Tech layoffs keep stacking up
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For the past several years tech companies were desperate to hire because everyone was growing and the hiring market was tight. This inevitably results in companies loosening their hiring standards and retaining underperforming employees because they can't afford to reduce team sizes.
Layoffs combined with hiring freezes (or slowdowns) signal real stress within a company. However, many of these layoffs are single-digit percentage layoffs from companies that are still hiring across the board. That's not so much a traditional layoff as a pruning of the workforce. That pruning wasn't happening as much when hiring was tight, but now that hiring is easier and real, actual layoffs have put more good candidates back onto the market, the companies who simply collected too many underperforming employees can afford to churn some of them back out of the company. Doing it as a "layoff" makes it more palatable than going on a firing spree.
That said, when it comes to interviewing you shouldn't assume that a laid off employee was necessarily underperforming. A lot of companies don't really perform layoffs with surgical precision and will instead drop entire teams at once. I've watched great engineers get swept up in minor staff reductions simply because they were assigned to bad managers or doomed teams that they couldn't save by themselves. I've also hired great people who came right out of layoffs at other companies and I would have missed those resumes if I had been using dumb filtering rules like ignoring anyone who had been laid off.
I was laid off recently along with many others because an entire experimental project was killed because the market shifted (crypto, I know). Prior to that I’d received top performance marks and had been promoted to team lead. They gave me a great recommendation for the next gig.
It’s as easy to get a low performer who’s on a PIP and employed, as a high performer in a risky company. Hard to tell which one you’re interviewing.
On the other hand... grinding LeetCode is way more measurable. ;)
To add a differentiator between laid off and fired, I've been fired twice in my life, once after I quit (toxic manager), and once when I refused to do something clearly illegal (another toxic manager).
I was at my org for roughly 9 months, I came in as part of a large class of new hires across the entire org.
The last 4 months we were in crunch mode trying to land a big client that leadership continued saying would be a game changer for us. My eyebrow was already raised, because if one company is that much of a game changer, what happens if we don't get that client?
Sure enough, as I was texting with a friend who was spared, he let me know as soon as the last person left the office that day from layoffs, company had the weekly all-hands and announced sure enough, they didn't get the client.
Given that this is the status quo, employees should adopt the same attitude. When working for an ethical employer, I'll work 48h/day if the situation requires it, but for everyone else, I'll bill them for the "quick question over the phone" outside of my agreed upon working hours; and I'll quit when someone else makes a good offer. Once a (spectacularly unethical) employer tried to pull the "think about the others in your team" stunt only to be amazed when I found them better jobs within a week and everyone else quit, too. I cannot say he learned from that experience, but I equally cannot say I regret my decision.
Hard agree.
I've hired high performers from dumb layoff situations like start-ups going belly-up, companies resizing, contracts getting prematurely terminated, etc. I wouldn't consider a layoff a negative metric unless the interviewee outright admitted "they were trying to get rid of me."
I'm always shocked when people bring it up as signal vs. noise in regards to interviews.
And it's also possible they were actually high performing in their last role but they managed to bruise someone's ego and wound up first on the layoff list as a result.
There is just way more to firings and layoffs than performance.
Mind you. Companies can do more with internal development/retraining and institutional knowledge is a thing especially with large organizations. But, at some point, no one's going to be happy.
I remember, many years ago, being tasked with teaching PHP to the mainframe COBOL team - we’d retired the mainframe, and all our COBOL apps with it, but we’d kept the team, and management had struggled with finding them something else to do. It was a painful experience, they were getting it, but very slowly. Didn’t help that I wasn’t the best teacher, I had to slow myself down a lot and found that a struggle - but I was young and inclined to say “Yes” to everything.
Eventually, they were all laid-off - and pretty much straight-away found new COBOL jobs (with a higher salary too). I think, in the end, they were happier that way.
Sometimes, people are fired for "performance," when what that really means is "new manager/tech lead didn't like them." Interview enough people and you'll see this at some point. Sometimes, low performers in one environment are star performers in another. This is what happens when founders are replaced by more experienced executives, among other scenarios. Sometimes, people with impressive credentials (PhD + significant publications + previous experience, for instance) will completely bomb your interview because they can't figure out which of their language of choice's container types is suitable to the task. I literally interviewed that candidate once. Sometimes, people are fired for straight up illegal reasons that have nothing to do with performance. (This literally happened to me at a big company you've probably all heard of and used their product.)
As a company and an interviewer, the best thing for all involved is for you to have a structured process with which to evaluate all candidates for a given position, and follow it. No interview process is perfect at either selecting good candidates or rejecting bad ones, but if you have and follow a structured process, at least you should get consistent results out of your interview process, and you can calibrate your hiring bar from there. I don't want to go into much more detail regarding "structured processes," but if you search on HN for u/tokenadult's hiring comment cum copypasta (albeit an informative copypasta), most of what's there still holds true according to the best and most current research on hiring.
Layoffs are financial and political decisions. Sometimes people layoff idiots when given the chance, other times they layoff the smartest people to protect their friends. I consulted at a bank where a SVP would reorganize non-core business units into his org specifically to meet his reduction target while minimizing business impact. Those people were cannon fodder from day 1.
Hiring is the same way. If you only hire pristine resumes without gaps, you’re selecting for survivors - not the same as performers. It’s more of a statement about the hirer-er than hire-ee.
You never know when you need a sacrificial lamb, eh.
Yep. Before the IPO the task came up to increase our development team size to 200 people, cause “people would rather invest money in 200 developers than in 30”. We would hire anybody who was able to say anything sapient about the task “insert an element into a double-linked list” (and were amazed when 80% of applicants were unable to pass this simple barrier).
On the other hand - when layoffs came they were rather reasonable and the worst people were let go. (None of them were among the people who passed the above-mentioned barrier though).
I’ve been programming professionally for 20+ years and I had to look this data structure up. Granted, once I reviewed it, node insertion is trivial, but I hope you gave applicants that opportunity. Or perhaps your line of work commonly deals with stuff like this.
I’ve spent my career in web and mobile product development, usually with a business focus of some kind, and it still surprises me sometimes how little I’ve used certain topics from college, like mathematics. I think most of the math I’ve used I likely learned by grade 6.
More importantly, having the general problem solving skillset to reason through this problem in 20-30 minutes seems super important to many aspects of front-end development...
At most places I've interviewed, each interview question is a 25 minute - 30 minute session. Since white-boarding the solution takes perhaps 5-10 minutes max, in this case, there's plenty of budget to refresh definitions and provide a clean interface from which the actual task begins.
Critiquing "insert into DLL" as an unreasonable question does a disservice to the "less leetcode" position :(
Exactly! We were not looking for A+ CS students, we were looking for people we can work with.
My high school did not offer CS except as an independent study (you could technically do anything as an independent study, so "offer" is shorthand for "convince a teacher to let you sit in their classroom during planning period and find a way to sit for the AP CS exam").
There have existed high school CS courses since the 80s. (The AP CS exam was introduced in 1984.)
I took AP Computer Science in High School in 2012. The whole curriculum was based on this “Grid World” Java program where a Grasshopper extends JumpingBug extends Bug or something like that, no not as an analogy for OO, the classes were literally named like this. And, the AP test asked specific questions about Grid World's implementation, so you had to learn about it even if you understood the underlying computer science concepts.
I wish we learned about linked lists. I didn’t get that until college.
Linked lists were much more fundamental (and covered much earlier) when they were using C++.
Wasn’t too much learning about double linked lists going on in that class.
We couldn’t - there was no Google at the time of our IPO. (More importantly there was no mobile Internet). But the reaction “please clarify what are you talking about” is absolutely sapient, so you would have passed. But note that this:
> node insertion is trivial
- is much less sapient. In my alma mater “trivial” meant that you are able without a pause to write down a proof - without a single error. And this particular task is not designed to be rushed through, there are a couple of potholes. Anyway, hire / no hire was not based upon the absolute correctness of the code. It was mainly based upon the applicant’s reaction to me pointing some “obvious” error in their code. We were not looking for A+ students, we were looking for the people we can work with.
You can be at the top of the layoff list for nothing more than voicing your criticism of company strategy at some random meeting.
I’ve seen very talented VPs go from “hero” to “zero” in the span of a month when the CEO decides to change direction and concludes those people aren’t “aligned with the new direction of the company”.
Seems to me this implies that companies that do this, have found a way effectively measure performance and productivity. I don't think OP intends to say this, it is pretty much impossible to measure productivity of individual developers. I mean those on the team know who is or isn't contributing from day to day, but among teams and over time it is much more difficult. If someone has figured this out they should be a $billionaire by now.
I'd go further and counter that this is completely bogus claim, and yes, no one hiring should view a candidate being laid off as being related to anything performance or desirability of the candidate.
In my experience, layoffs are merely a popularity contest.
It amazes me to see high salaries at companies which are engineering heavy and the revenue per employe is significantly below the median TC for the median engineer.
To get the tech slowdown you’re proposing the higher interest rates will have to shake out through all of venture capital and start-up money will have to tighten up.
My guess is tech salaries will stagnate for a while. But with poor performance of RSUs and inflation eating into purchasing power this will essentially be a pay cut.
However, if your timing is good and risk tolerance is high, taking more options over a higher base can work out quite well.
Options on the other hand are largely vapour in modern markets. Many start-ups are electing to stay private for time periods exceeding fifteen years. They fully expect most employees to not be able to afford the options they get because of the tax implications combined with limited ability to sell. Some services exist to try and alleviate this problem although most do so imperfectly and take a large premium for the risk and uncertain time window for the shares to become publicly tradeable. These days I mostly don’t bother looking at companies that can only offer options because they generally aren’t willing to offer a high enough base to compensate. I’d far prefer $200k base and $200k RSUs to $300k base and $100k of uncertain options. The first offer is far easier to find than the second as very few start-ups are willing to raise base to compensate people for the lack of liquidity in their options.
Loss aversion plus money illusion in a nut shell. Most people wouldn't agree to a paycut so employers must fire employees which is even worse for the company and the rest of the economy. This is why deflation results in mass unemployment.
that may take some time, If there are more job seekers then your next offer may be lower than your current one.
Good with math. He was trained as a physicist.
When interest rates go up, there are low risk ways to get those same returns, so business expectations of ROI go up.
So projects that made sense, were being run well, but which simply aren’t likely to make high enough returns are going to get canned in these conditions. No reflection of the staff laid off in such a case at all.
Recruitment Tech founder here. The job market is still tight. There are two open jobs for every available person. Source: Fed Chair Jermaine Powell. This means you lay off, someone else will hire quickly.
> However, many of these layoffs are single-digit percentage layoffs from companies that are still hiring across the board. That's not so much a traditional layoff as a pruning of the workforce.
100% this is the story. The pruning seems to take two forms: classic "underperformance" and, as much as I hate this, people who just won't come back to the office, or have moved to lower cost areas and will not accept a pay cut.
Why would anyone accept a pay cut if their job is remote? I get it if location based pay is used for jobs that require in person. But how can the employer have it both ways? Why would the employer want to subsidize more expensive lifestyles for a remote position?
People are not accepting cuts and that is leading to positions being eliminated (layoffs) as employers are realizing they can pay sometimes 50% less than their high cost of living area wages.
Cutting costs usually lets those people get bigger bonuses, so the incentive is towards forcing the issue.
Employers don't pay high because CoL is high; they pay what the market allows them to pay.
People fear loss more than they welcome gain. There is a lot of demand for good engineering talent and there just aren’t enough engineers with these skills. While many people fear that remote would decrease salaries in high col areas, I believe the opposite will happen.
Of course the second order effects are somewhat difficult to predict. If you can get SF salaries in eg Ohio, it might reduce the number of people flocking to SF reducing the talent pool.
The system used to get demand numbers is a survey, and has been done the same way for decades, so it's pretty reliable compared to counting job ads on job boards. Job ads often will contain lots of duplicates (search spam) and fake jobs.
During the bust, tech workers took ANY job, no matter how terrible, and held on for dear life so they didn't end up unemployed for 2 years. Finally, the market recovered, and companies experienced turnover as people finally had the opportunity to move to greener pastures.
Same feeling, but from a bit different perspective. During the dotcom bust I’ve learned to love layoff periods. Cause then friends and neighbors from friendly and neighborly other teams suddenly started to look for more work instead of looking for less work - and my life became a bit easier.
At the time my team of 2 (two) was handling 12 (twelve) rather simple but important projects. Steve and his team of 4 (four) in Denver was handling 1 (one) similar project. Then the bust came, and the prospect of layoffs. And here we are at the meeting where I am transferring three of my projects to Steve’s team.
After the meeting Paul, a PM from France - we enjoyed working together, asked me, puzzled: Mike, why on earth haven’t you fought to keep your projects?? And I go: Paul, I have nine more of these - do you want some?
No idea where you are, but I'm not seeing any reversal at my job or in positions listed...
Personally, I think the layoffs are due to tech companies not hitting profit numbers the investors expected. Just like the PC market, seems people expected Amazon, FB, Netflix, etc to keep growing at 20+% yoy.
At the meeting, our CEO announced that he wasn't seeing any of this, that it was a Cisco problem, and that it was an indicator that we were even winning! Of course, a number of our customers were on the brink of declaring bankruptcy, including Cable and Wireless and a few others. Worldcom was about to happen.
Of course, our CEO said, not only weren't we laying off, we were going to accelerate hiring, and we did. No layoffs planned, more heads to take more of the market!
We did accelerate hiring. Our group almost doubled in the next three months with more reqs opened. One day in early April, I was the last interviewer for a candidate who had done really well and was walking the guy out. Normally at the time we'd make an offer on the spot if the interview was positive enough, we would do incremental round-tables in those days as we went, and this one was positive, so I was a little confused. We happened to walk by my manager's office as we I was seeing him out - were on our way to the elevator. He rushed to join us as and had positive things to day on the way down by gave me a look. We said goodbye and my manager says, "Yeah, there's a hiring freeze as of a few minutes ago, so all reqs closed."
A month later, the CEO denied any layoffs were pending or planned, but suggested that we do a prayer at the company all hands in April. To pray for... something? Worldcom not to go bankrupt? I don't quite remember, I was so shocked. Very explicitly, the CEO promised: "no layoffs are planned." And then, about a month later, the company did its first ever layoff.
And this brings me to the point. New companies - and there are a lot of them this round just like there were going into 2001 - suck at almost everything. They don't know what they're doing and they do a lot of idiotic stuff. I've worked at companies that peanut butter the layoff, that try and cut functions, that target non-human expenses first (such as HW prototypes or expected builds for labs or server farms), companies that target engineering first (or specific engineering disciplines, like ASICs or new boxes, where the project can, in theory if not reality, be put into hibernation for a bit), that target customer support or marketing first, and even one that targeted sales first (because there weren't any). New companies that have not done it before get stupid.
This layoff was the first ever for the company, and they had absolutely no fucking idea what they were doing. What actually happened for about half of the managers was they wanted around the cube area at 9am in the morning and did a sort of "duck duck go" in their heads, and when they approached someone they decided to lay them off or not based on whether they appeared instantaneously busy. To this day a friend who was at the same company swears that when his manager came to lay him off, "can you talk for a few minutes?" he survived entirely because he told the guy to go away because he was incredibly busy on something another team needed and could talk in an hour or two.
So yeah, don't judge people by layoffs from small or new (years) companies. Judge each candidate by what they do and can do and what they've done, not that they ended up on the wrong side of the layoff.
Companies are adjusting for future earnings falling and the cost of money going up.
Unfortunately the tables turned since Feb 2022, investors want them to tighten belts and reduce cash burn.
and on a macro level what's the point in reducing cash burn in a high inflation environment ? Driving even more inflation ?
I'd rather categorize it as for the past several years the managers in tech companies seize the chance to inflate their teams to boost their careers at the cost of their companies, while the leadership in those companies are just too incompetent to tell separate the Wheat from the chaff. It's not their money, after all. I mean, why the hell does DocuSign need 7000+ people? Why the funk did Uber need to build their own Slack? Why in whoever's name does Uber's ATG need to hire > 2000 people under two years to build a research project? Why did Coinbase need to have > 3000 people to build a god damn crypto exchange? Incompetence is just not enough to explain these jokers.
And the crown of the crowns, of course and again, goes to Uber: they think that k8s wouldn't scale yet their in-house crap would beat the k8s community and therefore they hire a freaking organization to build their own resource scheduler, as if Uber has "internet scale". Yeah, right.
Empire building in the small is “growing your org” and in the large is “growing your company”. Until we stop measuring company performance by customer counts and employee counts, this will probably continue.
Classically, the way to go from l1 manager to l2 manager to director, senior director and VP was to grow your organization in headcount terms, so in a situation where it is "hard" to hire, say Amazon is busy grinding through the entire valley, you might accidentally create a situation where everyone feels urgency but no one feels backpressure.
I work at a company that just laid off 18% of the workforce (Coinbase) including many people in engineering. The day this happened my email, LinkedIn, Twitter inboxes exploded with companies asking me if I knew of anyone looking for a job or if I myself had been impacted.
I reached out to many of my former colleagues who had been impacted to see if they needed help. All had multiple interviews in flight and were not having trouble finding jobs.
Aside from many crypto companies the inbound jobs were from many public and private companies and spanned many industries.
I expect tech layoffs to get worse and the white collar job market to tighten towards the end of this year and 2023.
I expect the main driver for this will be cost reduction at public and private companies in the lead up to earnings or quarterly reports. Main cost for a tech company obviously being labor.
Now though, I see the exact opposite. Tech moguls, central bankers, VCs, etc. etc. have been warning "this is going to be really bad" now for months. But, in actuality, it's not that bad (yet). Yes, inflation is really bad, but unemployment was 3.6% in May. It still feels like many companies are having a very difficult time hiring and keeping workers.
So why the difference? I don't want to go into "conspiracy theory territory", but I do think it's pretty undeniable that there is a marked difference in "warning levels" between the current time and recessions in the past 40 years.
The risk of an unexpected recession is much worse than a warning that doesn't come true so warnings are always pessimistic. Risk right now still feels 50/50. The next CPI report after the major Fed action will be watched very closely.
Hard disagree, at least by what I said in my comment about what "widely foretold" meant. I mean, the IMDB opening description of The Big Short starts with "When four outsiders saw what the big banks, media and government refused to..." Michael Burry, https://en.wikipedia.org/wiki/Michael_Burry, famously said he wasn't a super genius or anything, and was surprised that so few other folks saw the coming housing collapse like he did.
Again, my point is not that nobody could foresee that the recessions were coming, it's that the institutional "powers that be" - government, large corporations, VCs, etc. - actively downplayed the risk of recession. The exact opposite is happening now.
Burry is also a shameless self-promoter who has predicted a lot of disasters that haven't happened including WW3 a few years ago. There's like a dozen people who have made careers out of claiming to be the only ones that predicted the 2007 recession. If you keep predicting recessions you're bound to be right. In reality, it's just not possible to predict accurately. Here's Krugman in late 2006 presenting the data and putting the recession risk for 2007 at 2:1
https://www.nytimes.com/2006/12/01/opinion/01krugman.html
Right now there are several indicators flashing and a lot that aren't. Technical data like P/E ratios, volatility, yield curves are great at predicting things that happened in the past but they just can't be relied on as being infallible.
He might have made other wrong predictions but to gloss over the above fact is a big omission.
There are the economists and there are people with skin in the game, I think there's a big difference if you're a wealth manager versus a NYT editorialist. Incidentally Krugman seems like a proponent for whatever blue tie is in power (https://www.nytimes.com/2022/01/04/opinion/2021-economic-rec...). That's different than placing bets in the tens of millions.
And Burry definitely wasn't a rogue genius. Lots of hedge funds bet on the crash. Goldman Sachs was specifically called out for betting heavily on a crash while they were still selling mortgage assets to customers.
https://mronline.org/2022/05/26/u-s-federal-reserve-says-its...
> According to a transcript of the presser published by the Wall Street Journal, Powell blamed this inflation crisis, which is global, not on the proxy war in Ukraine [1] and Western sanctions on Russia [2], but rather on U.S. workers supposedly making too much money.
[1] https://multipolarista.com/2022/03/24/us-official-ukraine-na... [2] https://multipolarista.com/2022/03/24/us-official-ukraine-na...
This is basically Russian propaganda. The author and founder of that website has a history of sympathetic covarage of authoritarian regimes (https://en.wikipedia.org/wiki/The_Grayzone). It's also funny that these far-left journalists always cite their own previous articles. Powell mentions the war in Ukraine as contributing to inflation, but since he didn't call it a "proxy war" I guess it doesn't count.
> “Employers are having difficulties filling job openings, and wages are rising at the fastest pace in many years,” Powell complained.
LOL. Definitely sounds like a complaint to me. No editorializing here. That's why Powell said this later in the press conference:
> If you think about it, if you look at the last cycle, we had a very, very—longest expansion cycle in our recorded history, and in the last two, three years, you had the benefits of this tight labor market going to people in the lower quartiles and it was—you know, racial wealth and income—not wealth but income gaps were coming down, wage gaps. So it’s a really great thing. We’d all love to get back to that place, but to get back to anything like that place, you need price stability.
https://www.wsj.com/articles/transcript-fed-chief-powells-po...
If you want to lower home prices you are going to need to stop land speculation and so far public land ownership has been the only way to do that e.g. in Singapore. The alternative is a land value tax.
This orthogonal problem needs orthogonal solutions. Money is about employment and trade, not about housing. Housing is a land allocation problem e.g. zoning.
In this case people knew that overly dovish monetary and fiscal policy would overstimulate demand. That leads to inflation, and the Fed’s job is to balance inflation with employment, and since the unemployment rates they look at very low, that means it’s time for them to raise rates to curb inflation by reducing aggregate demand. This has a knock-on effect of cooling asset prices since credit becomes more expensive and harder to get, so the market deleverages.
One difference is that expectations are set but interest rates/the money “printed” due to overly dovish policy are still in the process of being changed. So stocks are sold off and people are planning for a recession, but layoffs and the actual economic cooling haven’t happened yet.
It’s entirely possible that the fed is able to cool inflation easily (it could also resolve itself if Russia stops fighting or China stops trying to do zero-COVID) without that much of a recession, but raising rates lowers demand, so since rates may go much higher than they are, a recession is likely. In terms of assets, rising rates and subsequent recession involving lowered rates are already priced in
I wholeheartedly agree that some people saw the crashes coming, and honestly, I don't even think they were that hard to spot. I'm a pretty big fan of Jeremy Grantham, who considers himself a "bubble historian", who points out that while the timing of when bubbles pop is almost impossible to determine, the fact that one sector is in a bubble is not.
But that said, my point is that the institutional powers that be were very quiet, or in many cases actively argued against the possibility of a recession, in both the .com and Great Recession cases. In the present day the exact opposite appears to be happening. The seats of institutional power (central bankers, execs of large corporations, rich VCs, etc.) have been talking about the sky falling for a while now. That is what is really different.
The 2008 downturn had tons of warnings, everyone I knew who had any visibility into product shipping and future orders was talking about the big slowdown in orders, across all kinds of industries.
While there was the Covid downturn, in general, the economy has been on the upswing for 12 years. The US Federal Reserve has appeared to manipulate that due to the Great Recession.
So, many of us are worried that roosters are coming home to roost.
That doesn't mean it will happen, but our fear is mean-reversion.
According to Keynes a recession only happens when the interest rate on financial capital exceeds the maximum yield of physical capital. That implies that if the interest rate is set properly, then you would expect economic recessions to never happen. Economic cycles are equivalent to oscillations in control theory and those are usually a sign that you are doing something wrong.
The expectation that when things are too good then something bad must eventually happen is completely misguided and can at best be explained by having a medium of exchange that is incapable of conducting in some transactions that humans would like to engage in and are currently engaging in.
Barter is unable to represent a lot of useful transactions. Money without credit is unable to represent a lot of useful transactions. Money with credit is unable to represent a lot of transactions. The next stage is money with credit and inflation is able to represent more transactions than without inflation and so on.
This means that if anyone tells you to go back and adopt a system that allows less transactions they mistakenly believe that the transactions you have conducted are somehow sinful/immoral or simply shouldn't happen and hence adopting their system will require undoing a lot of transactions which they consider akin to divine punishment for going against the laws of their preferred money system.
It is particularly common with Austrian economists who insist on going back to gold currency. However, because gold is unable to conduct a lot of transactions that we today take for granted, all the growth that happened because we abandoned gold shouldn't have happened according to them and we must now pay for going against the gold standard.
It is complete nonsense. If demurrage currency sits at the apex of representing the most transactions then it is entirely plausible that this economic cycle and crisis crap was pointless and inefficient nonsense to begin with and that booms and busts should only ever occur due to the real business cycle theory which as it stands only explains a subset of all recessions and not most of them because it is about external economic shocks in e.g. oil and gas prices for example.
I think that's the main point. Tech is going nowhere, it's crucial for the future for most countries around the globe.
that said...
There are some very hyperbolic people comparing this to the .COM crash and also to 2008/2009.
In 2001, there was literally a site doing nothing but reporting in flamboyant terms all of the "fucked companies" going under. IIRC, it was dozens a day, at one point, with people stating that the Internet had failed, and it was all going down the drain.
In 2008, absolutely no one had any clue what was going on but everyone knew it was catastrophically bad. People were trying to guess if it would be merely the worst recession ever or the second great depression.
This so far seems like a fairly normal correction. We will see if Debt blows up and changes that.
As of today, many crypto companies have money from 2021/early 2022 raises and are still hiring. In 2008 the private tech market reaction to the stock market crash was swift and brutal.
It was really hard to get a job in 2008. Today it feels like their is a big lag between stock pullbacks and jobs drying up. None of my colleagues who were laid off are having trouble getting jobs in crypto and have options in other parts of tech if they want it.
To be clear I expect the jobs situation to get worse this year and in 2023.
In an effort to mitigate this, companies will cut costs by firing people, slowing hiring and cutting services and advertising.
This will then impact private companies ability to raise.
I had friends who, in 1999, were freshly-minted millionaires at Microstrategy, then lost it all less than a year later. And a friend who joined Lehman after his Wharton MBA in the summer of 2006. While it was not fun to be in the middle of the burst they all easily found high paying jobs within a few months.
I suspect this crisis may be worse as, after spending trillions on covid lockdowns, we have fewer options to spend our way out of this problem. The pain in both 2001 and 2008/9 was limited as the US pumped money into economy and inflated another bubble just as the previous one was bursting, and I think this option is not easy to use today. But I am not an economist, we shall see in a couple of years how this shakes up.
I was laid off right after 9/11 and I have no illusions that I was very lucky to land a job (at reduced comp with someone I knew well) quickly given that I otherwise didn't even have a nibble.
I wouldn't rule out that in 6 months the parallels with 2001 are more pronounced. However I agree it's not really close, especially with Google/Facebook/Apple/Amazon, etc. are still printing money at an incredible rate and that money continues to sprinkle into other parts of our sector.
During the .com crash there was a severe pullback in general on investment in the online startup space in general and it wasn't until the Google IPO that I felt we were truly out of that phase.
Crashes are not instantaneous.
Crypto alone is easily a dot com sized scandal.
Cheap cash has led to a lot of dysfunctional and gigantic industries, eg food delivery.
We are nowhere near the bang yet.
The cheap cash situation on the other hand is the elephant in the room. Unprofitable companies are about to be under immense pressure.
I don't know if there is going to be much of a bang rather than a very long deep slide for equities (especially tech) as indices undergo P/E compression. When we start seeing 12 P/E then maybe things will turn around.
That's what I used to think, until I began to see how connected it was to other parts of the economy. Once financial institutions get involved, you just don't know how connected that system is anymore.
and many other offshoots.
None of this is normal and what follows won’t be either.
https://coinmarketcap.com/currencies/tether/ (see market cap)
https://www.multpl.com/inflation-adjusted-s-p-500
https://fred.stlouisfed.org/series/M1SL#0
This won’t end well and in the current environment of high inflation the fed has no choice but to raise interest rates and companies will continue to layoff into the recession.
As for the fed, they're raising interest rates to cool things off - hopefully people are investing in ibonds and just maybe savings accounts will see more than 5th of 1% again so there are some upsides.
Layoffs? they're happening but unemployment still went down.
You mean like https://rekt.news ?
If it's all gone to shit, I'm not seeing it here (Scotland), salaries I'm seeing are really good for the area too.
I don't think Canadian companies could compete and hire, so mostly just rode it out and let positions sit unfilled. I suspect there are more unfilled positions in Canada than there are unemployed devs in Canada right now, but if layoffs continue, the Canadian companies might get some relief
Of course this kind of thing can change very quickly, and agency recruiters won't really know for a while.
On the other hand, the flood of unsolicited recruiter emails that I delete without responding has become less flood-y in the last month or so.
Two months ago it was extremely busy and noisy. It might be even less than half the activity today.
"Employer demand for workers remains strong, with Indeed job postings as of June 24, 2022 54.2% above their pre-pandemic baseline. New job postings, defined as those on Indeed for seven days or less, are also well above their pre-pandemic baseline, up 68.3%. While job postings growth has slowed, the leveling out has been moderate."
https://www.hiringlab.org/2022/06/30/june-2022-us-labor-mark...
Heck, my family in service industry says anyone with a pulse is hired these days.
That being said, be careful with this assumption. Recruiters aren't going to stop recruiting; that's their job. At many companies, they have a certain amount of outreach they're required to do. If they stop emailing, then all of a sudden they stop doing their job, and that means they're personally going into layoffs with bad numbers.
The jobs still exist, but behind the scenes it's likely things are changing. Companies are hiring 2 engineers instead of 10, or increasing their hiring bar significantly. The difference between "we're desperate to hire" and "we're open if someone great comes along..." is huge, but you won't see a difference in how recruiters treat you.
tl;dr = if a company cuts their hiring plan from 10 engs to 1, they still send the same number of recruiting emails.
A bit of my job ends up being a hiring management and the amount of recruitment agencies that want to send developers our way increased a lot. They are getting desperate.
Eventually the recruiter messages tapered off until about.. 2005.
And now that the hiring is reduced, the number of recruiters haven't (especially since they tend to work on commission, rather than on a fixed salary). Since they now have fewer jobs to connect people to, even they are likely to get more desperate and send more recruiting pitches to candidates, because they aren't filling as many jobs as easily and earning as much commission.
IOW, seeing an increase in recruiter activity can be completely consistent with reduced hiring (and is also consistent with increased hiring), so in itself it doesn't tell you much.
That I don't get. It should rather be good for the skills you have on offer, not where you are based. From my experience the offers are pretty sh*te and only gone up slightly. You also need to take into account being caught in the higher tax bracket. So if the offer is £120k you'll only get £73k, which these days isn't that much considering costs of living are not the same as 10 years ago. That being said, I have received a couple of offers for over £150k recently so at least the trend is upwards. Still not enough for me to consider.
VCs react first, in the most savvy and farsighted places. That’s why we’re seeing symptoms already.
There is literally a geographical delay. Things like house price crashes take time to spread. The more remote you are, the less connected you are to the global economy. Scotland is relatively isolated.
The tide has gone out, make plans.
Interesting! What is it they react to?
I agree VCs react to the markets and/or anything that is likely to affect them.
chill bro, things will be fine, planned or not
the wheel keeps turning
Of course that wasn’t going to happen and should have been obvious to anyone. The pandemic is over and the “new normal” has just gone back to the “old normal” with marginal changes in work/play patterns.
This was always going to happen, with or without current rate hikes. The rate hikes just accelerated everything by 2 years.
Hiring and such didn't only happen in the pandemic period but also overall in almost the entire past decade(2012-2021).
Hurting the understanding of the people in the market, we are now seeing the sudden shrinking to have caused them to figure out priorities of either growth or profitability in even later phases of the business. At least that's what it seems like to me.
Because the jobs market is almost just as good in tech as always, it's just big startups and companies are shrinking and increasing margins while smaller ones in early phases of growth are still increasing jobs or just in sheer numbers.
It feels like a white collar repeat of what blue collar voters did in the US in the 70s and 80s.
Any examples of those policies?
http://web.archive.org/web/20080916075626/http://news.ycombi...
top story: > Stock Market Meltdowns - Why they will happen again and again and again (blogmaverick.com)
http://web.archive.org/web/20080916075626/http://news.ycombi...
second story: > Stack Overflow Launches (joelonsoftware.com)
http://web.archive.org/web/20080916075523/http://news.ycombi...
if you want to see what people were discussing back then
blabla print money, blabla dont print money, blabla change jobs, blabla dont change jobs, its the fed's fault, its wallstreet's fault, more regulation, less regulation.. etc
or people bashing apple claiming android is going to disrupt the app store
one thing is for sure, almost all predictions going forward in the chaos are as good as random, anyone can explain the chaos in hindsight.
Tesla is kind of the exception to this but aren't there always layoffs there? seems par for the course.
riplol
All of this being done on internet forums and social media produced and managed by those same people.
Reality is, yes, it's a new industry, but no, it's not special.
Every other industry I've been exposed to has all the same bullshit office politics. The same supposed "in jokes" that only "their industry" would understand.
Around 75% of what I encountered touched real products, workers, and production directly.
It seems like there is plenty of that kind of tech out there and in development right now.
The other 4 or 5 companies were strictly internet related, selling digital products to people doing things on computers.
I’m not sure if I encountered that because that’s a reasonable representation of what’s out there right now. I do know I prefer work where I get to support real people doing real things, so to speak. In any case, there are definitely roles like this out there and plenty of companies hiring.
I know the people who were laid off were passionate about what they were working on - and this was a big disruption to their life.
But when I see some of these layoffs, my immediate thought is:
1.) Who is this company and how did they have so many people?
2.) OK, that industry experienced a COVID boon (edtech, mortgages)
3.) Taking advantage of others laying off people to get rid of poor performers
Netflix laying off employees; I'm sorry, but Netflix is mostly a catalog of garbage at an ever increasing cost, with legitimate competitors at this point.
Didn't Elon just say how Tesla's software needs more work? How is he going to do that without software engineers? Is Tesla even laying off software people or other employees? As a model 3 owner, the mobile app sucks, the in-car UI/UX which was cutting edge is now falling behind, let's not talk about auto-pilot/self-driving. They should be desperate for better software people.
The one common thing about "overvalued" companies is that they either need to show strong growth or their stock is going to be decimated. Management often looks at headcount as proxy of growth (I'd argue that's not always correct but that's a different question). It's extremely dangerous for the stock price of these "overvalued" companies to do massive layoffs both in term of further hurting the short term and a big impact on the long term. If they have plenty of cash they can and should be looking forward. That said this can be a reasonable excuse to offload some lower performing employees or adjust some priorities.
Please ignore the man behind the curtain.
What is a real industry to you? Farming done by migrant, mostly illegal workers, or machines? Manufacturing of goods that mostly happens in China?
An NFT marketplace is a similar to gambling or derivatives. The value is potential income for people.
Another definition of "value" is something which increased the economic output, a positive-sum game. Thus gambling (which is zero-sum) does not create value.
Derivatives do create value in the second sense, in that they can be used to protect against risk, thus creating value (or allowing the creation of value). Yes, they can also be used for the equivalent of gambling, but they have additional uses.
Derivatives have real utility.
Other than organizing the information of the internet (lately it is debatable as to how well they have been doing this lately) via google, what value addition would you say facebook or google is providing?
Same thing with Uber, now that VCs are no longer subsidizing Car rides for the entire world, it's just a more expensive cab.
What are the tech ventures that have been adding value addition to society. Based on the experience i've had with family members becomes complete Q psychos i'd say net negative on facebook's part and they dont even build anything.
[1] Not your personal favorite, of course. That one's the pony in there somewhere. https://quoteinvestigator.com/2013/12/13/pony-somewhere/
Just because something is not physical, doesn't mean it's not valuable.
https://www.multpl.com/inflation-adjusted-s-p-500/table/by-y...
Inflation -> Rate hikes -> Growth slows
?
Hiring is still hectic. Every company and recruiter I know is trying everything they can to find candidates. Our company is desperate to hire and we're nothing special.
One of the reasons there's so much hiring going on is a bunch of emerging markets have entered the field and are looking to build tech products. Another is that the developed world is still awash in record corporate profits and have plenty of runway to fund new development. But there has been no huge push to get more bodies into the labor market in the past 4 years so the numbers are still too low. Add to that the onward march of retirement of old staff and we're going to be in a hiring crunch for a few more years. Companies might actually have to learn to be efficient / use a few staff to get more done
I mean obviously the layoffs are real, but are they necessary, or just symptoms of the chill winds and fear now blowing from the fed.
This is as real as it gets.
If $33B in funding doesn’t get you a dollar in profit, you have to wonder if its all even worth it.
which markets did Uber exit voluntarily?
As an end user in this country, it definitely looks like a business that's close to capitulation.
0: https://www.news18.com/news/business/uber-explored-options-t...
Home Price to Median Household Income Ratio is even worse than 2008.
https://www.longtermtrends.net/home-price-median-annual-inco...
Redfin and banks have started layoffs as they're seeing demand quickly drop with mortgage rate increases.
Savings have dried up.
https://fred.stlouisfed.org/series/PSAVE
Consumer debt is at an all time high.
https://fred.stlouisfed.org/series/CCLACBW027SBOG
We're in the early stages and I fear we're looking at a combination of the dot com crash + 2008, but longer lasting because the Fed won't be able to bail us out this time.
Crypto got wiped out but a BTC is still hovering around 20k?
> now the tech and real estate bubbles are popping
I sincerely doubt it, things might slow down and plateau but with the cost of everything going up (including rent) people will still desire a home with a mostly fixed cost. We also haven’t seen any massive layoffs yet coming from tech companies.
Also if home prices plateau and inflation rips the value of those homes are deprecating without price reductions.
People have forgotten what a real estate downturn looks like because it's been propped up by the Fed for so long, but in the good old days (before 2004 or so) it wasn't uncommon to go through periods where the average house took 9-12 months to sell and sellers went through 3-4 Realtors before it sold. Do the Realtors still say that 6 months is the average time to sell or have they forgotten that too?
The fact is that people buy homes based on monthly payment and significant rate hikes are something we haven't seen in decades. When the monthly payment doubles housing prices go down.
Here's an example. Imagine a $500k house in Texas with a 2% property tax rate and $2k/year in home insurance. Suppose a hypothetical buyer is putting 20% down.
At a 3% mortgage interest rate, the monthly PITI payment would be $2686. At a 6% mortgage interest rate, the monthly PITI payment would be $3398.
That's a substantial increase, to be sure, but if payments had doubled then it would cost $5372, not $3398.
How high would mortgage interest rates need to be for the payment to actually double? Answer: about 12.8%. So interest rates would need to more than double from where they are today to see actual housing payments double.
Yes, losing 2/3 of your value is getting wiped out.
Crashes are not instantaneous. They occur in patches.
Crypto is in another winter cycle. We've seen this before. The interest rate/inflation story had a part to play in that but this is a normal market cycle for this sector.
> now the tech and real estate bubbles are popping.
I don't think the real estate bubble has "popped", rather cooling off from the massively overheated valuations in 2021. I don't see a cratering of existing home values (yet).
> I fear we're looking at a combination of the dot com crash + 2008
Turn off the news that spends all its time trying to convince you the sky is falling 24/7.
Curious. What do you see as the forces which drive a crypto market cycle? What is a normal crypto market cycle?
As an illustration, Ray Dalio talks about short-term debt cycles as driving the economy; where the debt is (hopefully) linked to investment in activities which increase the economic outputs.
Or a business cycle is "business cycles are marked by the alternation of the phases of expansion and contraction in aggregate economic activity,... the aggregate measures of industrial production, employment, income, and sales, which are the key coincident economic indicators used for the official determination of U.S. business cycle peak and trough dates."
For crypto, I don't see anything more than simple supply/demand, and it is really unclear what drives that besides pure speculation.
If it is just driven by speculation, then what makes for "normal market cycles" in speculation?
Miners are rewarded in BTC for keeping the network secure, and they sell these BTC to cover operating costs. Every four years, the mining rewards are cut in half (per the consensus protocol). Miners have less coins to sell, which results in a supply shock. The price floor between these supply shocks is ostensibly determined by economic activity outside of speculation. This has resulted in a repeating four-year market cycle. Of course this pattern will only continue until it doesn't. You can search "halving" or "halvening" for more info. https://www.investopedia.com/bitcoin-halving-4843769
What exactly would drive demand for BTC except for speculation?
To your more broad question, BTC demand outside speculation is driven by economic usage, despite HN's doubts. If it wasn't for that, I'd be asking the same question about its value. If you're open-minded and interested in learning, I've written up answers to that question several times. https://news.ycombinator.com/item?id=31932743
> He noted that since “the national bank is not really operating, crypto is helping to perform fast transfers, to make it very quick and get results almost immediately.”
That quote is pretty unambiguous. At least for a time, Ukraine benefited from a financial system with no central point of failure.
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Pornhub probably offers different payment methods depending on your jurisdiction. I don't know much about that industry, I was just quoting a thread from the day before where a few people confirmed.
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You're right that in a first world country, with reliable infrastructure, paying for uncontroversial products (note uncontroversial != legal), BTC will have more friction. Even if BTC is wildly successful, I'll be happy never to buy socks with it. But there's lots of adoption in other countries, and for fringe products like the ones you listed plus VPNs, "water pipes", etc.
And why are you asking for use cases "besides" these? That's the problem with these threads. Someone says "no use cases", then I list some use cases and cite my sources, then the next reply is "actually those don't count, please give me even more use cases!" Posting in these threads is exhausting.
Both political parties service wall street and our defense industry, not regular people and don't really care about inflation and other problems that slam the poor and lower middle class. Printing money is good for the republican's and democrat's constituents (the elites).
This whole "government printing money" framing is very wrong.
The government was printing money and it led to tremendous growth. In other words, the economy was able to absorb the money which meant the money printing was absolutely appropriate.
However, we had several external supply side shocks due to the pandemic, and Russia's war on Ukraine, which drove the cost of goods higher. Since the US government cannot really stop Russia from killing civilians in Ukraine, or force China to get rid of its zero COVID policy, or single handedly fix the logistical breakdowns in all the shipping lines, etc, it has to rely on the only tool it has, which is cooling the economy. In essence, it's solving a supply chain shock with a demand side response, because that's all it controls.
In fact, the fact that the Fed had kept interest rates low and "printed money" meant that it has a lot of leeway to actually tackle this situation right now without causing too much pain. After several significant increases, the target rate is still 1.5-1.75, which takes us back to what the Fed had reduced it to during the peak of the 2008 crisis.
Which means that thanks to its policies, the Fed still has a lot of room to help control inflation without causing too much pain, something which wouldn't have been possible if it had prematurely raised rates earlier.
just a sec. huge inflation started before Russia’s war. and it was due to the government printing huge amounts. the politicians miscalculated and we’re paying the price. Russia’s war just confirmed things will be bad, it was not the precursor, no matter what the politicians are saying.
https://news.sky.com/story/amp/us-inflation-hits-fresh-four-...
> And yet the dollar is getting stronger relative to other currencies.
this is because the US dollar is considered a safe haven asset. especially in a global recession.
And don't forget, the people that were lucky enough to get houses before they became unaffordable have to (somehow) fork over the real estate tax on the insane valuations of those houses - which newly unemployed folks won't be able to do, so there are going to be even more houses for investment firms to buy.
are you saying companies are coordinating their layoffs?
At any given point at any major city there are a half a dozen to a dozen of those company corrections happening at once. When talk of a recession happens a few of the companies that might have been given a bit more slack are told to shape up earlier.
So many of these are companies that boomed during covid and now are correcting.
When I left Amazon last year, there were effectively two Amazons. One is a group with half baked product or service ideas, throwing garbage at a wall to see what sticks. The other Amazon is like a retirement community worker, keeping legacy services alive, ensuring their security recertifications, and not much else. There isn’t even a concept of innovation.
Though I don’t work there anymore, I’m still a shareholder. I look forward to the company trimming the excess fat. If the broader market really is impacted, unfortunately, there’s going to be a massive army of H1Bs suddenly faced with leaving the country.
The best thing that could happen to Amazon is unionization. Stability in their massive churn and perhaps more stability as a company.
I seriously doubt Amazon would rehire engineers from unregretted attrition or employees who were let go.
Amazon is actually insanely cost focused. For engineering, Amazon is more likely to hire more aggressively in India, bring more H1Bs to the US, or hire in European markets where total compensation is a fraction of what it is in the US.
During my time, a common tactic was to grow offices in India and use them as a pipeline to source H1Bs. In theory, you pay an H1B engineer the same total compensation once they’re in Seattle. Except in reality, if SDE 3 comp is $350K, you can bring an SDE 3 from India for more like $200K. You can get away with this for at least 18-24 months and get enough labor out of that person, until they realize they’re underpaid and demand a higher comp. Then, they either leave Amazon, but you already got several years of cheap labor from them. Otherwise you adjust their pay if you seriously want to keep them around.
Why does bad planning on your part need to result in stress, anxiety, and financial concern for me?
The market is thankfully in a good place and I’m good at what I do. Did atleast one interview activity with 20+ places, it was hell, busier than a average work day. To get to final around it took 6-8 hours of interview activities.
It would be amazing to see companies that are struggling to hire to create a fast tracked interview process for those laid off.
When the cost of capital increases it's bound to have ripple effect on an entire generation of startups which were founded when money was effectively free (0% interest rate). When it's ingrained in companies' DNA that they have to grow at all cost you can't then suddenly ask them to start focusing on profit. They built this huge structure by ignored fundamentals such as cash-flow, unit-economics, business-model (selling $2 for $1). Now that they have built this 100 story sky-scrapper they can't just go back and fix the foundation. It's going to be a painful process.
It's fascinating to trace the genesis of present crash to Fed's policies post 2008 crisis. The interest rates were kept artificially low to prevent another Great Depression. 2010s saw an unprecedented rally of tech/growth stocks, fuelled by cheap capital. Growth at all cost was the mantra, hoping companies will turn profitable at some point á la Amazon. Uber's CEO hit the nail on the head when he wrote "The average employee at Uber is barely over 30, which means you've spent your career in a long and unprecedented bull run".
There were signs of rate hike in 2019 but COVID forced Fed to create trillions of $$. Which only added fuel to the fire; equities, housing, crypto saw unbelievable growth.
However the signs of inflation were clear in early-mid 2021 they were hoping it to be transitory. But when the inflation data came in late 2021 it turned out to be multi-decade high leaving Fed with no choice but to raise interest rates for the first time in more than a decade.
Which brings us back to growth companies. As Uber's CEO candidly stated "Channeling Jerry Maguire, we need to show them the money". 2020s will be all about cash flow and efficiency.
On the other hand expect to see cool innovations as it requires genuine scarcity to look for out of the box solutions. While Amazon's stock soared in 2010s their core tech was being built in 2000s while they were relentlessly driving for efficiency.
We have inflation and soon, reduced discretionary spending power which is becoming rapidly more obvious.
Airbnb fees are through the roof, and tons of people are choosing hotels over them again. "AirDNA" recently showed a trend towards vacancy, and if you read reddit subs on the topic you'll see hundreds of people piling on saying things like, "I used Airbnb for years, it used to be cheaper than a hotel, now not only is it drastically more expensive with the service and cleaning fees, but the hosts leave a laundry list of TODOs before I check out, and I can't check in til 4pm"
Now what?
Yeah, easy money from FED is drying up for banks ( and various companies and rely on access to easy money from banks.. such as early tech ), but should that automatically mean crash?
It can still happen. While I am certainly preparing for this possibility, I dislike various CEOs saying its coming and media trumpets putting it in bold letters.
No, not automatic. But it sure increases the likelihood.
Especially after years of cheap money have allowed tremendous unproductive investment. It isn't just banks, it is every company with access to capital markets.
Unproductive investment made sense when money was free ("easy money"), but when money starts to costs, those investments get closed down. And the people those investments employed become unemployed.
It's impossible to know certainly how much and where it was having effect. Housing market was just one place, which caused a sort of wealth effect as households' equity increased. Stock buybacks might be analogous.
These mechanics have been in play since 2010? Potentially alot to roll back.
Then, when the deal is closed, there's usually a reorg involving massive layoffs, where the most affected people are usually the people that just got hired.
Edit: oh right, thanks @blakesterz, it was called "Fucked Company"
https://nitter.net/HayekAndKeynes/status/1541760176826499073
Seems like Fucked Company is officially preserved by the Library of Congress because... September 11? Huh.
A profanity-laden title on a dot-gov site always manages to surprise:
it goes to show how despite all the media attention tech companies get , they are a drop in the bucket as far as the labor market is concerned (except amazon and its warehouse workers)
Lots of schadenfreude on my part, I must admit.
The whole conqueror of the world attitude bugged the hell out of me, when it was reallly just luck that the picked a good profession and happened to be at the "right" time to see a 400% increase in the NASDAQ, as if it was all them. I was in tech also, but it just bothered me to no end.
So of course, I see a lot of parallels, although tech workers don't seem to be quite a full of themselves now, even with the monster salaries. Emphasis on "quite."