yours says "quite obvious" about advertising, which doesn't seem to be an industry segment in which you work.
It seems your observations are right in line with Twitter's new owner, to whom everything that's happened over the last few months has also been "obvious," and mostly wrong.
Yes, Elon who made Tesla and SpaceX some of the largest companies in the world in just a few years, and likely many more over the next two decades is a totally incompetent buffoon.
I’d rather take his side than the small minded and intellectually weak detractors.
Just because things tend to be a certain way, doesn’t make it optimal or right. Evidence, all of history where bad practices were pervasive and common and later usurped by better practices.
Maybe use forethought and critical thinking rather than credentialism and groupthink
I didn't say he was an incompetent buffoon, you did. I think it's more true than not, but those are your words, not mine. I said only that he was frequently certain while being wrong.
When he makes a pronouncement and then reverses that pronouncement, one or the other was incontrovertibly wrong. Whether he was wrong first and right later, or right first and wrong later, the list of reversals at twitter is a long one, starting before he bought the company.
He tendered an offer that skipped due diligence, then attempted to avoid doing what he'd agree to do, invoking the due diligence he'd explicitly skipped in the process. Then they day before he would have to open up his financial records in court, he reversed his reversal and closed the deal. Since then he's stated multiple times he regrets buying twitter.
However many times you count him being certain-but-wrong in that story, it's more than zero, despite the financial success of his unrelated companies, and despite your unwarranted personal insults.
To say that somebody’s success at tasks that are highly correlated with a separate task is irrelevant is simply wrong.
And people who tend to succeed at most things they do, tend to do so for a reason. It’s effectively statistically impossible for it to be sheer coincidence/luck.
Or should I just pick random “logical fallacy” links to put in my replies instead?
If a baseball teams wins their first four games and you see them in the seventh inning behind by 30 points in game 5, when you predict game 5's winner is the relevant correlation how the team did in games 1 to 4 or is the relevant correlation how a team who is that far behind a particular game tends to do?
I simply noted you appear incapable of perceiving Elon as making bad decisions, which is kind of funny, since he seemed to think agreeing to buy Twitter was a bad decision, and was in the process of losing a court case about it before he saw the writing on the wall and closed the agreement.
If he actually is making bad decisions, I think the halo effect is at play.
Actions that drives results aren’t credentials, they’re evidence.
Saying you have a degree in this or that, or title X/Y without having any results to show for it is credentialism. Unfortunately far too pervasive in our industry.
Yes, somebody building multiple of the world’s largest companies is a much higher hurdle than getting a degree or mid level manager job title.
By your logic we can’t consider any accomplishments from somebody’s past as a reliable indicator of their future results.
Which is obviously not true. “Credentialism” is giving far too much weight to low barrier to entry and easy to accomplish titles.
Ignoring past results, the fact that Twitter is functioning fine after 80% layoffs has already validated the decision to downsize. No need to look to the past.
The level of nastiness in your comments here makes it very hard to take you seriously as an "objective" observer. Considering that you're using your HN profile to attract clients—"Hire me for your development needs!"—you might want to tone that down. I wouldn't want to work with anyone who thought it was appropriate to behave that way.
(And I'll say your rosy impression of Twitter seems a little strange for a supposedly objective observer, given the recent outages/pervasive legal problems/chaotic feature rollouts/various fits and reversals/overall dysfunction that has characterized that company since it was acquired by Elon Musk.)
Nothing nasty about my comment, its a factual response to the parent comment.
Fortunately I couldn’t care less if somebody decides not to work with me because they disagree with my opinions. People who care about results will get ahead, those that don’t won’t
> ... small minded and intellectually weak detractors. ... Maybe use forethought and critical thinking ...
> Nothing nasty about my comment, its a factual response to the parent comment.
I called out your use of the word "obviously" without factual basis, and you responded with insults.
Insults and praise for the CEO of Twitter, which is irrelevant, since he still has not made any statement whatsoever on the subject, which was entirely the point of my initial comment.
"Elon who made Tesla and SpaceX some of the largest companies in the world in just a few years,"
What in earth are you talking about? He brought his way into those companies. I think you are confusing Elon Musk the fictional PR character who exists only in paid press releases with Elon Musk.
Elon Musk's success was being the CEO of a slimy payment processor.
> They obviously did that because the API is not benefiting them at all from a revenue perspective. If it were, they wouldn't have gotten rid of it.
Everyone hates on Dorsey because he essentially turned Twitter into a walled garden (killed third-party clients + RSS support), but really, how else are you supposed to make a startup that got millions in funding profitable? Just by giving your stuff away?
Nobody begrudges Twitter the right to (the opportunity to) make money. It's not clear why they decided not to work with the clients. They could have put ads into the API feeds and required that clients not filter them out, or some such thing.
And it's fine that they didn't. It's even fine that they shut down the API. But the lack of communication is ridiculous. Just tell people what the fuck is happening. They don't have to like it, but complete ghosting is the way you burn bridges completely down.
But amazingly third party clients still thrived even after those API nerfs for over 10 years.
I mean it's within his right to do it, and I can even see the arguments. However, to do it without even a press release let alone notice. Without even answering support tickets from those third party clients. Just an utter failure of management.
- They are experimenting more aggressively.
- Depends on what features you build and time that it take to build those.
- How much can you afford to delay the tech debt.
When the CEO is focused on rolling out features faster, everyone rallies behind. Does it mean the company is operating great. End of 2023 will be a good indicator.
Also note that recent tooling around LLMs (eg. ChatGPT) will improve aggregate efficiency.
So far every new feature has been a previously-developed canceled feature. Even Twitter Blue was an existing feature repurposed, and it took two tries to release.
Twitter has been objectively worse since the layoffs. I get tons of sex-bot accounts liking my posts that never existed before, the app constantly refreshes itself, there’s a few second loading message every time I view my timeline that didn’t exist beforehand, and my timeline is much worse than before (instead of seeing mostly tech stuff in the area of my interest, 60% has become fluff akin to my instagram story rec’s).
> Interesting that Twitter is shipping features faster than ever after 80% layoffs.
Do we have an independent source that doesn't have a history of dishonesty confirming this? Does it have a creative definition of 'shipping', 'feature', and 'faster'? Are there any long-tail dangers that have, or have the potential to blow up in Twitter's face from it?
My car goes faster and gets better MPG ever since I stripped out the weight of the braking system...
my experience at two big tech companies said this extremely overdue.
especially since about 2012.. lots of added head count. managers and sr. managers and directors #1 priority on increasing head count to grow empires and get promotions. it elephant in the room supported by easy US fed policy. uncomfortable truth these people dont want to admit.
what is vision for these new teams? if stock price is $100/share does director X’ org contribute $.50 or $1 or $10? many teams are negative contributors to this equation.
actually much of $ attribution and downstream impact was gamed. the founders and their protege slowly left and replaced with professional managers. no vision. no obsession with features. little thought to value. instead they see prestigious job. “i have 150 people report to me.” that kind of discourse mainstream. indirect way of bragging “look how important i am.”
maybe 15% of employees at both companies providing actual value building new things that bring revenue. another 15-20% just support legacy cruft with software patches. no feature work. no innovation. large teams of engineers and managers resting and vesting.
it is honestly entitlement and horrible joke. why these people entitled to $200-500k+ salaries??? its like this country built fake economic class of worker. little to no economic output.
re >> #1 priority on increasing head count to grow empires and get promotions.
I'm sure that's the case always, but I'm convinced it's the case more often than many of us realize. I also recall this being discussed in David Graeber's book "Bullshit Jobs"
What are you getting at, exactly? Are you implying they don't need to fire these people, they just want to? Or are you saying they think they need it, but they really don't?
Firing a bunch of people impacts morale, PR, etc. So there may be a bunch of people they'd like to fire but not badly enough to deal with those consequences. But a public narrative of "it's the economy" or "layoffs are just going around" can shield them from those consequences and give them an opportunity.
What I took from it – and I think they might be on to something – is that it's opportunistic firing.
Firing people at this scale would have been pretty expensive just a few month back, PR wise. Right now, a lot less so. So you might be tempted to think of the current climate as a good opportunity to shed some fat, to the point where you go into it with the idea of hiring back right away and being able to do so at better conditions. The market has relaxed.
Compare it to a few month back, where switching jobs (= firing your employer) was a great way to automagically increase your pay. It works both ways.
PR wise to who though? I don't think any of Microsoft's customers actually care. For developer hiring yeah it will hurt their PR, but at the end of the day sorry to say devs tend to go where the pay is highest irrespective of PR.
To give an example in microcosm, this news about layoffs is affecting my decision of what UI framework to use with .NET projects. .NET MAUI was already low on my list because I don't trust Microsoft to commit to supporting a UI framework long-term, but if any of these cuts are to the MAUI team then it will put it out of the running completely for me. I'm sure there are other devs in similar circumstances (and who likely rank MAUI much higher as a candidate than I do) who will weigh this layoff announcement into their decision. And there will be some who ignore it because they see it as a general symptom of the economy, not a sign of trouble at Microsoft etc.
> at the end of the day sorry to say devs tend to go where the pay is highest irrespective of PR.
I have to assume that, in the same way that glass palace FANG offices and around the clock full-service employee pampering are doing something for (potential) employees, the idea of large scale firings will move the needle in the opposite direction. Clearly, it's not only about who pays most.
He's implying that the company has some kind of duty to treat its employees like humans who would be adversely affected by being fired - or the company would perhaps suffer some PR damage from mass firings. But if everyone's doing it, it's a necessity.
I think he's suggesting that they want to do periodic layoffs regardless but that there may be a more negative perception of doing so in isolation rather than the current situation of multiple other big tech companies doing it.
> seeming negligible external-facing impact on the core product
In both technical and product axes Twitter has already deteriorated massively, possibly beyond repair and the company might not make it to 2024, so I wouldn't call that "negligible".
Call me ignorant but Twitter seems no different from what it was a year ago. There has been way more media attention and pearl clutching since Elon's takeover, but that hasn't translated to noticeable a difference in terms of usability and product.
There have been some product changes in terms of moderation, those blue checkmarks, and impression count. I don't really blame Elon for trying new things. On the technical side I don't know what's changed.
That said, I concur that Twitter is doomed. It was already not very profitable before advertisers started backing away, and Elon's tendency to "move fast and ignore regulations" won't serve him very well in the current climate of tightly regulated social media. Elon's piggy bank is no longer unlimited due to the revaluation of TSLA and the tendency for his huge sales to drive the price down even further.
Users have been reporting issues with missing reply notifications and missing replies for a while. It's not obvious if you're not paying close attention, so I think most people won't really notice. Try counting the number of replies versus the number of replies shown. It doesn't appear to be a spam-filter issue either as those replies are benign and still exist if you navigate to them via a profile.
Twitter stopped working entirely for some 3rd party apps late last week. Dev communication looks extremely slim and the only comms has been a very vague tweet: "Twitter is enforcing its long-standing API rules. That may result in some apps not working."
I'm pretty sure breaking 3rd party clients was intentional.
Twitter had tightened the reigns on them years ago because it just cost them money to keep them alive. It makes sense that would be first on the chopping block when they're looking for cost-saving measures, and I figured it was inevitable regardless of the Elon takeover.
I have a feeling it's coming for reddit too. That one I dread cause their official app is horrible.
But how is that relevant? Pulling the rug under third party apps is probably a bad move from Twitter, but everything seems to indicate that it was intentional and not just a breakage/outage caused by a shortage of staff.
Breaking SMS delivery, logins, increased number of 500 responses, failures in the recommendation engine, failures loading conversations and bugs galore, including displaying tweets of locked accounts you don't follow that someone you do follow replied to are some of the recent outages and bugs I can remember of the top of my head from the past 3 weeks.
I've continued to use twitter daily since the Elon takeover. If I wasn't in the loop about that I wouldn't have noticed anything.
I think early on I heard there was a 2FA outage? That was resolved fairly quickly.
The only issue is dumb changes, like the "no linking to other platforms" rule that was announced and then rolled back within the day, or adding view counts that add no value. But none of that is technical issues.
> I'm pretty sure breaking 3rd party clients was intentional.
> Twitter had tightened the reigns on them years ago because it just cost them money to keep them alive. It makes sense that would be first on the chopping block when they're looking for cost-saving measures, and I figured it was inevitable regardless of the Elon takeover.
I don't think that was technical ineptitude, but rather a cost-saving decision from the business.
I think the mistake you're making here is assuming that your average tech CEO is paying attention to the same degree you are. They aren't. They don't have time to notice all the many little things that degraded already, they just saw that the site didn't go down a week later and moved on.
If he hires people, if he doesn't fire people, if he doesn't tweet, if he tweets that the flat earth people are out there fighting the woke mob, it doesn't matter, Musk will be hailed as a genius no matter what.
Musk has enough money and influence to stress out his employees and userbase for decades.
That's what some of these companies have stated on the record. Like Zuck explicitly said that some people shouldn't be here, months before the layoffs.
Or maybe it's some collective BigCo board of directors shared thinking that they need to show to shareholders that they are being proactive on that Overton window.
> some of these companies are free-riding on the ability to do some firings with minimal pushback because of the "well, look at what everyone else is doing!"
In finance circles it is referred to as “taking a big bath”. When everyone is doing it, you write off past goodwill from bad acquisitions, lay off redundant employees, etc, all to emerge clean on the other side. Having used the cover of everyone doing it, you aren’t punished.
Corporate Americas' bloat has been the butt of many jokes for decades. Big tech is just as guilty. They still do want to keep high performers, which is usually why its not just a layoff announced, but a "re-organization", aka lets move all the high graded employees to other orgs and fire the lower graded ones
It can be that but also it can be that they see some of the competition cooling so they don't have to spend as much to keep up with their competition.
It's like airline pricing. One airline has a sale, others follow (competition heating up), then, one airline hikes fares, others follow (as competition cools down).
There was also the situation where companies were hiring simply so that the competition couldn't. Now that the competition isn't hiring, you can free the people you were hoarding.
It's hard to see how so many companies could grow their headcounts far in excess of their revenue growth, and people didn't see at some point, they'd start cutting.
> It's hard to see how so many companies could grow their headcounts far in excess of their revenue growth, and people didn't see at some point, they'd start cutting.
It's hard to separate the wheat from the chaff without hiring both and sorting after the fact when you're actually informed by experience.
The economic downturn just gives excellent cover for what's an arguably necessary part of a cycle akin to forests burning.
Sometimes you can have an employee that just lacks motivation, and keeping them around while hoping to motivate them one day is cheaper/easier than finding a new hire, when hiring is super competitive.
MS may have less time/patience for these people right now.
It is, but it's difficult to do, needs documentation, etc., and most managers in Big Tech would rather not do it unless required to from above (which is what a layoff gives them the opportunity to do).
There's very little incentive for managers to cut bad hires. It is a tedious process (involving HR, PIPs, lots of paperwork), and firing people always looks bad. Most will just choose to let them hang around and give them unimportant tasks.
Plus, when upper management mandates that you have to fire 10% of your org, well now you have all these people you can put on the list with zero impact to the product.
It depends on how layoffs function. "Hey, every line manager chooses their least productive report and fires them" is one approach, but the situation often doesn't seem to get pushed down that far. Directors axe entire teams not necessarily through some analysis of productivity.
There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a "shortage," remember. Some of it is genuine growth in the sector, some of it was definitely "labor hoarding" by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)
While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that's discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.
The "war for talent" quickly turns to the "war on talent."