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[flagged] Signal app's president-“layoffs in tech are to keep salaries in check” (twitter.com/mer__edith)
106 points by myth_drannon on Jan 22, 2023 | hide | past | favorite | 74 comments



It is very much true. It has never been profitability. Just look at this activist letter from an investor from Google. (They had a similar one in Nov.

> Competition for talent has fallen significantly in the tech industry, allowing alphabet to materially reduce compensation per employee. Particularly, alphabet should limit stock based compensation given depressed stock price.

https://www.tcifund.com/files/corporateengageement/alphabet/...


Alphabet could've reduced compensation per employee by as much as 50% at any point in its history and still would've had no problem hiring the same number of people. But it didn't, because success in software is extremely sensitive to quality of talent.

The best analogy I've come up with is that hiring software engineers is like hiring a bunch of book authors and asking them to write a NY Times bestseller. While your competitors are also trying to do the same.

If anything, I'd argue tech compensation isn't high enough. Software has unprecedented reach and (as a corollary) a winner-takes-all flavor. A team of a few hundred tech workers could build a business that brings the company in the order of a billion dollars in annual recurring revenue, justifying their own salary by several orders of magnitude. No other profession can do that. An accountant, plumber or lawyer can never create business value that is 1000x their own salary.


You know this. I know this. Pretty much everyone in tech knows this. But this isn’t about only Google paying lower, Google already pays lower than competitors and still hires talented people. This is more about market wide pressure to suppress wages. If every company does the same, suddenly the quality engineers start getting paid a lot less than they should be.

Of course over a course of a longer period, this drives up competition and new startups capitalize on the opportunity, but in the short term it resets the wages until the cycle starts again.


Where I work, there are multiple senior ICs making 7 figures.

There are many dimensions in the calculus of layoffs:

- An opportunity to get rid of staff they don't like

- Trim down for the particular economic environment (Meta went insane the past 5-10 years, zooming up in head count like a hockey stick. Google has some bloated departments.)

- Virtue signal to investors that they're "using their money well"

- And, tamp down on wages

If high impact engineers had any sense, they would:

0. unionize

1. form worker-owned co-ops to capture the market value for their labor rather than whatever crumbs a corporation decides to grant them.


>form worker-owned co-ops to capture the market value for their labor

There's a word for that - "startup"


The part about Google still hiring talented people is not true. You should look around at offers. Google is hiring fewer good people because other companies are paying more. Google is losing their best people to startups that pay more. For ML roles, salaries are much higher than they ever have been.


Many in tech are only their instead of starting direct competition to the major tech players because of the high compensation. Sure I could create my own startup and make more, but with lower pay and way lower headache i’ll take the salary.

If I was being offered what European companies offer swe, i’d be out the door. I might even go take a job that’s enjoyable since the pay isn’t there.

I actually hope this is a broad movement for big tech companies to pay less. I’d love to see an exodus of power from them.


> A team of a few hundred tech workers could build a business that brings the company in the order of a billion dollars in annual recurring revenue,

Like who? "Software" in and of itself doesn't accomplish anything. Nobody today is selling CDs in boxes that run entirely offline with no dependencies.

What is Airbnb without a giant network of IRL brokers that actually make inventory available? What is Uber without thousands of real people running ID checks, lobbying politicians, and negotiating down AWS and Google Maps API bills ?

Figma, everybody's favourite unicorn, only made $190m in revenue. It's only in bizarro world Silicon Valley that that results in a $20bn acquisition.


Software has near-zero marginal cost to manufacture, very few barriers to distribution, and can displace giants in a very short amount of time solely by virtue of being Good. In other words, software is viral. Valuations are an extortion fee. Here I have a doomsday device that will kill your multi-billion-dollar business faster than you can say Mississippi, and I'm selling the key.


I don't know if any of that holds true anymore.

Marginal Cost to Manufacture - Not in terms of cardboard boxes and CDs, but you can't scale up your user base without paying hefty fees to cloud providers or payment processors these days. In any case, software companies aren't valued on the basis of gross margin but recurring revenue and operating cash flow.

Barriers to Distribution - OK, this is still mostly true. I will say that "enterprise" type software tends to require RFPs, SSO integration and regulatory compliance that can let monopolies fester, like Microsoft (and Adobe).

I wouldn't say software is displaced at all though. Companies are simply buying the competition as in the case of Figma, (or Instagram, or Activision) or pouring money into developing vertically integrated solutions to strengthen their moats further.


Valuations are also about the future based on current adoption trends. It's like asking why did facebook pay so much for whatsapp, it's because it was very close to pulling a tiktok on FB themselves. They had half a billion people and was the defacto network effect locked in messenger for most of the smartphone world outside of China and the USA & Canada, on top of being extremely more staff efficient. If they bothered to add social networking, it would've been the beginning of the end for FB in those markets, and I wouldn't be surprised if it was a WIP in WhatsApp when acquisition talks were happening.

Figma was pretty much acting like the whatsapp to core parts of adobe business based on adoption. If they let it go on further, a similar thing would've happened.


How does this gel with:

1. The widespread meme that Google and other likeminded tech giants snatch up talent for the sake of denying competitors that talent, rather than for developing their own businesses.

2. Google’s seeming inability for the last decade or so to launch new products that stick around, as well as questionable decisions with existing products- with their chat messenger strategy being the intersection of both failings.

Maybe the previous post only applies to SWE and not PMs.


Give bonuses to that 1% of SWE's then (pretty sure Google does this)


Why do you think that reducing salaries has nothing to do with profitability?

Why is keeping salary in check valued? Simply for the sake of cruelty?


>Simply for the sake of cruelty?

"because cruelty is the point" was a pretty common refrain in political discourse last year, so at least some people believe that.


I didn't buy it in that context and I don't buy it in this context either.

It just seems to hey disingenuous and thoughtless saying to avoid actually engaging with a topic in good faith


More like, cruelty is easy and cost-effective.


Cost effective at doing what?


Why has competition fallen? Is it simply due to an increase in supply?


HN Title: Signal app's president-"layoffs in tech are to keep salaries in check"

That's not what the linked tweet says. Not literally and not implicitly. The tweet literally says "It's not about $" - which presumably means that salary costs aren't the main reason for the layoffs, which still doesn't support what the title claims. The point of the post is that it's about power dynamics and reining in "perks/freedom", not salaries.


There's a really good general rule - if someone says it's not about the money, it's literally always about the money.

Tech layoffs from my perspective were about many companies hiring in 2021/2022 in line with the explosive growth they saw during COVID. They hired in accordance with the new trend instead of the longer-term trend. Once we reverted to the mean, most tech companies had too many employees.

Because all the tech companies were chasing the same employees, each individual employee was paid more than historical average too so it was a double-whammy.

It's not about lowering individual salaries it's about lowering aggregate salary expenses. But doing one will cause the other, too.


> There's a really good general rule - if someone says it's not about the money, it's literally always about the money.

Horse shit. But independently from that: your rule of thumb, good or bad, does not justify editorializing the headline to literally opposite of what's linked.


I wasn't suggesting editorializing the headline.


You're right. This is one of the most misleading titles I've seen on here.


Yeah, the tweet literally says layoffs in tech are to keep worker power in check.

A mod should really reword the title. It's really an interesting and insightful tweet thread which is horribly misrepresented here.


A lot of upper tech management seems really upset when, despite their best efforts to completely encapsulate themselves with yes-men, people started telling them "no".

No to commutes and work in the office, no to unpaid overtime (wage theft), no to toxic mismanagement, no to sociopathic C-suites and investors, no to "we are a family" emotional manipulation, and no to underpaid roles targeting "passionate" (exploited) people.

Yes, it hurts when one's "family" finally sets some healthy boundaries against one. And that is what a part of this is. Perhaps these CEOs think that the layoffs have a more rational reason, but such reasons sound like like narcissistic personality meltdown type justifications when contrasted with real figures and facts.


All the laidoff people should form a tech union of sorts, one big agency/union/syndicate combo thing where to get talent you gotta go through the union, maybe union gets 0.05% of wage paid by employer in lieu of dues, etc, encourages the union to fight for higher wages too.


Surely they’ll never get laid off with that approach.

<Yes, this comment is intentionally ambiguous>


This. It's much more of a reaction to the recent "quiet quitting" or "let it rot" trends and attitudes, where people will purposely do shoddy work because there's no real consequences.


The title is literally the opposite of what the tweet is saying.

> Now a hint of recession = excuse to break promises/reestablish dominance over workers. It's not about $

The claim is that this isn't about keeping salaries in check; it's about keeping working conditions in check.


Below comment on another layoff related thread is relevant here too - https://news.ycombinator.com/item?id=34480652

The professor recommends across the board pay cuts as an alternative to layoffs.

> One thing that Lincoln Electric, which is a famous manufacturer of arc welding equipment, did well is instead of laying off 10% of their workforce, they had everybody take a 10% wage cut except for senior management, which took a larger cut. So instead of giving 100% of the pain to 10% of the people, they give 100% of the people 10% of the pain.

Curious if there is research here on how this impacts the company? Seems like it would also increase stress and encourage top performers to seek new opportunities.

He also recommends hiring during a recession:

> He actually hired during the 2000 recession and saw it as an opportunity to gain ground on the competition and gain market share when everybody was cutting jobs and stopped innovating.

I suppose this works when it works, and then fails completely when it doesn’t. In essence, this increases the risk profile on the company which seems problematic too. Would be curious if there are studies that show the outcomes of these strategies.

Perhaps there are no “good” strategies- just those that favor employees or those that favor investors.


At a tech company that did this, the best people would leave. The remaining people would be the ones who are below average, or the ones who can’t risk a job loss because of visa issues.

What Google is doing now is clearly not great for morale either, but universal compensation cuts would be worse.


> At a tech company that did this [10% pay cut for everyone in lieu of layoffs], the best people would leave.

Why would that be? Is it trust?

If I was making FAANG Staff+ TC, and a 10% paycut seemed necessary to avert layoffs in tough times, I think I'd take it, and have good morale about that.

I suppose, if the company currently had large profits, and people didn't trust that belt-tightening was necessary, there'd be morale problems.


Well all the FAANG are doing it right now, so not the best example, but if your company is cutting salary and other companies that offer the same TC are not, then there's no reason to be loyal to a company anymore (companies aren't loyal to you), you might as well jump ship to the company that will give you more money for pretty much the same work. Usually people only get raises when they job hop anyway.

I've been at a company that cut benefits because of hard times. I stupidly stuck around longer than I should have. Those benefits never came back, after multiple years. Meanwhile those that were laid off got all those benefits and more back with their next company. I eventually left and got all of it back plus a large salary bump.


I don't get this "instantly jump ship logic". Finding the next big thing takes time, even for the best people. A bunch of other companies are laying off too right now, so that makes the search harder, not a great time to rage quit. One company may steal the benefits forever, another one may actually bring them back at some point. Rage quitting immediately after a 10% pay cut doesn't seem very logical, wouldn't you want to stick around for a bit to see if the company recovers (and the job market improves)? and only then move.


I have personally been the guy that 'stuck around to see if the company recovers'. I stayed for three years with just more of my benefits cut, salary freezes, promised "we'll maybe promote you in six months or so even though you've already been doing your previous bosses job for a year and we refer to you as the SME in the department" multiple times without it happening, etc. When I finally jumped ship, I got a 60% raise and better benefits than I ever had at that company.

Meanwhile everyone else who left or were laid off were getting their raises and salary bumps and 401k matches etc that entire time so the opportunity cost of all that lost salary for me was very high. I should have been looking immediately and left as soon as I found something better.

As a hint of how they're currently doing, their stock has gone down 71% since I joined seven years ago, and down about 30% since I've left a year and a half ago. I sat and listened to each of their quarterly earnings reports and I think every quarter their year-over-year revenue went down the entire time I was there. I'd still be waiting for things to get better if I was still there.

I'm not saying turn in your notice today, I'm saying the company can always hire someone to replace you if they're desperate enough, don't worry about being loyal to it, at the expense of your own livelihood, out of hopes that maybe it'll get better someday. If it does, rejoin the company after it gets better.

As long as you didn't burn the bridge on the way out, they'll probably be happy to rehire you. And you might get a better salary that way than if you stayed the entire time.

That's not the only time I stuck around, btw. I've been one of the guys that survived an initial layoff just to be laid off in a later round three other times. They were in the video game industry, so I wanted to stick it out until the game was released at least, and thought 'well maybe things will get better by then'. It didn't. I was just unemployed and not making any money while looking for a new job, (severance isn't much of a thing in the game industry, at least not for smaller companies), which also made me a bit desperate to take the first job that gave me an offer, instead of being employed while looking and able to be more discerning.


I also tried to stick it out in a bad situation, and leaving was the best career decision I ever made.

This business requires a mercenary attitude sometimes. I'm not saying that's the way the world should be, but that's definitely the way the world is.

One of the nice things about that is knowing a lot of good people at other companies, who would be helpful to me if I was hunting for another job, because they are also mercenaries and have done some job hopping since we first met while working together.


There tends to be a self-fulfilling aspect of this. Some good people might not leave just because of a 10% pay cut -- but others would, and the ones who plan to stay will suffer the consequences of that happening.

It's demoralizing, it creates an impression that the company is a sinking ship, the workload for the people who stay will increase to cover for the people who left, and the overall quality of coworkers moves in a bad direction. Those are all pretty good non-money reasons to want to leave.

Tech workers have options, even in today's job market. If you work at the only auto parts plant in your region and pay cuts might be necessary to save the company, the logic is different.


And layoffs are even more demoralizing. They’re like pay cuts but even more extreme. Companies always factor in voluntary attrition after layoffs.


That's true, and I mentioned that what Google is doing now is also demoralizing, but consider the following:

With layoffs, you either get screwed or you don't.

With company-wide pay cuts, everyone gets screwed.


The ones who get screwed with layoffs aren't just the ones who let go. They're the ones who have to stay and clean up the mess afterwards. Also it opens up the floodgates to the possibility of further layoffs, where you might still get screwed.


They don't really need to explicitly cut TC, it's already being cut by the stock value dropping a lot and no new stock grants being given out, on top of a general %25 inflation in pricing in almost everything with no concordant compensation bump. Annual refreshers / raises this year are probably going to be reduced.

Voila! Tech worker comp was just dropped %20 and you didn't even need to make it obvious!


Maybe, maybe not. Many senior people (especially those who spent close to a decade at these companies and more) don't chase pay bumps.

Some of the best people would leave. That is a much more realistic statement to my mind.


I consider myself a pretty good employee and I wouldn't leave for that. Especially if I had projects in flight at the company.

YMMV


I worked for company that forced everyone to use their vacation every quarter (right after Covid hit and revenue dropped)

Meanwhile they remodeled some executive offices.


I would expect a mix of all of these strategies 1) cut non biz critical distracting scope which sometimes means teams or parts of teams 2) remove underperformed 3) rethink compensation for those who stay and future hires 4) don't always backfill natural attrition

This is how things even out


There's no reason to have any narrative other than the Fed raising rates.

If you've watched with absolute astonishment how despite the COVID crisis the stock market kept on climbing because of the Fed printing press, then you'll learn the lesson never to fight the Fed.

Now the directions are reversed. If the Fed could pump the stock market despite the worst economic doom and gloom, when the Fed raises rates this high into a powder keg, I expect to be surprised even more.

I wasn't surprised yet. We're not even at the same peak level of interest rates of the 2008 recession, and we're still in high inflation.

I think companies are starting to dread the depth of the incoming recession.


> ...and we're still in high inflation.

This actually isn't true. On a month-over-month basis CPI was negative. If you look at the three-month moving average, it's pretty clear the inflation crisis is over at least for now.

The annual 6% number or whatever is the wrong thing to look at, look at month over month numbers. The Fed's goal isn't to zero out the price growth before throwing in the towel. Their goal is to bring annualized month over month numbers back in line with their historical 2% target on a forward-looking basis. It's very unlikely we'll deflate back to pre-crisis pricing unless the Fed makes a big mistake.

> I think companies are starting to dread the depth of the incoming recession.

For what it's worth, we're not seeing one yet. It may happen, I guess, but so far the numbers all look quite good. That said, expectations in this regard tend to become self-fulfilling.


Hopefully we can buck that - things have been going swimmingly for the better part of a year despite said recession expectations. At this point I feel like we may well get the best of all worlds - inflation dealt with, roaring economy, recession averted.

We even still have a fairly tight labor market pushing up wages a bit.


You're speaking about US.

The rest of the world is still quite shaky. And everybody is looking towards China reopening and wondering how that economy will fare in the post-zero-Covid-policy world.


Yup, the 'soft landing' narrative we put to bed 6 months ago or so seems to be making a comeback. Fingers crossed.


People seem to have forgotten the lessons of The Mythical Man-Month: it's possible to have hired employees who are negatively impacting the overall software development effort.


> it's possible to have hired employees who are negatively impacting the overall software development effort.

Yes, but Brooks was speaking about the effect of bringing new people on to a project. His words, "Adding manpower to a late software project makes it later". However, had those same people been brought on board at the start of the project, they would not have had the same negative affect on the timeline. Certainly some people turn out to be what G. Gordon Schulmeyer called "net negative producing programmers" (NNPPs)[1], but presumably they could have been let go before their impact was a problem.

Could companies be just now laying off the NNPPs they should have let go long ago? Of course, but the track records of these companies hiring the top talent would suggest that NNPPs don't stick around long.

1 http://web.archive.org/web/20011023084845/http://pyxisinc.co...


Cant remember that sentence.

But if your project is late and you put more people onto it (more people more work done..in theory), it gets even worse.


Context from the book: bringing on new workers has a one time cost of bringing them up to speed and an ongoing cost in synchronization / communications complexity. General consensus, try to assign the optimal number of humans to as specific a task as possible and shard / divide and conqueror the tasks to minimize the headcount per task.


He wasn't blaming that on the quality or nature of the specific people you added though, was he? The GP to me seemed to imply that.


>He wasn't blaming that on the quality or nature of the specific people you added though, was he?

No you are totally right, it was just about that you then waste even more time to introduce those people to the project then it will save you time.


Yep, and in general more time on communication and coordination overhead -- ongoing, not just for the period of introduction -- the more people you have involved.

While I find this a very insightful and important observation -- I'm not sure I see much relevance to current tech layoffs.



People saying the title doesn't match the tweet are incorrect.

When she says "it's not about the $", she doesn't mean "it's not about salaries". She means "it's not about the (supposed) cost savings". And this is correct.

The power and flexibility gained by workers in the late 2010s being "reined in" is exactly about suppressing worker compensation and benefits. In a tight labor market, keeping and hiring employees gets real expensive. Coordinated layoffs are to shift that power balance back in the employer's favor and if you think that won't reflect in salaries, you're crazy.

Remember that many of these companies generate in excess of $1 million in profit per employee. That's profit.

As good as tech workers have (had?) it, the fundamental forces pushing the exploitation of labor still apply.

EDIT: corrected gender.


It really doesn't matter. The text in question is put in quotation marks, and it's not even close to an exact quote.


> When he says

Meredith is a woman.


Break the back of wfh as well…


Even if salaries get cut significantly, they might only drop to pre-2020 levels.

The job market was insane in 2021. New grads getting stock comp that used to be reserved for senior engineers. Constant emails from recruiters. Nobody seemed to have only one offer when they negotiated their comp.

Companies all thought they would miss out on talent and growth if they didn’t participate in this, and most did participate. It was a job market bubble, driven by low interest rates and naive optimism caused by inflated stock prices. More people should have seen it for what it was. Some companies didn’t let themselves go crazy, and they aren’t the ones doing layoffs.

What we are seeing now is a reversion to how things were before.


Idk about you, but im getting more cold emails from recruiters now than i did in 2021/22. Admittedly the compensations advertised do not seem to have kepy up with inflation though and are relatively stuck in 2020.


I've never seen a salary number in a cold recruiter email that wasn't a total joke, even before 2020. The effective recruiters who work for the companies that pay more are not generally the ones slinging emails to everyone they can find.


Same here.


the quote in the editorialized HN headline is nowhere to be found in the twitter thread.


With non-timeline based, tweets can be deleted / edited, some algorithm decides what each viewer sees (and it might be / will be different per viewer!) - yeah, that's plausible. I've never been a huge fan of dynamic history.


This isn't about the algorithmic feed. The linked tweet explicitly says the opposite of what the editorialized title here says it does.


agree, it’s misleading


very rare for “its not about the money” to be true in business.


Tech probably hired without regard to true business requirements as well. Makes sense they layoff in similar fashion. When you are talking this many number of positions, can they really connect each position with profit/revenue/cost


Keep in mind she was fired from Google in retaliation for speaking out against what she considered unethical behavior, so she knows exactly what is going on. That’s more relevant than her current job at Open Whisper Systems.




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