If the company fires hundreds or thousands of people and there is no visible dip in the productivity, is it really a bad thing? One thing that is baffling to me is that these companies can fire 10% of their workforce and they just keep on chugging without a hitch. The bullshit job phenomenon is the problem here.
I'm pretty sure a lot of this is connected to the bond market. Companies are running out of operating capitol. When they try and get an operating loan the terms are onerous. Rather than refinance they are electing to perform layoffs to maintain solvency.
It does not matter how good you are doing in contrast to previous years. If your loan comes due and you can't afford another one to keep that revolving credit going you need to free up the capitol to pay.
I mean, if companies like that didn’t run such a huge deficit, they might be able to get more favorable loan terms.
It’s not about running a deficit (most are free cash flow positive), it’s about improving returns on capital with leverage.
I'm financially illiterate, but what does this mean? Companies have the revenue to pay their employees, but they choose to terminate them instead, because... why?
Hey, SWE who happens to have an MBA here.
Theoretically, if a company has money to pay employees it keeps them if the present value of their project is positive, and terminate them if the present value of their projects is negative.
Let's say an employee earns $100K this year. The project they're working on this year will generate 40K of revenue in 1 year, 2 years, and 3 years. Is the project worth doing?
Let's assume the discount rate is 5%. A dollar now (which we call 'present value (PV)') is worth $1.05 a year from now ('future value (FV)'). And 1.05^2 in 2 years. And 1.05^n in n years. And a dollar in n years (FV) is worth 1/(1+discount)^n dollars today (PV). It's a mechanism similar to inflation, or paying interest. (IRL the discount rate is the WACC + some factor for riskiness, but that's too much to talk about.)
Let's say the discount rate is 5%. Is the project worth doing? The present value (PV) is -100K + 40K/1.05 + 40K/1.05^2 + 40K/1.05^3. So if you approve the project, the future profits and expenses are as if you earned $8,930 today. You approve the project.
Let's say interest rates go up, and you now need to use 10% as the discount rate. -100K + 40K/1.10 + 40K/1.10^2 + 40K/1.10^3 = $-526. If you approve the project, you will lose money. So you don't approve the project. Now you don't need the employee anymore, and you get rid of the them, by reassignment, reorganization, or layoff.
But won't the projected value of the project go up with the discount rate? Why would the project still only make $40K on year 3, rather than now making $40K*1.10^3?
In reality, the projected value of many such projects were either never accurately measured, or allowed to differ from the "measured" value for a very long time.
The projections would go something like $0 two years ago, $5k last year, but then $100k next year, $5mm year after that. One day? $1B, easy.
There'd be precious little evidence to support the exponential growth hypothesis, while having 10 assigned engineers earning as much as their peers in more predictable domains.
It's easier to justify such ideas in a big, rich company when the risk free rate of return is near-zero and the profit center of the company is compounding (the growth in Ads justifies the negative ROIC everywhere else).
But when your profit center is wavering and showing worrying signs of stalling out (as Google and Meta did in 2021/22), the calculus shifts dramatically.
When you manage a company not for "growth" but for "value" (which is an inevitable part of the corporate cycle), these projects and the employees behind them are decreasingly seen as a potential source of future profits and more as a waste of increasingly valuable cash.
The other 2 replies seem accurate, but I'll also reply.
The future earnings should go up with inflation, but not the discount rate. The government adjusts their interest rate to maintain the rate of inflation around 2% or so. The government interest rate is often around 5%, but can vary from 0 to 20%. The discount rate (or technically the cost of capital) is the gov't interest rate plus 4% or so (the higher the better for investors).
Rent changed in that scenario, not inflation. So the project wouldn't make more since money isn't worth more, you just get more ROI on external investments making internal investments less lucrative in comparison.
It's a lot simpler than that, firing people was earning 30x return in stock price. Almost no one's actual revenue to the company was worth that. The market has created negative human incentives.
The person you were replying to is explaining why firing people "raises the stock price". And yes, it really is that complicated.
Firing people whose salaries have a dramatically positive ROIC for the company does not raise the stock price, it lowers the stock price.
The mistake, in retrospect, is the executives': they should not have over-hired in 2020.
I know it's a bizarre silver lining, but to the extent there is one, workers got capital (in the form of SBC and cash) that they otherwise "shouldn't" have. If those companies had been run more effectively, most would have never been hired in the first place.
It's kind of a crap silver lining, because we psychologically feel loss [of a job] 10x more than gain, but the realistic "market-optimal" alternative was not "I have this cushy, high paying job forever", it was actually "I have never had a cushy, high paying job".
Basically, it's not about piles of cash. It's about the rate at which those piles are changing, and how you can allocate capital to min-max those rates of change.
In an environment where the "risk-free rate of return" is secularly-higher, the floor of minimal necessary productivity goes up.
Let's say the ROIC of investing $300k "into" an employee is $310k (3.33% rate of return).
If the risk free rate of return is 1%, you take that employee. If it's 5%, you fire that employee.
I think the reality is that the typical ROIC was above the typical salary, but that there was an inflection point that they crossed in the hiring spree of 2019-2021.
If you're a capital allocator (CEO), your responsibility is to maximize ROIC for shareholders over the long run. In environments where you're not absolutely confident that your eventual, steady-state employee ROIC will trounce (i.e. 2-5x's) the risk free rate of return, you should generally favor returning capital to shareholders (with dividends or buybacks) instead of putting good money after bad.
I work for a company that does something that I guess is a bit unusual - they use the revenue from our customers to pay employee salaries. If you would have asked me, this would seem like the obvious way to do things, but I'm told that debt is very important for some reason or other. As Homer Simpson has been known to say, "I don't know how the economy works".
You would think that this would be an acceptable approach, but MBAs have decided that this is not the case so I don’t know.
Except all tech giants do just that, yet they fire people. Google has an amount of cash in the bank comparable to all the help that has been sent to Ukraine (though there are also many things that Ukraine gets that are not really measurable in money). Sent, not "promised" or whatever else some states do to make themselves look better.
It's about percentages. If the CFO expects that the company can earn 10% on any capital, and they can borrow at 1%, then they will do that. In effect, this means that they will make 9% for free. Even more so, the CFO's bonus probably depends on the net income, so it's a great deal.
It's all fun and games until the tide goes out. Then you suddenly might need to rollover the debt at new rates like 6% while the company earnings also go down because everyone can spend a bit less. Suddenly, you might lose a few procent (or more!) on the loans. It's a bit of a double whammy.
IOW (as I've said before and been throughly downvoted for before): short-term profit comes before long-term sustainability.
When interest rates are very low, companies are incentivized to borrow more as they can get better returns by investing their own cash flow into assets with predictable returns. When those interest rates go higher and these higher interest rates are coupled with harsher terms, then the ability to invest decreases, companies view reducing headcount as the way to survive to the next phase.
I'm told that debt is very important for some reason or other
I can help you out here :)
In addition to revenue, debt is a source of funding for investment into growth.
For example, if you can get a return of 8% on an investment, it make sense to borrow capital at a 5% rate. But not at a 10% rate.
How very dare you suggest that organic growth is the way forward? Everyone here knows that unless you've hit your series c and are soaring for unicorn status then you might as well just not exist at all.
Congress has decided this is unacceptable for engineering salaries.
but this is not true of the giants like Microsoft and Google right?
They chose to fire thousands and yet have sufficient to invest further into markets all over the world.
Burn and churn is just much easier and lax labor laws do not prohibit such tendencies!
They elected to do that because the 1 billion dollar write down yield 300 billion in market value -- firing people literally raised their market cap more than what those people could earn doing a real job earning real revenue.
To be clear, this is not people being fired for bullshit jobs. This is people being fired because their 1 billion in revenue is a fraction of the 300 billion in stock price opportunity.
Ask me how I know...
...how do you know
I think both scenarios can be true. Let us not deny that there are worthless employees and worthless jobs, which tend to accumulate in large organizations organically, and warrant periodic correction.
Yup. And this is why smart companies avoid that game.
I know one regional company who sells nationally/internationally which has done that for decades. Decades ago, the owner asked the local bank for a growth loan for some equipment and was turned down. The next week, he found out that one of his employees, who depends 100% on his company for income, went to the same bank for a motorcycle loan and was approved. the business owner was so outraged at the bank's stupid decision-making (if the business isn't good for the money, how will the employee be good for it?) that he decided to never use bank debt for growth again. That was in the 1960s, and the company is doing great, focusing on product and service and not financial games, with very expansive and expanding facilities and workforce. The regional bank was absorbed long ago.
Remember: no matter how much banks advertise being your partner and friend, they are not.
They're not your friend, because they're in the business of making money.
Unless that business was the only employer in the area, the owner was basically just having a tantrum over the idea that different kinds of loans for different amounts of money might have different decision-making processes behind them. When my credit union decided to give me a car loan, they didn't look into the solvency of my employer, they just saw that I have good credit and a steady income and took a safe 5-digit gamble. It may have hurt the owner's feelings to essentially be told "we're pretty sure we can make our money back on this $1000 motorcycle loan which has a very easy-to-deal-with collateral, but we don't want to give you a $100000 for specialized equipment"
Even if you see it that way, the result of his decision was excellent, and likely superior.
I've literally dealt with banks (US state/regional scale) as a technology business with a loan that was absolutely current and on-time every one of scores of months, and we were running profitably (small, but definitely positive). Yet, when the bank started having problems in their real-estate sector, they came and called in OUR loan. We had to seriously scramble to have it not put us out of business, cold. There were several other businesses in the area, also non-real-estate, that were caused to fail in this bank's BS moves and made the local papers.
It is not just that bank's business is making money. They have a whole bunch of internal incentives that make it perfectly OK in their eyes to fck over anyone for no reason other than to make their personal numbers this month look good. And they don't hesitate to do it.
Instead of minimizing costs by performing massive workforce reductions and while not earning profit, corporate officers could just... earn some profit to keep the momentum going. And to go beyond, beyond initial starting conditions.
But that's asking for too much from the average corporate leadership. Efficiency and technology acquisition are too much for these agents of the entrenched hegemony. So, what we have right now is a form of nationalist socialist welfare that looks like our current financial-administrative system. There's some momentum and inertia, but it's all being wasted on keeping unproductive fat cats alive.
And that's okay. Because smart people will be leaving this oppressive Egypt under a stubborn Pharaoh. For much better lands and pasture. And while that happens, profit will start to look like a heinous crime to these welfare recipients. Who naturally will not be invited to the awesome parties that's coming in the future.
Something like Eloi and Morlocks, if you wanna get biological about it. Eloi and Morlocks, though, are just the starting point. H.G. Wells didn't have anime music videos to inspire him to think about the more accurate possibilities of a matrix of biological degradation and environmental niche adaptation.
You know it's satire from the title (and the first paragraph) because it uses terms like "fired" and "let go". Nobody uses those anymore.
You're "impacted".
This needs further dehumanization: your "role" is impacted.
“there’s nothing that can’t be solved by another layer of abstraction”
“Succeeding downwards”
"promoted to customer"
If companies started saying "We have taken the decision to fire you", people would complain about it being too harsh.
If they say impacted, people complain that it's euphemistic.
In the end, people just want to complain, and they're going to do it either way.
Yes, because they are getting fired!
Pro tip, it goes both ways.
"Unfortunately, you have been impacted by my resignation"
Euphemisms!
"transitioning"
And the teams are rightsized!
A term which I hate because potentially everyone on the team was “impacted” if they have to do the same work with fewer people. It’s just one person who isn’t getting paid.
"Poor people used to live in slums. Now the economically disadvantaged occupy substandard housing in the inner cities. And they're broke! They're broke! They don't have a negative cash-flow position. They're ****ing broke! Cause a lot of them were fired. You know, fired. Management wanted to curtail redundancies in the human resources area, so many people are no longer viable members of the workforce."
George Carlin. https://youtu.be/vuEQixrBKCc?si=cLfi4-hH78PA6ZEg&t=217*
I can't decide if I'd prefer to hear a bunch of nonsense from an executive at the moment of being let go, or no explanation and just an email saying I'm part of a layoff.
The nonsense (thank you for your valuable contributions) makes me nauseous. I'm so sick of that shit. We as a society need to stop sugarcoating (denial, rationalization) and be more candid. Otherwise the words just become more and more meaningless and nobody can trust anything anybody says.
So I know which I would choose, is what I'm trying to say. Like a band-aid.
Executives and bloviating. Peanut butter and jelly unfortunately.
You may find value in bullshit.js: https://mourner.github.io/bullshit.js/
You’ve helped us bullshit so much that the only possible way for you to continue to help us bullshit is by no longer working here, effective immediately.
There's a third option - no warning at all, your laptop is remotely disabled, and you have to figure it out yourself.
I didn't get my paycheck last Friday. And they took my red stapler.
If you could just go home for the day, thad would be grrrreat.
I'll be forever proud that when I got the call from my senior manager, I started with, "so you got some bad news for me"? No matter how bad the situation, it seems like my snark will never fail me.
i'd rather be told "game's the game" and let go without the corpo speak.
I’ll take the latter when/if it happens.
The young lad who blames capitalism has obviously never lived under socialism.
What's interesting is that capitalist systems often make socialist systems poor through sanctions, military intervention, & other underhanded tactics. It's a geopolitical game of control & socialism stands of defiance over the banking establishment. Times seem to be changing though as the commodity producing nations are gaining leverage & winning wars against colonial nations. The problem for the colonialists is if the peasants walk away, peasant work is no longer as inexpensive & readily available.
I'm all for free markets, but the end-game of capitalism is power cartels backed by military intervention...not free markets. So socialism seems like an interesting alternative to collaborate. That being said, rhetorical systems are used to convince people to adopt an underlying real political order.
Mate, you want to tell me that a country that had 1/6 of all the resources of the planet collapsed into oblivious because of the Western sanctions and mean Western banks? I'm sorry, I'm not buying it.
Authoritarian/Totalitarian structures always flop. Unfortunately, they also tend to screw millions of lives in between. They also like put the blame on others and gaslight. Like a crazy doomsday cult.
Oh mate... The so-called socialism is a much worse mafia which wouldn't even allow you to call them mafia. The way they disregard human life and any human morals would damage your mental sanity if you ever had to face it. I hope you wouldn't. I wish you all the best and a great life, and hopefully you would never have to face the evil that the socialism is.
Mate, you want to tell me that a country that had 1/6 of all the resources of the planet collapsed into oblivious because of the Western sanctions and mean Western banks? I'm sorry, I'm not buying it.
Are you talking about Russia? They seem to be on the upswing by all standards. Food is plentiful & inexpensive compared to the inflation that we see in America with rampant homelessness...while billions are sent to buy weapons for foreign countries. You seem quite emotionally agitated.
Authoritarian/Totalitarian structures always flop. Unfortunately, they also tend to screw millions of lives in between. They also like put the blame on others and gaslight. Like a crazy doomsday cult
Gee...are you talking about Pax Americana Exceptionalism? With NeoCon/NeoLib crying about "human rights" while supplying weapons & escalating conflicts to genocide populations of brown people?
Oh mate... The so-called socialism is a much worse mafia which wouldn't even allow you to call them mafia. The way they disregard human life and any human morals would damage your mental sanity if you ever had to face it. I hope you wouldn't. I wish you all the best and a great life, and hopefully you would never have to face the evil that the socialism is.
I'm glad that I don't live in a country controlled by Nazis, yes actual Banderite Nazis, brought in by a US backed coup...where young men & women are picked up off the street & sent to the front lines to die. All because the country is dissuaded from making a peace agreement by British & American politicians. Lets get real. This insanity needs to stop...or people will look for alternatives...which is happening as we speak. I hope we can focus on what is constructive again & be on the right side of history. The age of Colonialism is nearing its end.
Food is plentiful & inexpensive compared to the inflation that we see in America
Is that why Russian TV channels are showing Putin heroically promising to "personally" "solve the issue" of egg prices? [1] Is that why Russian authorities are telling people to grow their own bananas? [2] This strongly resembles the USSR in its final days. Even the old jokes from that era are relevant once again:
A man goes to a doctor and complains: "Doctor, there appears to be an issue either with my vision or my hearing." - "What makes you say that?" - "What I see doesn't match what I hear."
[1] https://www.reuters.com/world/europe/putin-rare-apology-over...
[2] https://www.newsweek.com/putin-banana-ban-shortage-ecuador-u...
These Banderite Nazis, are they in the room with us right now?
Are you talking about Russia?
No, USSR. Russia is a capitalist country that is quickly becoming a totalitarian fascist country though. Which hugely brings it back to the socialist times.
Oh mate, you need to get out of the far right bubble.
In an open market of ideas, critiques should always be welcome. Pigeonholing critiques of capitalism as automatic support for "socialism" is the opposite. Capitalism is basically a first step towards sanity, not some panacea.
For example, you go on to bemoan authoritarianism. But a corporation is an authoritarian structure, and your critique most certainly applies. The redeeming bits are that they're generally smaller scale than a country, and that there is often a higher level power structure that can moderate its worst incentives. But the same obtuse aloofness/politicking/groupthink do apply, as caricatured by the linked post.
What about when companies are doing layoffs but still continue hire at exactly the same time? Sometimes, they even hire for the same positions that were just laid off.
Are there ever conversations where employees are asked to take a pay cut instead of being laid off?
And what about companies who do layoffs and then have to scramble to try to re-hire some of the very key, crucial people that were "accidentally" let go?
I wonder if those accounts ever make it back up to the C-level executives and the board of directors.
Personally I doubt it and I don't think they'd care if they did.
large companies move like cogs. one team suddenly sees the value of X role that another team is letting go of. but i like how some of them don't try to help existing employee switch teams.
I have twice been asked to take a pay cut: once long ago at a startup when the funding dried up, and early in the pandemic when my (fairly large) employer got nervous.
Well, the second time it wasn’t really a request.
I've seen it done for consultants before - in fact was working for mega financial services company in the years heading up to the 2008 crash. When it hit, they told all the consultants from the big consulting firms (i.e. Anderson etc) they needed to take a 50% cut if they wanted to stay on - almost all accepted the new rate.
Months later, when things continue to go really bad in the economy, they told them same firms, they needed to take another 50% cut (so now down 75%), most took that as well, but not all. Those that didn't take it largely found themselves unemployed for a very long time.
Just goes to show you how bloated those rates were to begin with.
Isn't this kind of weird? Some try to blame capitalism, but AI is not capitalism. It is technological progress. Every president and dictator, no matter what type of economy or political system they have, are trying to develop AI right now. It's something that goes beyond any economic system and is a fact and force that can't be stopped and one must simply reckon with.
What we have in the US today is not capitalism. It's cronyism, soft socialism, and an increasingly government-led economy.
Capitalism defined: "an economic and political system in which a country's trade and industry are controlled by private owners for profit." When the government gets its paws out of the economy, then we can blame our ills on capitalism. Until then, don't call it capitalism.
Capitalism fundamentally depends on government enforcement of contracts and property rights. It is not possible to have capitalism without government interference in the economy.
Not just capitalism. I'd argue it's not possible to have much of anything without government enforcing contracts and property rights.
In a socialist economy (in theory!) the lives of people have intrinsic value regardless of their productivity. In a (purely) capitalist economy, a person's value comes instead from the value they contribute to society. Under socialism, work is a necessity to keep welfare solvent. Under capitalism, a worker's welfare is the market price of their work.
Under (ideal) socialism, automation reduces how much human labor is required to provide welfare. Under capitalism, automation displaces workers from jobs, creating structural unemployment. It's up to the workers to justify their continued existence by re-skilling and finding a new job.
A major problem with socialism was laziness. If income isn't tied to work, why work at all? And if nobody works, there's no income. Usually, this is answered by authoritarianism - you must justify your existence to the Party, rather than the market. This is less relevant with automation, since machines don't need financial incentives. Socialism should become increasingly viable as automation makes UBI cheaper.
...whereas the endpoint of capitalism, it seems to me, is serfdom, as it becomes increasingly difficult to justify any wages, so a person's value becomes purely a function of the capital they own - such as shares in increasingly autonomous megacorps.
Oh a semantics argument, lovely. Let me ask you this, what percentage of US trade and industry isn't controlled by private owners for profit? Shareholders count as private owners in case that confuses you since it's public stock that is privately owned. Once you answer that, let me know what percentage is required to classify a country as capitalist.
"We are the horses building a car to replace horses."
...said the retired horse in its shed in 1886.
daily reminder that you are probably not cynical enough about your companies sociology:
https://www.ribbonfarm.com/2009/10/07/the-gervais-principle-...
i certainly wasn't
We blow back and forth, windlessly, in the void.
We imagine the story of it, and sell it to others.
From this we build our world from nothingness.
Did you have ChatGPT generate this?
Ha no. If you read the essay you’d understand.
Thank you for the reply! Yes, Venkat's essays tend towards logorrhea, so I don't quite like them (though the kernels within are insightful). I went back and skimmed this one again, and your verse makes more sense now :)
Ah. I'm old enough to remember the last time automation was going to eliminate all the jobs.. back in the 80's, when robots entered the chat and manufacturing jobs got outsourced to Japan. (side note, interesting to read that the nikkei finally surpassed the previous record set in 1993 or so).
But now, it's interesting because, well, for one, I'm actually old enough for it to matter to me now. And two, I actually work in a field that may be impacted.
Perhaps it's time to invoke Martin Niemöller's poem:
First they came for the garment workers
And I did not speak out
Because I liked cheap clothes
Then they came for the blue collar assembly line workers
And I did not speak out
Because I liked cheap cars
Then they came for the journalists
And I did not speak out
Because I was not a journalist
Then they came for me
And there was no one left
To speak out for me.when robots entered the chat and manufacturing jobs got outsourced
FWIW: Car manufacturers have started moving back away from robots because productivity gains have not quite materialized. Turns out humans are really really good at solving small problems in real time without needing a bunch of hand holding.
Research in a highly automated German car body production plant found as many as 20 to 30 human interventions per shift were needed to prevent major flaws in quality and productivity. Agile, cost effective, and high-quality operations in the automotive industry require adaptability and the ability to change quickly, and humans can be more flexible and capable than production line robots.
Human labour also won in studies conducted by Toyota comparing the time it took people and machines to assemble a car.
https://www.performancedrivers.com.au/single-post/robots-hum...
This was not apparent in the mid 1980s when the robot panic was definitely in full swing. You're looking back with almost 40 years of hindsight. The view in the 80s was that the entire assembly line was going away to be replaced with nothing but robots. We were taught to expect that our jobs would be to maintain and service the robots.
Heck in the 90s I remember going to a museum somewhere where McDonald's was demonstrating a fully robotic kitchen for its restaurants. This was a real widespread fear at the time. Thirty to 40 years later, maybe we can look back and recognize that it didn't quite turn out that way, but at the same time we can't know what's going to transpire by 2050 based on today's fears of AI outsourcing "information work" either.
McDonalds has automated the ordering process away, though.
They didnt really automate that at all. They just put it on their customers to push the buttons for the kitchen to read off the screen instead and move the food around.
An uncomfortable piece of fiction. AI will for sure shake things up.
All AI can do is make what's already happening worse. This has been the way of things for a long time now.
That isn't something to rejoice.
You're both right -- technology acts as an amplifier for human intentions (Kentaro Toyama's words, not mine).
Should private for-profit companies employ people just because they can?
Employed people are much more likely to be customers.
Pay salaries, or pay taxes. The society that enables a for-profit company to succeed is not free for the taking. Do your part.
Sure! Salaries are what people use to exchange money for goods and services that these companies produce in theory. But the free money environment we've lived in the last decade seems to have primed companies to think that operating at a loss is okay. If we just fire the workers, and sales lag and dip, its okay because it will force the fed to lower rates and we can just borrow our way back to the top with no sales!
Imagine though... an AI startup that just trades goods between AIs. We should actually start firing customers!
I know it's comedy, but the essense relies on faulty reasoning of why you were employed.
You are employed because the company expects the profit/savings you generate to exceed the cost of employment. If that stops being true, then naturally it's no longer profitable to employ you.
You'll notice there is no mention of the overall profitability of the organization in that equation. It holds equally true for both profitable and unprofitable orgs.
Obviously the world in messy, and it isn't always clear whether a given department or unit is or will be profitable.
This is a very simplistic understanding of how much more complicated the world has become.
Google was able to take 20 years worth of salary of its laid off employees and execute stock buybacks that increased stock price more than those workers POSITIVE revenues.
Its a more brutal reality than you think.
Thank you for articulating this!
I'm not accusing everyone of this cluelessness, but many appear to think that Google was looking at financially-trying times, and fired some employees to save some money -- no, they fired people, and then spent enough money to have kept those folks employed for decades on stock buybacks.
Google's layoffs weren't about saving money, but about juicing the stock.
Uber burned 250m a year for 10 years without making a profit; are you sure your logic still applies?
If the company ultimately has no need for workers, then it's competitors won't either. And as they compete on price there will be no reason for the goods not to sink to the raw ingredient price + cost of capital. With the hypothetically perfect AI this will sink to near 0 + raw material cost (which itself will be plummeting due to AI).
I have long thought that automation will result in goods being so cheap that it becomes unconscionable to not provide them free of charge to anyone who asks for them, within reason. Think like how we do not charge for air, or a glass of tap water (in the USA). I'd love to work on making it so other goods become as such. Simple diet like rice and beans, simple clothing just jeans and a plain tshirt etc. Call me a communist but I think as a society we can get to a point where these things are just free because the cost of accounting for who gets what is higher than the value of the stuff.
That sounds great, but I think it's more likely that they'll start charging for water and air before they start producing food and clothing with the intention of giving it away.
Yeah, I dont think any one would start a company with no incentives, but I do think the existing capitalized ones will have no choice. Once you've built a factory, you have a sunk cost and need to extract whatever you can out of the capital even if it's only 1% profit. (else you bankrupt and implicitly reduce the capital base such that it does profit)
Haven't you seen how discussion lately has improved in quality?
For whatever mixture of reasons, the world is finally waking up.
We should start lobbing some good thoughts and respect on folks around us, and start to bring them around. The government is us, and needs us.
The time is here.
...but really though.
Y'all are the smartest people I know, and with a little banter we could figure things out. A win for all parties.
"Yes, Mom, I took my pills today" Lol
Side thought I had: I've met a lot of software developers that will say "I'm trying to automate myself out of a job". It feels a lot different when you actually do lose your job. I know that isn't what's going on here, it's other economic trends, but this just made me think of that.
Ideally when you automate yourself out of one job, you are then available to take on another, and also to have more flexibility and higher compensation as part of that process. This is pretty much what “leveling up” is. Either literal automation, or automation through establishing process, culture, and hires around you.
If you want to automate yourself and then stop working you need to be an owner.
financial engineering has become a disaster.
Financial engineering is designed to benefit the designers of the financial systems. There is a sales pitch to convince people to play along, but it's a net negative game & not designed to benefit everyone else.
Any change requires massive bloodshed and revolution. It's a matter of when not if.
It doesn't have to be massive if it's just the C-suites and up.
I'm normally pretty pessimistic, but haven't we seen countless examples of initial panic over technology replacing jobs only to see new vistas of opportunity opening up? Hopefully that takes place in cases like this.
Technological breakthrough always causes a workforce expansion. More, diverse jobs. The "but this time it's different" people are correct. The important bit is when.
This reminds me of Reed Hastings (Netflix Co-Founder) talking about how after he had done layoffs (I think 30%) he found that they actually moved faster because all the dead weight was gone and the talent density had gone up.
This could also just be marketing spin however.
This is actually true. Cutting people automatically causes a cut in scope of work. Teams become more picky and focused about the work they would do in the next few quarters.
BUT - the cut has to be management. Management is overhead. They are the reason why red tape exists. Every manager in the company adds more reporting, more paperwork, and more bureaucracy for people doing the actual work.
By cutting layers and layers, companies can become very efficient.
"Our Company is Doing So Well That You're All Fired"
The title seems to presume that "you all" are contributing to the company doing so well. If you're not, then firing you will have no effect on the company doing well or not, except it will reduce costs. Arguably the company may do better without you as by firing you they have reduced costs.
This is, roundly, impossible to measure in real time as investments take long time horizons to mature. But its easy to self-justify as survivorship bias.
On my feed this appeared almost next to "10 rules of Zen programming" - What a contrast. If you feel anger and frustration after reading this, I'd definitely suggest you find and read that other article.
This actually makes sense, no /s. After all, the core reason for a business to hire is to access talent to fulfill various business requirements. And the better a given employee does, particularly one doing software development things, the less they should be needed over time. So with AI being increasingly available in limited forms, and at costs more business-friendly than hiring humans, it only makes sense that human talent is gradually deprecated.
And this is why I'd like to get to the point where I'm running my own business eventually, because one will always be "expendable" as an employee/contractor. I actually look forward to a day when there's 100% automation of all value-giving labour. Raises some interesting questions about what society and economy will become, but that's another topic...
I’m not sure how satirical that article is meant to be but Paramount Global is doing dreadfully by just about every financial metric (apart from great Super Bowl ratings!). They’re even rumoured to be looking for a buyer for Paramount+
Reminds me of the classics onion skit about Dell shutting down due to having reached its goal of becoming the biggest pc maker in the world. https://www.theonion.com/corporation-reaches-goal-shuts-down...
Solopreneur programmers collaborating using open source software to create businesses would be more fair. Even if it no longer makes sense to "keep the band together", the programmers have a greater chance of having something tangible to use moving forward. Non-programmers don't have the option, which is where proprietary Intellectual Property comes in. Giving everyone a share of the IP, like a co-op, would be more fair.
Perhaps this is unrealistic in most scenarios today, but it's at least worth pointing out. Perhaps the future of economic collaboration can have fairness in future progress/reward as a consideration.
I think any company that does layoffs in the US should be blocked from hiring H1-B workers for a period of 5 years.
In addition, the CEO and board of directors should have a tax increase of 15% on their income and capital gains taxes for 5 years.
The floors are always clean, so we don't need janitors...
Companies reduce initiatives and headcount at the same time.
It's usually approached as a budget reduction exercise: Company is reducing budgets by X%. Select which projects get cancelled. Now work with managers to identify enough employees to lay off to reduce headcount spend by X%. Now reorganize remaining employees across remaining projects, with the understanding that a few extra people will leave due to future layoff fears.
The idea that companies like Twitter/X just removed a lot of employees and then operated exactly the same as before is a myth being propagated online right now, but companies must change their operations as part of layoffs. It's usually not obvious from the outside because the core product always gets attention, but side initiatives, internal tooling, new feature concepts, and even less-visible things (think bot/spam detection on X) lose attention that they may have needed.
But no, the idea that companies are making 10% of their workforce disappear at no cost to the business is just fantasy. The only time I saw this happen was when a company hired so fast that they didn't have work for some people to do, but that mistake was quickly recognized.
Twitter shed 80% and still works, is still the go to outside of fringe empty echo chambers of the left and right divide. Not only that but they added a significant amount of features like Grok, which I know nothing about really, and Substack like payments.
80% is a lot and it works just fine. 7,500 to 1,300 in Jan 2023. Source: https://www.cnbc.com/2023/01/20/twitter-is-down-to-fewer-tha...
They effectively disabled the developer API via absurd pricing. That alone would cancel a ton of projects/teams due to the load that likely placed on their servers. The user experience is also not even close to the same, while they've not really added any new features that likely weren't already in the pipeline. Not even to mention their tanking revenue and valuation. It's not even close to a "working the same as before" company.
Your definition of "working" needs work. Nothing you said contradicts the parent.
So what you're saying is everything anyone using Twitter cares about is working just fine.
From my point of view, just not. I went from using Twitter a lot to gaining a lot of free time ... be because overall experience now sux in many small ways.
Whereas there used to be interesting exchanges and threads before, algorithm now promotes similar nonsensical short responses again and again. The stuff on top is just not interesting anymore.
I guess, unless you're also making the assumption that the number of daily users has remained the same from pre-elon acquisition. I promise you that is not the case. There's also that pesky profitability problem.
I think OP just meant it was working to strip Twitter of the majority of its operating costs so it can be transformed into a sweatshop profit machine (but, in that case, I disagree, since its not making a profit).
Twitter doesn't work if we go by the same definition as before.
They have a ton of outages, the app is constantly buggy, the ad network is ridiculous, the moderation is nonexistent. I faced a bug that new tweets wouldn't load _for weeks_. If it was any other company, we would be saying they are done, but since it is Elon at the helm, some people pretend that Twitter still works.
Twitter is in the "Wile-E-Coyote just ran off the cliff" phase where his legs are still running on air. Companies like that have tremendous momentum, but an airplane can only glide so far after you turn off the engine.
I'm getting a lot of "tweets aren't loading right now" type errors. The app keeps jumping to the top when I'm scrolling into someones timeline. Sometimes i see my replies twice. Sometimes things just don't load. It's seems like death by a thousand paper cuts. That said, I'm sure the technical issues can be fixed eventually.
I'm also getting a lot of garden variety "West/Christianity vs East/Islam" type race baiters and stupid 9gag type memes despite actively trying to indicate to the algorithm that I'm not interested. I think they've skewed it towards controversy to increase engagement but it's just boring.
It's so buggy right now. It feels like it's gone back to the old fail whale days. "It works" is a pretty low bar to clear. On the upside, it gave me back a lot of free time, because the Twitter experience is just too frustrating to deal with anymore.
They got rid of stuff working with paying customers - ad companies. And that part is now failing so much, that Elon Musk went on multiple public tirades.
Twitter is not able to attract ads, because they don't communicate with companies properly and are chaotic.
It still is cherry picking one out of many examples where the headcount reductions were by far not that drastic as in Twitter.
The parent reply has an important point: a good % of headcount reductions tend to affect r&d and the type of projects where cutting investment doesn’t have a negative short or even medium term effect on the company. Sometimes it can even be positive for operations (e.g. infra teams have to support less product teams). This is mostly why it’s very uncommon to see headcount reductions lead to instability, etc.
Long term effects (e.g. stagnation, no innovation..) may manifest, but are harder to see clearly in advance, and when they do happen the connection to those layoffs from N years ago is not obvious/even remembered
An implicit assumption I see often is that all 8000 Twitter employees were software engineers too, but at it's peak engineering only made up 40-ish%.
Without question though, despite the appearance of velocity in shipping features post-layoffs, the features were either small changes or if they were big, already partially deployed as experiments to small groups of users.
Aside from Grok, Musk's Twitter hasn't shipped anything new except and expanded monetization system (again, partially implemented when he took over anyway).
A premium (as in requires money), also-ran AI with a juvenile "sense of humor" and payments? These are significant?
Twitter's still working, but it's in a state that I think is worse than before. The spam bots alone seem to be orders of magnitude more prominent. I don't think I'd ever seen a spammer pre-headcount-change, and now "MY PUSSY IN BIO" is a running gag on the website because spambots are so prominent.
They also changed their content rules to allow drastically more content, which reduces the total amount of work to be done. You could argue that this is a good thing because the moderation was useless and censoring before, but the moderation also made it a friendlier place for major advertisers who have since pulled out—so changing the moderation resulted in a business model change. That's naturally going to reduce headcount.
It "works".
The main app is generally functional, but it's easy to see the deterioration of the smaller subsystems that large platforms like that need for a good user experience. For instance, I have an account that I am unable to log into because their password recovery/change feature doesn't seem send me anything when I click it. I'm sure frequent users have a litany of little things they've noticed that are flaky or outright broken, even if they can still send and read tweets.
Twitter/X hasn't seen notable user growth since ~2015/16 and has been absolutely flat since then, coming up on a decade now. It was 325 million active users in 2015 and it's still about 300 million active users today (spring 2024). A decade of no growth. I don't know if twitter is functioning exactly the same as it was before, but if you have to pay the bills, cutting 80% of the workforce and holding the line seems to have worked in this case.
Having 5000 engineers on tap for... potential user growth? Makes sense if you're planning on user growth, but Twitter is kind of the poster child of "we don't need engineers for anticipated growth" given a near-decade of totally flat userbase number.
It absolutely isn’t functioning the same.
Technically maybe everything works more or less as well as before, after a year.
…but the experience is quite bad now: every other thread is full of crypto and/or onlyfans promoting bots. The algorithm displays a lot of obvious attention grabbing posts which have 300 replies, 10 of which are from humans. There’s a constant stream of bots trying to connect with you via follows or likes.
It’s a mess and a fantastic example of why anonymous and free communication platforms absolutely need professional moderation.
On the other hand, I love it now and hated it before. Guess it depends on what you're looking for. Me - I like little to no moderation and government interference and don't find much offensive and have no problem just ignoring anything I do find objectionable. All worth it to be able to speak honestly.
My personal politics better align with based Elon than the previous regime, but let's not pretend there's no moderation happening. It's just different.
Surely, but I don't notice any less insane progressive takes, rather I also now see insane conservative takes. Appears additive to me.
I don't post a lot and I also find Twitter really annoying these days. I am used to getting pinged only by my friends to talk niche tech stuff, now I get porn/crypto bot spam... Trying to follow technologists I like, but their discussions are also mired in dumb blue checkmark takes and bots... OK maybe those blue checkmarks are speaking honestly but I'd rather have intelligent speech over honest speech at this point
I don't think it even technically works as well as before. The iOS app seems mostly fine, but on web the feed or tweet fails to load and shows the blue retry button probably 1/3rd of the time for me now. Combined with all the bot issues you mentioned, that has dramatically reduced my Twitter usage. It's become incredibly frustrating to use. I only use it now when I click on a tweet link that's been shared with me.
If you're logged out, you can't see any Tweets unless you're directly viewing a specific Tweet, and even then you cannot see any other Tweet apart from the one you're directly viewing.
This was one thing we had tried on Twitter before Elon, and had found that it is detrimental to the platform and engagement. So, had to roll it back. But now it is a thing again. This drives down the popularity and overall usage of the platform, but some people will still claim it works the same (or even better).
At least this was an intentional change, not something that just broke down out of sudden.
Remember when we were told Elon was going to unleash AI on the bot/spam problem and solve it in a month?
It's worse than it ever was. I hardly ever saw bots or spam. Now I have 100+ spam followers, and on the very rare occasion where I reply to something, it gets 90% spam likes. Ads are also crypto, soft porn games and drop shipping companies.
As a company grows (in size and age), there is definitely more waste and more bureaucracy. No impact in trimming that. But, larger, older companies also spend a lot of effort on defending their business or uncovering future business. Fire the people who do that, and you won't see any immediate impact to revenue or core metrics... But, you've probably reduced the future viability of the product (lower chance of uncovering new growth, higher chance of being disrupted by a competitor, etc).
You can see this a lot with companies bought by Private Equity firms. They slash costs and save a lot of short-term costs, and all looks good, but the company is now on a path to death.
I like your optimism, but twitter had already hired the best and brightest for a decade and were completely unable to move the needle, barely maintaining existing user count. You can see the same usercount story for traditional message boards/forums. There's just not that much demand for this kind of social media.
Probably, but it's going to be a very long tail. Forums do not cost that much to run.
Twitter almost doubled their mDAU between 2016 and 2022. They definitely weren't doing anything. (I have no idea what the recent acquisition has done to the numbers, though.)
I worked at Twitter and let me tell you that's not how it works. When you whack most of the engineers out of the company, and if it still continues to work, that doesn't mean you don't need that many engineers. It means the following:
1. The ones remaining are practically working 24x7 every day for essentially the same pay, with the promise of more.
2. You keep falling behind on all the things you need to do to keep things alive and compliant. This eventually comes back in the form of outages or worse, FTC fines.
3. There is very little room for forward looking work, which means you are sacrificing opportunities for growth. E.g.
These were two very different numbers. The numbers in 2015 were DAUs and the numbers today are mDAU. mDAU are in layman terms users that can be monetized. This number was ~180M in 2018, so the growth was there. Part of the reason why the ad revenue was growing for Twitter during that phase.
4. Safety and Trust on the platform drops quite a bit when you are understaffed. Regardless of your political beliefs or whether you're team Elon, when there are 10 people banning CP instead of 100, there is no way you could argue objectively that the platform stays the same.
There's plenty of other problems, but you would not know they exist unless you're one of the people left after the figurative massacre.
While X's main use case works, I just tried to run some ads there.
When trying to upgrade to verified org: "An unexpected error occurred"
When trying to change my display name: "An unexpected error occurred"
When trying to run an ad: "Awaiting verification" for a week
Contacting support through messages: No response
Finally finding a way to submit a ticket: 3 day response time with a standard response that didn't resolve the issue.
Responded to that ticket and haven't gotten a response in days.
I don't think they're operating at the same level as they used to :)
It's sad that you cannot even get through the workflow that gives them money. They must be in absolutely terrible shape.
Enterprise Darwinism.
Why is anyone so quick to take the company side?
For starters, productivity is a broad term, so without defining what it means in context it isn’t doing anyone any favors.
You won’t feel the dip or record it until after the event happens, and often not right away. When productivity drops a year from now for example, that could be due to layoffs. It’s not always immediate in its impact.
I also question this from the other side: why are executives who set the company priorities not also axed? They are the ones that ultimately messed up as they had poor strategic vision. Their ineffectual leadership is how it got there in the first place, if they aren’t gone how on earth do you know that it wasn’t their responsibility for the decrease in productivity? Logically one would think that axing the executives first and then seeing how productivity increases or decreases with new leadership would make more sense
Are you fired for any mistake you make in your job? Generally not.
And managing staff size is like 1% of their job. They're also busy running their divisions, managing roadmaps and objectives and all sorts of non-staff resource planning, etc.
It's entirely reasonable to think economic and competitive conditions will probably be such that we should hire more, and then your competitive situation changes and you have to have some layoffs.
That doesn't mean anybody made mistakes or the executives should be fired as well. It just means that nobody has a crystal ball. Very little future estimation that is done in the business world turns out to be perfectly correct.
Sometimes executives do mess up in big ways and get fired just like anybody at any level. But that has nothing to do with layoffs in any special way.
Yeah I think when a layoff is enacted, you made more than a mistake, you fundamentally missed something. Its outside the bounds of needing to be perfect or what have you, something went sideways in a big way, and unless you can actually simply trace it down to market forces beyond your control and you are telling me those people can't be productively moved into other parts of the business, then sure, we have some criteria for layoffs, but then we can be adults and get walked through the failures and how there wasn't anything that could be done.
How many situations do you think this actually applies? I have been apart of 2 layoffs (not affected in either, thankfully) in the past 3 years.
In the first situation, I and others repeatedly warned that our biggest 3rd party integration, which made the backbone of our business, was going to ban us for abusing their APIs and other business practices that we were doing, and we needed to address that. This was repeated all the way up to the highest levels, I was in the meetings with the CEO, talked about precedent etc.
They didn't change anything. The ban eventually happened, and they never recovered, laid off over successive rounds, ultimately ~50% of staff is gone now, because of this very obvious strategic error.
In another situation, they tried to blame it on interest rate hikes, but before interest rate hikes, we were sounding the alarm that we were on-boarding way too many iffy customers (its a fintech place for SMBs to manage AP) with out of bounds credit profiles, and that these new sign ups would dry up way too easily, we needed to re-focus on a better core ICP before we try to further expand the business, try and target customer segments with stronger business profiles etc, and this is prior to the majority of the interest rate hikes. I and several others made this case, and yet again, not headed, layoffs hit 6 months later, because all those customers either went belly up or had to downsize themselves, because they were too credit dependent.
So what commonality do you think this happens? Because I have a feeling its alot more than is acknowledged.
I think you just have a fundamentally different view of what a layoff means then the executives, board of directors, and general shareholders.
But what if the customers survived? What if interest rates didn't hike as fast? You're suggestion would have been horrible. The risks of over-hiring is a layoff which no one else views as really that bad vs failing behind competitors.
Most likely, and I personally believe that is part of the problem, not the problem.
I recognize how damaging layoffs are to people. Its unfair to act like they aren't. Its people's livelihood and we as humans often make decisions around these things, and when its yanked out from underneath them without notice, its very damaging.
Its not numbers on a spreadsheet, it is human lives.
We would have hired more modestly, and could focus on making the business more generally efficient, cut down on process, and focus on keeping the business nimble and responsive.
If I'm wrong, we end up primed to take on more customers while continuing to hire modestly. Ironically, our smaller more nimble competitors ate a bunch of market share from us with much smaller overall staff, because they could move faster, and I can directly trace that to the hiring spree.
Now, I will admit, if we had stronger safety nets in the US that made layoffs relatively painless for the unemployed, I'd feel differently about this.
Or more realistically doomed the company to fade from grace as you competitors surge past you eventually ending with a massive layoff.
This is a black and white take that doesn't jive, additionally, we have the hindsight of history, both recent history and the history of other boom / bust cycles, that serve to validate. Our competitors wouldn't have zoomed past us. We have strong market presence and we bleed more users due to our own ineffectiveness than strictly from competitive pressure, and I can trace much of that ineffectiveness back to hiring practices from late 2020 to mid 2022. As I noted previously, we have a clear line of how this happened.
Generally speaking, a moderate growth strategy would have left us in a better place, and it was easy to see by the end of 2021 that things were going to change sooner rather than later. I'm not that smart, by my own admission, I'm a pretty dumb guy, but I put the pieces together by then by simply looking at where the money was coming from. There was no way the conditions of 2021 were going to continue at most past 2025 if you wanted to be an optimist, but realistically, it was coming down a lot sooner to anyone paying attention to how the money was flooding in, and I felt we would start to see some downturns in 2022 and 2023. As soon as the COVID relief stuff was announced to be ending, it should have been even more so, yet there wasn't a prevalent skepticism in the status quo until much later.
Every company already tries this as hard as they can, there is no magic button they can press to just make themselves more efficient.
Then why are so many so inefficient? In the Silicon Valley mythology, one of the core tenants is that startups can act more efficiently than big companies simply due to focus & size.
If this were inherently true to any reasonable degree, I actually think we would have a differently shaped workforce. I can point out dozens of inefficiencies I experience even today that slow down development, and that is just if we analyze development. I hear from other wings of the company[0] of other things - simple things like consolidating tools so they don't have to bounce between different apps to do things - that also drive alot of real inefficiency.
This isn't the first place I worked where all these issues exist either, and its not nitpicky stuff, its all low hanging fruit. Consolidating tools is a complaint I have heard at almost every job I've had sans 1. I don't imagine I'm alone, my peers at other companies often have similar complaints when we talk.
I think some things are inherent to simply organizing humans, and I get that, but the obviousness of some improvements that simply aren't undertaken runs counter to the assumptions one makes when they buy into the "efficient business" hypothesis
[0]: we successfully became more cross functional, that's a huge plus, our solutions are much more holistic now, but its only part of the problem.
Sometimes a company is moribund much, much earlier than people realize. When you're faced with "do X or shut down" you will often chose to do X, even if X is pretty likely to result in shut down because you have a "die now, maybe die later" thing.
Or you can do a massive pivot, which has successfully worked at times.
Has anyone tried laying off most of the executive team - instead of the workers?
I always wanted to see an experiment where you take a really knowledgeable about the business front line employee, and hoist them to the C suite with all the same support systems executives have (and there's more than you might expect) and see if they do the same or better in that chair.
There's only be limited studies done in this vain, and the results, while limited, seem to suggest that any reasonably smart person with knowledge of the industry could do a good job but the studies are pretty limited, and don't construct the circumstances as I described, so its hard to say its true or not true.
They would do terribly. They're completely and utterly different skill sets.
It makes as much sense as taking an oboe player and asking them to conduct an orchestra, without any conducting experience.
Do you know how to handle investor relations and different factions on the board? Managing sales and marketing strategies? Assessing the regulatory environment in Europe and the legal risks of expansion in China? Can you speak confidently and charmingly at conferences with billionaires? Do you understand how to manage different interest rate environments? Is it obvious to you which law firms to hire for different needs?
This isn't just stuff you can learn on the fly. It takes many years of experience, and often a business degree in the middle, to become even moderately competent in this stuff.
All these tasks you listed - what makes you think an average CEO knows how to do any of them? How do you know if the company is doing well because of the CEO or despite them?
I have yet to see evidence that what gets done in the C-suite of many (not all, possibly not most—but many) companies is making use of any skill set at all, besides self-aggrandizement and bullshitting.
To be charitable, for some of these, what's happening is that rather than leveraging their skills, they're leveraging their relationships. And that can be valuable, sometimes, but it's not a substitute for actually knowing what the hell you're doing.
The real problem is that far too many of these people—skills or no skills—primarily bring their egos to the table, and operate mostly based on that.
What's funny is that people assume the executive team must be high performing.
In reality, they are able to fire the people with the least amount of power.
HN has a lot of "wish I was a tech CEO" types, plus the general dose of contrarianism that runs deep in this place.
... who also won the birth lottery, went to stanford, and then golfed with venture capitalists.
And don’t forget a nice dose of “I’ve never struggled in my life” libertarianism.
We are all temporarily embarrassed founders here.
Everything is a gamble, the right decision can still lead to a bad result due to randomness. So just because a gamble didn't pan out doesn't mean that it was the wrong thing to do.
For example, not hiring extra is also a gamble, it means you gamble on the market not growing and you would lose a ton of money if the market didn't stall.
This assumes hiring is the only way to grow the company. More specifically, it assumes ramped up hiring is the only way.
There are balances that can be struck, for example, instead of hiring 100 people, maybe hire 20 and see how onboarding and growth pans out? Perhaps evaluate business inefficiencies that serve to slow people down like bad process etc. so people can focus more time on what matters.
Automated onboarding, group sales calls and other tactics let you make more with the same amount of people.
There are other things you can do, not just hire. And I'm never going to say don't hire people, but what executives did was irresponsible and I knew it even at the time.
IMO, this stuff happens because executives know they won't be held responsible if it can't be sustained, and that is really the core issue.
Proportions are what matters. I like many am tired of seeing a world that favors oscillation in the extremes like this, and its the average person who takes the brunt when it goes south and the higher ups rake in the brunt of it when things are going well.
For what its worth, if we had European style safety nets, this would be a moot point in a way, because we have so much of American society tied to having a job (be it health insurance, ability to afford rent etc)
You assume they were fired due to inefficiencies, but they were fired since the market went down and the US government made software engineers more expensive short term by changing how those investments were taxed. That means they can no longer maintain as many software engineers.
Lots of people said this during the entire hiring spree from 2010 to 2020, but most of those people are still there paid and working. If they listened to people like you most of us here would be out of a job since the job market wouldn't have grown that fast.
That assumes I'm taking an absolutist position like you shouldn't hire or hire rarely, and I'm not. There needs to be successive indicators and re-evaluation of conditions that need to be balanced. In many (most?) cases, they simply weren't. I would say the accurate time to call this out would have been 2021, not 2009, and that is the timeframe in which I looked at everything and thought to myself "this won't last more than 5 years at best". By late 2020 to early 2021 I created a thesis that we crossed into artificial growth rate and too much "free" money being pumped into everything around us, to be clear about this.
The steady growth from 2009-2019 in tech was relatively organic by comparison, and far more moderate for most of the industry if you compute only non FAANG companies (FAANG companies, and those near that acronym, simply had outsized growth by comparison, by many multiples)
All this is to say, that I think if people listened to me, it would have nothing to do with 2010 to the start of 2020.
Honestly, I think taking the company's side is the contrarian opinion. The knee-jerk reaction is to judge them as the evil man oppressing working families.
Why? The vast majority of people have not worked in managerial positions with high levels of responsibility to understand the decision-making and interest balancing processes required for a large organization to operate.
But everyone's been a victim of managers at least once, and certainly seen bad ones. And many people think they can imagine what's entailed in the job. Your questions about ownership and responsibility are not invalid, but they are also the most accessible (easiest) questions. You don't get to see the sausage unless you're on the inside and most people can only imagine what that looks like, and then tend to imagine the worst or most malicious alternatives. Thinking beyond those questions isn't always warranted, but doing so does require a perspective that most people don't have direct experience with.
There are some of us who have and still see the facades and illogical reasoning for many decisions, decisions that if made in the lower wrung of the company would definitely lead to someone getting fired. People ignore good evidence even at the highest levels all the time because their incentives are not aligned, for example. I witnessed this before. I've been in director+ levels multiple times, at small and medium organizations. I'm not convinced that my peers were any smarter than lower level employees when it comes to making decisions given all the available inputs.
I will say, that in mid sized organizations I've been apart of, you do see sometimes that lower level employees have no concept outside the department, and that leads to tunnel vision. They don't see the complete story all the time, but I always viewed those as communication failures most of the time.
I "made the sausage" at my previous job reporting directly to the CTO[0] at a 1000+ person company. It was alot more volume of information, and I talked to alot of different people all the time, but I think you could take any whip smart employee, elevate them to that position, and they could do a reasonable job.
That experience has left me really jaded to be honest. Whatever humanity I had left to endure corporate life had sunk by the end, as it were.
[0]: This is why I was raising alarm bells in the first place, because I knew it'd be heard. Fact is, it was ignored.
“It is difficult to get a man[ager] to understand something when his salary depends upon his not understanding it.”
(With apologies to Upton Sinclair.)
Corporate and Political propaganda since the Powell Memo.
For the sake of argument, does that mean all those employees were useless or does it mean the management isn't doing a good job of allocating them to effective work? I've been at a few companies that were rudderless and yeah, letting go of people wouldn't have made much difference because the leadership didn't know what to do with them anyway.
If the company is rudderless and unable to allocate effective work to employees, it won't be doing well. This is about companies that are doing well. At least, that's the premise of the article.
Not necessarily. Companies can be rudderless and have some kind of industry capture or brand recognition and still be doing great. In other words, at one point they had good leadership or built up during times of low regulation or economic prosperity and now are just living off those early successes. A lot of large tech companies are like this.
Yeah. The Google Graveyard really shows how far this can go.
https://killedbygoogle.com
The punchline is that in addition to hundreds of failed hobby projects, their stock is doing great. Monopoly rents are a helluva drug.
I never understood the complaints about this. Why shouldn’t a company try and do new things?
A company probably should try new things if they have enough extra money. A company definitely shouldn't develop a reputation for abandoning every new thing they try shortly after launch. Why would any company risk depending on a new Google offering for something they actually care about?
Monopoly rents happen at the expense of other economic participants. For every tombstone on that page, I wonder how many mom & pop diners died due to CAC math.
Yeah, not sure if it would be better if Google put all those people to work on their main products like most other companies. Google maintains their ability to launch new products by those constant launches, they are like constant small exercises, sure they usually aren't new billion dollar products but at least they still know how to launch new products fast unlike many other companies.
This is essentially assuming that competence translates directly into high monetary value.
That is not true either at the individual level, or at the level of companies. It is particularly untrue with tech behemoths who enjoy near-monopoly status, massive network effects, and/or huge mindshare.
At the very simplest level, it is not at all uncommon for good decisions made previously to allow an organization to "coast" for a significant amount of time after it starts making bad decisions. This is part of why bad CEOs are so frequently not held accountable for their incompetence: they take over, and for 3 years, everything's going great! It's only after the accumulated "soft" resources (customer goodwill, employee loyalty, lack of technical debt, etc) are burned away that the bad decisions actually start being reflected in the balance sheets.
Big tech clearly overhired during the pandemic. The layoffs over the last 12-24 months are a return to the mean.
It actually feels like a semi-coordinated effort to push down wages. With high inflation, workers would have demanded raises, but with the specter of layoffs, they keep their heads down.
Musk bought Twitter in April 2022, had huge layoffs and then rest of tech followed in Nov 2022 onwards.
Prior to current trends was it common to announce great earnings and then announce layoffs?
We went from 0% interest rate to a whole lot real quick. It used to be there was literally no overhead for over hiring if it moved the bar at all. Thats not true anymore.
If it was really over hiring, and the end of ZIRP, why have their financial results been so strong? It’s not like profits dipped to losses from these “headwinds” — companies have been strong and AI is increasing demand for cloud services, chips, etc.
Nothing seems coordinated.
Musk made layoff palpable to investors, ZIRP ended, the industry is correcting for over hiring when assuming the 2020s growth would continue forever.
Just a bunch of things that happened. As always.
“We didn’t start the fire”
Funny you should say that because H1B's have shot back up to pre-pandemic rates.
I've never understood why people would believe this overhired narrative, have you ever worked for a company that correctly understood it's own hiring capabilities or measurements? I haven't 15 years in.
It's cost cutting, not demand for labor. A large headcount used to be a status symbol for a public company (to juice the stock), now if anything it's the opposite.
In the states it’s a new tax thing going live.
Not to mention that those bullshit jobs that don't really impact the company's earnings initially tends to include stuff like fixing the IT systems and handling customer issues within an acceptable time frame...
^This. It isn't easy to say, in the short-term, what the costs of cutting those jobs is. You might be underinvesting in future products, or in satisfying current customers. None of that will be immediately reflected.
A lot of high growth companies simply hire too many people because too many people is usually better for maximizing growth rate than too few people. (If a company's focus shifts from maximizing growth rate to, e.g., optimizing for cash flow or profit instead of growth rate, the equation shifts and lay offs happen)
Having extra people on staff who aren't needed can be good as long as you expect to need them in the near future. That obviously creates the risk of needing to terminate the positions if the need for the person never materializes.
It takes 2-3 months to hire someone after opening a role, and 6-9 months to onboard them. So 8-12 months to fill a role with someone fully up and running. That's a really long time which is why so many high growth companies fill roles they don't actually need right now.
Also, in a company that's growing 30% every year, hiring "10% too many" people at any given moment is an extra 4 months' of pay for 9.1% of your payroll, or about a 3% mistake in a 30% growth environment.
In a company that's growing slowly or not at all, hiring "10% too many" people is a much larger error, possibly even a disaster as it could be a full year or more worth of extra hiring in a slow growth company.
They bet on projects but those projects didn't pan out, every company does this, every hire is a gamble. Even a cafeteria that hires a new person assumes future demand will keep up or increase, if that prediction was wrong the person will not be needed and will be laid off, that is just how business works.
This is much better than the "you get what you use" resource allocation where organizations never shrinks, we want them to shrink when they don't have any useful work to do.
If you have a project/company that's already running well and you fire almost everybody except a skeleton crew, you'd be amused but things don't crumble down instantly. Technical debt piles up and everything goes to maintenance mode, when you need the insight of the good people who left is when you realise that going to the previous state will cost you a lot more time and money than you might possibly predict.
This is why I think X is worth maybe 1b, not more.
It depends. Musk has a great ability of burning his employees out to make up for mistakes he has made: (Early automation efforts at Tesla in 2017/2018 where they repeated the mistakes GM made in the 70s/80s, dumb mistakes in the early days of SpaceX when they tried to replicate what NASA had in the 50s/60s).
In the end he succeeds powering through all the dumb decisions he makes and manages to pull ahead:(Tesla production and engineering is now seen as a innovation leader in the industry and not just dismissed as some dumb flash in the pan, SpaceX has no real competitors, maybe the Chinese will eventually catch them but no one else is even in the conversation).
I have often wondered why so many people sign up to put themselves though this and I guess the clearest answer I got was when I interviewed some Starlink employees at DEFCON. They just want to be part of a team of excellent players and will overlook Musk's faults to be a part of that team.
In Walter Isaacson’s biography of Musk, one of his employees completely burnt out and quit. Then came back years later because he was bored and wanted to be part of something cutting edge again.
Yeah I remember that. Honestly I wish there was some other organization that could rival the Musk companies. We need to spread out the power that he has right now but man I just don't know what the other guys are doing. Just today I saw the Rivian and Lucid financial results and they are not looking good. On the space side I'll take Bezo's Blue Origin but I hear almost nothing good.
How horrible mismanaged have all other big companies have to be, for someone like Elon Musk to easily overpower and overtake them?
It's not like overworking employees is a novel concept no other big corp has left untried.
I think attributing Musks success to "overworking employees" is either completely wrong or not sufficient to explain his success.
You can't say it's by chance, because it's not his first and last successful company either.
On a much smaller scale, six years ago I inherited a service which previously had two people working on it full time. I've spent about a day a month on doing the bare minimum to keep it working ever since. Clearly we were massively overinvesting in it previously, right?
Recently it broke, and I have no clue how to get it working again. Fortunately it's just an internal thing so it's just disrupting work and not causing problems with customers, but now we're having to abruptly scramble to migrate off it and it's going to push back a lot of timelines. We got away with coasting on our upfront investment for six years, but it didn't last forever.
This perfectly describes a scenario I found myself in several years back, down to a tee.
“I stopped changing the oil and my car runs fine.”
Sometimes problems take time to present themselves.
How about “ I stopped changing my oil every 50 miles and my car runs fine”
that is more like it.
Or we fired 1/2 the scrum masters, so now each project only gets 50% of one instead of a FT one, and BTW, all of a sudden developer meetings get cut in half as a side benefit.
Every large company I have ever worked for could have easily fired 1/3 the staff and ran just fine indefinitely - but only if they fired the right third.
In my experience usually the real benefit would have been if they hired the right kind of positions. No, not "hire better developers/etc".
Hire for positions they don't hire because they seem superfluous.
I think in every bigger project over the last 10 years I asked, in otherwise reasonably staffed companies, for a technical writer. Even part time one. Fohgeddaboutit. Sometimes the issue is, as sacrilegious as it sounds even to me, not enough managers. Because sometimes you need people whose only role is to be communication points, or people whose job is to be responsible and accountable.
In most of those companies we could probably fire a lot of people too, probably mostly among executives and a lot of those invested in SAFe and the like...
Is Google doing mass layoffs every few weeks?
This. Attrition often doesn't appear until the next vesting cliff / bonus. If leadership is not careful, they could lose a lot of key people all at once. For a big company like Google this is easy to stomach (they still pay well enough that _someone_ can be made to do the work eventually) but this could well be death to a startup.
Even an understaffed team can crawl along with a skeleton crew for a while, but you will burn people out. A burned out team ceases to make forward progress and is going to act like things are in maintenance mode. You're liable to spend more money and SWE-hours looking for backfills vs if you'd just kept your team intact.
A few issues to consider:
1. Many companies can continue to operate for a time purely based on momentum and existing pipelines. That does not mean that this is sustainable.
2. The lack of a visible dip does not mean the internals are healthy. Often layoffs are accompanied with an expectation to "do more with less", which generally means the conditions going south for remaining workers.
3. In an economy that is predicated on everyone having a job or enough income to spend money to support the continued existence of companies, it is not sufficient to look only at the output of the company itself.
Bullshit jobs may be a real thing, but much of the system is built on "bullshit", all in service of perpetuating the ongoing success of the system.
If every company could automate every function and there were no employees anywhere, this would obviously not be sustainable in the long run, and it becomes more apparent that the role of the worker is not just about the company's output, and is intrinsic to the whole system, and that's something we'll have to contend with eventually.
I'm not arguing that this is a good thing, or that companies should keep people for no reason, but we're in an era where technology is increasingly disrupting core aspects of the system.
I've always wondered: If the layoff is happening because the company over-hired and the roles are no longer needed, then why do existing employees need to step up and do those roles that the company just said are no longer needed?
Highly depends on the company and how they select the people to be laid off, but the issue can be that the layoff targets some % of over-hiring, and some teams are effected more than others depending on the makeup of those teams, project load, etc. Some teams are disproportionately impacted.
> If every company could automate every function and there were no employees anywhere, this would obviously not be sustainable in the long run
Perhaps not, but I'm not sure it would be for the reason you are implying.
What is this hypothetical company that automates every function and has no employess anywhere producing? And what price can that thing fetch in the market? If the marginal cost of producing additional units is basically zero, which is what the hypothetical implies, then the products should be basically free, since standard microeconomics says that price = marginal cost. Which means nobody would need jobs to afford these products. Which means this condition would be sustainable in the hypothetical as you state it: sure, there would be no employees, but there would also be no need for the jobs that no longer exist.
Of course in the real world there are plenty of ways this could go sideways, but they all basically boil down to: in the real world, governments mess with markets in ways that prevent price from being driven down to marginal cost. That means many things (food, for example) cost more than they should, which means people need more income than they should need if the market were truly free. So what is really not sustainable is governments trying to mess with markets. If that stopped, we could make the necessities of life basically free. That would be a good use of technology.
My point about a lack of sustainability wasn't assigning that issue to companies alone, but broadly to the system as it currently exists and in which those companies operate.
I don't think this is implied unless all productive work across all industries is automated. Practically speaking, this would happen over time, meaning that a fully automated company today could significantly reduce its costs, but would still have to purchase goods and services from upstream providers and pay to market and distribute their products.
And since companies essentially operate on greed, the leadership of these companies would carve out space for themselves, and the short term goal would almost certainly still be to maximize profit, meaning goods are not free, even if the marginal cost is low (gotta pay for all of that automation R&D after all).
Somewhere there is a tipping point where enough automation would throw the system into chaos without major changes. If it could be achieved overnight, then hypothetically we could all have free stuff.
How can you be so callous? This is why people don't like startup people.
Yes, obviously it's a bad thing, because those people are now without a source of income and often without health insurance. I say "obviously" because it's pretty reasonable to expect people aren't sociopaths, and care about the well-being of others. It's only within your sick bubble where maximizing profit at the expense of human suffering is considered a reasonable option. Unfortunately, people like you have a disproportionate power in our society.
I'm not saying you're a sociopath, I'm saying that the economic ideology which is commonplace on Hacker News makes normal people who believe it behave like sociopaths.
Sure, in a society with a reasonable safety net where losing your job wasn't a potential death sentence, laying off some workers occasionally would be fine. But we don't live in a Keynesian fantasy-world, we live in a world where insurance companies have death panels.
Would it also be preferable for companies to act as de-facto charities and hire an extra 10% (or an extra hundreds to thousands) of people in order to provide some of the people who are currently out of work a source of income and health insurance?
If 100 fewer employees is bad; is 100 more good?
No, that's a low-effort straw man argument.
It would be preferable for us to stop trusting companies to provide for people's needs, and build effective systems for providing people's needs.
A good start might be to stop pretending corporate actions are always morally good as long as they're profitable, and recognize that firing people causes harm to those people. That's not a difficult concept for normal people--again, its obvious--and corporations have spilled a great deal of ink to override basic human empathy on this subject.
I'll agree that companies can't be made to work if they're required to act as charities, but I'll also say that if corporations can't exist without causing harm then I'm not sure why we'd want them to exist. The entire purpose of allowing corporations to exist is that they are supposed to benefit society.
At the very least, if we're going to allow companies to fire at will, we need a much more effective social safety net to help workers pick up the pieces when they get fired. But of course these corporations will fight against that, because exploiting their workers' dependence is profitable, and besides, they don't want to be asked to pay to fix the harms they cause.
thank you for saying this. the archives of HN comments are going to make a fascinating case study for the next civilization explaining why this one collapsed.
You can fire half the commercial pilots, and planes will continue to fly without a hitch. Why have two pilots, when one will do. Trucks have one driver and work just fine.
Eventually some planes will crash, but it's ok as long as it happens after effective management gets their bonus and moves on to optimise another company.
And make them pay for their own diapers.
My productivity has been severely impacted, actually, without even going into the mental health / stress / morale effects. I've seen two rounds of layoffs at my current employer and today I am utterly and completely fucking swamped in work. New initiatives showing up in January, directly from corporate sponsors at the SVP and executive level, despite the Great Big Fucking Deal they made about us getting our 2024 "roadmap" to them in November of 2023. Bullshit jobs or not, I'm not sure why I'm expected to have to pick up the slack and do more work at the same time.
Time to look for a new job.
It's great for the company. Not so much for the people.
It's a matter of perspective.
Perhaps, but who's fault is that? Sounds like the company's problem. Who suffers from the layoffs however? Per your example, not the company.
One relevant question is would the fired person have been better off had they not been hired or the job didn't exist in in the first place? It's far from clear to me, but admittedly doesn't soften the blow either way.
Yes. Getting fired ruins lives. It causes divorces, suicides, depression, home defaults, and more. Firing and laying people off should be more painful for the company than it should be for the firees.
Why? How?
You start making it painful for the company to lay off people, I anticipate they stop hiring people to minimize risk, and then unemployment shoots up and presents it's own set of (some overlapping) problems.
That’s one interpretation.
Another is that that 10% of work is distributed to the remaining 90%, who now work harder and are more stressed, but well aware that they were lucky to keep their jobs and therefore willing to absorb an extra hour a day.
Which, free market and all that, may just be smart business. But I don’t think it’s necessarily good management in the long term.
This is an interesting thought experiment, because in that situation the company should cut another 10%, and so on, until they get some sort of message they can't cut anymore.
This is Price's law in action: https://nielsbohrmann.com/prices-law/
Price's law didn't really fit well even within the context in which he created it. Lotka's Law fits better.
And they aren't laws, just heuristics, that the tech world likes to propagate as if they are laws, when if fact most tech people that believe they are part of the "square root people", but really just lack an appreciation for what is often really going on.
Productivity inertia is a thing. It's common for things to keep rolling in the short term after a big layoff. Over time, though, the little things that so many faceless now-gone people were dutifully keeping going the whole time start to degrade and the cracks get bigger. It's not like these people were all working line jobs where there's an obvious productivity falloff like a now-unmanned conveyer dumping product on the floor.
The difference is that now usually the conveyor is smart enough to stop conveying if it notices items falling off its belt.
Human labor is becoming superfluous in the face of self-sustaining capital arising or whatever.
I too rely on jobs, right now, but jobs are not something we are entitled to, especially forever jobs, and I cant stand people that act like that
Accumulate capital, make it grow
If you fail, your life is encumbered in ways that prevent you from doing that, there are limited programs in the US for you, but burdening corporations is a symptom
I guess that depends on what you believe the goal of all of this is - making a great society for companies or a great society for people.
In many cases the company can run fine for a while... the systems that engineers already built will continue to function until a certain point. Once they start breaking/failing the company needs to hire additional people for maintenance/improvements. Often these are people who hadn't worked on the original systems and don't have a full understanding of the stack/systems involved this leads to many other issues... knowledge fragmentation, tech debt, maintenance difficulties, increased bugs, etc.
I've seen this happen many times in large orgs, and the people making the decisions to cut engineers in certain areas often aren't responsible for what happens down the line and don't need to deal with the fallout. ¯\_(ツ)_/¯
That feels reductive. Are the people left working 80 hours a week now, maybe? Are they sacrificing long-term goals to keep short-term productivity in place? Etc.
Just laying off 10% of your employees is easy. If a company can identify the 10% of their workforce that isn't contributing anything, that would speak very highly of their management processes. And in any sufficiently large company, there are always 10% that are either adding nothing or are creating negative value.
How long do you allow for evaluating if there is a dip? And will times never change?
And even if there is really none, then sure it makes sense from the company point of view and pure profit perspective. But if the company is well of, why lay off experienced, trusted and loyal workforce still? You always need slack room, like you need some money put aside.
And another level, work puts meaning to our lives.. either we allow for other meaningful things supported by some UBI, or we should rethink if profiting companies really need to ultra-maximize, or how they can also do a little welfare for their employed work force.. imo it's a pity the employee owned model is not more widespread, and it is all for the few.
But anyway, different end of a very wide spectrum. Certainly, struggling companies must get rid of the bloat, bullshit jobs, and evil within, if it needs that to survive and is the actual problem ;)
I think it's this is more of a real point. Honestly if someone who works in a large bureaucratic organization, the amount of people who do next to nothing is astounding. Is that a bad thing? Yes to some degree, however we do need to have jobs for people to do no matter what and if this gives them something to do everyday and they feel like they're contributing something then maybe that's all they need to do.
The global team I was in halved while I was at the bank, partly from cuts and partly from people deciding to take their various opportunities to leave and then not being replaced. By the time I departed with severe burnout, I had been consistently putting in 15-hour days for 19 months, and that as a fairly senior member of management (regarded by the business as an exec) just to keep our processes running. In Switzerland, that's not normal. But from the outside, yes, we just kept chugging along, so obviously we were finally the right size.
It could mean the companies are sacrificing long term investment for short term gains. Maybe some of those employees are allocated to failing projects, but it's straight out of the MBA book to kill off stuff that maintains the company position long term or innovates in service of short term bumps in profitability. That guarantees large payouts for execs and shareholders.
It’s a bad thing for everyone who depends on the company for their livelihood. The company that decided to hire them, the management that used their headcount to justify a higher valuation.
People are burning out, working the jobs of 3 people and are told they’re lucky to have a job. It’s not bullshit if it’s unsustainable.
Simply because the impact never happens instantly. Companies life span is different than humans, and just because you didn’t see it happening in the coming months right after they did, it doesn’t mean there’s no gradual decline, keep in mind this also does not account the gradual hiring after that event, they news will be reported that they terminated 10%, but who’s going to report a 1% hiring every month in the year after?
How did you measure that? How long are you tracking it? How are you isolating other factors?
While you figure that out, what accountability does your organization have towards the hundreds of thousands of human individuals whose lives were just grossly disrupted and sent into potentially catastrophic strain?
Different societies have found different answers to the accountability question.
Whether or not the jobs were individually bullshit (almost all jobs are, as are almost all companies) has little to do with the conversation.
You can make pretty significant cuts to R&D and see short term revenue and productivity stay pretty level. In fact it should improve your metrics since you are spending less and selling just as many of your existing products as you were before.
Whether that is a good long term strategy is a different question.
Imagine there are 2 groups of people. The first group endeavors to automate and streamline their work as much as possible such that there isn't much left on their plate when the feature well runs dry. Another group has stymied every attempt at automation such that every deploy is a two day long process involving a dozen people. Who do you think management sees as replaceable?
I agree. We are gradually discarding (again) all possible methods of resource allocation other than market capitalism, so we have to make up pretend jobs for people to do in order to give ourselves the excuse to feed them. For some reason, we think that companies should maintain this insane indirection as a public service.
We're not paying people to dig holes and fill them up as a society, instead we're demanding that centers of production and growth willingly disdain productivity in order to subsidize people digging holes and filling them up.
We'd be far better off directly subsidizing education, health care, or even customer service and scientific research than demanding that the real sources of all economic growth (and prosperity) have departments printing out reams of paper for another department to shred. Efficiency and technology lower costs and (when properly distributed) give people more time for leisure across the system. You aren't sticking it to the fat cats by telling them not to do layoffs; if you want to stick it to the fat cats, tax their profits and strip layers of economic indirection/middlemen.
HN: "Why do you need 1000 people for that? It's a weekend project."
Also HN: "You can't have less than 1000 people for that!!"
If you cut off your leg, you'll have enough meat to last for a while. In the long run, you're going to be worse off.
It’s simple. People stop taking vacations and work longer hours and make up the missing 10% of labor. You also no longer have spare capacity for sick days or people leaving, but that doesn’t all come to roost on day one.
Productivity is a lagging indicator. Anxious, scared, overworked people can still be "productive" for weeks even months, it's just not sustainable in the long run.
Similarly, many systems can continue functioning (seemingly without a hitch) when you cease all maintenance and preventive care. Eventually, they will fail.
Yes. These companies are faceless entities, literal money printing machines where some people in charge are the gods who get to decide what to do with the money printer.
They hold an insane monopolistic position. Often these companies utilize verticals which obliterate entire business segments because they are allowed to give products for free (MS Teams for example).
This should not happen.
You could probably cut every employee’s salary by 10% without noticing a visible dip in productivity. Maybe that means that visible measures of productivity are lagging indicators?
Or those people are doing work that takes a longer time frame to impact the company. Sure it’s fine for the next year, but once you start dealing with issues down the line you’ll wish you had been taking care of all that work.
The discrepancy is time i.e. time for things to happen. All organizations have inertia and they will continue as they will until they don't - slowly, until all at once in the end. Maybe that company will retool with a new cadre of recruits, and catch up, or maybe they won't. That's the bet the mgmnt are making. Can I anticipate the next inflection, and if it's later than I expect, will I be somewhere else and outside of the blast radius?
Bullshit job phenomenon is inevitable because the game encourages a winner takes all scenario for now. One or two market leaders keep accumulating all the capital and then instead of using their hires to move the needle of progress forward, they force most of them into some pointless hyperspecialisation or stuff like denying competitors of needed talent.
All this just means that the balance of society has tilted to one unsustainable direction. Society simply needs much better antitrust (or other) laws to the point that every monopoly/duopoly is broken down and balance is restored.
I will use twitter as a hypothetical example. If only twitter can raise capital to the point where it can handle enough traffic at scale and be an arbitor of global news, then it can easily use its resources and reputation to create and staff bullshit jobs without much consequence.
To bring back balance:
1. other legal jurisdictions should ban or tax twitter out of existence over there and raise their own monopolies, for which they will likely need a global workforce
2. cost of investing in twitter or the cost of holding large investments in twitter should be increased so that the instead of accumulating capital in the market leader, people are incentivised to let their money be reinvested into competitors.
This will be resisted by those who already have enormous sums of money invested into the market leader, which unfortunately also happens to be the people who make the rules.
IME (having gone through 3 layoffs), you can squeeze a lot out of fearful employees. I haven't be able to see that sustained over the course of 12+ months though.
They don't, they just stop doing some things and pile on extra unpaid work on those left.
I'd rather those profits be spread out among additional employees (who might help the company either produce better stuff or give better service to customers) than to shareholders.
unless those 10% were working on things which may become important to the company in the future; a company that just "chuggs along" will eventually die
As companies get bigger they tend to get more bloated and disorganized. A lot of initiatives end up not being worth continuing on, so they lay off the people working on those initiatives. Better companies will reallocate talent to new, better initiatives so they don't lose the knowledge in their workforce, but that seems rare.
What's your timescale? If you take medicine for a chronic condition you can often skip a dose without problem, maybe even two, but eventually you presumably revert back to where you were before treatment.
I saw a lot of this back in the "reengineering the corporation" craze in the 90s (and then the "lean organization" and so on). They cut all the slack out of the system so in steady state everything seemed to work. But the world is not consistently in a steady state.
So fire that guy doing backups, and save money by not paying for the redundant network connection you've never used. Stock goes up, prepare three envelopes, and retire!
How would you check for the visible dip in the productivity? and in what time frame? Sometimes it is not easy to measure the impact of layoffs on the org in the short term and it may take some time to realize it.
Probably a good way to cultivate your garden of technical debt.
You can cut costs and cut costs and things seem to operate just fine. Until they don't. See: Boeing.
If your company did something that made everyone's job 10% more miserable
-like maybe all salaried people need to work an extra hour every day to cover the laid off people's work-
Productivity per employee would go up, and it would be impossible to really attribute any negative impact to the product to the layoff!
But would that have been a wise decision for the company? If it was wise, the company should keep laying off more people, but how can you tell when it has gone too far?
Large companies reinvest most of their profits as bets on the future — building new arms of the company, that initially do nothing but quiet R&D for months/years — but which might bring the company entirely new revenue-lines years down the line.
Much of a large company's headcount at any point in time, is people hired to work on these bets on the future. You can fire all of these people, and nothing will happen to the company's day-to-day operations.
But the company's stock will take a nosedive nevertheless — because the promise of future increased returns had already been factored into the share price, and that factor now has to be removed.
Delayed impact is rarely taken into account. You fire people who's impact is going to show up 2-3-6 months from now. Same goes to maintenance. Stop doing maintenance you can save money in the short term. Should you stop doing maintenance? Should you fire this many people?
Probably not.
"If hundreds or thousands of people suddenly have no income, putting them in a position of severe hardship and potential homelessness, but it doesn't have any direct negative effects on me personally, is it really a bad thing?"
One thing that is baffling to me is that these companies can fire 10% of their workforce and they just keep on chugging without a hitch.
A company I used to work for set up a team to develop a new product for a new market. After 3 years they were still unprofitable, the product was shut down and the entire team was fired. This obviously had no direct effect on the companies overall productivity. Was that team doing a "bullshit job"?
If you fire the team doing R&D on the next generation of one of your products or the team working on launching your company into an entirely new market or the team the works on internal tooling or some of the people managing key account relationships with certain customers or suppliers or many other similar jobs then the company can absolutely keep going without a hitch, for a while.
Redundancy isn’t a bad thing, it’s what lets you go on vacation sometimes. It’s hard to know how much you should have, and it’s no surprise it’s one of the first things to go when companies downsize.
Sure, some bullshit is going to slip in, but it’s still a bunch of human beings trying to make a living on this dumb rock. Software itself is all bullshit in the grand scheme of things.
"these companies can fire 10% of their workforce and they just keep on chugging without a hitch"
That's not always true though. I've been on both sides of layoffs: laid off and remained. Sometimes the people who remain are asked to do more with less. I was even asked to do more with less pay at one point.
If the people working for the company has finished making the product, then after that they would have to be tasked with making a new product. So, yes, if the product is delivered then there shouldn't be any dip in revenue if you fire the people who made it.
Companies keep these productive people if they want to grow and deliver even more products. They fire these productive people if they're not aiming for more growth at the moment.
I use some old software that nobody has been working on for a decade and it still works perfectly, to give an example.
Yes.
Companies exist at the allowance of a nation-state for the benefit of the people.
If the benefit is attenuated, the people, via government, can sanction the corporations.
If the corporation is succeeding and paying more into the public till by providing fake jobs, what's the problem? They're not succeeding hard enough?
I think the error you've made is that you've mistakenly projected your sense of "fairness" on corporations.
Corporations aren't people my friend.
That people have to be employed artificially so they don't starve: is the problem. UBI has the potential to remove a lot of bullshit jobs, companies can run much leaner when they aren't responsible for a citizen's needs.
Operations is one part of a business. Canning your development and marketing doesn’t affect that right away. Everything gets a little shittier over time.
The best tech example is IBM. They descended from industry leader to desiccated husk, only sustained by legacy business and acquisitions.
generally they keep chugging along (in tech) because so much of the work has been automated.
As long as they can find people to educate themselves on the systems fast enough it's not an issue.
I'm sure there's chafe in that 10%, but not all of it is.
If I went into your body and deleted all your DNA, you'd feel fine too. Chugging along. For a while.
Here's another thing: the productivity that's being tracked isn't aligned with the value that the consumer is paying for. You can see this in government contracting a lot, where the consumer doesn't even see the product - they just see the paperwork. If you're really good at "producing" paperwork, you don't need anything else for a very, very, very long time.
Which part is bullshit? The part where, in order to survive, everyone* needs a job? Or the part where, because everyone* needs a job, some jobs might not be as important as others?
*Y'all know what I mean.
If only a handful of people are capturing all the profits, and everyone else is unemployed, homeless, and hungry... that's how you get a decline in society.