Discord is laying off 17 percent of employees

I wonder if the new IRS section 174 rules are intensifying these tech lay offs. As far as I understand it, software engineering salaries are no longer fully tax deductible in the year they are paid, instead they can only be depreciated at 20%.

i don't really get why this law was invented, what was it supposed to prevent?

I'm not an accountant, but to me it looks like the IRS was operating at an assumption that the software engineers write is not immediately consumed, but rather has on average 5 years amortization period (meaning, it's producing value for 5 years, on average).

seems reasonable iff you have a tax system where this deductability is based on the product employees produce which seems strange to be but might be normal

if I understand it correctly it means the cost of this year would be written of over 5 year each year 20%, but if you keep your employees it means in the second year you have 20% write off from that year and 20% of the previous years and so one, so 5 years in still 100% write off every year

I wonder if that would motivate companies to have a more constant number of employees or more precise a similar income bill every year.

Through it would definitely mean if you had considered layoffs this year is the year to go.

I am not an accountant, but there wouldn't be a requirement to keep the employees.

If you spent $100M on developer salaries in FY2022, you'd create an amortization for that over the next 5 years.

And then in FY2023... even if you had fired your entire software department... you'd still get to claim that year's portion of that previously created amortization.

Yes because normally, without this absurd law, you’d just deduct employee salaries from your taxable income.

That's correct as I understand the tax law. The credit carries over because it's depreciating the capital investment. Net operating losses (NOLs) work in a similar fashion. You get them as a credit in later tax years.

IANAL but have filed corporate taxes many times.

yes, I didn't try to say there is an requirement to keep them the writeoffs are base on what they are assumed to have produced not them being there so they would go one

but when keeping a job position (not necessary the same person tho) through overlapping writeoffs it will lead to a consistent 100% writeoff

not doing so can lead to spkies of little writeoff when increasing company size and the opposite when shrinking it. This would make new hires on a limited budged harder and in turn should motivate more long term planing when it comes to head count and that might lead to less head count fluctuations maybe

Yep, it incentivizes getting rid of software staff as soon as you can after they complete the work. It makes downsizing especially profitable in the short term.

No more than 10% in the first year is deductible.

5 years is the shortest, 15 is the longest. Their assumption is that 5 years is the minimum time that it provides value.

I don't think there's any real logic to it, it's just a way to balance the tax budget.

For 1, presuming that all software engineering is "research or experimental" is faulty. The vast majority of software engineers are implementing known things, and the "experimental" status reflects its reliability. Most "experimental" software isn't really doing experiments to answer questions, it's just checking whether an approach works correctly. I don't think anyone could honestly call writing an Okta integration for a SaaS app "experimental". You know that it will work ahead of time, you just aren't sure if your pass implements it correctly.

For 2, this would imply insane things if applied to other fields. What is the correct period to amortize a bridge engineer's salary over? 50 years? 100? We still have some Roman bridges around, maybe we need to look in the thousands of years. Patents are good for 20 years, so any salaries that lead to a patent clearly need to be 20 year amortization. Copyright is life + 70 years, so graphical designer salaries should be amortized over at least 100 years.

I don't think there's any real logic here, it's just a way to balance the tax budget.

The deficit hawks have routinely included legislation that included automatic ways to reduce the US deficit to be implemented at a future point in time, when hopefully Congress has sorted out whether or not such a thing is actually desirable. It's essentially a budget Sword of Damocles.

Of course, Congressional budget negotiations have been an unproductive circus show for a while, so this never actually happened and the thing that was never actually intended to go in place went in effect. With the current razor-thin majority in the House constantly getting derailed over budget negotiations, this is unlikely to resolve any time soon.

If they set it in motion and say they'll stop it before it causes pain, they have no intention of stopping it. Sequestration in 2013 was a solution to a political problem. Nobody wants to be blamed.

This particular set of regulations was from the Trump tax cuts, which were passed by reconciliation and had to be "budget neutral" as a result.

Achieving budget neutrality with a policy that won't come into effect for 5 years, that people expect to be negated, is an "interesting" hack.

...and that will come to fruition during a subsequent administration. It was one of the many time bombs set up to make the opposing party look worse come election time.

As I understand it, it's because they could pass "temporary" tax cuts with only 51% in the Senate through the "budget reconciliation process. The Republicans at the time did not have the 60 votes necessary to defeat a filibuster. Not quite the same.

https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act

There hasn’t been 60 votes for a long time. Reconciliation is how a lot of normal legislation is passed.

You have chunks of the explanation in other responses, let's try to put them together:

Since Obama became president, all legislation basically needs 2/3rds of the senate to pass if it's remotely controversial and every tax change is controversial. There is one exception though: if the bill is of a budgetary nature, and is revenue neutral over 10 years.

Trump really wanted to pass some tax cuts in 2017. But as you'd expect, claiming that a big tax cut is revenue neutral is far more than the senate parlamentarian would believe. So instead, some tax cuts are made temporary, and some tax changes are made that would gain revenue. Then the whole thing appears to be revenue neutral over a decade, because nobody expects that the poison pills at the end will actually be allowed to happen. They tend to come in 6+ years later, as to make sure that all senators and the president might also claim said increases are not their problem.

So the expectation is that a future congress will just undo those tax changes, and push them further into the future, by again making another bill that looks revenue neutral in the long run, but is just kicking the ball down the road.

The congress since the midterms, however, is even less functional than in the Obama or Trump years: So the poison pills that are not supposed to happen are starting to happen. Other cuts that occurred, like the increase of the standard deduction, were also marked as temporary, and could come back if congress doesn't do anything.

So ultimately it's all side-effects of people trying to bypass congressional rules, because otherwise we'd not see anything other than emergency spending bills passing in congress. Changes to legislation that would make this kind of dysfunction stop happening are even harder to pass. Every incentive pushes politicians of all parties to play with fire. This time we got burned.

Since Obama became president, all legislation basically needs 2/3rds of the senate to pass if it's remotely controversial and every tax change is controversial.

This is an odd way to mention (abuse of) the filibuster

It's pretty insane. How is the US going to get back to having a functional government? One side or the other needs to win a significant majority or the two sides need to start working together. I can't really see either happening.

Same reason why the Trump Tax cuts almost made PhD tuition waivers taxable.

1) Tech workers are liberals

2) Liberals being owned is good if you're an administration consumed with punishing your enemies and enriching your allies

#2 is also why SALT deduction was curtailed, to punish blue states. While I think that's accidentally good policy, it made people mad enough to flip the House in 2018.

https://blog.pragmaticengineer.com/section-174/ is a good overview and describes some of the history:

In 2017, then-President, Donald Trump, signed the 2017 Tax Cuts & Jobs act, which overhauled tax codes and reduced tax – for example, it reduced the top tax bracket from 39.6% to 37%. To make the bill pass strict budgetary rules, the Senate used a process called reconciliation: adding in tax code changes that delayed tax increases. These delayed increases “balanced out” the tax reduction.

One of these changes was Section 174, set to come into effect 5 years later, in 2022. These parts deliver the blow by making it clear that software development costs need to be amortized over 5-15 years. Most experts expected Congress to push back the Section 174 amendment to a later date, or simply remove it. But Congressional negotiations to repeal the changes fell apart at the last minute in December 2022, meaning it became law.

Amazon, Microsoft, Intel, Ford, Lockheed Martin, and other US companies created the US R&D Coalition in 2018 to advocate in reversing this change. This group concludes... "By diminishing the near-term value of R&D expenditures, the Tax Cuts and Jobs Act will reduce incentives for companies to invest in the development of new products, ultimately hurting consumers and businesses alike.”

What about VC-funded companies? For loss-making companies this change doesn’t make much of a difference. But the change does impact VC-funded companies near to break even. Most VC-funded companies close to breakeven have big-enough cash buffers with which to pay unexpected tax bills. However, these companies might reduce hiring – or even consider letting go staff.

My 2c are that big tech companies with large amounts of cash on hand wanted to be seen optically as fighting against this change... but those with cash on hand would also benefit from being the only ones able to weather the storm relative to their would-be competitors. It's unclear that incentives were aligned here among those companies with lobbying budgets.

Anything that pulls in income and/or pushes out expenses results in a higher tax liability to the IRS. It makes a lot of sense in the world of real estate and equipment expenses (i.e. items which have very long useful lives to a business), less so for labor and other short term expenses.

The change was part of the trump tax bill, which at least needed to be able to claim that it was revenue-neutral after 10 years to be able to be passed through the budget reconciliation process.

I'm having a hard time understanding how this leads to lay offs. Software engineering salaries being amortized over 5 years leads to an increase in yearly taxable income for the company. So what makes this a bad thing for the company? Are they doing the layoffs just to reduce total income to bring taxable income back down to (or closer to) 0? I.e. is this all just to avoid paying more taxes?

Small startups who were not anticipating this change may not have the cash available to pay the tax bill due on that taxable income.

Small startups almost make no profit for this to have any meaningful impact

Tech Companies that are not making profits are the most affected.

Let’s say you have $100 in revenue, $100 in salary expenses and $50 in other expenses.

Pre 174 you would be considered to have a loss and wouldn’t pay taxes on profits since you don’t have any.

However, post 174, since you’re amortizing salary expenses, you can only deduct $20 out of that $100 (actually the scaling is a little weird I believe, so it’s even worse and the first year you can only set aside 10%), so as far as the IRS is concerned you made $100 in revenues and $50 + $20 in expenses, so you had a profit of $30. So somehow you now need to find actual cash to pay for the $30 in profits when in reality you’ve paid out more than you’ve made.

This just means you have to raise more funds for something that is not returning any value to you.

Your competitors abroad don’t need to do this. Your deep pocketed large competitors don’t need to do this. They have cash to pay and they will get the money back in 5 years, a time which you may not even survive to receive that set off.

This is the worst kind of policy because it doesn’t even make the government more money (the overall tax deduction is still largely the same) but it makes things way worse for companies.

The weird scaling is what's called in accounting the "half-year rule." Any depreciable expenses are assumed to have been incurred halfway through the year, so the first year you can only deduct half of the normal amount (and the other half of that is in the last year + 1 of the depreciation period).

Thank you for explaining this in such a digestible way, I was struggling to put two and two together.

All other factors being the same year to year, this accounting change will suddenly show the company making a sizable profit. Because the R&D cost (engineer salaries) can no longer be expensed.

Exactly. How we've thought about what 'profit' is has changed.

When I bought a laptop for my business, it was amortized over... 3 years I think. Kinda nuts but, whatever. It's a couple thousand dollars.

But the example above (somewhere) with the 5 employees at $200k/each... only being able to deduct $100k of that, even assuming $1m in revenue... meaning 'profit' of $900k.... it's just crazy.

Actually, this has the most impact on startups that are close to break even or barely making profit. Let's say you make 1m ARR and have 5 software engineers at 200k/year. Prior to this tax code, you had $0 in profit to be taxed. With this change, you can only amortize 10% of software labor in the first year. Now, the IRS treats you as having 900k profit so you have ~200k in taxes to pay.

That is the point? They don’t have any means how to pay.

That's not true.

To take a simple example under Section 174 rules let's take a bootstrapped business with one US-based developer developing a SaaS product. If you pay them $100K and also bring in $100K revenue, prior to Section 174 the taxable revenue was 0. Under section 174 the business now can only claim $20K and the taxable revenue is $80K. Your tax bill is some fraction of that after you get done applying credits of various sorts.

The problem with the Section 174 change is 2-fold. It was unexpected--most people assumed it would be corrected. It also hits bootstrapped businesses hardest, which are exactly the sort of businesses we should be encouraging. VC-backed businesses have less of a problem early on because their expenses tend to be so high that even with Section 174 they aren't profitable. However even there as a founder there can be a substantial impact, because the Section 174 charges eat up your Net Operating Losses (NOLs) which you can use to offset the profit from selling the company or future tax bills.

Edit: as others have pointed out the amortization schedule is apparently not linear, so 20% might not be right. The other complication is that there are many deductions and adjustments that affect your taxable revenue. NOLs are the biggest in my experience but there are others.

Imagine you're a small business that makes $1m ARR and you employ 5 software engineers at $200k per year. Your net income is 0.

Prior to this change in the tax code, your software labor costs for that year would all count against your income so you'd be taxed on $0 in profit.

With this tax code, you can only amortize 10% of software labor in the first year so now your business just had $900k in profit as far as the IRS is concerned. You now have to pay ~200k in taxes. You have to come up with that money somehow, and for most businesses the only short-term option is a combo of reducing costs (layoffs) and loans.

In addition to more layoffs/less hiring it looks like there are a lot of undesirable side effects of this change, especially for small to medium sized companies. Including moving IP out of the US. What were they thinking?

https://newsletter.pragmaticengineer.com/p/the-pulse-75

The context of the 2017 tax cuts is important; it was/is a major feather in the administration’s cap.

I've seen some suggestions that this was done specifically to punish blue states where most of these kinds of jobs reside. I'm not sure they were actually thinking that far ahead, but I guess I wouldn't put it past them.

Or reward states that have lower taxes.

Since those states are receiving funds from the federal government you’re not really rewarding lower taxes. You’re just rewarding poor fiscal management.

The fact that the same legislation capped the SALT deduction lends credence to your argument.

I knew bracket creep was going to a land mine and did figure they included others to make the numbers work out the way they did. Now the government makes more money with higher inflation which I think is a risky alignment of incentives.

If I’m reading that right, that seems to be referring to foreign-originated IP, that’s been contributed to a Delaware corp, but is now being repatriated elsewhere to avoid Section 174. I assume the reason the associated software development activities are no longer subject to 174 is because there’s no longer a US taxpayer involved. Is this really applicable for US-originated IP? To the extent that there’s still US tax jurisdiction involved, doesn’t that just put you into the world of transfer pricing, GILTI and such?

I’m also fairly skeptical that this is all that much of a deterrent to doing business in the United States. The US had uncommonly high corporate tax rates until recently, and that didn’t seem to adversely affect economic dynamism. I mean, sure, one can avoid this particular taxation regime by (checks notes) moving the entire operation to another country, but that obviously sacrifices the advantages of doing business in the US (deep and liquid capital markets, well-known legal regime associated with investing in a Delaware corp, network and agglomeration effects, etc.) and the replacement jurisdiction is certainly going to have its own set of downsides.

It definitely affected hiring. I work at a startup that is self-funded, profitable, and at about 24 people. The tax change increased our tax bill by around $125k, so that's an engineer we couldn't hire.

Made me glad our founders are so fiscally conservative, as other startups around had to lay off some people to have cash on hand to pay the increased taxes.

What were they thinking?

"Tech companies, specifically, have lots of money. How can we get some of it?"

Is this just a Biden admin thing? Or were finance people gunning for tech layoffs for a while?

This was legislation passed under Trump, but didn't take effect until 2022.

Take credit for "lowering taxes"... push the effects of the time bomb on to a future administration. Definition of stable genius... ;)

Politically it’s a master piece. Take the credit and move blame to the next guy.

It wouldn't look like such a master piece if Trump won his re-election. It would have happened during his watch. So, are you saying he's such a master that he knew he wasn't going to win (which is contradicted by the tantrums thrown saying he didn't lose)?

The dems wouldn't have dug in their heels to oppose a can-kicking fix.

Trump runs on a cult of personality, not real policy. If he had won, he'd either use his cult of personality to ensure the poison pills don't happen or he spin the poison pills as victories because they harm tech companies. Remember, a voter upset with him once said on him "he's not hurting the people he needs to be". If the economy is harmed because of Trump admin's poison pills and Trump isn't president, that's Biden's fault because he's an incompetent leader look how bad the economy is doing under him, but if Trump is president and the economy is harmed from those same poison pills, Trump is just hurting those fat-cats who need to get taken down a peg anyways.

It's quite literally taking a loan from the future.

Passed by the Trump administration to help make the long term CBO math work on cutting taxes for the wealthy.

This is a Trump admin thing, with a delayed fuse so his successor gets blamed

The fact that, as far as I understand, section 174 rules are disliked across the aisle, yet Congress cannot get its act together enough to fix what will wreak the pipeline for arguably the most valuable and dynamic part of the US's economy speaks volumes. The legislative branch of the US federal government is in such dire need of reform.

What reforms exactly would fix that?

Campaign finance reform.

Dont see how it would fix this. The donor class absolutely wants this fixed, how would campaign finance reform help get this passed when donors already want it passed?

This is impossible for the foreseeable future given that we have a conservative super majority in the Supreme Court who see corporations as people but also special people who don't have the full responsibility that regular people have as far as the law goes. This allows PACs to spend unlimited money on elections as long as they don't wink wink nudge nudge cooperate with political candidates/campaigns.

Like the other commenter said, campaign finance reform. But also, I feel like Americans don't even discuss what other improvements they could make:

- No more gerrymandering

- Mandatory voting(You can still vote for nobody, but you have to go to a polling station)

- Voting always on a weekend

- Strict rules about how many polling places per X many people

- Preferential Representation voting system instead of first-past-the-vote.

Look at how Australia does it.

Some of these would likely require constitutional amendments. Given our threshold for passing that (38 states out of 50 must ratify), this is extremely unlikely to happen for any suggestion that is likely to negatively affect either or both of the large parties that we have.

For the remaining stuff, you need federal bills passed, so we're talking about both chambers of Congress + president. So the one party that isn't opposed to all that needs to have a trifecta, for starters. Majorities are razor thin these days, especially so in the Senate, so filibuster in the latter is another hurdle (although it could be dropped for something like this).

That's why it's such a nasty deadlock - the system is in a state wherein there are no legitimate methods to recover its operation.

While I agree with you completely, no way this happens in the USA without a dictator and well if you have a dictator then they're all irrelevant. It's an unsolvable problem.

I think if you survive(d) layoffs, then that means the company employing you now has a more long-term view of their investment into your onboarding and continued growth. So while the pain at first may be jarring, in the long run it is worth it if the move causes companies to view their developers as long-term team members rather than assets which can be depreciated right away.

Especially in vesting environments, where devs need to wait for the vesting to have made their R&D-heavy roles worth it from a monetary point of view. Well, large firms will need to give their devs enough runway now so that they can depreciate the costs over a longer period of time instead of only thinking in the short term. They can still fully deduct the salaries, just over a longer period of time. It is 5 years for domestic R&D / development and 15 years for foreign. I think that is good and will cause better treatment of developers in the long run.

The problem is that we now have a massive surplus of skilled engineers so good luck getting hired when you're inevitably arbitrarily let go.

Your mindset is only valid in the explicit context of a company

A) not having cut you

B) having cut others prior to you

As soon as that context is lost in the next two years when you get fired or find a new job, you're back to square one, except you're also competing against Joe Google Engineer.

Switching companies frequently increases comp, but it’s less safe from the point of view you brought up around starting from square one in terms of rapport and “safety.”

I think this is a normal trade off. You left a team or a company for more money. There is nothing wrong with this, but you necessarily need to start from a new context since it’s a new team. When times are tighter because of economic cycles, this means that you should be more intentional with changing a team so that you are sure you will be able to compete with Joe Google Engineer. It’s still a competition in some ways, and that’s fine.

If you find a good place, stay a while in tighter economic cycles in order to build more skills and rapport and then hopefully, and realistically based on experience, you’ll have more runway within that company even if times are bad or if your performance sometimes is low because of life events.

This article is QED that your ability to retain your employment is in question.

Until they do 5 more rounds of layoffs over the next year.

Last startup I worked for is on round 7 of layoffs / restructuring right now.

I believe that if an organization is having that many layoffs, that means they are imploding and it is not quite the same thing as these smaller rounds. So far I’ve not seen indications that software teams are experiencing this many cuts. That would significantly compromise critical infrastructure and development knowledge and domain knowledge on too many teams and cause too many products to degrade.

I don't get it: a salary is a depreciable asset? I thought that only applied to actual tangible things that needed replacement on a schedule. I'll never understand accounting... and I'm increasingly thinking that's the point.

The idea is that you're converting some % of developers' salaries into intellectual property (i.e. code), and that intellectual property is a capital asset that depreciates over time in the same way that a tractor or a widget-making machine would.

The salary is not the asset, it's an expense that produces an asset.

Ah, that makes sense now. The value of the code itself as an asset would be really subjective, but what you pay someone to write it isn't. Thanks :)

The reason amortization exists is to reduce taxes in later years:

If a company invests $1 million into an asset that earns $250k each year over 5 years, the company would otherwise see a $750k loss the first year followed by $250k profit for 4 years. By following an amortization schedule, they are taxed on a steady $50k profit each year. In other words, the taxable effect of the expense is "spread" through the years in which that asset is expected to earn income.

Wow - that is absolutely insane. I had no idea that existed. Looked it up, section 174 amendment added in Tax Cut and Jobs Act 2017 coming into effect 2022.

Worse is that it was fully expected to be repealed before becoming law, but then got stuck in political quagmire. So here we are...

It makes sense that it was expected to be repealed, it’s a cash grab from small to medium businesses (SMEs) who are growing and are at least making some money. Traditionally tax law would provide breaks for this category as an ‘investment’ because they would get more tax later out of the bigger company these SMEs would turn into. It’s a major drag at already the most difficulty time for a fledging company and would have hit me badly had I stayed in the US.

Discord isn't profitable

Venture capital investment dollars are not revenue and not taxed as revenue – so not sure if discord is profitable or what (edit: article says it's not) but the rule doesn't impact growth stage cos iiuc. Really it just impacts bootstrappers who are royally fucked, good job USA

Layoff season is becoming an annual thing in tech, isn't it?

Really need the government to start heavily penalizing companies who lay people off. Layoffs can't be a tool for a company to get ahead financially. We're ruining lives and triggering suicides with these layoffs.

How would this work? Would companies be unable to fire people except for rule violations?

maybe don't allow them to hire any visa employee for the next x years? That would make them much more careful with layoffs.

There are already restrictions on visa and employer sponsored green card applications for 6 months after a layoff, iirc.

should extend to H1b, J class visas and others, and for longer than 6 months, maybe 2 years. Give other companies a chance of getting those people, htey just proved they cannot manage them properly.

Blocking the EB GC applications of an employer that had layoffs screws over the employee, not the employer. If anything, the employer gets to have that employee tied to them for that additional time, regardless of the desires of the employee to move on.

It’s not exactly related to the parent, but in many parts of Europe, yeah, you can’t just fire someone after the probation period, and the firing needs to be for cause (which is genuinely a high bar to cross).

To the point of the parent, in a lot of Europe it’s not so simple to just lay off some small portion of the company. It needs to be justified and a decent percentage, and employees are often entitled to some compensation (some severance) to offset the layoff.

Yeah, obviously depends from country to country, but for a layoff the company often has to be in some problems. It's difficult to do a layoff when you have record profits.

Of course there are other ways to fire employees but those have their own rules.

Right. My point is that the company can’t just say “we’re not doing well, we need to get rid of a few people” and do a layoff with impunity. They have to lay off a pretty decent amount of people (in some cases like 30%) and they need to pay severance to the laid off employees. In most of Europe it’s basically a tool of last resort besides going bankrupt, unlike in the states where it’s easier and done somewhat regularly.

if you have millions in cash why would you ever fire someone except that?

No fault layoff == 50% salary severance would help align incentives.

Simple, only allow them after top management takes a heavy decrease in compensation.

I don't think its the role of the government to penalize layoffs. If a company needs to do a layoff to remain viable it must be allowed to - the downside (everyone loses their job) is worse. And trying to apply some mechanism where the government decides if its ok or not seems too intractable.

I think the approach of things like the WARN (https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...) act are more plausible. Use legislation to make the workforce more informed, resilient and ahead-of layoffs. You don't want mass layoffs crippling your economy because people are unable to plan.

It's a direct consequence of the WARN act that most tech layoffs have extremely generous severance.

So should companies be prohibited from doing stock buybacks or paying dividends for some period of time if they do a layoff. Or should they be required to rehire laid off workers before doing any new hiring? When it’s truly about maintaining company viability, I have some sympathy for the corporate position. But companies reporting increasing or record profits AND doing layoffs smells of financial engineering and socializing costs while privatizing profits.

Isn’t it net good that tech companies regularly overhire? I’d be afraid that too much regulation would end up making companies hesitant to hire in the first place. And why are we asking companies to act as charities here. That’s so against their nature. Tax them instead and have government improve the safety net.

Why not just tax stock buybacks the same or higher than regular profits? This would force companies to either increase R&D/CAPEX spending or lower prices.

That’s because it is. It is degenerate inhumane latestage capitalism garbage.

If a company needs to do a layoff to remain viable it must be allowed to

What makes you think that's why most of these tech companies are laying people off?

I don't think that - I am speaking generally.

The question we really need to ask is – why are people driven to bankruptcy and suicide because of their employment situation? Why can't everyone have a cushion so they aren't reliant on their next paycheck to have food and shelter? Why can't everyone have healthcare? Why can't we have reasonable vacations, sabbaticals, maternity/paternity leaves? These are the issues government should be solving. And when they do, companies should happily lay off as many people as they want as frequently as they want.

That severance package is quite generous. "Why can't everyone have a cusshion" = because someone has to pay for it.

Not everyone is getting laid off from Google. Most people are handed their last paycheck and shown the door.

As for "someone has to pay for it", well we already are. We have the highest per capita healthcare spending in the world, also the highest rate of medical-related bankruptcies in the world and lowest life expectancy in the developed world. We are putting 6-12% of our paycheck into social security and will likely never see a payout when we need it. Different industrial sectors are getting hundreds of billions in subsidies. The military is getting trillions.

The money is there, we just need to have the will to spend it to everyone's benefit. But no, we'd rather set it on fire instead so the wrong people don't accidentally get helped.

The rich man points at the destitute man's donation cup, and tells the poor man, "Look! That guy's stealing your money!"

Or, instead of the government dictating those kinds of company decisions, put in place a system so that you're ok if you do get laid off, like a real health care system that is not linked to your place of employment.

put in place a system so that you're ok if you do get laid off

the being laid off part itself takes a huge mental toll, regardless of material circumstances. There's a reason the mental health of phd candidates and a good chunk of white collar workers in nominally lucrative professions is in the gutter. The hire and fire hamster wheel is in itself completely pathological. The industry just has done a really fantastic job of marketing permanent insecurity and precarity as individual choice.

Sure, but the threat of losing your house, and the ability to feed, clothe, and care for your family, is also a pretty big stressor.

Yeah, you have a point... it's trickier to figure out a good way to create stability without also creating genuinely harmful rigidity too, though. I lived in Italy for a long while and you do see a lot of negative effects. People stay in jobs they hate because they have landed a permanent position. Companies reticent to hire because they're stuck with you.

I agree that a lot of US companies have behaved very poorly and casually with people's lives.

I guess I just see stuff like health care as easy wins. The rest of it is trickier.

That would slow down hiring.

Maybe that's a good thing?

Companies need to stop defining growth in terms of head count and instead in terms of revenue and profit and learn that just because you have access to money doesn't mean you should go on a hiring frenzy.

I don't think penalizing will work. I think government shouldn't constantly inflate bubbles where companies have way too much investment money so they constantly overhire until the shit hits the fan. It would have been better to slowly more away from the low interest rates over the last decade.

It's shareholder capitalism. On one hand, you get stock options in your comp that might be worth a lot. On the other, you could get booted if it means that the company's earnings per share beats Wall St estimates.

The government is totally disinterested in penalizing companies for this. How else will it keep a healthy well-supplied reserve army of labour?

More government is not the solution to all problems.

There's already a known way to combat these sorts of things... they're called unions. Tech jobs will be a lot more stable and bearable when more people understand that, and that we aren't all embarrassed millionaires.

Rank and yank

https://en.m.wikipedia.org/wiki/Vitality_curve

1. Rank everyone

2. Layoff bottom 10% or so

3. Reward the top

4. Keep it secret or the workforce will adapt by hiring bad people and sabotaging good people

Used at most companies with performance evaluations. Taught at MBA schools.

Trivia: MBAs have accomplished nothing throughout human history. Only creating overpaid executives that avoid taxes, corrupt the government, ruin the environment, make people poor, sick and make other countries richer. If all MBAs retired tomorrow 90% of obesity, pollution and corruption would stop.

Just about all companies have performance evaluations. This is not an explicit tactic in most companies.

Performance evaluations are not evaluating your performance, the evaluations are the performance. “Performance” evaluations. They’re intended to be a method to easily fire people in a litigious world.

Yeah, manager’s duty is to always find something that could be improved.

Same with interviews: gotta keep things qualitative lest someone sues you for not being the successful candidate.

This isn't an eval. It's typically "you need X poor performers, Y average performers, and Z top performers. Can't fit your folks into these buckets? Too bad!"

Correct, this isn't an eval it is "stack ranking" which was made famous by GE. Some companies still do it. But not most.

If it’s a tactic in a company, at some level it is explicit.

Someone makes the choice.

It is.

Because of bad math and pseudoscience.

Neither this round of layoffs at Google nor the last had any association with performance as far as anyone can tell.

Strong performers from the teams around have been laid off, and people who really need to be gone have not.

Ratings aren't even finalized at Google for another week to be used for a layoff decision.

There are always rankings....

Using last year's grad ratings as the input for this when this year's ratings will be final in literally a week seems ludicrous.

Used at most companies with performance evaluations.

I suspect this is not true. Evals are far more common that stacking.

Btw when you do do this, 4 pretty much never works, and generate a political layer around it.

Perversely, at the group level it raises the value of lower performers, mostly as "chips".

[at a FAANG] Just the other day my director chastised his directs for "letting low performers leave without getting fired," which is something I had yet to hear get broadcasted to a full room of people. The company's leaders would rather get credit for a URA target than do what's best for the company (in this case, not paying out severance). Tech is so polluted with this kind of thinking that I really can't wait to leave it.

After surviving what feels like a dozen rounds of layoffs over the past year, morale is already non-existent. You can go weeks and sometimes months without even hearing a peep from the people you once thought were the brightest and hardest working. The whole thing just feels in need of a reboot. Is this consistent across all companies at the moment or is it just time for me to leave?

URA = unwanted attention rate

You are talking about stack ranking. While yes, it does happen, the outcome of it isn't dictated in a single "x% people are now fired" event. There are multiple rounds of performance reviews, employees at the bottom are identified, they go through PIPs or some other similar process, and it may eventually lead to their firing or resignation. What we are seeing right now isn't that.

There are multiple rounds of performance reviews, employees at the bottom are identified, they go through PIPs

I think this is a little hand-wavy. I bet the number of people identified for PIPs by stack ranking who survive the process is likely to be in the low single digit percentage, if that.

Stacked ranking is a more subtle name that obfuscates the truth. Rank and yank better represents what it is.

The company that first applied that strategy, GE, ran themselves into all sorts of problems with that approach. Microsoft’s era of doing fairly poorly was also at a timeframe when they were doing rank and cut strongly.

Yep, and these rankings are less about performance and more about politics. You actually have a very high chance of getting an organization made out of talkers and not-doers.

That's putting it mildly, re GE. When both Fortune and WSJ ("hardly bastions of anti-corporate sentiment", with apologies to _The Insider_) are criticizing your approach and leadership style, then you have an issue.

Not to mention Jack Welch's very "Let Them Eat Cake" attitude to the middle and working classes and executive compensation.

Stack ranking people has got to be one of the most soul crushing tasks imaginable. You don't know what if any of the bottom will be cut.

Stack ranking people has got to be one of the most soul crushing tasks imaginable.

So don’t play a part in it. Is doing it more or less crushing than being sacked?

At least the stack rankers will be able to “prove” they provide value every year by way of creating stacks.

Sucks to be on any team that delivers cyclical/lumpy value (with arbitrary windowing/snapshots).

4. Keep it secret or the workforce will adapt by hiring bad people and sabotaging good people

AWS isn't even hiding it anymore ...

There’s always an annual layoff. Media just perpetuating it…

30%+ at Twitch, 17% at Discord, huge numbers at Google (anyone have a % from Google yet?)

There's definitely more layoffs this year than usual. There's always layoffs, but the size / scope of them are not traditionally this big.

I get a "ripping the bandaid off" sense of it. Like for a lot of them the assumption is "okay, this is the rest of it, and then we are reset to the new normal". No idea whether that assumption is correct, but it seems the mentality is more that than "oh crap, batten down the hatches, another storm is coming".

Like for a lot of them the assumption is "okay, this is the rest of it, and then we are reset to the new normal".

Not to say this is universal, but I read a comment here on HN just earlier that said their company said this last year... then did the exact same thing this year.

Companies lay people off. The 2010s were very unusual. ZIRP and other kinds of free money are addicting.

Mine did the same

Google are being shy with the numbers. Confirmed 'hundreds'; probably very low thousands? Maybe 1%?

layoffs.fyi says 1000

The google layoff was in the Hundreds... i.e. what they do normally every year anyway silently. It's just being played up for investors.

Aren’t these companies who historically try and avoid layoffs? To me is them changing their stance.

Lots of social and casual-entertainment companies hired a ton for the pandemic "nobody goes outside" surge too. Some of this (and the last year or two) is simply shedding unsustainable increases as everyone gets a better idea of what changes have actually occurred and will stick around.

Whether that's a 5% increase or a 500% increase in amount-laid-off though, no idea. And I do worry that the increased media attention will simply make these easier to pull off unjustly, as people get more and more used to seeing it happen.

No these sets off layoffs are way different than before.

How many people did Google lay off annually in January before 2023?

Google did not do layoffs like the one last year really ever before last year.

Eyeball test with zero context, but honestly? I doubt a 17% layoff will cut deep enough.

That still leaves them with more than 4x the employees they had in 2020 (when the product had already reached massive scale and, IMO, very high quality):

“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,” Citron wrote. “As a result, we took on more projects and became less efficient in how we operated.”

I know someone always makes a comment about "wow, X company had Y000 employees? what do they even do all day?", and I don't wanna be glib, but it really does seem like they expanded beyond any kind of reasonable measure.

If I were at Discord, and I wasn't part of an extremely core team with a direct line to revenue generation, I would be sharpening up my resume.

---

Edit: Okay, I missed this:

Discord has raised a total of about $1 billion in funding. It has more than $700 million in cash on its balance sheet and the goal to become profitable this year

That's actually a lot better than I expected. Clearly they are making non-trivial revenue, and still have quite a bit of cash; maybe keeping a still-pretty-high headcount to pursue new monetization projects is the right call.

Knowing the average SV interview loop too well, I can't imagine how many bad (for corporate type work) hires growing that fast brings in. A bunch of leetcode-hard optimized engineers being thrown into an organization that just grew from 200 to 1000 people.

If you are part of that 200 original group, you probably have a paycheck for another 5 years just answering tech debt questions

When hiring fast, there's also an element of "we'll find something for you to do", meaning that you're expected to find something yourself. This can lead to people becoming very narrow on something that the business doesn't really value

Or better yet, "We hired you to do some work" but at performance review time "tell us how you have made an impact"

Dear company, I did what you asked me to do. If my work doesn't have adequate impact, that is on you for planning poorly.

thats the meaning of working for engineering-driven company. Engineers are trusted to collaborate among themselves and drive feature roadmap, and to make an impact.

Leadership doesnt trust non-engineers to handhold engineers and spoon feed feature requests, all non-engineer types should be focused on selling/marketing product or customer support

Brilliant! As if a solid feature roadmap doesn't require inputs from sales, marketing or customer support.

what makes you think that engineering-driven cultures ignore or don't ask for input from sales/marketing/customer support?

that's the collaboration part. But the final decision over prioritization of feature X over feature Y and planning is done by engineers, not salesmen

what makes you think that engineering-driven cultures ignore or don't ask for input from sales/marketing/customer support?

The part where managers who don't partake in these efforts refuse to believe engineering estimates, engineering challenges and unknown unknowns and yet feel empowered to blame engineers in performance reviews.

Unless your client base is exclusively the same kind of engineer employed by said company, how could that possibly work well?

Goggle started it, I think it worked well for 1.9 trillion company as gogel

That's all fine and dandy when you are small, and have a bunch of generalists that will throw themselves at any problem there is.

But when you grow to the point of having a sizeable middle management layer that isolates engineers from one another, by enforcing strict area of interest for each team, you really shouldn't call yourself "engineering driven" anymore. And also, the more you scale, the more specialists you need. Specialists that aren't able, or just aren't willing to move from place to place rapidly

Discord interview questions are not your typical leetcode problems. Your premise is wrong.

The graded lunch is dumb as fuck.

“Do you play any video games?”

“I’ve been playing a lot of KSP, but I’m not sold on KSP2 yet.”

“Yeah, I don’t play that game.” STRONG REJECT

Never heard of that happening, and neither would you, since you do not see interview feedback. Please don't make up a story.

Bwhahahahahahahahaha

Anonymous shill calls named lived experience a liar. What a time to be alive!

So you did somehow get access to your interview feedback? And you’re sure that your lunch buddy gave you a strong reject and swayed every other interviewer who otherwise gave you a positive review?

Now imagine if they opened those jobs to all of us in low cost of living areas instead of demanding in person presence. They'd get better people, and people like me would be getting a decent bump even if we were only getting 50 or 60% of SF salary.

Why would they give you 50 or 60% of SF salary when they could hire someone in a real low cost area then?

Because they already hired those people. There aren’t millions of super high skilled software engineers in Argentina or where ever, there are a limited quantity, and they are likely already employed somewhere.

Exactly - I feel that folks in the US or Western Europe who are in "low cost areas" are in for a shock, as in many ways they have the worst of all possible combos. Either you're in a big "tech city" where being present (often in person) provides a tangible benefit that your employer is willing to pay for, or your essentially bidding on cost, where someone in a lower-cost country will be able to beat you every time.

I've been in tech for a long time, but this is the first time we've had a significant downturn where remote/videoconferencing options have been so good. In the past it felt like executive cries of "we'll just outsource everything!" always backfired because the communication and management overhead (not to mention varying quality levels) had been extreme. Now, though, with everyone used to remote work, why bother looking to save a few bucks hiring in Wichita when you can save more, and get just as good if not better quality, hiring from Cordoba Argentina?

Time Zone, English proficiency, familiar tax and legal regime and cultural affinity? When you get basically the same employee for 50% less, that's really appealing.

The people in the "real low cost area" aren't the same employee - I'm not saying they are less capable, but most companies are afraid of the significant hidden costs when trying to go too cheap this way.

It sounds like a recipe for ruining a product and turning a company into a dysfunctional organisation. Onboarding 800 idle people prepared to reverse linked-lists :-)

Well maybe they just have like a lot of linked lists that they need reversed? With that many people working in parallel you could really increase the throughput of the reversing process. Of course this is assuming that you previously hired people to identify and remove any cyclical nodes in those link lists.

Tell me, what's the big O of having the people working in parallel on the reversing? And as a follow-up, can you explain whether it is better if you have a team of n people doing the cycle detection to do it using a system which is eventually consistent or strongly consistent and why?

Seems like it ends up with lot features that few people asked. And then another bunch that no one asked. And then outright user hostile things like reworking entire UI time and again and somehow it being worse each time...

One of the most surprising things to me during the pandemic was the dramatic hiring spree that almost every major tech company engaged in at the same time. I was getting pings from different recruiters multiple times a month during this time, and I’m sure others were getting many more.

Today’s layoffs are a direct result of the irrational exuberance of that era.

Can someone explain this systemic hiring phenomena? A pandemic hits and every corporation thinks that's the time to hire and scale by gross multipliers? Why? Whose idea was this? How did it catch on everywhere?

A lot of companies saw unexpected spikes in revenue and wanted to strike while the iron was hot. The impulse was rational but the scale of the response was completely out of proportion with reality. But it's not like we saw hiring sprees in airlines and hotel resorts. We saw sprees in industries which benefitted from people staying at home and communicating digitally (like Discord).

A lot of companies also saw spikes in revenue, raised money from investors at sweet terms based on that revenue growth (despite it being unsustainable), and then needed to spend that money to show they were going to use it to keep the good times rolling.

Federal pandemic money plus we were still at super-low interest rates.

Now the Federal spigot has dried up (well, is back to normal) and interest rates are higher.

Not every corporation, if I remember correctly Apple was quite restrained.

The lockdowns which came about as a pandemic response resulted in a huge shift in spending - many companies were suddenly flush with cash, and many of them decided to use that cash to invest in their business, by hiring engineers.

Stock market was climbing and everyone thought digital was going to be permanently the new default, so companies tried to move quickly to land grab all this potential market.

With more engineers you could make more babies per month or something.

Investors want more growth and that translates to hiring more people to do more things.

Then it’s painful when more people slow things down because there wasn’t much process in place before the blitz hiring.

This isn’t a problem unique to engineering, you see it a lot with sales too. Leaders aren’t experienced or self reflected enough to work smarter.

As someone who joined pre-pandemic, my opinion is that we were unsustainably lean at the time. I was shocked at how small the infrastructure team was when I joined the company and things were honestly a bit rickety at the user scale we were at then. While engineering was probably the single biggest department, a large chunk of that 200 were in departments like Trust & Safety and Customer Experience (support).

We saw a huge amount of user growth during the pandemic, we massively increased the number of users that could be in a single guild (server), we launched features that asked a lot more from our AV backend (stage channels, camera video in guild voice), had to deal with a massive increase in spam during the crypto boom, expanded voice calls to Xbox and PS5 and had to deal with an increasingly fraught regulatory environment.

We also shipped a lot of user-facing features during that timeframe. Some of those ultimately got removed because of poor results and depending on your use of the platform I imagine some of those that stayed may not be particularly visible, but we really did ship a lot of stuff and I'm not going to attempt to list it all here.

Obviously, in hindsight we should have had a tighter focus and probably hired a bit less, but this sentiment that we are/were hugely bloated feels pretty wild to me from where I'm sitting.

Still -- my quick google came up with 750 employees mid 2023. So this is 125-ish employees. Particularly with 5 months severance, that seems too small to save much money (assuming $300k fully loaded, that's $40m pa) and also too small to materially impact velocity by reducing headcount and being more careful about commits.

I'd expect more like a 50% cut to really speed up the significantly fewer projects by eliminating coordination overhead and giving PMs the ability to really slash projects.

ps -- I'm not claiming it was bloated, that's (implicitly, and I believe fairly?) the ceo's claim.

The article quotes the memo saying it is 170 employees.

It’s the way HN continues to rationalize the hundreds of thousands of layoffs. Every company is bloated and few software engineers are worth keeping it seems.

This is great context and I really appreciate it. I honestly thought of Discord as being super stable even in 2020; interesting to hear things felt rickety, internally.

My sense is that Discord was exploring a lot of different ideas for monetization all at once, and that maybe the sprawl of new projects got unwieldy, esp. in 2022-23; how accurate would you say that is?

Off the top of my head I cannot recall any big features added to discord over the last few years. I'd like to know what those 4x more employees were working on.

Activities and soundboards are the ones that come to mind. Activities are a pretty heavy feature.

Maybe not engineers? Discord quickly morphed from a place where gamers yell at each other into a place where lots of communities and movements exist. Maybe that skyrocketed the need for moderation, lawsuits of people demanding that their former block party co-organizer gets un-admin'ed, abuse reports, etc?

They have been trying a lot of different routes for monetization, and over a pretty short time period. Adding lots of little things to Nitro, more community server monetization features; at one point, Discord was even trying to sell games a la Steam.

I'm sure that last one in particular had quite a lot of headcount associated, and it seems obvious that after they totally shuttered the project, they just reallocated the employees to new stuff.

They changed the icons for mute mic, and mute sound buttons. So that probably took at least a dedicated team and few months of work...

what do they even do all day?

Discord has added a bunch of new features over the past couple years. Unfortunately, they don't seem to be very useful features (at least not to me). I still just use it for voice chat during video games.

Clearly they are making non-trivial revenue

"Non-trivial" is a very low bar to clear. It's obvious that Discord simply does not need to be the scale it is. It doesn't need a billion dollars and it doesn't need a thousand employees. It's very clear that they only have the employees because the investors were stupid enough to give them that much money, and they need to find something to do with it.

Some products just do not need to be that big.

It seems most, if not all, big-successful companies use the formula to over higher and then you prune off the lowest-poorest performers - however that metric is determined.

Their eng team wasn't particularly large. ~300 was what I last heard.

I don't know how eng grew over that time, but it doesn't strike me as bloated given their scale and user base.

Discord is like nuclear fusion - always one year from being profitable.

OK, the layoffs suck, and the whole "failed to realize the pandemic growth wasn't permanent" thing is getting way overplayed.

However, these are some crazy exit packages. Five months of salary? Health insurance through the end of 2024? That's a heck of a buffer.

While the severance definitely makes things easier, layoff season is also a terrible time to look for jobs because there are like 300,000 other qualified candidates with big company credentials in the same situation as you. The cushion isn't a luxury but a necessity. In some jurisdictions it is legally required.

because there are like 300,000 other qualified candidates with big company credentials in the same situation as you

And to add insult to injury, there will inevitably be lots of sound bites from CEOs whining about a lack of engineering talent, so can we please raise H1B limits???

I keep hearing this on HN about companies abusing H1B, so I was like "ah cool must be easy to get a software job in America then; I'll have a go" (I live in the UK).

But then I actually looked at the H1B process. It's insane. Not only is there a limited lottery but it only happens once per year. It's not like you can get a job and then apply for a visa.

Is H1B abuse real or are are American HN's commenters way overplaying it?

It's both. A few companies have most of the H1B allocations through basically fraud and they hold it over those workers heads because they need a sponsor or lose their visa. https://www.livemint.com/news/world/us-says-some-companies-c...

They should reduce the probability for entries, that are submitted multiple times. So, if you apply to several companies, you still have the same chance as if you apply to one company.

Or just make companies to pay to win a slot ;)

In the broader industry, I've never seen anything that I would qualify as abuse but abuse is very real at certain firms that specialize in hiring H1Bs.

Former H1B here. The abuse is real, but what many people assume incorrectly is that it's perpetrated by FAANG companies. Those are actually pretty good places for an H1B to be, generally speaking (subject to the usual caveats wrt hostile management etc) - they pay the same they do to citizens, and it's very rare to see revocation of status used as a threat.

But if you look at the overall visa numbers from a few years ago, they are dominated not by FAANG, but by "consulting" companies like Infosys. Those are straight up sweatshops who squeeze everything they can out of their H1Bs while underpaying them (and thus also undermining the local market).

The current H1B system of limited visas has far more demand than there is supply, but it's easier to abuse by certain kinds of firms. For an American company trying to hire someone off the street that is living in the UK, the math is so bad few would try: In the real world, companies tend to only try with people that are already working for them. So if, say, Google had someone working off a UK office, and wanted to move them to the US, it's relatively OK if they don't do well in the lottery that year, because they still have an employee.

The abuse comes from companies built entirely on this: Imagine we are running a contracting company from some cheap country. We have 6000 consultants we'll be able to bill higher from the US. So we ask our US subsidiary to just file said 6000 applications. Only 2000 got accepted? Who cares! those 2000 people get moved to the US, and are now working for us, and then we contract them out to normal Enterprise companies at relatively low rates. It's not hard to claim this is abuse, as ultimately one wants to make applications for anyone with a pulse.

Some commentators are definitely overplaying it, but any way you look at it, the system is not necessarily working all that well, precisely because the cap is relatively low, the number of random Indian contractors that would like to move in is very high, and those intermediary companies are rarely great, but they have a big advantage in the system compared to a small company that just really wants to hire one guy, or wants to keep someone that came in with a student visa, and has been doing practical training.

Unfortunately there are so many competing interests that any kind of sensible immigration reform isn't going to happen, as getting the majority of the house and 2/3rds on the senate to agree on something this contentious is almost impossible, especially when one of the parties has people whose idea of the perfect number of immigrants is zero.

Is H1B abuse real or are are American HN's commenters way overplaying it?

Yes and yes.

The long and short of it is that many companies don't want to pay market salaries, or have unreasonable expectations, and the H1B system basically lets a company hire at a lower salary than market salary.

The H1B system also impacts immigrants' job portability. An H1B employee is less likely to leave a bad job for a better job, thus H1B employees are more desirable because of the lock-in.

Edit: The other half is that a lot of people "age out" of tech for various reasons and like to point a finger. Working in tech at 40+ years old is very different in an industry that typically hires people in their 20s and 30s.

Surely what's relevant is the number of H1B workers in the U.S., not how hard the process appears to be.

In some jurisdictions it is legally required.

Which jurisdiction requires 5 months of salary?

Waives hand in general direction of Europe

Germany: not anywhere close. Typical is 0.5-1.0 monthly salaries per year of employment.

Die Kündigungsfrist beginnt bei 3 Monaten und geht schnell auf 2 Jahre hoch. FAANGs suspendieren ihre Mitarbeiter ab dem Punkt, wo die Kündigung mitgeteilt wurde, dementsprechend bekommt man üblicherweise die Kündigungsfrist ausbezahlt.

For example, up to 12 months of salary in Spain (with 20 days of salary for each year at the company), if a layoff meets certain conditions (that are usually met). Up to 24 months (with 33 days per year) if the conditions are not met.

I'm wondering if by "layoff season" you mean the first quarter, or the entire last 2 years?

January of last year had more than twice as many layoffs as any other month of the year, and the first quarter of '23 had nearly twice as many layoffs as the rest of the year combined. Not sure if we'll see the same trend this year, but it does seem like there have been an uncharacteristic number of layoffs this month already.

Consider the holidays in December as well. It's possible some layoffs were finalized but not enacted until after.

Yeah. I got laid off a few months ago and I can’t even get an interview. Never had that problem before.

You're not alone. Many are seeing the same thing.

I think it seems fair. Maybe forums are biased toward the negative, but it seems like the market is tough and it is taking even highly qualified individuals at least that amount of time to find something new.

what does 'fair' have to do with anything

Being 'fair' helps company relationships with current and future employees.

Does it though? In my experience any "credit" for fair behaviour disappears very fast. Employees don't really care about fairness, they care about themselves here and now.

Equally businesses see employees as disposable, and work to maximise short term profit, not fairness. There's generally a lack of trust in one, or both sides, and that results in poor behaviour from both sides that spirals.

Sure there are great companies to work for, but all their greatness is tossed aside as soon as a better offer comes along. Employees look out for #1. Employers do the same.

People generally like long-term stability and are willing to trade their loyalty in exchange for that, even to the point of turning down a more lucrative offer. Back when companies appreciated that, you had plenty of people with a stable employment at the same company for literally decades. But then this cycle was broken when employers started to treat their employees as disposable (all while still demanding at least token loyalty!) in pursuit of more profits - and they have succeeded in teaching the employees that any talk of loyalty from a business is virtually guaranteed to be a scam, so why would the latter ever take it seriously?

In short, this is not a "both sides" problem.

One would like to hope that some of these companies act in a manner that when the shoe is on the other foot, and it is an employees market again, that they will be judged by their actions.

This forum seems swarming with people with an axe to grind against SV employees of late. As far as I can tell some people think they are well informed on the matter purely from following people on TikTok. Such as the “they only work 6 hours a week” crowd.

Not just that, the comments on these layoff posts seem to put engineering staff on some "un-fireable" pedestal but think of PMs, Sales and Marketing, Admin people as eternally expendable.

A friend worked at Google. Pretty lazy guy. A few months salary to quit, but 8 months to wind down what he worked on. In truth, one year's pay to do nothing. He, predictably, did nothing.

This reminds me of the show Silicon Valley, there is a subplot where one of the main characters is unassigned from his own project but not given a new team or project. Just, unassigned. He wanders around the building and eventually makes his way to the roof where he runs into a small crowd of other "unassigned" employees. They mostly badge into the office, head to the roof and sit up there all day doing nothing of importance.

Big Head has always been an inspiration . Maximizing gains with minimal effort . If only I could make it work in real life lol.

when people slack at their jobs and just let other team members pick it up... it seems so scummy. Someone has to have a 'challenging' upbringing to have this be their default mode of operation.

If I remember right Big Head wasn't lazy, just clueless. The fact he unintentionally failed upward as much as he did was part of the comedy.

You should watch Office Space.

https://www.youtube.com/watch?v=QAiPcPRZlBk

The main character is nicknamed "Big Head", just referencing his big ol' dome.

Nothing crazy about it if you compare to whats _required by law_ elsewhere. In the Netherlands you’ll get at least 3 months salary, possibly more if the layoffs were negotiated with a works council, an additional N months depending on your years of employment, and healthcare, well, is not tied to your job at all. Nothing extraordinary about it.

Netherlands seems to do a lot of things right, and I know the US isn't making all the right tradeoffs, but lack of safety net is one of the reasons US pay is higher.

US pay is higher because there is a bottomless pool of VC money in California, not because of onerous hiring regulations.

Discord is wildly unprofitable, it is held up entirely through investor largesse.

Things someone who has never built a company says.

With such package I would voluntarily quit.

In this (tech) job market, I would not.

This buffer evaporates very quickly in a bad job market as I learned in 2002 and 2003. I think the only "crazy" exit packages are when they throw dozens of millions after failed executives.

it takes six months to get hired for many.

I believe it's only five months of health insurance since it says "Five months of benefit continuation". It does also say "Continued access to Modern Health through the end of 2024", but Modern Health is a mental health platform.

It’s not that crazy considering all the layoffs are happening at the same time and new openings are slim. I wouldn’t be surprised if almost everyone laid off have to use all the buffer provided before they can find another job.

For any HR folks kicking around HN: When thinking about lay-off at this scale of business, how do y'all go about navigating the WARN act? Do you just mitigate it with longer than 60-day layoff compensation?

My wife was working for a bank until August of last year. One day in late August they called a meeting and told the whole department that while they were still employees for the next 60 days they could no longer come into the office and actually work. That's how they got around the WARN act - they didn't have to file the WARN report until that 60 days was up. I guess that kind of makes sense for a bank: if you give people a 60 days heads up that layoffs are coming that could result in potential mayhem.

"if you give people a 60 days heads up that layoffs are coming that could result in potential mayhem."

Does this mayhem actually ever happen or is it paranoia? I have seen several layoffs where people got advance warning of a few weeks up to almost a year. I have never seen people do anything bad once they got told they would be laid off.

To be blunt, it doesn't matter if it actually happens or not. It's about risk management. It is absolutely the norm in most companies to remove an employee's access to company resources if the termination was not the employee's idea.

Other than general goodwill, there is no incentive to give an employee a heads-up that they are being laid off. And lots of downside if the employee happens to be disgruntled and do something evil. Goodwill does not show up on balance sheets. But theft and sabotage do.

I'm not saying I like it, but I understand it.

The norm in US companies. Note that other places manage to lay people off with much more humanity.

Goodwill does normally show up on balance sheets

"The value of a company’s name, brand reputation, loyal customer base, solid customer service, good employee relations, and proprietary technology represent aspects of goodwill. This value is why one company may pay a premium for another."

See https://www.investopedia.com/terms/g/goodwill.asp

Of course it happens. If you tell people they are going to be fired in 60 days, in the best case they will stop putting in any effort, in the worst case they will actively sabotage others or steal company data and property. Just making them stay at home is always the correct decision.

Even if it doesn't happen very often, for a bank the risks are just too high.

If necessary, nearly all companies will give at least 60 days severance in lieu of notice.

More to the point, though, in this particular example I'm not even sure federal WARN notice requirements apply here - there are lots of loopholes people don't often understand. See https://www.schneiderwallace.com/practice-areas/employment/w... - looking at those bullets:

* "Layoffs of 500 or more workers at a single site or location." - doesn't apply, was only 170 employees

* "Layoffs of 50 or more workers when those layoffs comprise 33% of the total full-time workers at the location" - my guess is that doesn't apply either, as the 170 workers were spread throughout the company

* "Layoffs of 50 or more workers when closing a building or facility, or the layoffs include the discontinuation of an entire operating unit" - Again, I believe these discord layoffs were broad-based and not the result of entirely closing a single business unit.

If necessary, nearly all companies will give at least 60 days severance in lieu of notice.

They don't call it severance - it's just regular pay for 60 days. Technically they're still employed by the company. At the end of that 60 day period when the employment is terminated, that's when severance (if there is any) is paid.

This is often called "garden leave".

California has its own WARN Act with less lenient rules

There are quite a few exceptions that can be used. They are listed on Wikipedia: https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...

IANAL, nor am I HR, but I have to imagine that if a company wanted to avoid the WARN act, those exceptions would give them creative ways to structure the layoffs to avoid it.

Unless you legitimately fall under those exceptions it’s generally viewed as best not try to skirt the WARN act you’ll end up with a bunch of lawsuits to defend and pretty harsh penalties if you lose (back pay up to the time of the award plus the severance and legal fees)

Not an HR folk, but from what I've seen they often just offer at least 60 days of severance and benefits.

in this case, Facebook is navigating this by giving 5 months of severance, in excess of what the WARN act requires.

Have been wondering this, too.

the Silicon valley of the last 15 years was a 0% interest rate phenomenon, going to take a long time for normalcy to return after a decade of distortion to organic market forces

Also these companies are reaching financial maturity. It's going to be the next generation of companies to be trendy/fun/excessive IMO.

Yes. It is time for laid off seniors to take these exit packages and incubate the next generation. Be ready to draw financing when rates fall in Q3 of 2024.

Don’t be so sure about that… rates will fall sharply in a recession, otherwise inflation will run hot (see today’s print!) Rates market prices in the average outcome, but the distribution isn’t uniform nor Gaussian.

Don’t be so sure about that… rates will fall sharply in a recession, otherwise inflation will run hot

What? Lowering interest rates raises inflation.

See today's print

Can you link? Not sure what your talking about

Official USA inflation numbers ticked up slightly in December.

mostly driven by housing which has a 12 month lag and has dropped significantly in the last 6 months.

How does 0% interest rate actually affect this though? Are that many companies actually funded on debt now? Or are are sales down because their customers were purchasing with debt?

It's a knock on effect. Most software companies sell to other software companies and VC funded startups

Companies evaluate ROI for projects against the "risk-free" interest rate. When that interest rate rises, fewer projects are viable.

Fair question, but there's a pretty direct line.

ZIRP means that huge capital managers (sovereign wealth funds, pension funds, 401k managers, etc.) get very, very little money on the super-safe stuff they like to buy.

They need to make returns somehow, so if a VC is promising them 15% returns, that sounds quite promising compared to T-Bonds that return 1.5%!

But over the last two years, the yield on super-safe investments now looks more like 6, 7, 8, 9%. That makes a high-risk investment like VC much less attractive, by comparison.

If VC is less attractive, less capital flows to their funds; smaller VC funds means much more discerning, stingy startup investment.

You can get debt cheap to fund investment. Other side is that lot of money is always searching for some kind of return. With rates going up that money can go back to boring bonds, either from governments or even big reliable companies that are unlikely going anywhere.

No need to gamble it anymore on tech companies.

What do you mean by 'organic market forces'? All interest rates are decided on, from what we have now to 0%. All markets are designed, with rules, regulations, and tax laws.

Markets are a technology, they don't come from nature. Markets are an intentional product of governments. Anthropologists haven't found a single stateless society that voluntarily chose markets.

Have anthropologists found any stateless society? Whether it's mother, father, grandma, brother, there's always an older person that sets the rules and expectations (and enforcement, the key quality of a state) for youngsters, even if indirectly.

In order for what you say to have meaning, "stateless" would almost tautologically require "no market." But clearly states are themselves a natural aspect of aggregate human behavior in resource limited environments.

0% financing and you're making losses year after year after year? Maybe it's time to return the money to the shareholders instead of playing musical chairs as the S.S. ZIRP sinks.

We grew quickly and expanded our workforce even faster, increasing by 5x since 2020

Am i reading this right? Once the pandemic hit headcount went 200 -> 1000 -> 830

What is different in the user experience since 2020? I can understand needing an army of SRE's but this feels extremely bloated for a company who was able to run their product on a 200 person crew

I think the growth of Discord partially explains it- They needed a _lot_ more SRE/Scale engineers, which causes growth in HR/Management layers.

They also added a bunch of monetization stuff (discord nitro) and attempted to get more "community" based features like custom emotes/badges/profiles per server/watch party stuff.

The core experience is the same, I think they've done a great job ensuring that doesnt change! They have also done the usual software stuff, improving core outskirts like stability/performance/login methods/slash options. Its the same core product but better.

I'm sure their userbase grew in a big big way during the pandemic, but honestly, by the beginning of 2020 Discord was already a massive operation. How much more headcount could pure scaling explain?

I think you're more on the money with the miscellaneous other projects. They were even trying to sell games through Discord at one point.

They hired 800 engineers to create the soundboard. That is basically the only notable feature in the last 4 years.

They also completely ran the android app into the ground.

I guess they are building other products and trying to diversify, like a game store that flopped within Discord. To make the progress/maintain what they currently have, yeah, you wouldn't even need 200 people if they were halfway decent.

Unlike Twitter or Twitch, they have to diversify, as I believe they are burning money on their core product. The benefits of Nitro is not much. But they aren't going to become profitable by paying engineers $400K on bad ideas and keeping the engineers on reserve duty, which they have probably been doing.

User experience? Lots of spam about new features.

Senior Executives experience? They look bigger as a company.

I can understand needing an army of SRE

As an SRE I can assure you, you don't need an army of SREs for a singular product.

Since 2020 they've screwed around with the UI several times and have added stuff like forums and threads.

I basically live on Discord these days. Love it. It's one of the best pieces of technology I have ever used. I hope they figure it out.

It's just a chatroom. People have been doing that for ages. A (poorly navigable, well made) chatroom is the best piece of tech you've ever used?

It is not just a chatroom when done correctly.

And yes, I've been in chatrooms for literally ages (since the early 90s,) and Discord is amazing technology. As an example, the ability for multiple people to share video at the same time seamlessly is unmatched.

From my POV - the joint experience, with friends, is the best combination of party line / group text / watch party / joint experience available on the planet.

No, it is just a chatroom when done correctly. Chatrooms have different forms, long and short.

You mean stream their screens or share webcam stream? I'm confused how that is new.

Your POV just means people are using chatrooms again in a modern PC environment. There's not much to credit Discord with.

I really don’t think you’ve used Discord enough, especially when it was getting big.

The smoothness of the experience was unparalleled.

OK. We can just agree to disagree.

I just deleted my discord account after realising I live on it way too much. I will miss the people I met there, but it was consuming my life

It's definitely the people that keep me on it and engaged, and how easily the software makes it happen. I've made a lot of friends, and it is nice to spend time with them there.

What servers?

how does discord survive? they also seem to have a large spam issue and they are stubborn on not implementing obvious features

What features? Asking as someone who doesn't use discord much.

bulk removing spam posts

Is the spam more like AI generated spam which is hard to detect?

no, spam users spamming with invites

Only being able to receive a DM from someone after approving a friend request. Last I checked you have to enable this after installing.

It should be the default setting.

I'd also love to see their storage and bandwidth bill. They allow users to upload unlimited files with no retention limit, and have now upped the single file limit for Nitro users to 500mb. As a user I'm certainly not complaining, but surely it can't be sustainable

I suspect there's a huge benefit to deduplication for things like gifs and memes and emoji for them. But yes, still.

Frustrating, layoffs seem to be back in full swing. I posted this comment just yesterday, https://news.ycombinator.com/item?id=38945990, and since then HN had articles about Google layoffs, now Discord, and I also saw that FullStory had a pretty big layoff.

It really had felt like things had stabilized a bit (at least for software engineers) in the fall. Was that just the lull before the storm?

Cruise, Spotify, VMWare, and Unity were among the companies that had sizable (15%+ of a large group) layoffs before the end of last year. I don’t think it ever really stabilized.

But Cruise, VMWare and Unity's layoffs were all very much company-specific execution issues - I'd expect to see some layoffs like that even during boom times. Of that list only Spotify is really in the "we hired too much and now we're downsizing due to economic conditions" boat. In fact, I remember thinking "That sucks, this is the first one of those I've heard in a while" when the Spotify layoff was announced.

VMWare's is because of M&A. I wouldn't classify it's layoffs for the same reason as Cruise, Spotify, and Unity.

I started to bookmark all the layoff stories to see how many of them.

No need.

https://layoffs.fyi

https://layoffs.fyi/

I think many companies are anticipating a significant downturn in the economy and are trying to get ahead of it. Layoffs help stock prices almost immediately and management get bonuses for increasing the bottom line.

Workers are defenseless. Save your money in case you're laid off. Work less if they keep you on.

Let management be rewarded by nothing more than short term monetary gain. Don't give them extra productivity.

Canceling my nitro

Heh, I cancelled my newspaper sub once they went hard-paywall. I was happy to support the freeloaders but not once they axed them.

Made for a confusing desub call.

I’m sure they’ll come out ahead but at least I know I hurt their user-hostile project’s ROI a bit.

I basically don't think Discord is ever going to be able to support my platform of choice properly at this point (Linux).

I hope this company crashes and burns, especially for what they've done to documentation availability across projects.

But... they support "your" platform? It is running stunningly well on Linux. What are you talking about?

Screen share with audio. Basic functionality missing from it.

There are third party clients that add this functionality.

Not familiar with that issue, what did they do?

Thank you for your service.

Reminds me of YouTube Red (as it was called at the time) where they were really pushing these original premium films. But my favourite part about YouTube is that I can share the videos I watch. As a subscriber it was actually doing me a disservice to lock them up because I wanted my friends to watch them and discuss.

I absolutely picked the right year to become a solo indie game dev

(after I was laid off :P)

Can't get laid off if you're the only employee

Try having an unhappy spouse..

how's that going? Not being sarcastic... i'm envious :)

I am teetering on the decision myself. Have you enjoyed it?

How are you supporting yourself?

Doing that a bit in my spare time (hoping to get a game into Steam early access later this year, and I should be able to get a small mobile game released, it's already about 2/3rds of the way done).

I'd consider going full-time indie, but then there'd be zero incomes in the family, instead of just one (partner is quitting her job and taking a break soon).

Best of luck to you!

Many sub-contractors right now are "naming their own prices" — but from my POV (as a construction consultant, retired electrician) being a residential GC right now would have been "a tough christmas bonus."

Hoping things swing better, but everything is in cycles. I definitely do NOT believe that AI has NOTHING to do with this (double-negative)...

What?

I'm providing perspective from non-IT/CS career (residential construction), which is booming for smaller trades (but not as a whole).

Being a homebuilder right now would not be enviable (because it is too expensive to build/buy right now).

I see, thanks for clarifying! Your mention of AI, is that with respect to residential construction or tech layoffs?

I know few people that haven't used ChatGPT (or similar LLM), both technical and construction -types. Even fewer follow-up with "it is useless" (except initial users), unless their ego is clearly the motivation (e.g. lawyers, accountants, top-brass). i aM SO teH sMArTeST

#A.I'mReplaceable

As for AI in construction: I trained IBEW in commercial spaces, and have seen video footage of basic device layout being directed by a mobile bot (which follows blueprints and marks walls accordingly). I think oldwork construction is much safer than newwork, as far as AI-directed replacements are concerned.

700 million in cash is a massive warchest to be sitting on. I’m still doubtful on their path to profitability but having looked at their financials that are readily available, I’m actually more optimistic about their long term prospects. Absolutely sucks for anyone losing their job but assuming they actually deliver on the claims made here, it is an entirely reasonable severance package to me.

Park it in 5% bonds. Can the employees beat that for making rev for the company?

Hopefully those were the guys that have been mostly ruining the mobile app UI over the past couple of years. Discord is the only app I've felt the need to turn off updates for.

discord was done for me when it became whatever it is now than it was envisioned earlier.

I have to imagine some of these single product companies (Zoom, Dropbox, Discourse) will eventually get rolled up to make some office suite alternative to Mircrosoft Office and Google Workspace.

gotta cover the midjourney cdn bill somehow

I was unaware they turned down a $12 billion acquisition. I think that is pretty insane even in the 0% interest era.

Considering all the useless crap Discord is bundling into the app. They definitely had too many hands on deck. So much spam whenever you open the app.

Can someone answer this question for me? By now, a ton of companies have done layoffs explaining that they overhired during COVID. These hires had to have come from somewhere, presumably other industries. What happened to those industries? Do they not want workers back? Did those jobs go away? Or do people just not want to go back to them?

Like I said before and as predicted [0], its not over yet for the layoffs.

More layoffs to come as the tech industry begins to correct further. Especially VC funded startups.

[0] https://news.ycombinator.com/item?id=37924095

Hopefully it's the people who designed the new mobile app.

170 employees at average IT salary of $100,000 = $17,000,000.00USD.

Saving 17 million a year is a lot. I feel sorry for the workers.

Back to IRC

Hmm. Coordinated effort to depress salaries? How did that work for Steve?

Good management. But you can buy stickers and stuff

I wonder if this yet another layoff as a result of the R&D tax change for SWEs

“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,”

Turns out ordering people back to offices is bad for the economy. Less disposable income and free time means people spending less sharing anime pictures on discord.

Time for them to cash in some more on the user data and metadata they are selling, I guess.

Why these folks don't blow the whistle is beyond me.

So this is just a new annual tech industry thing yeah? Because every year it happens, and always the same excuses. This screams of a boiling the frog strategy.

Do you think all the institutional knowledge that 17% took with them was documented somewhere in an internal Discord server?

Going to be a lot of lay-offs this year as employers reset employee expectations.