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Groupthink, yes, definitely. The shareholders, through the board, are responsible for hiring and firing management; so I guess shareholders haven't lost confidence in the CEOs yet, or perhaps it's too early still.

The most favorable explanation is that they didn't really think it would be permanent. They just needed the headcount at the time, and they don't need it anymore. The rest is just marketing spin to not make it seem so bad.

Now if they all balloon back up to the same headcount in the next year, but with lower salaries, then we will see if the real motive was to lower salaries. Someone had posted on another thread that the federal reserve stated that the goal of recent policy changes was to lower salaries. It's much easier to layoff and rehire, than it is to give out paycuts.

I think the main reason for the layoffs is AI accelerating jobs. As Sam Altman stated, programmers in the future will be much more productive than programmers today.

This is Altman selling snake oil. As of yet there is no evidence of this on anything beyond toy examples. And these gigantic codebases are anything but toys.

I agree, think it was also a ripe time for empire building further within these companies. I’ve been at one of these companies for many years and the shift in hiring dramatically changed in the years leading up to covid. Covid just put things into overdrive until reality hit that this kind of growth isn't sustainable or permanent.

I think the answer is in OP:

> Imagine if you bet against it being permanent, and you were wrong? Your company just lost out on a massive opportunity- a CEO that does that would be worried for their job. And if you bet for it being all permanent and are wrong, well, you just have to lay off a few people.

CEOs answer to shareholders, not employees. From the shareholders' perspective, the risk of losing out on market share was much greater than the risk of having to pay a few months' severance for the 5-10% of the workforce you trimmed.

The cost of being wrong in the other direction was a worse bet for them to make. Missing out on the growth was unthinkable to them. They would rather just fire thousands of workers than miss those possible profits.

I think this is the critical point. It's about if they thought it was likely to happen but if it could happen.

Maybe they thought it was only 5% likely, but still worth the risk and expenditure

The larger companies get, the fewer moves they can actually pull off. There aren't that many options on the buffet table, so it can look like everyone is eating the same thing.

Two words. Record profits.

https://fortune.com/2022/03/31/us-companies-record-profits-2....

Everyone saw an opportunity to make MORE money during the pandemic, and instead of focusing on long term health, focused on quarterly profits. This lead to massive expansion.

The second answer is that these companies have mass layoffs every year. Are these really that abnormal, given the context of their mass hiring's the year before? Facebooks headcount went absolutely bonkers, they are still up over a two year period.

I think saying they were wrong is a mistake. It was more of a hedge on a bet, a bet they could afford to lose, but not afford to miss taking. It was akin to a game of chicken or mutually assured destruction, where if somebody else was expanding, you had to as well, defensively.

Disaster Capitalism

The truth is that everyone takes the money when it's available.

Even if you "knew" a recession was coming and that you were overhiring/overspending, you get far less flak overall for riding the gravy train to the end, then making cuts along with everyone else, than for appearing to be overly conservative and not growing as fast as you could during the boom.

Taking the money and spending it while you can is the equivalent of buying IBM. No one else in your circle will fault you for it when things go south, because they all did the same.

I think the comment OP explained it pretty well. It's less of groupthink, and more of betting on this side is the optimal choice.

Bet on permanent growth - growth is permanent: You're a hero - growth is temporary: Sucks, but you just do some layoffs

Bet on temporary growth - growth is permanent: You're fired - growth is temporary: You're righ! But so what?

>Why aren't we having a big tech CEO layoff for massive wrongness?

The only job of the board of directors is to decide when to fire the CEO. (Waiting for Tesla's board to do their job..., but I digress)

Sure, capital is represented on the board, but what about labor? No representation, so a round of layoffs is not going to be a reason for this to happen.

Something I'd like to see is if large, profitable, private tech companies are also doing layoffs.

Like, it's reasonable for unprofitable companies to do layoffs. I can see investor pressure causing something similar in large public companies like Google and Amazon, even if they're profitable. But profitable private companies should be snapping up all the best talent now.

But it's not about capturing Talent. It is about the marginal benefit of the next worker that you hire. If they cost more than they raise your bottom line, there's no reason to hire them

CEOs don't get laid off (or fired) for being wrong—not once, not a dozen times. At worst, they get sent off with golden parachutes when the company is doing flagrantly terribly, or they resign if they're hit by a scandal they can't just spin away.

There just aren't systems in place to evaluate CEO performance with anything remotely resembling objectivity. The job has become a way for rich people (on boards) to give their rich friends and colleagues another way to get richer and exercise unwarranted power.

Apple still haven't has one yet. If they aren't having one later this year or if it's much smaller percentage than the other bigs, it really speaks how well Time Cook and the leadership is in forecasting and running the biggest company in the world.