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Comment by unicornmama | Hacker News Reader

Large technology companies won’t hesitate to layoff employees to protect their stock price.

Large profitable tech companies don’t lay off staff when they see opportunities to grow. I know that three of the Big 5 tech companies (FAANG - Netflix + Microsoft) are throwing money and headcount at cloud just from the aggressive recruitment I’m seeing - I work for one of the big 3 in the consulting department and I’m constantly getting solicitations from the other two. Apple also is still hiring where it sees growth

Facebook? Who knows? I don’t follow adTech

FAANG - Netflix + Microsoft started development centers in my Eastern European country. Apart from Google which is about the decent level, the rest aren't offering very good salaries or work conditions compared to competition so they aren't attracting the top talent.

Their strategy here is not the same as in US. They came here for cheap workforce, but cheap for them means REALLY cheap.

The bigger the machine the slower their wheels turn. But they will turn.

Large companies make tons of money and will hire talent for cheap from startups

> Large companies make tons of money and will hire talent for cheap from startups

How would staglfation impact digital advertisement and retail revenues?

I'm genuinely curious. Is there any other options? By this point it's too late, right? And even if they played it safe there is always some risk.

> Is there any other options?

Have a compelling product that generates revenue. Unless your workforce is 100% saturated and you don't really _need_ that many engineers, lay-offs are one step above cutting free snacks on the usefulness scale when it comes to trying to stop bleeding.

Have a compelling product that generates profit. Any product is compelling when subsidized heavily enough by VCs.

VC money is there until it isn’t. See the YC message from last week.

Packaged dreams and hopes as a product ceases to be investible with high interest rate / high inflation.

I think you mean profit, not revenue. In terms of surviving difficult economics, revenue is useless if not accompanied by profit. Cutting 33% of their workforce will at least temporarily stop an awful lot of bleeding. Long term effect, probably not good. If losing 33% doesn't hurt them long term, then they have been doing some incredibly bad hiring. They might make it to the other side of this and I know nothing about their specific situation, but judging from the history of other failures, this is sadly often the first step in a death spiral.

1. Startups without runway will die.

2. Public companies will cut the fat, cut “dream” projects, to protect their stock price. The further the money, the more risk to the employee.

3. Things could get a lot worse.

Remember that debt fuelled stock buybacks were a huge reason for propping up stock prices for these companies as well.

Now that cheap debt is off the table, that buyback strategy will have diminishing impact as well, forcing companies to find other ways to keep stock up (such as cutting costs)

I don't think VC-backed startups typically do stock buybacks? That's more of a Fortune 500 thing, AFAIK. "Startups" (of whatever size) are always concerned about the next funding round; I don't think they're going to burn runway to prop up the share price. It's companies like GE and IBM that do that, AFAIK.

I was referring to the OP’s comment that established publicly traded tech companies too will be under pressure to keep the stock price up and thus, aren’t immune to layoffs

I see. You have a point there. That would cement, in my mind, their transition from "growth" to "utility" companies, though, and I would expect them to start paying dividends.

I mean the established big tech companies are sitting on mountains of cash. I suspect they’ll start ramping up buybacks even more aggressively due to what they see as undervalued equity.

Yep, blowing the cash on stock buybacks. And then layoffs when the cash gets uncomfortably low.

The cash won't get "uncomfortably low" for profitable money printing machines (e.g. Apple) for quite a long time.

They just won't have quite as obscenely large of a dragon-esque hoard to sleep on.

Hammer and anvil.

Or their bonuses.

they don't need to layoff, just freeze the hires and wait for the churn

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