Microsoft to lay off 11k employees
reuters.com
reuters.com
There was a huge run-up in corporate employee compensation in the tech sector over the last few years. (Some called it a "shortage," remember. Some of it is genuine growth in the sector, some of it was definitely "labor hoarding" by large companies that could afford to carry excess staff in a tight market as a hedge against being unable to fill critical roles - or to deny talent to competitors.)
While I would be surprised to learn of explicit collusion to suppress wages (unlike the _In re: High-Tech Employee Antitrust Litigation_ case,) collusion is not needed. The more tech employers lay people off, the more incentive there is for the next large tech employer to announce a layoff, and that's discoverable without collusion. In the aggregate, the benefit to flooding the market to reduce employee bargaining power offsets potential loss of critical talent, because it drives down the cost of acquiring new talent.
The "war for talent" quickly turns to the "war on talent."
Cystic fibrosis is natural. So is the Plague and brain tumous.
Collusion, wash trading, self-dealing and insider trading are all 'free market dynamics'.
Finance is beginning now but a lot of layoffs will follow in H1 2023 IMO.
I don't attach any positive or negative moral value beyond everyone just working in their own self interest.
I also wouldn't describe it as a "war on talent" when it is actually a "war on wages." This is is also the reason I wouldn't be surprised to find actual collusion here.
If you want to avoid repeating that word you could go with
"The ware on wages is being conducted by..."
I'm sure there's other, equally good ways to phrase this, too.
> So in principle, it seems as though, by moderating demand, we could see vacancies come down, and as a result—and they could come down fairly significantly and I think put supply and demand at least closer together than they are, and that that would give us a chance to have lower—to get inflation—to get wages down and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially. So there’s a path to that. [0]
To be fair, much of the wage inflation (particularly in FAANG) was also led by an easy money policy.
I take issue with heavy handed manipulation of the money supply that leads to these weird dynamics. I've written about it before [1] that a big risk is ever growing Fed power in the form of heavier regulation or a digital currency. Imagine someone can flip a switch and decide that everyone earning above $X will take a pay cut to fight inflation, all without any oversight or judicial proceeding.
[0] https://www.wsj.com/articles/transcript-fed-chief-powells-po...
[1] https://mleverything.substack.com/p/inflation-and-government...
So until we give up our fat checks from FAANG they will keep beating FAANG down. I dunno, fuck them maybe? But the same expert told me many times: do not play against the Fed.
If our only two options are the Fed or FAANG winning I choose neither.
The macro market (and their truthsayers) are obsessed with reducing things to the [current price] of public companies. Even though there is never ending increasing disconnect between their stock prices and the long term value they generate for the broader markets. The more we gamble on those small sets of metrics being the "truth" from which to guide society the more we (see: gov and media) will adapt to protect and push them higher.
Anyone celebrating expensive real estate is celebrating destruction of our economy.
Real estate is an economic input, same as food and fuel. When those get expensive, it is understood that it will lead to widespread misery and poverty.
The people that make money off sitting on real contribute nothong, they should be treated the same way. assomeone who'd make money from hoarding canned tuna.
The timing of the layoffs was exactly "as soon as all investors decided to stop their long-term deals". It's really not an evidence of collusion, except maybe of the investors. (But they too had an explanation.)
People are confused here because MS doesn't care about investors timing, but they had a clear trend to jump into.
That said, other evidence may be more revealing. This is strictly about timing.
Most big companies need to purge workers on occasion, but don't because it sets off alarm bells.
Unfortunately, this is an opportunity for companies to make big cuts without standing out.
> collusion is not needed
It's not explicitly needed. However, rest assured there's a mutual understanding among all big tech executives that the next few years are going to be incredibly profitable for them.
Think about it. They can do layoffs as many times as they want. This forces lower wages. They can still use inflation, the pandemic, the recession, and war as an excuse to keep raises low (or non existent). They can keep current employees in fear for several years.
this is HR-speak. i see my colleagues as (code)monkeys not as talent, and i hope they see me the same.
I would expect a longer term plan than just looking forward or backwards one quarter which seems like what has been happening the last year. I would assume they had better information and insights than common investors, but the activity out of these companies in relation to hiring and layoffs has seemed to be as sudden as people changing their stock allocations.
There's also an effect of wanting to do smaller, pulsating layoffs over the course of many months or even years rather than one massive layoff of the size you actually need, because ultimately no one knows exactly how the machine of a corporation works, and you have to be careful not to cut so deep that you go beyond cutting out fat and start to damage critical systems.
A rapid, 90% loss of workforce like what happened at Twitter might be what the company ultimately needed, but cutting that fast and deep is an insanely risky operation that could lead to a company hobbling along in a compensatory state until it finally falls to decompensatory systems collapse that you can't recover from.
Would also be curious to know what % of the 11k are engineers/breakdown by department/org, etc.
The point in my second paragraph is that if the company actually needs a 15% layoff to maintain itself long term, it would be safest to do it in three smaller 5% waves rather than one fell swoop. After each layoff, you let the system settle and recover, making sure that the body is still generally healthy before continuing with the next operation.
This disregards the effect of repeated layoffs on the morale and mental health of human beings, which affects how "the system" settles and recovers.
I think it really depends on the overall health and strength of the corporate body and the external environmental conditions it's struggling to survive in. Sometimes ripping off the bandaid quickly is the best of many bad options.
However, you also have to consider that seeing a larger percentage of your teammates cut loose might be more psychologically damaging than just that one guy who everyone kind of knew was a poor performer anyway.
How many competent people do you expect to stay until the end?
Why would the paperwork be any different, whether it's a small layoff or a big payoff? Ctrl-C/Ctrl-V is cheap, Microsoft implemented it many times in many products.
Layoffs have a huge psychological impact on the people who didn't get cut. If you do layoffs at a time when the economy is booming and jobs are easy to find, you risk losing your best performers who don't want to be at a company that fires friends of theirs.
It's easier to fire people when jobs are scarce and people are already spooked and disinclined to try to switch jobs.
Much easier to do a Thanos-style snap and get rid of X% all at once, with no pre-warning or reasons required besides "challenging economic conditions".
I've heard people say this, but it seems contrary to how layoffs are run in practice:
• entire teams or divisions are often laid off with no eye towards individual employees' tenure, experience or skills
• decisions happen on a condensed time scale by higher-level executives—not exactly conducive to a nuanced view of individual employees' performance, which companies struggle to assess effectively at the best of times
The "common knowledge" about what layoffs accomplish and why they're necessary really doesn't match what happens on the ground.
For every one competent executive there seems to be 3 deluded narcissistic idiots who will slash and burn people who are overqualified and under-utilized for the positions they've been incompetently assigned.
Now before you think I'm a victim of layoffs, I'm actually the political navigator. I constantly survive layoffs as I see the most talented people get let go and the best teams get broken up and reassigned, it's nuts.
One of the best techniques is to get yourself into what I call a "management island" - essentially you have either 0 or many bosses, just not 1. The next one is to be associated with a small bet - essentially a cheap investment that may yield a great long-term payoff, preferably related to the company cash cow. A third technique is to not attend too many events. Vagueness works in your favor. People should know generally but not specifically what you do. With details comes critiques so keep it ambiguous by staying quiet.
If you survive a layoff then you must not let a good crisis go to waste. Use the fog of the firing and the power vacuum to resituate yourself into this political dynamic as the dust settles. Of course these techniques only work at large companies.
I learned all of these techniques from years in management. There's more but that's a good start
The point of "many bosses" is if your manager knows you work on other projects, it's easier to leave you off the list.
The point of "no bosses" is no manager is tasked with considering you. You're not on anyone's books. There's numerous ways of doing this if you're interested.
If you have to play the one boss game it's harder. Some managers will want to keep their most talented people, other managers are looking for team cohesion and want the most friendly while others will break their project into roles and then assign people on a sheet of paper into those roles and get rid of what they consider redundant.
Some bosses will want to get rid of the most talented people on the logic that they probably have one foot out the door anyway and there's always a resignation aftershock after a layoff so might as well be seen as the one bold enough to do the cost cutting.
Some bosses will want to get rid of their most expensive people on the logic that they'll have the easiest time finding other work or maybe they'll have to get rid of fewer when they're more expensive, while others might want to get rid of their cheapest with the logic that they'll be easier to replace in the future.
There's really no silver bullet way to survive that. You have to know who is making the decision and somehow guess how they'll do it well in advance of the event so you can occupy a safe position in the mind of the decision maker.
Almost nobody acts based on some objective logic, instead they have predictable patterns of behavior and varying modalities. That's why you need to shake the org structure and get out of that situation.
If you want to insulate yourself from consideration, that's where the small bet team is in play. Preferably this is associated with the company cash cow. Let's say you work for Uber. A small bets team might be optimizing the UI using some behavioral techniques to nudge the users into picking higher margin options.
The point here is the managers of managers will have a list of projects which will be sorted by some metric. You want to be at the bottom of that list and so even in the one boss model, your team may never be subject to layoffs.
Being a small bet makes it subject to the rational choice theory paradox of the dollar auction: https://en.m.wikipedia.org/wiki/Dollar_auction ... The manager of managers will hang on to the project using a sunk cost, but not a money pit, fallacy. (https://en.m.wikipedia.org/wiki/Sunk_cost) you want to be in a grey middle where you're not a cost of concern.
1. Lower level managers usually find out them at the same time as IC's 2. Managers and directors can be part of the layoffs. 3. If a manager/director is part of the layoff, they are even less likely to be consulted in the process.
The rule of thumb is if they can't fire you they aren't really your boss.
For instance, at a previous firm, the COO, which ostensibly can be fired by the CEO was actually the brother of executor of the chief investment in the last round so the COO has a direct board connection and so he could actually fire the CEO with enough effort. Underneath the COO was a finance guy who had just come from a possible acquirer so really that guy could probably get them both fired if it meant a good payout for an acquire.
The tendrils are wacky which is why when a room of those people have to do actual work, it's not some shrewd rational calculated execution but instead just some hot mess
Can you speak more to this? I don't know that I've ever seen this somewhere I worked.
You can be entrusted to work on your own little bet project for somebody in a C suite and you become so low on the priority that you're out of mind.
During a power vacuum, you can play teams off each other in a multiple bosses strategy and appeal upstream in the org chart. The exploit here is the company hierarchy in practice is closer to the Habsburg monarchy than some binary tree.
The multiple boss play can get you to a no boss play in this situation because each one will assume you're doing important things on other projects.
All of this requires a keen skill at social engineering. I worked at a place where I didn't have a meeting with anybody for about a year. I played the meetings off each other at first and they all slowly became optional and eventually I got them off my calendar.
I should probably use my time doing better things but I'm really lazy.
These are all hacks. YMMV.
Probably the most approachable explanation of this phenomena is in Reid Hoffman's blitzscaling. I was looking for the diagram and I found it on some random blog https://miro.medium.com/max/1400/0*LDHDNGnfy2IJmIWE
Anyway, if we extend this analogy, I could be say, an important member of a village, but within a nation, I'm just another worker. His book is fine btw, get it used. He's just summarizing other authors who said things in more nuanced ways, whatever.
I think this is totally reasonable for people who are not egoists. I can handle about a $10 million budget, but a billion dollar one, I don't look at with envy. Excuse my french, but fuck that level of responsibility. I'm only human.
That's how you can know intuitively that the people who take it on are kinda special, and usually not in a good way.
I've had to deal with lots of capital management and investment groups in my startup days and people that are senior execs at large firms. There's a couple brilliant ones but most are what I could best describe as neurodivergent. Understanding how they process information is crucial in securing that round of financing (unless you're lucky and in a hot industry) and in being on the safe side of their executive decisions.
And then you have to be explicit about what you want in your next role.
Do you have two different resumes?
No idea really
I seriously doubt these layoffs are from actual, measurable consumer responses.
Yeah, unfortunately, this is believed by so many low level employees that it hurts their confidence, if they ever are part of layoffs. I wish organizations really educated employees how layoffs work.
I was part of layoffs in 2008 in which my whole department was eliminated, including managers and their managers. The developers who were hurt the most, were the smartest ones who could not believe that C-level executives didn't see their contributions. Their egos were bruised and some even switched from development to other fields.
That would be true for poor performing projects. Try a bunch of projects; many don't take off; cut the chaff all at once.
What I've seen in various companies were cuts of all kinds of employees, regardless of their individual performance. Large cuts weren't about the employees but about the projects or teams. I've also lived through a cut which was basically reducing headcount across all teams. Cutting 11k employees isn't a micro-management thing; individual performers get hit all the same.
The fallback of some such cuts was that it took years to later re-acquire competent employees, especially since they were offering work conditions average for the market.
TLDR don't stay too long on projects or teams which aren't lucrative for the company, unless they are fun and you don't mind getting ejected from the company when cut comes.
This is repeated a lot but having lived through 3 layoffs (and survived 2) in my career, that has never been the case. Every time it seemed random, one in particular where EMs were upset that they didn't have the chance to pick their faves.
Layoffs are probably a bad idea, in general, given how expensive it is to hire new devs and bring them up to speed, but on the other hand, it's probably a pretty good way to eliminate orgs you wanted to get rid of anyway while blaming the economy. I'm sure it's not a coincidence that so many of Amazon's layoffs came from Alexa.
If you fire when everyone else is hiring, the market asks you if your growth prospects have dimmed.
If you fire when everyone else is firing, the market says you're being financially responsible.
Why?
If you are so good at identifying poor performers, fire them, and reap the profits of being leaner, more effective organization.
"The market" is a boogeyman used to rationalized everything.
Ok, that can possibly happen. But if it constantly happens, you have problems.
The world doesn’t work that way.
Plus the more people that you have, the faster you can get competitive products out to market
Could be a damned if you do, dammed if you don’t situation
This is not always true. Do you have citation to back this up?
It’s not always true but you can’t do the work of 6 people with 2.
I’ve definitely been on teams blocked by the number of people where getting even one more QA person sped things up a lot.
-James
In which case, they didn't lose benefit at all
Edit: props to Microsoft for not being scared to call the policy by its true name.
This was effective yesterday, and they paid off any remaining pto balance. I initially thought this would be an employee retention effort in the midst of low promotions and raises, but in was probably wrong. I don't know what gives.
The size of these organizations always catch me off guard. 11,000 is a huge number but 221,000 is even more staggering!
https://www.wolframalpha.com/input?i=Microsoft+vs+Apple+vs+G...
They're not the best best, but $919k/employee/year is impressive. Google is at $1.5M/employee. Apple is $2.4M/employee and Netflix is $2.7M/employee.
(and to the dead comment reply claiming $10M/employee for Musk companies)
Tesla: $158,613 https://csimarket.com/stocks/TSLA-Income-per-Employee.html
SpaceX: $210,526 https://www.zippia.com/space-exploration-technologies-career... (though https://en.wikipedia.org/wiki/SpaceX would put it even lower)
Starlink: (I can't find any reliable 'how many employees'; crunchbase has it at "1-10")
https://moneytransfers.com/news/content/meta-platforms-profi...
E.g. one big outlier is Amazon, huge revenue income from retail, but close to zero profits.
Then for Tesla, it would be $754K in an apples-to-apples comparison. I can't find any info for SpaceX though.
Meta is at $1.64M per employee btw, roughly similar to Google. Didn't realize Apple and Netflix ratios were so much higher.
Source for Tesla and Meta: https://www.wolframalpha.com/input?i=Microsoft+vs+meta+vs+te...
Tesla:
number of employees: 99,290 ( https://www.macrotrends.net/stocks/charts/TSLA/tesla/number-... )
revenue: $74.863B https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue
And that gives us $753k/employee - in agreement with your number.
---
SpaceX:
Number of employees: 12,000 ( https://en.wikipedia.org/wiki/SpaceX )
Revenue: $2 billion ( https://www.cnbc.com/2019/05/20/spacex-revenue-2-billion-fro... (estimate) )
And that brings us: $166k/employee.
MSFT currently have $100b cash on hand. It's gotta be a little... frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me.
That said, I don't know what severance packages people are being offered. That might help soften the blow for some folks.
EDIT: re one reply about people earning $250k. I indicated 'loaded cost' - health insurance, likely some cost of options/stock, retirement matching, FICA and more. I possibly could have removed 'average'. I suspect many of the folks being cut have on paper salaries (well?) below $200k. Is the 11k number global or US only? Round the number down to $200k. It's closed to $2.2b/year then.
“When the facts change, I change my mind. What do you do?”
Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping.
Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending.
There are tons of people at these companies that can be let go.
Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore.
It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
Microsoft stock has been incredibly volatile though in the past year.
It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap.
Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).
Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism.
I would assume many other companies do the same
If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost.
There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.
In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it.
For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing.
Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
It's a bad signal that Microsoft can't think of any development worth doing.
Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
*Microsoft lays off 11k in lead up to recession
"No, not like that."
I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important.
We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.
I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market.
However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community.
It's deplorable how a company can toy with someone's life like that just because some exec feels like it.
We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news.
Noone has even heard of shumpeterian theory.
What would be the kinds of capitalism that would or would not cause a transactional mindset to seep into all parts of life?
I feel there is no rational basis for this belief, and it's mostly guided by wishful thinking to fool yourself into believing that all this penance leads to some kind of salvation.
It doesn't.
There are highly paid professionals in other countries who benefit from higher worke protection laws and even public services like working national health services and free education. Virtually all European countries ensure greater workers protection and half have a higher human development index than the US, and FANG salaries in Europe often lead to far greater disposable income. Heck, I personally know a FANG who was forced to pay overtime for oncalls in europe while US workers only get the pager app and the shaft.
Also, being subjected to abuse is not a requirement for mobility. Mobility only requires that you can quit your job and apply for other positions. There is no piece in the equation that requires abusive revolving door hiring practices.
People should shed their victim mentality and stop fooling themselves on how the path to riches is through suffering. It isn't. Basic human decency doesn't need to be thrown out of the window. That's only a requirement to screw over workers out of their rights and livelihood.
It does not follow that it leads to greater disposable income. Retail workers in the US also get paid overtime yet their disposable income is nowhere close to that of exempt (no overtime) programmers. Basically, with the tax rates in most of Europe, one's disposable income would be less even if the nominal income had been as same as in the US but it is not even close so you are, at best, misinformed when you think you get greater disposable income.
It wasn't supposed to. It was suppose to point out a concrete example of how stronger worker protection leads to being paid fairly for the work you do, while US workers are not.
Meanwhile, feel free to check how any FANG salary for software engineers in places like Seattle compares with the cost of living, and how the salaries for equivalent positions in European cities like Amsterdam, which also has a notoriously high real estate, lead to higher disposable income.
According to levels.fyi, 90th percentile in the Greater Seattle area [0] is $344-363k USD while 90th percentile in the Greater Amsterdam area is $162-170k USD [1]. Taking the mid point of both ranges, you make 2.13 times more in Seattle before tax. After tax, you get $244,933 in Seattle [2] and $118,078.95 in Amsterdam (with requisite conversions from/to USD when using the linked tool) [3], bringing the difference to 2.07x more take-home in the US.
The next step is to compare cost of living. I don't know which source is most reliable, and not all sources include international cities, but a Reddit comment suggested Numbeo so that's what I went with [4]. It reports that local purchasing power in Amsterdam is 18.1% lower than Seattle, while categorized prices in Amsterdam are anywhere from 18.8% (restaurants) to 39.3% (groceries) lower in Amsterdam. So it seems you would need to have to be paid quite a bit more than 50% of your US total compensation to achieve the same standards of living.
I'll spare the details because I didn't look too deeply, but I also did look into the cost of major purchases that people value - houses (3 beds) and cars (specifically the Polestar 2, which is an EV more on the luxury side). These things are definitely not half as expensive in Amsterdam as in Seattle.
So, I can only conclude that US workers do end up with higher purchasing powers despite less worker protection. While European workers do get a lot of benefits, many I probably don't even know about as I don't live there, Big N-tier companies (besides Amazon) usually have generous benefits like employer-paid health insurance that lessen the gap in benefits somewhat.
[0] - https://www.levels.fyi/t/software-engineer/locations/greater...
[1] - https://www.levels.fyi/t/software-engineer/locations/greater...
[2] - https://smartasset.com/taxes/washington-tax-calculator#L3MFa...
[3] - https://thetax.nl/?year=2022&startFrom=Year&salary=900&allow...
[4] - https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...
As a founder it's crystal clear: you quit your job, you start building a company with no salary, you get some traction, get some investment, and if you work hard and have a good dose of luck along the way you can be very successful (far more than any salaried employee), or you might fail and earn nothing.
Now you add employees, they are expensive and you don't really know what the business climate will look like over time. You know you need some to fulfill your growth potential, but where is the point of diminishing returns? There's no way to know. The Silicon Valley VC model is: if you get a whiff of product-market fit and think you have a potential category-defining product, pour as much money in as you can to maximize scaling—even if it is wasteful or risks flaming out, you do it anyway because otherwise someone else may do it and win.
Now, if you are in a country like France, worker protections mean that if you over-hire, you risk killing the entire company because you overshot your mark and you can't do layoffs. This absolutely plays into hiring plans, and if you don't acknowledge this then it is you who are engaged in wishful thinking.
Note that I don't have anything against worker protections, I liked living in Europe and there are a lot of things that are preferable to the States, but economic upside for programmers like me is not one of them. FAANG definitely broke through the old glass ceilings for tech folks, but A) that competition was introduced by American capitalism and B) even for FAANG it's still significantly higher total comp stateside.
Something similar leads to russian people to support Putin. They know that they are wrong, but the thought that they are wrong and all the suffering was for nothing is too terrifying for their subconcience to even ankowledge.
The only reason Neofeudalism didn't quite arrive is that its difficult to get rid of unprofitable serfs. A lord was actually sort of responsible for his territory.
Here you can dump unwantes on the state and voila, no responsebility!
I don't even get the premise.
Your best effort doesn't require more .... effort ?
What kind of work is it that you do? I'd love to join.
If sitting around idly at low-paying jobs watching paint dry wasn't an easier way to achieve a paycheck than the hard work that the employer would prefer you to do then it wouldn't be the world's most common trope.
Always good to keep this in mind.
They must be looking at the recruitment cycle as a cyclical process.
Microsoft employs a wide variety of people, not just developers, and a lot of those jobs aren't making nearly as much as $250k/yr, nor are they so easily rehired into a job somewhere else.
Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)
Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.
In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.
Now since most of MSFT’s long term debt matures in 2027 or after, you could argue that there is not much cash need for debt repayments in the near term. On the other hand, cash flow from operations was down year over year in their last reported quarter so belt tightening is probably needed to reverse that trend.
I'm not a financier, but isn't "available cash" the amount left over after subtracting the amount needed to service (rather than clear) the debt?
The cash available on an ongoing basis to be re-invested or returned to investors is what you might call levered free cash flow [0], which I think is what you are referring to.
My comment about "available" cash is more like available for big one-time investments like a big acquisition, a special dividend, or something like that.
[0]: https://www.investopedia.com/ask/answers/111714/whats-differ...
There are far more employees than executives, though. Think about how many employees are in the org chart under a single VP.
Numerically you can’t get appreciable cost reductions by reducing management alone.
source: I'm an IC
Fwiw, unless cash on hand already accounts for it (I don't think it does), then $70B of that is tied up in the Activision acquisition. Thus we really only have $30B cash on hand, which in a higher than previous interest rate environment is probably not great (though afaict Apple has $48B). Likewise, our cash on hand has been drastically dwindling the last few years, making the $30B total seem a bit more precarious.
I have suspicions that the Activision acquisition is a huge part of the hiring freeze at Microsoft and the source of a lot of budget concerns and constraints. It's pretty frustrating watching all the freezes seemingly because of this one acquisition (as an employee without any inside knowledge about this).
Yes it's all cash.
https://news.microsoft.com/2022/01/18/microsoft-to-acquire-a...
> As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction.
https://www.businesswire.com/news/home/20230111005882/en/Act...
Where and how MS got that cash is not being addressed.
How so with interest rates that keep going up?
That microsoft is cutthroat here, sure, it is the nature of transactional corporate relations, but it would be a sad, ugly world if individuals internalized this same dehumanizing ethos in their personal dealings.
Furthermore, efficiency only increases in importance as companies grow.
nobody is entitled to be an employee, the purpose of corporations isn't to print employment numbers, these observations you made should be unrelated
A three year savings of $10B would be equal to their stated investment into OpenAI. Assume there is a global slowdown, and a corresponding decline in revenues; layoffs may be the way they've decided to free up cash flow to pay for the investment.
So far we have not seen much in the way of the highly-anticipated earnings decline, and the current projection for Q4 GDP is around 4% growth, which suggests to me that Q4 earnings should be better than anticipated by the pessimists out there.
I would see this as a relatively painless opportunity to cut out low performers. Sure it sucks for those who are being cut, but my experience working at a FAANG tells me there are a lot more than 10% who contribute very little.
As many other comments have pointed out already, that's not how mass layoffs work in practice.
Incorrect organisation and priorities will absolutely waste the best individual performers, and lead them to depression to boot. Correct organisation can deliver results even from a mediocore team.
I'd say unless you've got a good manager, really good hiring, and are keeping close tabs on the technical people (just to make clear, I'm one of them those technical people) I figure you've at least got 1 our of 20 you should just be sacking on principle.
You're left with middling who might have a hard time finding other jobs but could play the ladder game well enough - potentially with devastating consequence for health of the technical stack as more "features" get developed.
Focusing on productivity is of course the right metric, but the metric that gets used in practice is “Which of you helped advance your manager’s career?” After all, your manager is the one who decides who goes, and there’s no incentive to keep someone that does nothing for them over someone who helps them look good to the VP — which is who decides whether your manager goes. Same rule applies recursively.
The skills one develops on the job and the skills one needs to actually perform well at a job are not really tested well by the standard big tech interview loop (startups can be innovative here, but it can go either way).
Generally the competent folks reluctantly acquire the silly skills required to pass through the gatekeepers though.
Could be wrong, probably am, but I thought I saw that his base pay dropped significantly but his stock options and grants were virtually untouched if not raised.
[0] https://www.sec.gov/ix?doc=/Archives/edgar/data/789019/00015...
An increase in profitability most likely?
If we can agree "you need to have + pay employees in order to deliver projects which grow revenue", I don't know how they expect to grow with "less employees" delivering on less growth projects?
I don't know what you mean by enjoy here, but shareholders generally enjoy it when stock price appreciates, which is not what's been happening the last 12-14 months.
The execs must be doing a great job to have accomplished this. Let's give them some sort of bonus or promotion, when the time is right.
In many cases, they are basically returning to pre-pandemic levels and instead of an actual financial need, these layoffs are probably a result of the fact that you cannot effectively incorporate an headcount increase of 20% in a high-tech company within 1-2 years. It seems like they hired to please investors because everyone else was also hiring like mad. Since the shareholder expectations have reversed, the companies are using the "opportunity" to return to manageable numbers of engineers and administrators.
I’ve also seen companies do layoffs by cutting entire teams. Top performer on a misaligned team? You are also laid off.
It's always a bit of a gut clench. Ugh.
Somebody got a bonus for making this suggestion at Microsoft.
Indeed. We are all-in on using .NET6+ for building software for our customers. This locks us into VS/Azure/Windows subscriptions as a side-effect. Our clients sign 5+ year contracts, so we aren't leaving this area any time soon.
There are certainly less expensive ways we could run our business and deliver our product, but the amount of risk associated with those options is far beyond what our investors, leadership and customers would tolerate.
If MSFT cuts big again next quarter, I will then begin to reconsider my position.
Too many people assumed that Microsoft, Oracle, Yahoo, and related companies weren't matching offers and were somehow "worse" to work for.
It was exactly the opposite. They were matching offers, and even poaching engineers from the other FAANGs. Yet they never got any respect.
Matching offers is not the only thing that gets you respect.
Microsoft = asshole company
Oracle = asshole company
Yahoo = cringe company
Many people don't want to work for them, no matter what they are offering.
I would like to see top managers bonuses/refreshes and so on trimmed and maybe fired as well.
https://app.plusdocs.com/startup-funding-/page/clcgzzo551257...
My division fired a few percent of people.
A friend's group had a "We're firing everyone in Redmond who works on this team and consolidating in Hyderabad."
"There are three ways to make a living in this business; be first, be smarter, or cheat. Now, I don't cheat. And, although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first."
Like I said before, no-one is safe. not even the FAAMNG companies.
As an aside, these tech sector acronyms have gotten ridiculous.
So, in conclusion, Teams is probably a decent revenue earner for Microsoft at the moment, therefore I doubt that the Teams team will be hit too hard by this round of layoffs.
Cut half - faster decisions, more money. Will you have more problems, Yes. But you'll never know how bloated you were till you get lean again.
2. Too expensive humans
Most developers at FANGS can be replaced with mediocre devs in iowa or India. They will cut high-priced salaries soon and replace them with entry-level talent.
Software companies have been trying this for 30 years and it has never worked.
No lobbyists? Why am I not surprised.
Firing people at this scale would have been pretty expensive just a few month back, PR wise. Right now, a lot less so. So you might be tempted to think of the current climate as a good opportunity to shed some fat, to the point where you go into it with the idea of hiring back right away and being able to do so at better conditions. The market has relaxed.
Compare it to a few month back, where switching jobs (= firing your employer) was a great way to automagically increase your pay. It works both ways.
I have to assume that, in the same way that glass palace FANG offices and around the clock full-service employee pampering are doing something for (potential) employees, the idea of large scale firings will move the needle in the opposite direction. Clearly, it's not only about who pays most.
To give an example in microcosm, this news about layoffs is affecting my decision of what UI framework to use with .NET projects. .NET MAUI was already low on my list because I don't trust Microsoft to commit to supporting a UI framework long-term, but if any of these cuts are to the MAUI team then it will put it out of the running completely for me. I'm sure there are other devs in similar circumstances (and who likely rank MAUI much higher as a candidate than I do) who will weigh this layoff announcement into their decision. And there will be some who ignore it because they see it as a general symptom of the economy, not a sign of trouble at Microsoft etc.
In both technical and product axes Twitter has already deteriorated massively, possibly beyond repair and the company might not make it to 2024, so I wouldn't call that "negligible".
I think the mistake you're making here is assuming that your average tech CEO is paying attention to the same degree you are. They aren't. They don't have time to notice all the many little things that degraded already, they just saw that the site didn't go down a week later and moved on.
Musk has enough money and influence to stress out his employees and userbase for decades.
I think early on I heard there was a 2FA outage? That was resolved fairly quickly.
The only issue is dumb changes, like the "no linking to other platforms" rule that was announced and then rolled back within the day, or adding view counts that add no value. But none of that is technical issues.
> I'm pretty sure breaking 3rd party clients was intentional.
> Twitter had tightened the reigns on them years ago because it just cost them money to keep them alive. It makes sense that would be first on the chopping block when they're looking for cost-saving measures, and I figured it was inevitable regardless of the Elon takeover.
I don't think that was technical ineptitude, but rather a cost-saving decision from the business.
That said, I concur that Twitter is doomed. It was already not very profitable before advertisers started backing away, and Elon's tendency to "move fast and ignore regulations" won't serve him very well in the current climate of tightly regulated social media. Elon's piggy bank is no longer unlimited due to the revaluation of TSLA and the tendency for his huge sales to drive the price down even further.
Twitter had tightened the reigns on them years ago because it just cost them money to keep them alive. It makes sense that would be first on the chopping block when they're looking for cost-saving measures, and I figured it was inevitable regardless of the Elon takeover.
I have a feeling it's coming for reddit too. That one I dread cause their official app is horrible.
Here's an example I just pulled up that's the second thread on my feed: https://twitter.com/LordCarsonEsq/status/1615134592222257155
There are six replies here. If you refresh enough, you can see a different subset of two replies, so that's probably not a spam-filter.
Twitter is said to have lost $2.5 Billion/year in advertiser money, largely because Twitter's sales teams have not been returning emails from worried Advertisers. That's a pretty huge impact on Twitter's #1 revenue stream (estimated to be $5 Billion in 2021).
Twitter's core product is advertisements. Without sales staff to keep the advertisers, they're clearly losing a ton of money.
Advertising was always degenerating. I know that over the past year, I've been seeing more and more pornographic material in Twitter, and I'm pretty sure advertisers don't like that kind of stuff. But instead of having teams working out those kinks (pun intended), those teams have been simply fired.
So advertisers know that there's no hope for these issues to be fixed anymore, and are now leaving the platform. There's simply not enough developers left to change Twitter or combat the rise of unsavory material.
---------
There's been many a blogpost about "Airline advertiser didn't want to have its ads appear next to Airline disasters". (Ex: Southwest's shutdowns cause thousands of flight cancellations, it will be talked about on Twitter... does Southwest want its advertisements being shown next to that??).
These are the kinds of things that Twitter's teams worked to prevent. You know, mundane issues but require _constant_ coding to identify as news events cause a rapid change to the online discussion. And its fair: there's no reason why Southwest's advertisements should be shown in a negative light... or for Southwest to be paying for that kind of negative publicity.
Don't think Twitter's revenue issues have anything to do with sales staff. Advertising channels/campaigns can and should be 100% automated.
And indeed, advertisers aren't talking about it now. They're just leaving the platform in droves. There's no one _to_ talk about it with. Entire teams (including high ranking executives) that kept relationships with advertisers have been fired.
Twitter doesn't even have anyone answering / categorizing the complaints anymore.
> Don't think Twitter's revenue issues have anything to do with sales staff. Advertising channels/campaigns can and should be 100% automated.
You can't automate news. News is constantly changing. Advertisers _constantly_ are complaining about "X is being shown next to Y news event. Please stop that", and its impossible to predict X, or Y.
Twitter has functioned fine after massive layoffs, and feature velocity has only accelerated. Too many developers have an inflated sense of self importance
There's plenty of advertisers who have blogged about "My emails to Twitter stopped getting answered" around the time of the 75% layoffs. This is well documented.
What do you want the advertisers to do? To just keep giving money to Twitter even when all their contacts have disappeared? There's some pretty basic behaviors that have nothing to do with politics here that Twitter is failing at.
To say that ad sales has to be a manual, high touch channel is simply wrong. Perhaps you have staff on hand for large accounts, but why would e-commerce drop shipping headphone company #7 need to talk to a human?
Disney is most interested in making sure that Mickey Mouse / Winnie the Pooh / Zootopia is not accidentally shown next to furry porn. Southwest doesn't want its ads shown next to airplane disasters. Kellogs doesn't want "Itsssss GREAT" being shown next to the Ukrainian War.
As I said before: you can't predict the "X is being shown next to Y, please stop that" problem. Its impossible to predict X, its impossible to predict Y. You just gotta have email lines with these big companies and promptly issue your programmers / machine learning / data scientists the new algorithms to keep advertisers happy.
-------
Twitter is 100% the grounds where furry porn, Airplane Disasters, and Ukrainian War disasters are constantly being discussed and shared. Advertisers want protection of their brand, despite the online discourse.
When the tools aren't working as expected, the advertisers then emailed Twitter's API teams. All of those teams have been dismantled, the executives have been fired. With no one left to contact, the advertisers have begun to leave.
Feature velocity for users. Not customers. Also, the deprecation of APIs strongly intimates Twitter Blue was a failure.
... and has driven away, or may drive away, many of the core content providers for their network effects. People who buy a third party client for twitter are generally not casual users. I reached out to a few friends I would consider 'posters' a couple of journos, a couple of 'personal brand' advertiser types... all of their twitter engagement is way down .. from both sides of the conversation. Two of them are now in a 'mostly I just post now' mode. Having conversations has become to hard. The other two are struggling along but they've had to cut way back, one said 'It was like I was building a house with a nailgun, but it got taken away and someone handed me a rock.'
It took me two days without tweetbot to realize it was was one of the only things that kept me actually using twitter. Finally causing me to mothball my account and throw up a personal mastodon install and start re-finding my personal follows there (I'm at about 50% of my list, but i'm finding that mostly what I'm missing is retweets from a few degrees out). My feed's incoming posts per hour are certainly down from twitter by about 60% but I was honestly expecting much lower numbers.
Onboarding is a PITA. With Twitter ceding the ground, this could be a real differentiator. Hell, you could build a licensing component paid to the servers.
It won't help you, currently or maybe ever, pick a server, but it's a great client even in it's beta form.
I mean, yeah? If someone fired all my contacts at a company and didn’t return my emails as my revenue dropped as a result of their changes I would also stop paying them?
It's gone from a break even company to financial ruination.
Twitter is shutting down data centers and offices. Elon Musk has single handedly collapsed the company.
Twitter will shortly be either bankrupt or personally funded by Elon Musk's bank balance by the end of the year.
It would be interesting to have a UI that lets them say that they don't want to be next to X, or they do want to be next to Y, and they pay different prices to appear next to more/less popular things.
I don't know if deliberately breaking their developer API for third party clients counts as "shipping features faster than ever".
Twitter was run as a charity prior to the acquisition. Just as many VC fat tech companies were
Another comment of yours says "quite obvious" about advertising, which doesn't seem to be an industry segment in which you work.
It seems your observations are right in line with Twitter's new owner, to whom everything that's happened over the last few months has also been "obvious," and mostly wrong.
I’d rather take his side than the small minded and intellectually weak detractors.
Just because things tend to be a certain way, doesn’t make it optimal or right. Evidence, all of history where bad practices were pervasive and common and later usurped by better practices.
Maybe use forethought and critical thinking rather than credentialism and groupthink
And people who tend to succeed at most things they do, tend to do so for a reason. It’s effectively statistically impossible for it to be sheer coincidence/luck.
Or should I just pick random “logical fallacy” links to put in my replies instead?
I simply noted you appear incapable of perceiving Elon as making bad decisions, which is kind of funny, since he seemed to think agreeing to buy Twitter was a bad decision, and was in the process of losing a court case about it before he saw the writing on the wall and closed the agreement.
If he actually is making bad decisions, I think the halo effect is at play.
(And I'll say your rosy impression of Twitter seems a little strange for a supposedly objective observer, given the recent outages/pervasive legal problems/chaotic feature rollouts/various fits and reversals/overall dysfunction that has characterized that company since it was acquired by Elon Musk.)
Fortunately I couldn’t care less if somebody decides not to work with me because they disagree with my opinions. People who care about results will get ahead, those that don’t won’t
> Nothing nasty about my comment, its a factual response to the parent comment.
I called out your use of the word "obviously" without factual basis, and you responded with insults.
Insults and praise for the CEO of Twitter, which is irrelevant, since he still has not made any statement whatsoever on the subject, which was entirely the point of my initial comment.
Saying you have a degree in this or that, or title X/Y without having any results to show for it is credentialism. Unfortunately far too pervasive in our industry.
By your logic we can’t consider any accomplishments from somebody’s past as a reliable indicator of their future results.
Which is obviously not true. “Credentialism” is giving far too much weight to low barrier to entry and easy to accomplish titles.
Ignoring past results, the fact that Twitter is functioning fine after 80% layoffs has already validated the decision to downsize. No need to look to the past.
What in earth are you talking about? He brought his way into those companies. I think you are confusing Elon Musk the fictional PR character who exists only in paid press releases with Elon Musk.
Elon Musk's success was being the CEO of a slimy payment processor.
When he makes a pronouncement and then reverses that pronouncement, one or the other was incontrovertibly wrong. Whether he was wrong first and right later, or right first and wrong later, the list of reversals at twitter is a long one, starting before he bought the company.
He tendered an offer that skipped due diligence, then attempted to avoid doing what he'd agree to do, invoking the due diligence he'd explicitly skipped in the process. Then they day before he would have to open up his financial records in court, he reversed his reversal and closed the deal. Since then he's stated multiple times he regrets buying twitter.
However many times you count him being certain-but-wrong in that story, it's more than zero, despite the financial success of his unrelated companies, and despite your unwarranted personal insults.
Everyone hates on Dorsey because he essentially turned Twitter into a walled garden (killed third-party clients + RSS support), but really, how else are you supposed to make a startup that got millions in funding profitable? Just by giving your stuff away?
And it's fine that they didn't. It's even fine that they shut down the API. But the lack of communication is ridiculous. Just tell people what the fuck is happening. They don't have to like it, but complete ghosting is the way you burn bridges completely down.
Twitter to Devs: Don't Make Twitter Clients... Or Else [2011]
https://mashable.com/archive/twitter-api-clients
Twitter's API Update Cuts Off Oxygen to Third-Party Clients [2012]
https://mashable.com/archive/twitter-api-big-changes
(how could Elon do this!?)
I mean it's within his right to do it, and I can even see the arguments. However, to do it without even a press release let alone notice. Without even answering support tickets from those third party clients. Just an utter failure of management.
Desperation from the remaining devs? I mean, I can crank out crap as fast as anyone wants me to if it doesn't have to work right.
- They are experimenting more aggressively. - Depends on what features you build and time that it take to build those. - How much can you afford to delay the tech debt.
When the CEO is focused on rolling out features faster, everyone rallies behind. Does it mean the company is operating great. End of 2023 will be a good indicator.
Also note that recent tooling around LLMs (eg. ChatGPT) will improve aggregate efficiency.
Do we have an independent source that doesn't have a history of dishonesty confirming this? Does it have a creative definition of 'shipping', 'feature', and 'faster'? Are there any long-tail dangers that have, or have the potential to blow up in Twitter's face from it?
My car goes faster and gets better MPG ever since I stripped out the weight of the braking system...
Having worked in adtech for a while the more likely scenario is that lots of companies have turned off their ad spend. That isn’t “leaving”, ad spend is volatile coming and going with many motivations is not uncommon. Pausing your campaigns because the ad publisher is a bit broken isn’t permanent.
And whatever is “said” isn’t to be trusted, you won’t get real numbers from a private company and rumors. No doubt there was a big dip around the takeover, but the only thing I’ve heard is a few people complaining about the increased number of ads.
Probably some advertiser tools were broken and the people who’d been talking to those advertisers had been fired, but those are all temporary. Advertisers aren’t going to take some great moral stand unless there’s a clear reason that can be traced back to customers, disliking elon isn’t one of those things.
How is that temporary if — as it appears — the new management has fired the engineering teams which developed the ad tools, and also has no intentions of hiring more people to replace those ad sales teams?
Are you suggesting that Twitter is not going to have developers work on ad tools any longer? Are you suggesting that sales and customer relations for advertisers are just no longer going to be jobs that anyone does and Twitter is going to just hope and pray they get ad money?
Yes lots of reorganization happens, lots of jobs were lost, but, duh, the work is still going to be done, even if there is a re-org gap.
Hum... I'm not the GP, but pretty much that. Yes.
If they have been broken by weeks, the team working on it was fired, no replacement has been brought yet, and it's the one big interface with the people paying money to the company, then it's a good bet that management either doesn't care about money or can't fix the problem.
wow that sounds insane? I wish you would have had a source attached to this (an actual source btw, not some online journalist writing an opinion piece)
over the past 2 to 3 weeks the ads shown to me have gotten more and more small fish, bottom of barrel, and wildly unfitting for me. and weird.
its easy to predict the ones I'm seeing are by advertisers bidding much lower $ than the previous average. reasonable to extrapolate and predict Twitter's advertising income has likely crashed. I've heard from enough other people all experiencing the same shift over the same period
So basically there's been a team suppressing any really bad news about any company who advertises on Twitter? Am I reading that right? And you want them back?
Especially the ones that spend all day bragging about how they're a top performer on hackernews. :D
It's hard to separate the wheat from the chaff without hiring both and sorting after the fact when you're actually informed by experience.
The economic downturn just gives excellent cover for what's an arguably necessary part of a cycle akin to forests burning.
It's like airline pricing. One airline has a sale, others follow (competition heating up), then, one airline hikes fares, others follow (as competition cools down).
$MSFT ticking up ...
my experience at two big tech companies said this extremely overdue.
especially since about 2012.. lots of added head count. managers and sr. managers and directors #1 priority on increasing head count to grow empires and get promotions. it elephant in the room supported by easy US fed policy. uncomfortable truth these people dont want to admit.
what is vision for these new teams? if stock price is $100/share does director X’ org contribute $.50 or $1 or $10? many teams are negative contributors to this equation.
actually much of $ attribution and downstream impact was gamed. the founders and their protege slowly left and replaced with professional managers. no vision. no obsession with features. little thought to value. instead they see prestigious job. “i have 150 people report to me.” that kind of discourse mainstream. indirect way of bragging “look how important i am.”
maybe 15% of employees at both companies providing actual value building new things that bring revenue. another 15-20% just support legacy cruft with software patches. no feature work. no innovation. large teams of engineers and managers resting and vesting.
it is honestly entitlement and horrible joke. why these people entitled to $200-500k+ salaries??? its like this country built fake economic class of worker. little to no economic output.
I'm sure that's the case always, but I'm convinced it's the case more often than many of us realize. I also recall this being discussed in David Graeber's book "Bullshit Jobs"
Sure leadership and deviation from the norm would be refreshing (and smart), but that's that the era we're in.
In finance circles it is referred to as “taking a big bath”. When everyone is doing it, you write off past goodwill from bad acquisitions, lay off redundant employees, etc, all to emerge clean on the other side. Having used the cover of everyone doing it, you aren’t punished.
MS may have less time/patience for these people right now.
Plus, when upper management mandates that you have to fire 10% of your org, well now you have all these people you can put on the list with zero impact to the product.