>In April, Meta reported first-quarter revenue rose 3% from $27.91 billion a year earlier, after three straight periods in which it declined.
>Despite the cost cuts, Meta is still investing heavily into the nascent metaverse, and its Reality Labs unit, which is developing virtual reality and augmented reality technologies, logged a $3.99 billion operating loss while generating $339 million in sales in the first quarter.
>Investors have praised Meta’s major cost-cutting, sending the social networking giant’s shares rising 180% to $246.74 since bottoming at under $89 in November.
the company has money, management keeps investing in a dead end product & making workers pay the price for its lack of success, and the soulless ghouls who parts of the company make money off people losing their jobs
Completely obliviating the "human" part of what an employee is, reducing it down to a mere number on a balance sheet, will never sit right with me. In the end, what those companies are ultimately taking a risk on is people's livelihoods.
I wonder if Meta will have a hard time finding quality talent after all these lay offs. Why should we trust Meta going forward? Same with Google
and Amazon. They’re just not companies I trust to look after me as an employee and treat me like a human rather than a number on a balance sheet
Grinding the worker into a fine paste for profit has been the American way since at least the 60s. FDR made a few steps towards a sustainable life as a worker and business interests WENT TO WAR.
Eventually we got a president who fired every air traffic controller in the country instead of trying to make a literal safety critical job reasonable and well compensated, and a huge amount of people lauded him for his anti-worker action.
Meanwhile "liberal" groups basically did coke and nothing else for several decades, losing any support they ever had with a lot of working class people.
So yeah. We have an entire generation of management that knows nothing more than quarterly profits, stock buy backs, and executive bonuses to the point that the rewards from a doubling in American productivity all went to about 100 people at the top of the food chain, and they bought all the newspapers and convinced half the nation that thinking this is wrong is treason and socialism.
This was their actions after they failed to overthrow FDR in the business plot. They wanted fascism in the 30s.
I've got a burning question on my mind and I'd really appreciate some insights.
From what I can tell, the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios. But if that's the case, are we basically still in the early innings of this crisis? Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right?
Startup layoffs are very much related to the funding environment. I work for a startup that laid off half our staff. There have been very few series C and later this year. So if you are a startup you need to decrease burn now and get to having good MRR. You can't aggressively grow at a loss and expect to get more funding for that with few exceptions. When VC money was much more plentiful people hired a lot without the pressure to become more sustainable. For further funding rounds they had to show that they were growing in some way. SVB collapse was huge in the startup world not just due to the people who had deposits there.
With larger companies like Meta, their multiples are also based on growth. So even though large tech shows no signs of being financially insolvent, they will have to still deliver growth in profit with flat to declining revenue. So the focus then is to decrease expenditures in lieu of revenue. There was a ton of hiring the last few year along with the tail wind of tons of money out there. Now it needs to rebalance.
The Economist says that the layed-off workers were bloat:
"So far techies themselves have been mostly spared, observes Tim Herbert of the Computing Technology Industry Association, a trade body. Instead, the axe has fallen mainly on business functions such as sales and recruitment. These had grown steadily as a share of technology-industry employment in recent years, a telltale sign of bloat."
https://www.economist.com/business/2023/03/27/where-have-all...
The reality is that noone knows whether there's going to be normal growth, stagnation, or a recession, but one thing is for sure: The tech boom of the pandemic has ended along with the pandemic.
So these companies don't have proprietary magic insights and can reliably forecast a recession (as was your question), they're simply responding to the end of the boom and rising interest rates.
A related point would be Meta is exposed to revenue risk as customers pull back from advertising in a recessionary environment. This appears clearly in Meta’s financials.
An unrelated point would be that layoffs usually target the lowest-performing segment of the workforce and offer legal protection to the company against unlawful termination. Of course not all laid off workers are poor performers but there is obviously a correlation here.
That’s just an excuse the CEO’s are using to avoid blame. They over-hired during 2020 and 2021 “because everyone was doing it” and now they realize they have 10’s of thousands of employees with nothing to do and huge salaries so it makes no sense to keep them.
I can't speak for Meta specifically, but mass layoffs don't generally correlate with worker productivity. At the end of the day it is all about CEOs making shareholders happy so they get rewarded with juicy bonuses. Shareholders see their stonks going down so they want cost cutting. People making decisions are not always aligned with the long-term interests of the companies they manage.
I don't think it's necessarily so bleak. Another interpretation is that big tech companies had a recruitment drive over the pandemic when revenue was high. Now that revenue growth has slowed, they're trimming the fat.
Also: hey, those pesky coders and other white collars got way too expensive, let’s lay them off in droves to make it the employer’s market and rehire some back, but on our terms and not theirs (cheaper, no perks, but they will be glad to land a job anyway).
Source: a little bird told me some companies do such rehiring, and for many H1B holders it is an offer they can’t refuse.
Startups aren’t a great signal - especially if you’re only looking at Silicon Valley startups. For one they employ way fewer people (while garnering a disproportionate amount of tech headlines).
For the bigger public companies their data is available through yearly SEC filings. Just look it up. They’re making record high revenues. Layoffs for them are an optimization not existential. They could’ve been fine laying off fewer people but it protects them from their growing competitors and longer term global trends.
Doomsaying will always be popular but is often misguided. You’re basically relying on a broken clock being right twice a day.
I just found out the gym I go to is closing. The email said it was a lease dispute but there is no way it is just that. I suspect they remodeled and bought new equipment on variable rate credit and are getting absolutely squeezed with interest rates going up plus inflation plus lower demand post covid.
Pretty sure we are in a slow moving car crash with the knock on effects of rates having gone from 0 to 5% just starting to slowly take effect in the broader economy.
The twisted thing is that this is the plan, it's intentional.
The rapid rise of interest rates is to curve demand, which tames inflation. It's a really nice word for what is effectively targeted economic destruction. Job losses and bankruptcies are the casualties.
And that's not all of it. In my country, aggressive plans to build lots of new homes are imploding. Buyers suddenly face an interest rate 5 times what it was before and opt-out. Builders stop building because nobody is buying.
> But if that's the case, are we basically still in the early innings of this crisis?
We might be, but more likely is that Meta is facing a reality that all huge companies eventually face: there isn't a play for megagrowth anymore once you are the size of big tech companies. You'll grow a little faster or slower than CAGR. So, since you can't grow the top line, you start looking at the bottom line and becoming more capital efficient. Laying off overpaid people is the start of the process.
If the Fed raises rates too high or keeps them high for too long, it will push the economy into a deep deep recession. As we're always using lagging indicators, economists are generally unsure where we are in the cycle, some folks believe it's been pushed to far for too long, and further pushing is going to cause either a deep recession or, even worse, stagflation.
I'd love to know what Volcker thinks about our current situation.
Don't know about the FED but the ECB has openly stated that they will keep raising rates as long as necessary to get inflation back to ~2%.
It doesn't seem to be working, for very obvious reasons: demand for energy and food (main cause of inflation) isn't that elastic. Further, there's no unemployment, so people spending and will spend only more because of inflation itself.
The one thing that could motivate people to stop spending, raising bank savings interest rates to something meaningful, is oddly not in the playbook.
> Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right?
Right, but there's a time lag effect between when capital dries up and companies go belly up.
Many cash-guzzling companies had 12 months of runway. After layoffs and pivots to profitability, 12 months may get extended to 18-24 months, but ultimately, the traunch of businesses without real business fundamentals will shut down after cash runs out.
So, my guess is a significant wave of startup bankruptcies will begin Q3 of this year, and peak several quarters later (assuming markets stabilize around current levels).
I would agree. Interest rate hikes generally take a while to actually work through the economy. This current hiking cycle is the fastest we've raised rates, especially considering the interest payments required for our debt. I don't think it'll be a soft landing.
>the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios
It's not just startups though. It's big tech. It's financial services. It's big and small non-tech non-financial companies as well. Everyone has been predicting a recession for well over a year now. We're living in a very unusual economic situation where some parts of the economy are getting crushed and others are doing fine. No one knows the answer to your question, but yes, one possible answer is that this is just the early phase of the downturn and it's just taking longer than usual to move to the next phase.
+1 for asking the correct questions! Of course leaders of companies understand the current economic downturn and they to some degree can predict future economic problems better than the average citizen.
While hiking yesterday I was talking with a friend about history, and how all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view: USA, England, France, Middle Ages powers, Romans, etc.
Just as elites in a declining power will naturally “loot” as much as they can to ensure the long term economic well being of their family, doesn’t it make sense that corporate leaders will cut staff, and generally extract as much profit as they can short term?
At least in the case of the Roman empire, it was founded on looting. One of the main purposes of Julius Caesar's military adventures at the beginning of the empire was to capture people from neighboring nations and sell them into human trafficking. The US is arguably the same: human trafficking profits created the foundational wealth that everything else was built on (along with looting the lands held by the continent's original inhabitants).
Corporate America doesn't seem to be collapsing. It's just a mild recession and we haven't had one recently.
Also it's hard to make the same kind of analogy with 'corporate leaders' as they are typically employees rather than owners. Employees already loot a much as possible!
Agreed. We're in a recession. It's is one of the only things that does "trickle down." Haha.
We've all been experiencing recession since last year, when food and gas prices started to increase. While some regions are more impacted than others, the price of everything has increased.
For those who make over a certain amount (i.e., $100K/year) it's less noticeable than for those making under that. Because budgeting.
Bezos himself warned of this back in November 2022: https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-.... When ultra-rich tell you it's going to be bad, probably best to plan for that. Also, where is the government in all this? Why are ultra-rich still not paying taxes? It's quite an alarming and vulnerable position for majority of people in the United States right now.
Note that by the time "normal people" really felt the 2008-2009 recession, the stock market was already bottomed out and going back up. Just something I keep in mind.
Wall St. is just a game of smoke and mirrors and all it takes is one crisis to expose this. They're not anticipating a crisis, they're not prepared for one. The system isn't built for long term stability, it's built to maximize short term gains. Wall St. has long since figured out there are no consequences to causing economic instability for short term gains because the government will just bail them out with our tax money anyways and they still get to keep their ill gotten gains. The consequences of their actions do not affect them and that is the problem.
Yes, except there's two waves of layoffs. The wave that is announced, like you mention, and the wave of smaller layoffs that does not have to be announced. This is to say, more people are being laid off than officially reported. This is true for Facebook and Amazon alike.
The capital class thinks that the serfs are getting too "uppity" with all this "pay me a living wage to help deal with insane inflation" and WFH. All the layoffs send signals so the working class has an existential dread.
Also, there are very few exceptional leaders and there's some degree of copycatting here.
While you're arguing class warfare, I think it is worth asking whether the "serfs" (dictionary: "an agricultural laborer bound under the feudal system to work on their lord's estate") at Meta are working on things that improve society... Isn't the typical developer at Meta making hundreds of thousands of dollars a year making systems that are destructive to the social fabric and cohesion of society?
> Isn't the typical developer at Meta making hundreds of thousands of dollars a year making systems that are destructive to the social fabric and cohesion of society?
Tons of farmers supplied the compost that Haber-Bosch used to perfect their way of making amonia, later used to make hydrogen cyanide (a pesticide later used in late 30s germany for non farming purposes)
You can be a serf and be a necesary cog in a machine for destructive purposes.
The hundreds of thousands of dollars a year still keeps those devs much closer to a homeless person than to any single Billionaire. A rich serf, is still a serf.
I guess I could have been more clear that I wasn't talking specifically about Meta.
But, looking at this another way, when you make an example of a highly compensated, in demand worker (like a senior SW engineer), what message does that send to everyone else without the same qualifications?
Worth pointing out there are a lot of predatory practices around contract workers holding visas. I don't work at Meta so I have no idea if that's happening there but I have seen it at others places.
On the other hand, the open source work done by meta has been instrumental in advancing many technologies and techniques. Machine learning via PyTorch being a prime example.
I just can’t get over this kind of language coming from people who earn 300k/y.
The idea that facebook developers are “the working class” engaged in a class struggle to overcome oppression is just.. wow way out there! The struggle exists but it’s not at Meta engineering.
EDIT: I’m not saying layoffs aren’t mean/stupid/preventable. I’m only saying that it’s not oppression or class struggle. I can’t understand that people can write this stuff on HN while living in a country where it’s legal to pay restaurant staff below minimum wage cause hey tips amirite. There’s plenty class struggle in America, let alone the world, but not a whole lot of it at Meta.
This is the narrative that the elite use to divide the working classes. "The people making $300K/yr are not like you!" says the person making $30M/yr to the person making $30K/yr.
The senior software engineer at Meta has far more in common with a blue collar guy living paycheck to paycheck than he has with a CEO whose wealth grows faster than his or her ability to spend it.
I've said this before but the way I see it, almost all of us are N missed paychecks away from bankruptcy. For a lot of people, that N is 1, for some, it's 2 or 3, or even higher if you managed to save wisely. But we all have some number N. And the fact that we have that number should unite us against the few people on the far side of the derivative curve whose N is infinite. Tech workers had their relatively brief moment in the sun where their N was maybe 10-20, it got to our heads a little, and we started thinking we were "very different than a blue-collar worker".
even if the CEO makes 10,000x more? if you annualize zucks net worth that's where he's sitting, and that ratio actually is pretty comparable to what it was during the lord/serf days.
If you need a paycheck to live then you’re working class. People making 300k/yr have an easier time converting to the capitalist class but they aren’t there by default.
This attitude hurts poorer working class people because it causes high-payed workers to identify themselves with the capitalist class rather than workers.
It's not a higher monetary cost to have WFH employees. Businesses can shut down and get rid of office leases which save significant money. They can hire people in lower cost of living areas which don't demand as high of salaries vs. hot areas too. WFH is nothing but a cost savings for companies.
These companies have boards, and these boards are incredibly "inbred" so that the vested interests coincide and reinforce. You'd be surprised how many of your C-suite sit on boards of REITs or have invested huge amounts of company "cash" into them.
> WFH is nothing but a cost savings for companies.
WFH is a loss of control. For some leaders, being a "boss" is more important than what's good for the business.
WFH also requires the right culture. I've seen it abused when I worked at Intel, and when Yahoo cracked down on it, the abuses were similar.
I should point out that I've predominately WFH for almost a decade; but it works because I'm trustworthy and I work for people who are managers instead of "bosses." In an environment where the workers aren't trustworthy, or the management structure is more about being a "boss," it won't work.
As evidenced here by the vast increases in productivity provided by WFH, it is only natural companies need fewer workers.
I'm perplexed by postings like this, HN should be rejoicing in these right-sizings and the maximization of opportunities for those no longer bound to such inefficiencies.
Or there are business lines that have no hope of ever being sustainable, and as a private business that has to earn a profit to survive, it makes sense to stop throwing money away.
It probably doesn't help that the bar for sustainability was raised from 'generates any profit, ever' to 'generates a few % profit per USD invested each year, eventually'.
Speaking of business lines that have no hope of ever being profitable, I'm still waiting them to cancel the metaverse project, but it still looks like Zuck's ego >>> the appearance of future profitability >>> the people who actually make facebook's core competences function.
The more people they lay off while keeping that dumpster fire going the more alarm bells go off in my head around the long term viability of their stock. It definitely doesn't belong in a pension.
Its fashionable among herd mentality investors now to do noisy lay-offs, but the smart money is probably quietly hiring these days.
Instead of a grand conspiracy and malicious intent I believe the layoffs are more likely a result of bad decision making, over-hiring and waking up to the reality that perhaps they don’t need a staff of 100k to run a website and a few mobile apps (a vast understatement of course but still).
The best part is both the malicious intent and the utter stupidity and fecklessness options mean we probably shouldn't be paying these chucklefucks millions a year to cargo cult manage. The ownership class hasn't had to show performance for their payment in decades.
The best time to unionize is when you're in a strong bargaining position to set a sustainable baseline in your first contract and build the infrastructure to make a strike credible. Unions are strongest when they have a huge fund to support their members through a strike.
Tech workers have been warned about this all through the latest tech boom. It might be too late. Any union formed now will be broke and desperate at any negotiation. It's like trying to buy flood insurance while you're on the roof waiting for rescue.
300K puts someone at 97 percentile (top 3%). Nice, but nowhere near top 0.01%
It doesn't have the resolution to go into fractions of percent. Found this older (2018) article which says that 0.01% top income would be an income of $35 million a year. But that's 2018, so should be quite a bit more today.
So, it's safe to say that there are a hanful few people at Meta in the top 0.01%, but not many.
The "capital class" in US is mostly people who invest in their 401k and just get pensions from pension funds, whereas the "serfs" in context of meta are engineers who earn what, $400k per year?
You don’t understand the the vast difference, not just in wealth, but power, in the United States, and silicon valley in particular. This is a place where 400k/year won’t buy you a nice house.
Chris Rock explained the difference well when he said, “Shaq is rich, but the white man that signs his check is wealthy.”
Who in their right mind would consider business analysts at a social media company in silicone valley "uppity"? Has anyone started a kick starter to help collectivize their loss of earnings through to january?
Why would a union boss be more supportive of WFH and paying for value worked instead of hours worked? I see the incentives plausibly running in the other direction.
Not to mention the fact that unions often support politicians I would never vote for, let alone donate to or organize for.
The capital class isn't a single conspiring entity.
When you get fired from Facebook and then try to save money by canceling Netflix, then Netflix isn't going to be very happy about that, whilst they very much are capitalist. Most companies depend on customers having disposable income.
You are absolutely correct in that way of thinking. What astounds me the number of people on HN who are saying that we are lazy and anti-capitalist with that way of thinking. The system is broken. The rich are getting richer and the average workers are getting screwed big time. Privatized profits, but socialized losses.
As George Carlin said: "They are getting fcked by a system that threw them overboard 30 fcking years ago."
Pro-capitalist proposals exist, like YIMBY movements, pushback against regulatory capture, pushback against market breaking practices like locked down devices, and so on.
Can we stop saying this? Many taxes are paid before profits exist. Taxes are the sure thing; profits might happen, or you might go bust and investors lose all the money. That's not socialised losses. That's privatised risk, losses, then socialised taxes, then whatever's left is "privatised profits" - i.e. people actually getting a return on a risky investment.
Or perhaps, Meta is so poorly managed that they had employees paid $200k/year to do little-to-no work [0], and they are only just realizing that this is unsustainable, again due to incredible ineptitude.
Once again, I imagine the vast fortunes spent on finding, interviewing, more interviewing, MORE interviewing, onboarding and then firing all of these employees.
Shouldn't dozens of high-ranking heads be rolling for such profound mismanagement and gargantuan waste of company resources?
While I do think it is tempting and broadly correct to have the discussion about these layoff rounds being partially social contagion among the C-suite class, needless RTO, and the end of 0% interest rates, we should also keep in mind that Facebook/Meta appears to be egregiously mismanaged.
They burned billions of dollars and years of dev time on a product that was a bad joke at both the implementation and vision level, all while their mainstay products that actually make money are decaying in real time. Facebook is a product fully relegated to regurgitating content from meme pages to 40+ year olds + getting into extremely uninformed political arguments. It is a zombie product with no hope of revival. Instagram is better but is still showing shakiness in its business model and audience retention. And they can't monetize Whatsapp without ruining it. So they had to make a leap, but they chose an area (VR video games) that they had no pre-existing experience in and got nowhere in the 9 years since they bought Oculus. Oculus was the cutting edge in VR, so one must imagine that they also squandered that talent given the state Horizon Worlds is in.
I definitely feel for the people getting laid off...
But hear me out, I think this is going to be a good thing for those people and the economy.
The achievers that are getting laid off now have the opportunity, or are forced, to take that risk to start their own thing and create tremendously more value to the world than they would have at Meta. Alternatively, they could take their tremendous skills to industries and sectors that could really use them and make transformative changes there.
> I think this is going to be a good thing for those people
I want to see you say "You losing your job is actually freaking great!" to the face of one of to those 10k employees who now have to figure out how to pay the next couple of months' mortgage while they try to find a job in a now cautious market overflowing with laid off employees. And please, make sure to tell them it's good for the economy, that should make them even happier.
You cannot seriously be saying you feel for them and tell them them losing their livelihood in this economy is good for them either. Not everyone wants to have a high impact transformative job or change the world. Tons of people - I'd say most - work to pay the bills.
I was laid off in the Great Financial Crisis and was very early career. Honestly, I was angry at the employer for a few years. Eventually I got over it, and it inspired me to become more resilient & diversified in income. I've had clients, customers, and employers end relationships since, some hard stops and some soft stops. I don't get ruffled anymore by it, and knowing myself without that first layoff in early career I'd not be nearly as able to bounce back after processing.
It's not easy. I wish all the best to the folks who have been laid off -- it sucks, its hard, and really can be nerve wracking.
A few suggestions:
- Register for unemployment right away
- If you have tight constraints on resources (such as low bank account and food/housing affordability) reach out in your network right away -- people, community organizations, food banks, religious organizations if you are an adherent (my biased experience is they tend to be insular with help).
- Junior career or low network cultivation - pound the street, apply to what feels like an uncomfortably crazy number of jobs
- Mid to senior career or high network cultivation - pound the street, connect with what feels like an uncomfortably crazy number of people, even second degree connections
Readit News
>Despite the cost cuts, Meta is still investing heavily into the nascent metaverse, and its Reality Labs unit, which is developing virtual reality and augmented reality technologies, logged a $3.99 billion operating loss while generating $339 million in sales in the first quarter.
>Investors have praised Meta’s major cost-cutting, sending the social networking giant’s shares rising 180% to $246.74 since bottoming at under $89 in November.
the company has money, management keeps investing in a dead end product & making workers pay the price for its lack of success, and the soulless ghouls who parts of the company make money off people losing their jobs
this seems wrong
Used to be called "Personnel" - dry but definitely about human beings. Now it is "Human Resources" with the emphasis on the faceless resources part.
0. Assuming for a moment yhat such a thing exists.
Eventually we got a president who fired every air traffic controller in the country instead of trying to make a literal safety critical job reasonable and well compensated, and a huge amount of people lauded him for his anti-worker action.
Meanwhile "liberal" groups basically did coke and nothing else for several decades, losing any support they ever had with a lot of working class people.
So yeah. We have an entire generation of management that knows nothing more than quarterly profits, stock buy backs, and executive bonuses to the point that the rewards from a doubling in American productivity all went to about 100 people at the top of the food chain, and they bought all the newspapers and convinced half the nation that thinking this is wrong is treason and socialism.
This was their actions after they failed to overthrow FDR in the business plot. They wanted fascism in the 30s.
From what I can tell, the recent wave of startup layoffs seems largely driven by companies bracing for a potential economic downturn and using their own customer data to anticipate seriously bleak scenarios. But if that's the case, are we basically still in the early innings of this crisis? Logically, the domino effect would mean that step two involves companies closing up shop and going belly up, right?
With larger companies like Meta, their multiples are also based on growth. So even though large tech shows no signs of being financially insolvent, they will have to still deliver growth in profit with flat to declining revenue. So the focus then is to decrease expenditures in lieu of revenue. There was a ton of hiring the last few year along with the tail wind of tons of money out there. Now it needs to rebalance.
"So far techies themselves have been mostly spared, observes Tim Herbert of the Computing Technology Industry Association, a trade body. Instead, the axe has fallen mainly on business functions such as sales and recruitment. These had grown steadily as a share of technology-industry employment in recent years, a telltale sign of bloat." https://www.economist.com/business/2023/03/27/where-have-all...
The reality is that noone knows whether there's going to be normal growth, stagnation, or a recession, but one thing is for sure: The tech boom of the pandemic has ended along with the pandemic.
So these companies don't have proprietary magic insights and can reliably forecast a recession (as was your question), they're simply responding to the end of the boom and rising interest rates.
An unrelated point would be that layoffs usually target the lowest-performing segment of the workforce and offer legal protection to the company against unlawful termination. Of course not all laid off workers are poor performers but there is obviously a correlation here.
Source: a little bird told me some companies do such rehiring, and for many H1B holders it is an offer they can’t refuse.
For the bigger public companies their data is available through yearly SEC filings. Just look it up. They’re making record high revenues. Layoffs for them are an optimization not existential. They could’ve been fine laying off fewer people but it protects them from their growing competitors and longer term global trends.
Doomsaying will always be popular but is often misguided. You’re basically relying on a broken clock being right twice a day.
Pretty sure we are in a slow moving car crash with the knock on effects of rates having gone from 0 to 5% just starting to slowly take effect in the broader economy.
The rapid rise of interest rates is to curve demand, which tames inflation. It's a really nice word for what is effectively targeted economic destruction. Job losses and bankruptcies are the casualties.
And that's not all of it. In my country, aggressive plans to build lots of new homes are imploding. Buyers suddenly face an interest rate 5 times what it was before and opt-out. Builders stop building because nobody is buying.
We might be, but more likely is that Meta is facing a reality that all huge companies eventually face: there isn't a play for megagrowth anymore once you are the size of big tech companies. You'll grow a little faster or slower than CAGR. So, since you can't grow the top line, you start looking at the bottom line and becoming more capital efficient. Laying off overpaid people is the start of the process.
I'd love to know what Volcker thinks about our current situation.
Volcker is dead.[0]
[0]: https://en.m.wikipedia.org/wiki/Paul_Volcker
They'll just bring back out their bazooka and lower rates again and cause more inequality.
Tale as old as time.
It doesn't seem to be working, for very obvious reasons: demand for energy and food (main cause of inflation) isn't that elastic. Further, there's no unemployment, so people spending and will spend only more because of inflation itself.
The one thing that could motivate people to stop spending, raising bank savings interest rates to something meaningful, is oddly not in the playbook.
I am surprised they have not come up with better models given the technology and data available.
Right, but there's a time lag effect between when capital dries up and companies go belly up.
Many cash-guzzling companies had 12 months of runway. After layoffs and pivots to profitability, 12 months may get extended to 18-24 months, but ultimately, the traunch of businesses without real business fundamentals will shut down after cash runs out.
The capital constriction really started in Q32022. Here's a graph: https://techcrunch.com/wp-content/uploads/2023/03/Screenshot...
So, my guess is a significant wave of startup bankruptcies will begin Q3 of this year, and peak several quarters later (assuming markets stabilize around current levels).
It's not just startups though. It's big tech. It's financial services. It's big and small non-tech non-financial companies as well. Everyone has been predicting a recession for well over a year now. We're living in a very unusual economic situation where some parts of the economy are getting crushed and others are doing fine. No one knows the answer to your question, but yes, one possible answer is that this is just the early phase of the downturn and it's just taking longer than usual to move to the next phase.
While hiking yesterday I was talking with a friend about history, and how all great empires turn to “looting” as their influence wanes. There is plenty of data for this point of view: USA, England, France, Middle Ages powers, Romans, etc.
Just as elites in a declining power will naturally “loot” as much as they can to ensure the long term economic well being of their family, doesn’t it make sense that corporate leaders will cut staff, and generally extract as much profit as they can short term?
Also it's hard to make the same kind of analogy with 'corporate leaders' as they are typically employees rather than owners. Employees already loot a much as possible!
What's the data? Be interested to read about this correlation.
We've all been experiencing recession since last year, when food and gas prices started to increase. While some regions are more impacted than others, the price of everything has increased.
For those who make over a certain amount (i.e., $100K/year) it's less noticeable than for those making under that. Because budgeting.
Bezos himself warned of this back in November 2022: https://www.msn.com/en-us/news/technology/why-jeff-bezos-is-.... When ultra-rich tell you it's going to be bad, probably best to plan for that. Also, where is the government in all this? Why are ultra-rich still not paying taxes? It's quite an alarming and vulnerable position for majority of people in the United States right now.
Things aren’t good, or bad.
But all economic signals point to it potentially turning very bad, quickly.
Also, there are very few exceptional leaders and there's some degree of copycatting here.
But what do I know.
While you're arguing class warfare, I think it is worth asking whether the "serfs" (dictionary: "an agricultural laborer bound under the feudal system to work on their lord's estate") at Meta are working on things that improve society... Isn't the typical developer at Meta making hundreds of thousands of dollars a year making systems that are destructive to the social fabric and cohesion of society?
Tons of farmers supplied the compost that Haber-Bosch used to perfect their way of making amonia, later used to make hydrogen cyanide (a pesticide later used in late 30s germany for non farming purposes)
You can be a serf and be a necesary cog in a machine for destructive purposes.
The hundreds of thousands of dollars a year still keeps those devs much closer to a homeless person than to any single Billionaire. A rich serf, is still a serf.
But, looking at this another way, when you make an example of a highly compensated, in demand worker (like a senior SW engineer), what message does that send to everyone else without the same qualifications?
The idea that facebook developers are “the working class” engaged in a class struggle to overcome oppression is just.. wow way out there! The struggle exists but it’s not at Meta engineering.
EDIT: I’m not saying layoffs aren’t mean/stupid/preventable. I’m only saying that it’s not oppression or class struggle. I can’t understand that people can write this stuff on HN while living in a country where it’s legal to pay restaurant staff below minimum wage cause hey tips amirite. There’s plenty class struggle in America, let alone the world, but not a whole lot of it at Meta.
The senior software engineer at Meta has far more in common with a blue collar guy living paycheck to paycheck than he has with a CEO whose wealth grows faster than his or her ability to spend it.
I've said this before but the way I see it, almost all of us are N missed paychecks away from bankruptcy. For a lot of people, that N is 1, for some, it's 2 or 3, or even higher if you managed to save wisely. But we all have some number N. And the fact that we have that number should unite us against the few people on the far side of the derivative curve whose N is infinite. Tech workers had their relatively brief moment in the sun where their N was maybe 10-20, it got to our heads a little, and we started thinking we were "very different than a blue-collar worker".
I don't think it's really surprising that most of tech thinks wealth inequality is not about them while being in the 1%.
Or moving and driving up prices in places with much lower median incomes so they can have a better quality of living.
It's the amorphous, abstract, system you see, not them. They are not part of the problem.
It's most definitely about money, all the way.
WFH is a loss of control. For some leaders, being a "boss" is more important than what's good for the business.
WFH also requires the right culture. I've seen it abused when I worked at Intel, and when Yahoo cracked down on it, the abuses were similar.
I should point out that I've predominately WFH for almost a decade; but it works because I'm trustworthy and I work for people who are managers instead of "bosses." In an environment where the workers aren't trustworthy, or the management structure is more about being a "boss," it won't work.
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I'm perplexed by postings like this, HN should be rejoicing in these right-sizings and the maximization of opportunities for those no longer bound to such inefficiencies.
The more people they lay off while keeping that dumpster fire going the more alarm bells go off in my head around the long term viability of their stock. It definitely doesn't belong in a pension.
Its fashionable among herd mentality investors now to do noisy lay-offs, but the smart money is probably quietly hiring these days.
Tech workers have been warned about this all through the latest tech boom. It might be too late. Any union formed now will be broke and desperate at any negotiation. It's like trying to buy flood insurance while you're on the roof waiting for rescue.
WFH means work-from-anywhere, which dooms the leverage of a union
https://dqydj.com/income-percentile-calculator/
300K puts someone at 97 percentile (top 3%). Nice, but nowhere near top 0.01%
It doesn't have the resolution to go into fractions of percent. Found this older (2018) article which says that 0.01% top income would be an income of $35 million a year. But that's 2018, so should be quite a bit more today.
So, it's safe to say that there are a hanful few people at Meta in the top 0.01%, but not many.
The upper class has no skills other than dealing with money. Their power is the value we assign to money.
If we all decided tomorrow to use another currency and exclude the upper class from using it, in 1 week they would be starving.
How come serfs are richer than the capital class?
Chris Rock explained the difference well when he said, “Shaq is rich, but the white man that signs his check is wealthy.”
Not to mention the fact that unions often support politicians I would never vote for, let alone donate to or organize for.
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When you get fired from Facebook and then try to save money by canceling Netflix, then Netflix isn't going to be very happy about that, whilst they very much are capitalist. Most companies depend on customers having disposable income.
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As George Carlin said: "They are getting fcked by a system that threw them overboard 30 fcking years ago."
100% agree when it comes to the 2008 crisis, and the bailouts, and the zero percent interest rates for 20 years.
But what has this got to do with layoffs at meta? Did they get a government bailout?
Can we stop saying this? Many taxes are paid before profits exist. Taxes are the sure thing; profits might happen, or you might go bust and investors lose all the money. That's not socialised losses. That's privatised risk, losses, then socialised taxes, then whatever's left is "privatised profits" - i.e. people actually getting a return on a risky investment.
[0] https://news.yahoo.com/former-meta-recruiter-paid-200-144500...
Shouldn't dozens of high-ranking heads be rolling for such profound mismanagement and gargantuan waste of company resources?
They burned billions of dollars and years of dev time on a product that was a bad joke at both the implementation and vision level, all while their mainstay products that actually make money are decaying in real time. Facebook is a product fully relegated to regurgitating content from meme pages to 40+ year olds + getting into extremely uninformed political arguments. It is a zombie product with no hope of revival. Instagram is better but is still showing shakiness in its business model and audience retention. And they can't monetize Whatsapp without ruining it. So they had to make a leap, but they chose an area (VR video games) that they had no pre-existing experience in and got nowhere in the 9 years since they bought Oculus. Oculus was the cutting edge in VR, so one must imagine that they also squandered that talent given the state Horizon Worlds is in.
But hear me out, I think this is going to be a good thing for those people and the economy.
The achievers that are getting laid off now have the opportunity, or are forced, to take that risk to start their own thing and create tremendously more value to the world than they would have at Meta. Alternatively, they could take their tremendous skills to industries and sectors that could really use them and make transformative changes there.
I want to see you say "You losing your job is actually freaking great!" to the face of one of to those 10k employees who now have to figure out how to pay the next couple of months' mortgage while they try to find a job in a now cautious market overflowing with laid off employees. And please, make sure to tell them it's good for the economy, that should make them even happier.
You cannot seriously be saying you feel for them and tell them them losing their livelihood in this economy is good for them either. Not everyone wants to have a high impact transformative job or change the world. Tons of people - I'd say most - work to pay the bills.
It's not easy. I wish all the best to the folks who have been laid off -- it sucks, its hard, and really can be nerve wracking.
A few suggestions:
- Register for unemployment right away
- If you have tight constraints on resources (such as low bank account and food/housing affordability) reach out in your network right away -- people, community organizations, food banks, religious organizations if you are an adherent (my biased experience is they tend to be insular with help).
- Junior career or low network cultivation - pound the street, apply to what feels like an uncomfortably crazy number of jobs
- Mid to senior career or high network cultivation - pound the street, connect with what feels like an uncomfortably crazy number of people, even second degree connections
All the best to yall.
If I had to guess, probably with the surplus of their previous massive compensations and extremely generous severance.
By analogy: the cost of achieving 0 deaths from automobile accidents is probably not worth it. Still, prob best not to mention it at the funerals.