Perhaps I'm naive, but I think companies are doing massive layoffs these days because of some sort of "domino effect".
There are companies out there who would love to lay off half their staff, but in regular times they couldn't just do it (because it wasn't a common thing, and makes them look "bad"... everyone would protest). But since nowadays every damn company is doing massive layoffs (and not unknown companies, but companies like Twitter, Facebook, Google, etc.) then they take advantage of the situation and proceed to do the same.
> While we are looking forward to what’s to come in 2023, we must also make hard decisions necessary to set us up for long-term success.
This could have been said any damn year in the past, but massive layoffs is the latest trend, so why not.
The FED is currently raising rates to fight inflation. One of the FED's main goals is slowing down demand, as policymakers can't control supply.
So, to fight that elevated inflation they are killing demand, and when demand sharply drops, you can't keep paying your workers as before (because you sell less goods!).
Moreover, companies simply got fat during the pandemic and over hired. I mean, there are probably also a few (lot) companies which do what you write, but I don't think Flexport is one of them. It's more likely they over hired like everyone else. Also, you might want to take a look at the current container fright prices [1]. Pretty parabolic.
Another impact of rising rates and declining demand is decreased credit lines and increased costs.
The world, particularly business in the US, really did get used to cheap borrowing for everything. Using a line of credit for everything or acquiring massive amounts of easy to service debt has been basically a standard business practice for the last 20 years.
I am actually surprised things haven't imploded yet. So many companies have acquired massive debt that's going to become increasingly impossible to service. It feels to me like we are waiting for the first big domino to fall.
This is literally what interest rate hikes are meant to do though, and everyone plays along. You hike rates, which switches people to saving instead of spending, since no one is spending companies cut costs and downsize instead of spend for growth and hey presto, demand collapses.
In a cheap money environment you take the money and you gamble for growth, in an expensive money environment you do your best to run lean. The pain is moving between these two. The winners are the guys who did a raise at the peak and can use that cash to accelerate through the downturn, and the losers at the guys who just didn't quite get there, who now are forced into taking capital at a massively diminished valuation.
> In a cheap money environment you take the money and you gamble for growth,
It's a classical Austrian economists nightmare. The argument is that cheap money stimulates malinvestment. That is to say that corporate projects that would not have made adequate returns on capital under normal circumstances seem to look feasible.
It's all fun and games until the tide turns, and then the whole edifice collapses like a house of cards because it was built on shaky premises that no longer hold.
This was my initial take six months ago, but I've come to realize this is about runways. Imagine you just lost your job. First thing you'd want to do is get some idea of how long it'll be until you can get another one, then look at your budget and cash on hand to make sure you can pay the bills. If you don't, you have the options of borrowing money (which is hard and a bad deal in these circumstances) or selling some of your stuff. This is basically what companies are doing.
It's a bad deal for companies to borrow money or take big investments when interest rates are so high. If you want to avoid doing that, you need to predict when interest rates will drop and make sure you have enough cash to ride it out. In spite of being successful, some companies don't have the cash, and they need to reduce their burn rate.
Amazon and Meta are at 0 risk of running out of money. They make billions in profits.
Smaller companies that are still not generating profits? Absolutely they need cuts to survive.
Both of these things are true at the same time. I’m continually surprised at how quickly people have bought the excuse trotted out by extremely profitable companies for mass layoffs. In that situation it is primarily an exercise in juicing up the stock price and keeping investors happy.
You are naive they just want to rehire positions at lower rates if you see in the article they are cutting 600 but are hiring for 350 to 400 people. It would immediately allow them to replace higher wages workers that have been with the company with entry level positions . Also it seems like an identification of long term trends and they figure they want to invest in automation.
Well, that's what I said. They are doing it not because of "bad times" or "recession" or "post-covid era", they are doing it because that's what they wanted to do from the beginning. They couldn't do a massive layoff in the past because it would get them bad rep, but nowadays, it barely is a thing anymore (just look at this thread: people commenting "well, at least the severance is nice". What the hell? Massive layoffs shouldn't be seen as regular news)
A global recession is coming against a backdrop of the Fed raising rates, that is going to be very painful. A lot of people here don't seem to realise this is the case or are in denial. This is a bubble bursting, this is serious.
Lots of companies are laying off workers or at least freezing hiring because they anticipate earnings cratering, or are already seeing it happen. They haven't reported on it yet, but they will in the coming months. The layoffs will continue to gather pace, as will bankruptcies.
As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a recession. But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off.
That actually really gives me hope for a soft landing - those high-wage folks are much less likely to have serious financial problems like homes getting foreclosed (not to say it's not possible but they're much more likely to have a cushion to keep making payments). If they pull back on their discretionary spending plus stop doing things like driving up housing/car/stock prices by putting money into those things, that feels like it could be the basis for inflation slowing down without a huge uptick in unemployment and everything that comes with it.
This is a good point that I had not previously considered.
Inflation has been pretty stubborn. I assume some of that is coming from supply chain issues, but some of it also could be due to higher-earning households not being as price sensitive as they would have been in previous eras. i.e. a Google engineer is not going to really notice or care that milk is 50% more expensive. They might not even notice or care that their new car now costs $40k instead of $30k. Their annual stock options probably fluctuate by that much on a daily basis. That level of economic comfort used to be the exclusive purview of the professional class, i.e. doctors, lawyers, etc... But the tech boom has expanded that class (upper middle, lower rich?) considerably.
Will be interesting to see if this is the straw that can break the inflation camel. Overall, I am getting the impression that these layoff announcements, while grabbing headlines, are not very indicative of the market at large. But it does seem like they are picking up steam, and of course, these things can also reinforce each other. For example when you let go of 10% of your staff, that means you also reduce your per-seat SAAS software spend, and that money was someone else's revenue.
Anyways, I am rooting for a soft landing but still feel like these things are too hard to control. Would be nice if we could just let some air out of the more bubbly parts of the economy while keeping everything else chugging along. Previous recessions usually result in those who can least afford it getting hit the hardest, so a change of pace on that front would be welcome. Fingers crossed.
I make a good wage and the first thing I'll do if I get the boot is stop buying things from the plebs. No eating out and paying the cook. No day care paying the working class daycare worker. No buying lumber for house projects paying the logger and mill worker. No cars paying the auto worker. etc, etc. Less toys for the kid meaning less trucking and shipping work.
Compound that at scale and it will definitely have an effect.
But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off.
There will not be a soft landing.
When has there ever been a soft landing and how would raising rates into a recession ever result in one? Raising rates takes 1 year to come through to the real economy - we haven't even seen the impact yet, only on stock prices which foreshadow the real economy and again are a leading indicator. They will raise till unemployment starts to rise.
Unemployment is the goal of this Fed policy - that is the point - cause unemployment so that inflation goes away.
Even more it still seems like it’s mainly companies who doubled their headcount since COVID started because someone extrapolated the madness to last forever? I sure hope the first in line for layoffs are the people who thought that was a great idea
>As far as I can tell, layoffs seem concentrated among high-earning folks - I can definitely see how anyone browsing HN would think we're headed straight for a recession. But it seems like overall, and especially in lower-wage jobs, employment is still humming along and people are very much not getting laid off.
Shit rolls downhill. We'll see how well the service economy holds up when their client base has been out of work for 6 months.
One interesting concept is that falling inequality will look exactly like this.
Wealthy people have gotten used to increasing the gap and therefore assume that trouble at the top is much worse below.
But what’s actually panning out is that Internet technology is great at replacing white collar jobs and awful at replacing blue collar jobs (I don’t think electricians are losing sleep over ChatGPT).
EDIT: Thank you all for generously sharing your time in writing up such thoughtful answers.
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Would love to hear more on your perspective / insight.
This is all intentional, right? My understanding is that the fed is leaning into this particularly hard in order to dislodge the stubborn housing bubble.
For an individual (someone who isn't a current business owner), does this basically mean we should continue stockpiling savings, and avoid moving (rent) / avoid buying house / buying a car?
Any ideas how long this could last / what the bottom looks like?
> My understanding is that the fed is leaning into this particularly hard in order to dislodge the stubborn housing bubble.
They are trying to reduce inflation. The housing bubble certainly played a part, but inflation was hitting nearly everything. A big concern here, is that many smart people think a fair bit of that inflation was due to COVID related supply chain disruptions (which still persist, see China and COVID). So while raising interest rates will help, it may not be the right tool for the job (but it is the only tool that the Fed has, so here we are).
> For an individual (someone who isn't a current business owner), does this basically mean we should continue stockpiling savings, and avoid moving (rent) / avoid buying house / buying a car?
Definitely build up your savings. The other three are more complicated. Rents appear to be finally going down in some marquee markets. So moving might actually save you money. Buying a house now feels like a bad idea, seems like the market is still carrying on from the fumes of the bubble, but interest rates are definitely having an impact. Based on historical examples, the full impacts will probably take a few years to shake out as housing tends to move pretty slowly. And buying a car, well that is complicated. If you need one, buy one. If not, probably best to avoid it.
If you do have savings, might make sense to start looking at CDs, treasuries, and municipal bonds. Interest rates are up and if you have a chunk of cash sitting around those are good ways to put it to use.
> Any ideas how long this could last / what the bottom looks like?
Watching the Fed is the key here. And the Fed is watching inflation. So as long as inflation stubbornly persists the Fed is likely to keep raising rates, and that is going to impact the economy. I read somewhere that the "market" is expecting inflation to normalize in the summer of 2023. But personally that feels optimistic. I think we still need to shake off the COVID induced supply chain disruptions before things get back to normal, and that still feels like another year or so away.
2008 lasted nearly 17 months. The hard part is deciding when the recession actually started. The media and government is in denial, so they'd tell you we aren't even in a recession yet. But the rule of thumb is typically two negative quarters of GDP growth, which we hit this summer.
If you run a VC backed business my suggestion is 24-30 months of runway is a good starting point.
As far as individuals go, it's not a bad idea to mirror this advice. Have essentially 2 to 2.5 years of income saved in the event that you get laid off and can't find a job for a long time. Hopefully it never comes to that, but it never hurts to be prepared.
Falling stock prices are really a reflection of real-world problems - while it obviously feels in the US like everything is fine (judging from the many comments saying this here on this thread), everything is not fine, companies looking at their P/L and laying off staff are not fine, and the Fed is deliberately going to cause a recession and cause unemployment to stop inflation, which is a very brutal and indirect tool to do so.
This is all about inflation, not housing. Housing is just going to get caught in the crossfire.
If you have a low mortgage, hang onto that! Otherwise standard advice applies, try to keep at least 6 months expenses in cash or cash equivalents. Don’t make big purchases.
Unemployment is at a record low. US economy added 223k new jobs in December. US Q3 GDP increased annualized 3.2% over Q2.
Some companies are doing layoffs (mainly those that overhired during COVID), others aren't. Look at the data instead of clickbait headlines and everything looks much less bleak.
If you are really certain you can forecast how the economy is going to do with high accuracy, get a job at some hedge fund and get rich.
Unemployment is low due to a lot of early retirement/retirement. It is obvious we're headed for a recession, the question is how bad will it be. Will China's housing market collapse?
> A global recession is coming against a backdrop of the Fed raising rates
I believe we're going to double dip. We already dipped before the holidays. We'll see one more very painful quarter, which may not be Q1, but Q2 or Q3. From what I've seen, Series B+ is essentially impossible right now unless you're in the top 0.0001% of companies. Even then, if you're that operationally efficient, you might even hold off on funding until you can pull a higher valuation in 24-36 months.
As far as tech layoffs go. I think this has been coming for nearly a decade. Companies have been hiring at what seemed an insane pace for so long that it just became the norm. My personal opinions on Elon aside, he proved how bloated a lot silicon valley tech companies are/were.
Yes, there will be more layoffs, and when earnings collapse there will be another fall in stocks.
Raising money is going to become very difficult, even for those in a good position who manage to raise, they'll be asked for a lot more of their company in return for less money.
This might be a real bear market in equities (anyone remember those?), where things are bad for years and we may see something like the 70s, where the inflation peaked twice, the second time it was worse.
Many people seem surprised that an organization would simultaneously hire and fire. I think that's normal.
At the end of every season, the Yankees fire some players and hire others.
Old cells in organisms die or are killed, while new ones are born.
Soldiers going on missions may put down the equipment from the prior mission, and pick up new equipment.
The argument "the organization is behaving selfishly, they should just repurposing the existing organization member" is inane since the function of members of an organization depends on the member's specialty, role, purpose, and an organization's purpose can change over time.
It's really strange people act like this is some killer argument when in fact nearly every organization with multiple entities does something analogous (grow in some ways, shrink in others, at the same time)
Remember when everyone cut jobs and canceled orders at the beginning of the pandemic and it really bit them? I'm like 49% sure that's going to happen again. Something funny is in the air.
Amazon's headcount literally doubled from 2019 to 2021. The recent layoffs barely move their headcount back at all.
While Amazon may be the most visible, this pattern was repeated across a lot of smaller companies. Even my employer was setting arbitrary goals to grow headcount by certain numbers last year and hired a lot of people with questionable qualifications in the process. Now they're laying people off and using it as an opportunity to cut their mistakes.
A lot of good people are getting laid off, but I have a feeling that many of these layoffs are an overdue correction from companies that were too afraid to let anyone go in the past few years. Now that the hiring market has changed to give employers the upper hand, it's only natural for them to start wanting to cut underperforming employees and focus on the people doing most of the work.
> Amazon's headcount literally doubled from 2019 to 2021.
What you're leaving out is that Amazon's net sales literally doubled between 2019 and 2021, from $280MM to $470MM. The doubling of headcount over that period was perfectly rational and in-line with its business model.
There was definitely irrational exuberance in hiring during 2021-2022. But Amazon's exuberance was far more rational than most of tech. Ironically, Amazon both hired far more than everyone else and also over-hired less than everyone else. Unlike all of the other FAANG++ companies, Amazon is and always has been a low margin and labor intensive business.
> Now that the hiring market has changed to give employers the upper hand, it's only natural for them to start wanting to cut underperforming employees and focus on the people doing most of the work.
That reeks of "I'm so sorry but with the tough financial times right now, we have to run a skeleton crew, so we won't be able to approve any of your PTO requests and we're expecting you to work long hours for the forseeable future"
Then later at the earnings meeting: "We made record profits this quarter! The CEO is getting a giant ass bonus!"
I wonder if this is what drove a lot of pandemic hiring. A bunch of companies froze their hiring in March-April (some did layoffs), realized they made a mistake, and in the Summer went on a hiring spree.
In this case the maritime shipping industry has a huge oversupply of boats (compared to last year which had a huge undersupply). Consumers are slowing their spending and retailers have a lot of inventory.
It’s slightly different dynamics. At the beginning of the pandemic, people thought the world was going to end (either in literal terms or just economic ones). The massive hiring came after people realized that life would go on.
What’s happening today is a result of the free money spigot being turned off. The layoffs and hiring freezes are going to be a bit more sticky.
I'm skeptical. I think companies are still in denial about just how thorough the upper quintile of the labor force was hollowed out during COVID. This is easy to miss -- especially in industries like tech -- where title inflation for junior workers has cause executives to over-estimate the fungability of veteran labor.
There is also a lower chance of having stimulus to soften the initial blow for those being laid off. It also seemed like layoffs at the start of the pandemic were centered around the service industry, where as now we are seeing them in a broader context.
I'm of the opinion that we're just regressing to the pre-COVID trend line.
Many metrics have a huge pandemic bump that's just approaching the pre-COVID trend line. I suspect we'll see a slight overcorrection. First dipping below trend, then bouncing back up a bit, before finally returning to trend line.
Companies will adjust to supply chain issues. Workers will wisen up and move jobs. Home demand will level out with supply. People will return to "normal" work areas.
> At Flexport, 2023 is going to bring extraordinary velocity – we are in the process of doubling our software engineering talent and moving to single threaded business organizations to build world class products faster, and we will continue to invest in delivering best-in-class operational execution for our customers.
Looks like they are laying off non-tech workers who they have made (or will make) obsolete through automation
You don't layoff workers that you replace through automation. You simply don't renew their contract. It's much smoother and cheaper, and automation does not happen overnight anyways.
Reading the letter, it looks like the departing folks are being offered good severance. That makes me happy to see. I've been through rounds of layoffs myself. It never feels good, but how the company treats you if your number is called makes for a lasting impression.
This is one company i've always wanted to work for- my mother is a CTO of a company in the same space/different aspect of the pipeline so I knew this company was going to do well when it entered the YC batch, but I've never even received a screening interview. Hope i can apply once the economy recovers
Readit News
There are companies out there who would love to lay off half their staff, but in regular times they couldn't just do it (because it wasn't a common thing, and makes them look "bad"... everyone would protest). But since nowadays every damn company is doing massive layoffs (and not unknown companies, but companies like Twitter, Facebook, Google, etc.) then they take advantage of the situation and proceed to do the same.
> While we are looking forward to what’s to come in 2023, we must also make hard decisions necessary to set us up for long-term success.
This could have been said any damn year in the past, but massive layoffs is the latest trend, so why not.
So, to fight that elevated inflation they are killing demand, and when demand sharply drops, you can't keep paying your workers as before (because you sell less goods!).
Moreover, companies simply got fat during the pandemic and over hired. I mean, there are probably also a few (lot) companies which do what you write, but I don't think Flexport is one of them. It's more likely they over hired like everyone else. Also, you might want to take a look at the current container fright prices [1]. Pretty parabolic.
[1] https://fbx.freightos.com/
The world, particularly business in the US, really did get used to cheap borrowing for everything. Using a line of credit for everything or acquiring massive amounts of easy to service debt has been basically a standard business practice for the last 20 years.
I am actually surprised things haven't imploded yet. So many companies have acquired massive debt that's going to become increasingly impossible to service. It feels to me like we are waiting for the first big domino to fall.
I tend to think they will stick to their guns: they will raise to 5+% and stay there as long as unemployment is below 4.5%
In a cheap money environment you take the money and you gamble for growth, in an expensive money environment you do your best to run lean. The pain is moving between these two. The winners are the guys who did a raise at the peak and can use that cash to accelerate through the downturn, and the losers at the guys who just didn't quite get there, who now are forced into taking capital at a massively diminished valuation.
It's a classical Austrian economists nightmare. The argument is that cheap money stimulates malinvestment. That is to say that corporate projects that would not have made adequate returns on capital under normal circumstances seem to look feasible.
It's all fun and games until the tide turns, and then the whole edifice collapses like a house of cards because it was built on shaky premises that no longer hold.
It's a bad deal for companies to borrow money or take big investments when interest rates are so high. If you want to avoid doing that, you need to predict when interest rates will drop and make sure you have enough cash to ride it out. In spite of being successful, some companies don't have the cash, and they need to reduce their burn rate.
Smaller companies that are still not generating profits? Absolutely they need cuts to survive.
Both of these things are true at the same time. I’m continually surprised at how quickly people have bought the excuse trotted out by extremely profitable companies for mass layoffs. In that situation it is primarily an exercise in juicing up the stock price and keeping investors happy.
Dead Comment
Lots of companies are laying off workers or at least freezing hiring because they anticipate earnings cratering, or are already seeing it happen. They haven't reported on it yet, but they will in the coming months. The layoffs will continue to gather pace, as will bankruptcies.
That actually really gives me hope for a soft landing - those high-wage folks are much less likely to have serious financial problems like homes getting foreclosed (not to say it's not possible but they're much more likely to have a cushion to keep making payments). If they pull back on their discretionary spending plus stop doing things like driving up housing/car/stock prices by putting money into those things, that feels like it could be the basis for inflation slowing down without a huge uptick in unemployment and everything that comes with it.
Inflation has been pretty stubborn. I assume some of that is coming from supply chain issues, but some of it also could be due to higher-earning households not being as price sensitive as they would have been in previous eras. i.e. a Google engineer is not going to really notice or care that milk is 50% more expensive. They might not even notice or care that their new car now costs $40k instead of $30k. Their annual stock options probably fluctuate by that much on a daily basis. That level of economic comfort used to be the exclusive purview of the professional class, i.e. doctors, lawyers, etc... But the tech boom has expanded that class (upper middle, lower rich?) considerably.
Will be interesting to see if this is the straw that can break the inflation camel. Overall, I am getting the impression that these layoff announcements, while grabbing headlines, are not very indicative of the market at large. But it does seem like they are picking up steam, and of course, these things can also reinforce each other. For example when you let go of 10% of your staff, that means you also reduce your per-seat SAAS software spend, and that money was someone else's revenue.
Anyways, I am rooting for a soft landing but still feel like these things are too hard to control. Would be nice if we could just let some air out of the more bubbly parts of the economy while keeping everything else chugging along. Previous recessions usually result in those who can least afford it getting hit the hardest, so a change of pace on that front would be welcome. Fingers crossed.
Compound that at scale and it will definitely have an effect.
There will not be a soft landing.
When has there ever been a soft landing and how would raising rates into a recession ever result in one? Raising rates takes 1 year to come through to the real economy - we haven't even seen the impact yet, only on stock prices which foreshadow the real economy and again are a leading indicator. They will raise till unemployment starts to rise.
Unemployment is the goal of this Fed policy - that is the point - cause unemployment so that inflation goes away.
Shit rolls downhill. We'll see how well the service economy holds up when their client base has been out of work for 6 months.
Wealthy people have gotten used to increasing the gap and therefore assume that trouble at the top is much worse below.
But what’s actually panning out is that Internet technology is great at replacing white collar jobs and awful at replacing blue collar jobs (I don’t think electricians are losing sleep over ChatGPT).
going to hit $1 trillion soon for the first time. seems not great in face of high interest rates.
https://fred.stlouisfed.org/series/CCLACBW027SBOG
Dead Comment
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Would love to hear more on your perspective / insight.
This is all intentional, right? My understanding is that the fed is leaning into this particularly hard in order to dislodge the stubborn housing bubble.
For an individual (someone who isn't a current business owner), does this basically mean we should continue stockpiling savings, and avoid moving (rent) / avoid buying house / buying a car?
Any ideas how long this could last / what the bottom looks like?
They are trying to reduce inflation. The housing bubble certainly played a part, but inflation was hitting nearly everything. A big concern here, is that many smart people think a fair bit of that inflation was due to COVID related supply chain disruptions (which still persist, see China and COVID). So while raising interest rates will help, it may not be the right tool for the job (but it is the only tool that the Fed has, so here we are).
> For an individual (someone who isn't a current business owner), does this basically mean we should continue stockpiling savings, and avoid moving (rent) / avoid buying house / buying a car?
Definitely build up your savings. The other three are more complicated. Rents appear to be finally going down in some marquee markets. So moving might actually save you money. Buying a house now feels like a bad idea, seems like the market is still carrying on from the fumes of the bubble, but interest rates are definitely having an impact. Based on historical examples, the full impacts will probably take a few years to shake out as housing tends to move pretty slowly. And buying a car, well that is complicated. If you need one, buy one. If not, probably best to avoid it.
If you do have savings, might make sense to start looking at CDs, treasuries, and municipal bonds. Interest rates are up and if you have a chunk of cash sitting around those are good ways to put it to use.
> Any ideas how long this could last / what the bottom looks like?
Watching the Fed is the key here. And the Fed is watching inflation. So as long as inflation stubbornly persists the Fed is likely to keep raising rates, and that is going to impact the economy. I read somewhere that the "market" is expecting inflation to normalize in the summer of 2023. But personally that feels optimistic. I think we still need to shake off the COVID induced supply chain disruptions before things get back to normal, and that still feels like another year or so away.
If you run a VC backed business my suggestion is 24-30 months of runway is a good starting point.
As far as individuals go, it's not a bad idea to mirror this advice. Have essentially 2 to 2.5 years of income saved in the event that you get laid off and can't find a job for a long time. Hopefully it never comes to that, but it never hurts to be prepared.
He called this correctly in 2021, before it burst: https://www.livewiremarkets.com/wires/grantham-this-is-a-bub...
He feels there is still farther to fall (and I agree with him there): https://www.msn.com/en-us/money/markets/prepare-for-an-epic-...
Falling stock prices are really a reflection of real-world problems - while it obviously feels in the US like everything is fine (judging from the many comments saying this here on this thread), everything is not fine, companies looking at their P/L and laying off staff are not fine, and the Fed is deliberately going to cause a recession and cause unemployment to stop inflation, which is a very brutal and indirect tool to do so.
This will not be a soft landing.
If you have a low mortgage, hang onto that! Otherwise standard advice applies, try to keep at least 6 months expenses in cash or cash equivalents. Don’t make big purchases.
God I wish we could just do a Land Value Tax and be done with it. It wouldn't hurt the economy and might even create more work.
Some companies are doing layoffs (mainly those that overhired during COVID), others aren't. Look at the data instead of clickbait headlines and everything looks much less bleak.
If you are really certain you can forecast how the economy is going to do with high accuracy, get a job at some hedge fund and get rich.
Unemployment is low due to a lot of early retirement/retirement. It is obvious we're headed for a recession, the question is how bad will it be. Will China's housing market collapse?
I believe we're going to double dip. We already dipped before the holidays. We'll see one more very painful quarter, which may not be Q1, but Q2 or Q3. From what I've seen, Series B+ is essentially impossible right now unless you're in the top 0.0001% of companies. Even then, if you're that operationally efficient, you might even hold off on funding until you can pull a higher valuation in 24-36 months.
As far as tech layoffs go. I think this has been coming for nearly a decade. Companies have been hiring at what seemed an insane pace for so long that it just became the norm. My personal opinions on Elon aside, he proved how bloated a lot silicon valley tech companies are/were.
Raising money is going to become very difficult, even for those in a good position who manage to raise, they'll be asked for a lot more of their company in return for less money.
This might be a real bear market in equities (anyone remember those?), where things are bad for years and we may see something like the 70s, where the inflation peaked twice, the second time it was worse.
At the end of every season, the Yankees fire some players and hire others.
Old cells in organisms die or are killed, while new ones are born.
Soldiers going on missions may put down the equipment from the prior mission, and pick up new equipment.
The argument "the organization is behaving selfishly, they should just repurposing the existing organization member" is inane since the function of members of an organization depends on the member's specialty, role, purpose, and an organization's purpose can change over time.
It's really strange people act like this is some killer argument when in fact nearly every organization with multiple entities does something analogous (grow in some ways, shrink in others, at the same time)
Flexport always seemed to be hiring.
Source: I’m a hiring manager for software engineers at Flexport.
Deleted Comment
Taking Amazon for example, look at this chart: https://www.statista.com/chart/7581/amazons-global-workforce...
Amazon's headcount literally doubled from 2019 to 2021. The recent layoffs barely move their headcount back at all.
While Amazon may be the most visible, this pattern was repeated across a lot of smaller companies. Even my employer was setting arbitrary goals to grow headcount by certain numbers last year and hired a lot of people with questionable qualifications in the process. Now they're laying people off and using it as an opportunity to cut their mistakes.
A lot of good people are getting laid off, but I have a feeling that many of these layoffs are an overdue correction from companies that were too afraid to let anyone go in the past few years. Now that the hiring market has changed to give employers the upper hand, it's only natural for them to start wanting to cut underperforming employees and focus on the people doing most of the work.
What you're leaving out is that Amazon's net sales literally doubled between 2019 and 2021, from $280MM to $470MM. The doubling of headcount over that period was perfectly rational and in-line with its business model.
There was definitely irrational exuberance in hiring during 2021-2022. But Amazon's exuberance was far more rational than most of tech. Ironically, Amazon both hired far more than everyone else and also over-hired less than everyone else. Unlike all of the other FAANG++ companies, Amazon is and always has been a low margin and labor intensive business.
That reeks of "I'm so sorry but with the tough financial times right now, we have to run a skeleton crew, so we won't be able to approve any of your PTO requests and we're expecting you to work long hours for the forseeable future"
Then later at the earnings meeting: "We made record profits this quarter! The CEO is getting a giant ass bonus!"
A bull-whip effect, but for employment.
What’s happening today is a result of the free money spigot being turned off. The layoffs and hiring freezes are going to be a bit more sticky.
No. Did they have layoffs previously? I also don't remember anyone cancelling orders and cutting jobs at the beginning of the pandemic.
[0]https://www.bls.gov/opub/ted/2021/temporary-layoffs-remain-h...
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Many metrics have a huge pandemic bump that's just approaching the pre-COVID trend line. I suspect we'll see a slight overcorrection. First dipping below trend, then bouncing back up a bit, before finally returning to trend line.
Companies will adjust to supply chain issues. Workers will wisen up and move jobs. Home demand will level out with supply. People will return to "normal" work areas.
I can imagine a lot of companies struggling to hire in a few months. But I can't imagine they being the same ones that are just firing.
There are a lot of companies not unsustainabled, at least in the 10 year frame, that are laying off.
> At Flexport, 2023 is going to bring extraordinary velocity – we are in the process of doubling our software engineering talent and moving to single threaded business organizations to build world class products faster, and we will continue to invest in delivering best-in-class operational execution for our customers.
Looks like they are laying off non-tech workers who they have made (or will make) obsolete through automation
What does that even mean? They are only able to do one thing at a time? Doesn't sound like a recipe for business success to me...
They could start by laying off 50% of their CEOs