The truth is that a majority of tech companies don't need 50%+ of their employees.
Google could lay off vast swathes tomorrow and be immensely more profitable without any loss in revenue.
The 2010s will be remembered as the golden era for tech employment. The second we start getting industry wide layoffs, the insanely high wage inflation we've seen will kick into reverse much faster than you probably believe possible.
Further, tech employees will be the first to suffer in a high inflation environment due to rising discount rate. Yet tech is such a small portion of the labor force that layoffs here basically mean zilch when it comes to the unemployment rate/inflation, and thus there's a long way for it to fall before the Fed adjusts policy
> The truth is that a majority of tech companies don't need 50%+ of their employees.
Totally agree. The problem is, nobody knows how to tell which ones.
On the ground it's obvious. I'm sure everyone here knows who on their team is crucial to their current production stack, and also knows others who would have no impact (or even positive impact!) if they left.
One level up - the direct EM - has most of that context too, but some is already lost. At the next level (Sr. EM or Director usually), almost all of it is gone. At that point, cutting 50% is just guessing. Keep going up and eventually the risk becomes too high that you'll sacrifice your key players along with the rest. Bath water, baby.
No heuristic is perfect, but it's fairly easy to quantify empirically from activity/records. Developers who are productive (actually write and ship large amounts of quality code) tend to be valuable and those that don't, aren't.
That being said there are some intangibles, like morale etc. It's possible there are people that benefit the team while having low personal productivity.
But anyway, no need to approach in that way. There are probably entire branches of google that could be laid off without any material impact to revenues/profitability, thus all layoffs concentrated in single arm.
Crypto divisions could be cut at many companies without affecting their core businesses. Did Square need to rename itself to Block and add all kinds of crypto functions? How many hundreds of developers are working on that.
I don't think X% headcount cuts horizontally across the org are ever a good idea. Cut non-essential functions. And cut in core branches opportunistically based on low performance.
You say that, but companies that cut tech too deep will probably get crushed under a mountain of technical debt or gradually lose goodwill due to buggy or stale products.
Point is, it's possible to ship crap with a small crew. But the cuts won't come uniformly from scoping back or removing low productivity engineers. You'll also see corners cut, upgrades delayed, security flaws ignored, and so on.
Obviously there's bias involved, but I really don't see a reality where this isn't the case. I've literally never worked at a company where half the team could be laid off and the product would still function at its current level of functionality for 12 months; let alone adding functionality. If you've worked at a company like this; I imagine there are some; then sure; the lights could be kept on. Hey there Oracle & IBM 2.0.
Then again, you (the company) just laid off hundreds of extremely talented engineers with few other marketable skills except "the industry you trained them in", you've been paying them insane salaries, they're just going to turn around and compete with you, except now they've got a clean slate and have learned from all the mistakes that caused them to be necessary in the first place.
The well paying, large companies are literally 7 of the 10 largest companies on the S&P. Oh, and by the way, one of those other 3, UHG, they have... 850 job openings with the word "software engineer" in the title; about 15% of all their openings. Johnson & Johnson, they're on there, 300 software engineering openings, out of 3000 total. Berkshire is also on the list, harder to get their count, but you get the point; software is EVERYWHERE.
I just... don't get it. I don't get how someone can believe what the grandparent believes. I mean, you can argue a more measured stance, that the outlier 99.9th percentile salaries we've seen in the past four years are probably going to stagnate. Maybe; I'm not convinced of this, but its a reasonable stance. You can argue it'll be harder to get into the industry, as companies want experience and not coding bootcamps; I'd bet on it. But to argue that tech companies don't need 50% of their employees, when they're the plurality of the wealth of the United States' public markets; its comical. Where else did that wealth come from, if not their (tech) employees? If the argument is they're overvalued, maybe, but that's speculation; buy Puts if you believe it, but I'd buy Calls on "you won't".
Then again, maybe the grandparent is talking about non-tech roles in tech companies? I can't tell; and moreover, I don't think even they know what they're arguing for.
Adding people fast is very bad for an organization's efficiency, for a variety of reasons, including the one you mention.
However, subtracting a lot of people fast is just as bad for an organization's efficiency, for a whole host of other reasons. Not that I expect Robinhood had much choice in the matter at this point.
That remote work stuff will go away. People are kidding if they think large organizations can innovate and remain competitive when everybody on a team isn’t in the same room.
Individually people might think they are more productive (at least coders do) but the communication issues that arise from remote work are gonna really become an issue soon enough.
Well then - found a company that employs half the people and become the next Google. Should be easy if your magic insights can make you twice as profitable. Maybe this is not how innovation works though.
Google could fire their entire org outside of ads, search, and android and still roughly maintain the same revenue/growth.
It's quite obvious. They are dominant via first mover advantage and monopoly esque positioning in search.
And they could likely even not change search at all and stay on top for 10+ years.
What is the marginal value today of a given Google employee to the company's bottom line? Super low.
The tailwinds driving strong growth for these companies came primarily from macro/digitalization, not because they invented feature X which enhanced revenue
Not a good argument from you. As if the sheer number of employees is what made Google successful in the first place. And as if efficiency alone makes a successful company. Why would you think these things?
> Yet tech is such a small portion of the labor force that layoffs here basically mean zilch when it comes to the unemployment rate/inflation, and thus there's a long way for it to fall before the Fed adjusts policy
The really scary thing for me is the possible macro environment for tech.
Indians will soon overtake any of the Western countries as the largest English-speaking population on the internet. As I'm sure many of you know, Indians are hugely talented and most of us who had to deal with CS or Maths have probably resorted to some of the extremely generous Indian experts who teach these subjects on Youtube. There are some very good institutes and universities with solid reputations, many expanding to boot camps and such - so there is a very good volume of tech talent coming online fast.
So you have a tsunami of highly educated, English-speaking tech workers coming online AND a sudden surplus of laid off tech workers in the West. It could potentially get really ugly for the Western tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks. After all, we just tested remote work and you can live like a king in India for much less than even the cheapest Western town.
> tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks
> You've never worked a job that isn't 30 minutes of work and then the rest of the day is posting "day in the life of a FAANG employee" Tiktoks or being a paid activist.
That is incredibly not what it's like to work in tech in the US. I doubt you've been anywhere near a big tech programming job.
This gets said in every conversation about remote work but this has been the case for a few decades now. If the software business was just about chucking commodity CS grads at problems and YouTube videos and the man month theory was true then everyone would be running their companies on batteries of commodity Devs already.
>It could potentially get really ugly for the Western tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks
I don't know where you work but the people actually doing the core work that drives multi billion companies don't work like this.
Multi billion Companies aren't stupid they aren't paying these salaries because of cost of living they're paying them because the economics mean get more value from the work done than they're paying out. The best developers in India already get hired by FAANG and they're working in SV.
Have you ever worked with an Indian company?
I am just laughing each time I hear huge talent pool. So maybe your top 1% is incredible but they already left the country.
You say that like these well established tech companies (like Google) haven't already optimized the employee counts and employee salaries needed to produce the (current) best ROI and also figuring for future company growth.
A bare-bones, scrappy team makes sense in the startup world but not the publicly traded enterprise engineering world. Move Google back into this world and it'll quickly crumble in a few quarters.
Has any tech company that laid off 50% of it’s employees survived? Maybe one or two. That would seem to indicate that the 50% number is too high.
Perhaps you see it as 50% as like when people say they only need 10% of the functionality of MS Word so they could drop 90%. Except that 10% is different for everyone.
The bureaucracy expands until external factors force it to stop or contract. Google Search and Ads are a small percent of the company but nearly all the revenue. It’s not hard to see how that can lead to runaway bureaucracy.
The key is competitiveness. If all your competitors are improving their offerings year over year, you must do the same. If they all cut staff and stall on development, you can too
So nothing will change then? Instead of 135k people not answering the phone and telling you to go F… yourself you’ll only have 120k people not answering the phone and telling you to go F… yourself. Or maybe Google has amassed so much AI knowledge that all of its employees can be replaced by a single Raspberry Pi that doesn’t answer the phone and responds to all inputs with go F… yourself! A hundred years ago you would have had to pay a million people a penny a week to sit around not answering the phone and telling you to go F… yourself to achieve the same effect. Hard to believe the human race has come so far so little time.
But what’s more amazing is AWS support, because they answer the phone, and they solve your issue, and that’s the trick nobody else seems to be able to master.
That's brutal. We just laid off a couple hundred people last week, only five from our department (which is 190 people) but two of them were from one of my teams. Demoralizing, and in the case of that team, absolutely devastating to productivity in the short term.
Cutting almost 1 in 4 employees is beyond anything I can imagine. I think I'd feel like I was rearranging deck chairs if I survived the cut and stuck around. I'd be putting out my resume right now.
I’ve gone thru those it a few times - while most all other companies were doing hiring freezes or layoffs as well. It’s times like that that employers really squeeze every last bit out of those “lucky enough” to stay around.
So several times I've had the opportunity to join fast growing startups that offered quite a bit more compensation, and equity as well. One of the things that I always took consideration of was the stability of the company vs where I was at.
Many of these people made a bet that working for Robinhood would pay off, it didn't that is part of the risk that came with the SV salaries, and the stock. I get that it sucks, but it seems like it is part of the parcel that comes with joining a VC backed startup.
Do people really not consider company stability and long term projections when choosing where to work?
Name one company where you could be confident there's no risk of being laid off. Big companies definitely go through downturns and cut significant chunks of their staff, and you're even less likely to be able to do anything about it there than at a small company.
Public companies have shareholders to please quarter-after-quarter. If the markets remain bearish for long, public companies will have to do multiple layoffs as they restructure their operations.
Private startups, especially well-capitalized ones, have only their Boards (mostly, founders) to answer to. They can be, counterintuitively, more stable job-wise than many public companies.
Oracle is also doing layoffs today and would somewhat be in the stable class. It’s just like nature it just is. Think the thing to do is just take Larry Ellisons advice and GTFM.
Stability is a bit of an illusion, as even profitable companies will do layoffs from time-to-time for a variety of reasons.
When choosing where to work, I tend to look more at: Is this a reasonable business? Does management have a plan that makes sense? Do these people seem to have their priorities in order? Do I trust these people?
Those questions hardly guarantee stability, but the right answers leave me comfortable that they've got a fair shot at it.
I’ve heard a lot of tech people not consider stability because it’s so easy to just get a new tech job. Everyone was hiring. Everyone was throwing money everywhere. Why be stable when you can find an employer easier than calling a taxi.
That's a lot of staff - it means 1/5th of your coworkers got laid off...
I'm very bearish on Robinhood - I don't know if they have enough of a moat to defend themselves from other free stock trading apps. People have forgiven so many outages. The Gamestop saga was the straw that broke the camel's back for many.
The Gamestop fiasco rightfully killed their reputation among their absolute core fanbase who gave Robinhood the word of mouth that got them off the ground
Those people are never coming back and they're never going to have anything good to say about Robinhood
I like Robinhood and I have no problem with them having technical issues when users a flash mobbed a meme stock. In the end they learned what to do next time.
They weren’t technical issues; they were financial, business, and policy issues. And many people people either lost or think they lost a lot of money because of it.
Robinhood branded themselves as bringing power to the people but as soon as the people got the upper hand in a market, Robinhood turned around and screwed them. It’s a lot worse than a young startup struggling to keep up with explosive demand.
I know I’m a mere small drop in a large bucket, but I take solace in knowing there were plenty of other drops like me that eventually wrecked that bucket.
A lot of Robin Hood's growth in particular was driven by people gambling their stimulus money because they didn't need it to make ends meet, and by the Fed juicing the markets with low rates for far too long, and by the ridiculous meme stock phenomenon. It was a perfect storm of stupidity.
Personally I'm glad that some sanity is returning to investing, and we are still a long way from getting back to normal.
The hardest part of this to me to deal with is that it’s the truth. For decades, the conservative line was if you give people money they’ll just blow it on gambling and booze. Turns out it’s true.
Ah yes, it’s completely fair that the only people who should be morally allowed to participate in the financial apparatus that sometimes leads to getting rich, are the people who are already rich. I see no incongruities whatsoever with this logic. rapid eye blinking
Bunch of people lost money. Some of them got rich. Booze is good and gambling is fun and it’s ok to blow their own money on exactly the things that everyone else blows their money on.
(This hits on the idea of “accredited investor,” and I have such a hard time not calling out that it’s a mechanism for already-rich people to participate in every deal that could make not-rich people rich. And that there are very few other ways to earn a fortune when you only have $10k in the bank. I lost my dad’s $11k when mt Gox exploded, which is objectively stupid. Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?)
Didn’t mean to rant, but it is what it is. You’re not wrong though.
It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
And a massive increase in crypto scams. And a massive increase in collectibles prices like trading cards and old video games. So much cash sloshing around. Everything inflated except the consumer price index (especially if you adjust the automotive, fuel, and electronics sectors of CPI because those price increases reflect supply issues rather than stimulus demand). Where did all that money go?
The untargeted stimulus just enabled mob madness and scams paid for by tax dollars. Wealth redistribution from the tax payer to the dishonest and lucky.
It's hardly surprising that given breathing room, people who live in miserable poverty will spend on things they couldn't previously afford. "Man cannot live on bread alone" is a pretty old concept. As for the people who already could afford the necessities of life, why not have a bit more fun than normal?
What we had, in effect, was the closest thing we will ever get to a nationwide short-term UBI experiment and it was a complete disaster.
The worst fears about UBI were realized with just a few payments: people gambling with the money, creating stock bubbles with meme stocks, and contributing to a rapid rise in inflation.
People will say that wasn't really UBI -- but it's the closest we have ever been to it and probably the closest practical implementation we could ever expect from our government, and with "real" UBI people would have been given even more free money.
One estimate puts it at $170 billion extra flowing into retail investing.[1]
Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2]
In my industry the wave of stimulus definitely caused behavior changes, it was pretty distinct.
Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
They didn't, but I think most people would guess that is accurate. I know I do. I supported one of their open source infrastructure solutions(that they weren't paying for mind you) when SHTF.
This reads like a boring classist commentor. Reddit is always joking/lying about what they are really doing. So no, stimulus checks didn't cause retail investors to become less sane.
People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.
Yes. Try to be a cold-blooded professional. Do your job without attachment. Your company is not your family. It will end one day, but you will still be going. What you take away is experience, learning from success and mistakes, connections, and most importantly - friendships. The rest is insignificant.
Robinhood... like robbing from the rich to give to the poor... hold on a minute! What a name for a huge public corporation in the US. They almost had me!
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Google could lay off vast swathes tomorrow and be immensely more profitable without any loss in revenue.
The 2010s will be remembered as the golden era for tech employment. The second we start getting industry wide layoffs, the insanely high wage inflation we've seen will kick into reverse much faster than you probably believe possible.
Further, tech employees will be the first to suffer in a high inflation environment due to rising discount rate. Yet tech is such a small portion of the labor force that layoffs here basically mean zilch when it comes to the unemployment rate/inflation, and thus there's a long way for it to fall before the Fed adjusts policy
Totally agree. The problem is, nobody knows how to tell which ones.
On the ground it's obvious. I'm sure everyone here knows who on their team is crucial to their current production stack, and also knows others who would have no impact (or even positive impact!) if they left.
One level up - the direct EM - has most of that context too, but some is already lost. At the next level (Sr. EM or Director usually), almost all of it is gone. At that point, cutting 50% is just guessing. Keep going up and eventually the risk becomes too high that you'll sacrifice your key players along with the rest. Bath water, baby.
That being said there are some intangibles, like morale etc. It's possible there are people that benefit the team while having low personal productivity.
But anyway, no need to approach in that way. There are probably entire branches of google that could be laid off without any material impact to revenues/profitability, thus all layoffs concentrated in single arm.
Crypto divisions could be cut at many companies without affecting their core businesses. Did Square need to rename itself to Block and add all kinds of crypto functions? How many hundreds of developers are working on that.
I don't think X% headcount cuts horizontally across the org are ever a good idea. Cut non-essential functions. And cut in core branches opportunistically based on low performance.
I guess there is no leetcode BS for firing. May be someone create one so that circle of sucks can be completed.
Point is, it's possible to ship crap with a small crew. But the cuts won't come uniformly from scoping back or removing low productivity engineers. You'll also see corners cut, upgrades delayed, security flaws ignored, and so on.
Then again, you (the company) just laid off hundreds of extremely talented engineers with few other marketable skills except "the industry you trained them in", you've been paying them insane salaries, they're just going to turn around and compete with you, except now they've got a clean slate and have learned from all the mistakes that caused them to be necessary in the first place.
The well paying, large companies are literally 7 of the 10 largest companies on the S&P. Oh, and by the way, one of those other 3, UHG, they have... 850 job openings with the word "software engineer" in the title; about 15% of all their openings. Johnson & Johnson, they're on there, 300 software engineering openings, out of 3000 total. Berkshire is also on the list, harder to get their count, but you get the point; software is EVERYWHERE.
I just... don't get it. I don't get how someone can believe what the grandparent believes. I mean, you can argue a more measured stance, that the outlier 99.9th percentile salaries we've seen in the past four years are probably going to stagnate. Maybe; I'm not convinced of this, but its a reasonable stance. You can argue it'll be harder to get into the industry, as companies want experience and not coding bootcamps; I'd bet on it. But to argue that tech companies don't need 50% of their employees, when they're the plurality of the wealth of the United States' public markets; its comical. Where else did that wealth come from, if not their (tech) employees? If the argument is they're overvalued, maybe, but that's speculation; buy Puts if you believe it, but I'd buy Calls on "you won't".
Then again, maybe the grandparent is talking about non-tech roles in tech companies? I can't tell; and moreover, I don't think even they know what they're arguing for.
However, subtracting a lot of people fast is just as bad for an organization's efficiency, for a whole host of other reasons. Not that I expect Robinhood had much choice in the matter at this point.
Some FAANG companies will likely prioritize hiring in Europe and Asia and use that to pressure bay area salaries down.
Individually people might think they are more productive (at least coders do) but the communication issues that arise from remote work are gonna really become an issue soon enough.
It's quite obvious. They are dominant via first mover advantage and monopoly esque positioning in search.
And they could likely even not change search at all and stay on top for 10+ years.
What is the marginal value today of a given Google employee to the company's bottom line? Super low.
The tailwinds driving strong growth for these companies came primarily from macro/digitalization, not because they invented feature X which enhanced revenue
The really scary thing for me is the possible macro environment for tech.
Indians will soon overtake any of the Western countries as the largest English-speaking population on the internet. As I'm sure many of you know, Indians are hugely talented and most of us who had to deal with CS or Maths have probably resorted to some of the extremely generous Indian experts who teach these subjects on Youtube. There are some very good institutes and universities with solid reputations, many expanding to boot camps and such - so there is a very good volume of tech talent coming online fast.
So you have a tsunami of highly educated, English-speaking tech workers coming online AND a sudden surplus of laid off tech workers in the West. It could potentially get really ugly for the Western tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks. After all, we just tested remote work and you can live like a king in India for much less than even the cheapest Western town.
> You've never worked a job that isn't 30 minutes of work and then the rest of the day is posting "day in the life of a FAANG employee" Tiktoks or being a paid activist.
That is incredibly not what it's like to work in tech in the US. I doubt you've been anywhere near a big tech programming job.
>It could potentially get really ugly for the Western tech workers used to six figures for working 30 hours per day and then spending the rest of the day on activism or "day in the life of a X" Tiktoks
I don't know where you work but the people actually doing the core work that drives multi billion companies don't work like this.
Multi billion Companies aren't stupid they aren't paying these salaries because of cost of living they're paying them because the economics mean get more value from the work done than they're paying out. The best developers in India already get hired by FAANG and they're working in SV.
A bare-bones, scrappy team makes sense in the startup world but not the publicly traded enterprise engineering world. Move Google back into this world and it'll quickly crumble in a few quarters.
Perhaps you see it as 50% as like when people say they only need 10% of the functionality of MS Word so they could drop 90%. Except that 10% is different for everyone.
Then why are they hired? It can’t be image alone
What's unusual about the last 20 years is that there's been so much available capital to fund tech companies doing just that.
But can people who work in tech become teachers, nurses and police officers? I am not sure.
But what’s more amazing is AWS support, because they answer the phone, and they solve your issue, and that’s the trick nobody else seems to be able to master.
Cutting almost 1 in 4 employees is beyond anything I can imagine. I think I'd feel like I was rearranging deck chairs if I survived the cut and stuck around. I'd be putting out my resume right now.
Many of these people made a bet that working for Robinhood would pay off, it didn't that is part of the risk that came with the SV salaries, and the stock. I get that it sucks, but it seems like it is part of the parcel that comes with joining a VC backed startup.
Do people really not consider company stability and long term projections when choosing where to work?
Companies are ruthless, but that's a straw man. Risk is not all or nothing.
The company I work for is profitable. That fact alone lets me sleep at night.
Private startups, especially well-capitalized ones, have only their Boards (mostly, founders) to answer to. They can be, counterintuitively, more stable job-wise than many public companies.
Obviously that’s over now.
Not even close.
I'm very bearish on Robinhood - I don't know if they have enough of a moat to defend themselves from other free stock trading apps. People have forgiven so many outages. The Gamestop saga was the straw that broke the camel's back for many.
Those people are never coming back and they're never going to have anything good to say about Robinhood
Robinhood branded themselves as bringing power to the people but as soon as the people got the upper hand in a market, Robinhood turned around and screwed them. It’s a lot worse than a young startup struggling to keep up with explosive demand.
Dead Comment
Personally I'm glad that some sanity is returning to investing, and we are still a long way from getting back to normal.
Bunch of people lost money. Some of them got rich. Booze is good and gambling is fun and it’s ok to blow their own money on exactly the things that everyone else blows their money on.
(This hits on the idea of “accredited investor,” and I have such a hard time not calling out that it’s a mechanism for already-rich people to participate in every deal that could make not-rich people rich. And that there are very few other ways to earn a fortune when you only have $10k in the bank. I lost my dad’s $11k when mt Gox exploded, which is objectively stupid. Meanwhile my friend is now a multi millionaire simply because he didn’t lose his coins and didn’t sell them. Was he stupid? Did I blow my money on gambling, but he was just lucky?)
Didn’t mean to rant, but it is what it is. You’re not wrong though.
It's absurd Americans judging at normal people spending money, but same people ok with companies making record profit during pandemic, the minimum wage limit etc. It's pathetic.
Let the privileged folks have their fun, so the unprivileged can eat and not worry so much.
The untargeted stimulus just enabled mob madness and scams paid for by tax dollars. Wealth redistribution from the tax payer to the dishonest and lucky.
Most people just have no financial skills and will just get slaughtered on the stock markets. Others refuse to save money for their retirement at all.
What we had, in effect, was the closest thing we will ever get to a nationwide short-term UBI experiment and it was a complete disaster.
The worst fears about UBI were realized with just a few payments: people gambling with the money, creating stock bubbles with meme stocks, and contributing to a rapid rise in inflation.
People will say that wasn't really UBI -- but it's the closest we have ever been to it and probably the closest practical implementation we could ever expect from our government, and with "real" UBI people would have been given even more free money.
Also, it may be reasonable to use the savings rate as a rough proxy. That rate was higher than it has been for decades when the stimulus was active and has since dropped. [2]
[1] https://www.nytimes.com/2021/03/21/business/stimulus-check-s...
[2] https://fred.stlouisfed.org/series/PSAVERT
Obviously, a lot of people did need that money to make ends meet. But it's also obvious that some % of the population was able to treat it as money they were able to play around and have some fun with.
People stuck at home, with extra spending money, and a desire for internet points, caused your deviation from normality in investing.
sheesh...