Every company is now blaming the “macro environment” for poor strategic business decisions.
Meanwhile unemployment is still at an all time low.
Meanwhile unemployment is still at an all time low.
But then, venture capital backed companies generally (arguably by design) are not profitable, so their ability to weather storms is likely weakened and maybe the boards get squirrely when faced with the threat of bad weather.
Unfortunately, if your customers are mostly other tech companies, they are doing the same thing.
It seems like a bunch of healthy companies are putting on the brakes hard enough to collectively cause the recession they are trying to avoid.
I've heard this before but I don't get it. Why are they not profitable "by design"?
Edit: not sure if it was the reason this is downvoted but this was an honest question
Also, it happens to bring growth company valuations and a nice exit. What happens after that (ie if the entire thing was unsustainable), honey badger VC don't care.
You also don't have a choice but to play the game. If you don't, your VC funded competition will outspend and destroy you.
That is incredibly circular logic. So companies shouldn't be doing layoffs because unemployment is low?
Are you arguing that the macro environment isn't bad? A G7 country is in a mexican standoff with its bond market and pension funds to avoid a systemic collapse in the next 3 days. How much worse is the macro situation supposed to get before businesses should worry?
When the economy turns you have to adjust that strategy, which is what they are doing now.
That said I think the real story now is that the previous recessions haven’t really impacted the big tech companies, but this time it is so we’re seeing the first mass layoffs that this generation of developers has likely ever encountered. Couple that with the “tech” companies that are essentially just advertising companies that write software (obviously FB and G, but many of the startups aren’t too different) discovering that attention based advertising isn’t as stable a revenue stream as was thought, and you get a _lot_ more “safe” jobs disappearing.
But there's also just simple lag on the unemployment numbers as companies like Facebook, etc have only just started large scale layoffs.
As a side note, I am curious how much the less fragile companies are going to be using current events to get rid of "expensive" or "unproductive" employees. Previously companies got around legal reporting requirements by simply laying off people in groups of < N people where N is a legal "laying off N people in X days must be reported" - do "current macroeconomic" effects provide a different path? I write code, not legal docs so know nothing of such things and am kind of curious how it goes
Both U-3 and U-6 are near historical lows. Even if you don't believe that U-3 is meaningful, you can compare the U-6 numbers now against other times in history and see that unemployment is indeed low right now.
When the equity market is hot, issue more shares
When the consumer market is hot, sell more product
It has nothing to do with employees unless you are trying to bribe a politician with “jobs” you’ll bring to their area
The fed is in full bore inflation fighting mode. The only tool they have for that has the known and expected result of driving up unemployment.
They currently view that as the lesser of 2 evils.