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Comment by mcv | Hacker News Reader

I really get the feeling that many companies are just blindly doing whatever other companies do. One starts large layoffs, and suddenly everybody is doing it. At other times, when one goes on a hiring spree, they all go. One tries to reduce salaries, they all do. One pays enormous bonuses, and they all do. It's like CEOs aren't really thinking for themselves, just copying whatever the market does.

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The CEO answers to the board, and the board is usually of the type to at least ask the question "Everyone is jumping off a bridge, why aren't we?"

And sadly the easiest answer is "we ARE jumping off the bridge, see?"

Is it inconceivable that layoffs are the right choice for a business?

Yes. They never are. A recent study investigated this and neither stock price nor productivity nor profitability improved. All mass layoffs do is crater employee morale. And yes, it's a "others are jumping into the lake with their clothes on, let's get our brooks brothers shirts wet, too" thing without any rational cogitation involved..

Do you have a link to that study would like to share that with someone.

This may lead you to it: https://news.stanford.edu/2022/12/05/explains-recent-tech-la...

What should a business do that has more people on payroll than their revenues can support?

Hiring freeze, for one. Then anyone that leaves won’t be replaced and headcount will (presumably) go down trauma free.

If everyone does a hiring freeze instead of layoffs, there’s no attrition other than the PIP kind. Ask an Amazonian what that does for morale.

I think the argument is that you shouldn't get into the position where mass layoffs are the solution, just like you shouldn't get into the position where gastric bypass surgery is your only option.

Something like each team is maintaining themselves at a proper rate, laying off inside the team as necessary. But even then you will at times have to fire entire teams, but those aren't really a "mass layoff" so much as "we're not doing X anymore".

Yeah, but reality bites. You're in the situation that you're in and you have to deal with what's in front of you.

I mean if your company makes ~150M a quarter and has operating expenses of 217M and cost of revenues of 53M a 6% cut towards your operating expenses isn't going to get you anywhere close to profitable.

https://investors.confluent.io/node/8031/html

Use those people to build products that increase revenues. Isn't that why they were hired in the first place?

Layoffs may have second order cost saving effects (e.g., reducing competitive upward pressure on salaries, discouraging staff from asking for raises), but those seem impossible to measure

That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

Granted, getting into that situation was probably "executives making stupid mistakes" -- seems like it usually is -- and granted, they're probably not saying "we have to do these layoffs because I was an idiot last year", and they're probably not taking commensurate pay cuts. But still. It can certainly and obviously be good for the company's health to have fewer people on its payroll.

> That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

Well, the evidence is that mass layoffs aren't having the result of being very positive for companies that engage in them.

Given that what you say also feels true, in my experience, an explanation immediately suggests itself:

Big companies rarely if ever manage to mass lay off only unproductive staff, or net-drain internal orgs. Rather, they're almost always implemented as an across-board X% haircut for most departments with little targeting whatsoever. So in the end, they don't solve the problem you're identifying, and that's why the evidence says they end up doing nothing positive for the company.

I think its more complex than that: even if, by magic, you managed to lay off every non-contributing worker, and only them, the affect on employee morale is significant, and would cause contributing employees to leave completely or contribute less. Reducing the total output for the company.

And I'd also suggest that very few, if at all, employees has zero contribution. It's just that some of those contributions are invisible to you.

I wonder if, despite not being a benefit, they avoid a worse outcome at the same time? perhaps the evidence can distinguish those, not sure. It seems like if "not a benefit" means "the stock or performance or profitability didn't go up"... well, I think stock prices are a very trailing indicator of the health the company, since executives are incentivized to pamper over anything bad about it. So the layoffs may reflect the fact that "things have been bad for a while" and thus the metrics staying flat would imply that they would have gone down if they _hadn't_ done it.

> So in the end, they don't solve the problem you're identifying

It may be unpopular to say this, but of course it does. Just hire more people if you need to and hope that you're making the right decision. Yes, it has a terrible effect on employee morale, but that's a tough thing to quantify so it won't show up on the balance sheet.

It's too soon to know if the impact of layoffs on most of the companies doing them is positive or not. twitter is an anomaly: that was driven by basic stupidity!

When the $BIGCO I worked for was acquired, instructions were to cut 8% headcount across the board. We were explicitly told that they expected that some valuable people would be cut accidentally, but that's unfortunate. No one should be unreplaceable and if they really are, this is a way to find out and change processes so it can't happen again.

They risk laying of RedundantHuman93, who years ago was super human according to the metrics then, and retains the most in-depth institutional knowledge from being core to the business, but on paper for this layoff and it's (holy financial crusade) metrics looks like a lesser performer because their projects are just 'part of the institution' or they are bogged down in tons of unsexy deadwood 'keep the business running tasks' at this point and uninteresting 'overhead' that 'anyone can do'. But once they let RedundantWetware93 go the company realizes the mistake and have to hire them back as a consultant at greater expense, now with zero buyin from ParasiticMeatsackConsultant93, and as they interact with many core people/departments their lack of buyin and the reason for it impacts large core groups of biologicalLoborUnits. The company is also less flexible as they now have to schedule around Deadwood93s availability. Without the 'underperformer' the company is at risk of falling out of applicable legal/industry regulation/various compliance requirements because that stuff's all invisible and 'of course someone takes care of that stuff' without thinking who catches all the little intimate details that require a proactive thinking human being. They stop paying attention to specific customer commitments/requirements/requests that are just going to be dropped now, with potential contractual lawsuits and definite loss of customer good will.

All humans are not just FutureRedundantWetwareMeatsacks that the all knowing bean counters can move around on a board. In reality business is about relationship/small detail institutional knowledge silo'd in individuals/humans proactively getting done what needs doing, many details that get poorly caught by tribal documentation systems.

If your people are truly cogs you don't have a business, you have a franchise, and anyone else can do the cookie cutter things your business is doing, and most likely better/cheaper/flashier. But for some reason HK and all these companies doing layoffs either don't understand that, or they WANT to turn their company into a generic franchise where everyone is interchangeable and lose the flexibility/capability/competency that being a business of interconnected humans gives.

> That seems absurd. I've worked at big companies. They sometimes have staff, often _lots_ of staff, like whole orgs, that are a net drain on the company. What's the alternative in that situation?

It’s tough. Look at Amazon. They cull the bottom 5% every year. It has a negative affect on morale because everyone is continuously on edge and having a bad month or two can be dangerous. Look at a layoff, it craters morale and reduces productivity.

The best bet seems to be to grow slow, hire and retain the best, and fire the low performers only as needed.

After that, look at corporate giants like IBM. They are laying off, yes, but historically they just lurched along, providing a paycheck to everyone.

I worked at Amazon (a while ago) and they both (a) did not do that and (b) what firing they did not, imo, affect morale. If anything the fact that really bad engineers were quickly removed was probably a net positive for morale.

There were a couple of dubious episodes, though, where a bad manager tried to do something to people they didn't like. Sometimes it worked (aka, negatively affected people) and sometimes the manager got in trouble instead. So it's not like all good. But it was heavily dependent on the managers you ended up under.

It's not inconceivable, but it's weird that everybody is doing it at the same time even when the company is perfectly healthy.

patagonia see, patagonia do. I blame the boards.

Is it weird at all given the market, inflation, and debt?

It could be because they're all planning for market conditions predicted by the same forecasts.

Also if your strategy is to hire as many engineers as you can possibly afford so that you can keep up with or beat the competition, then if the competition starts downsizing it means you can do the same, and maybe you see an economic contraction as a bigger risk.

Conjecture of course, but plausible I think.

Do not play to where the ball is, play to where the ball will (might) be.

It could be, but that all the big companies come to the same conclusion at the same time is unlikely to be a coincidence.

Coincidence = market conditions in this case probably.

Some businesses, sure. Some of the big tech companies that are doing layoffs though (like Google) are just fine financially, and are losing two decades' worth of employee morale and goodwill for a temporary stock bump that is already dissipating. Memegen is a firestorm, and everyone is now talking about the importance of being on safe projects and staying away from experimental/unproven ones. That's going to hurt Google's prospects of launching anything else revolutionary even further.

What is memegen?

A google internal meme generating+sharing page.

A Google Monopoly that needs to be broken up and opened to the public (mainly, xooglers).

lol right. I want to rollover my Mcmillen score just like a 401k

> Mcmillen score

I'm unfamiliar with this term and a quick search didn't produce any meaningful results.

What is it?

Think reddit karma, but for making memes.

The meme version of h-index.

https://en.wikipedia.org/wiki/H-index

A meme sharing internal website.

At the moment it's also the most reliable source of information for what happens across Google's PAs (Product Areas).

> (like Google) are just fine financially

Why do you think you know what is in Google's best long-term interest? Do you think you could run the company?

Google hasn’t really demonstrated a good track record of revolutionary launches. Doing so requires risk and long term investment and vision. Bigger companies have more to lose with risk and thus take much “safer” risks because CEO and middle management are incentivized to do that - risky bets might cause you to be on the losing side of a bet and end up regressing from where you are now. Risky bets are also how you can attain 1000x results but management is incentivized and condition for loss avoidance. That’s why in-house incubators always fail to produce billion dollar businesses - the incentive structure is very wrong. For everything else that Ruth has delivered to Google in terms of getting it into a supremely healthy financial position, I think the concerns about her killing “Google” have been largely borne out (whether or not that’s her or just her delivering what was asked doesn’t really matter - it’s probably both).

Facebook is about the only company attempting to do this at the size of the big tech companies with Oculus. I think because it’s viewed as an existential threat that they otherwise don’t have their own platform so temporary headwinds / market punishing them for investing so heavily is less a concern for the board and Mark. Ford had to outsource this with Cruise and it’s a delicate balance even then. Apple is interesting to watch because they make very few moves in public that it’s hard to see what’s going on even from the inside in terms of innovation. Toyota is an example of taking a bad “market risk” investing into hydrogen although I think that’s an example of either saving face until they fix their EV story, truly making a misstep, or the story being misreported (eg hydrogen for fleet vehicles and trucks but EV for individuals).

> Google hasn’t really demonstrated a good track record of revolutionary launches.

I disagree. Search was the original product, and since then, Google has launched the following other products/technologies that I would also describe as revolutionary: Gmail, Maps, Android, Chrome, Ads/AdSense, YouTube (depending on who you give credit to), MapReduce, Kubernetes, TPUs, TensorFlow, and I'm sure I'm missing some.

The trajectory of these revolutionary launches over time does seem to be decelerating though even as the company gets larger. And with these layoffs it'll likely get even worse, not better.

Google didn't launch YouTube, Android, or DoubleClick; those were acquisitions.

It grew them by orders of magnitude and in some cases saved them from failure outright.

I'm not familiar with all of those but if the ones I am none are revolutionary. They are mostly just a large company using their vast resources to capture market share. Gmail, Android and Chrome aren't revolutionary in the least bit. They are just Google taking over existing segments to sell ads more effectively. Same for maps, perhaps street view was at the least innovative.

That sounds like some pretty high standards then. What within the area of tech would you classify as revolutionary then? I'm guessing DARPA: The Internet, IBM/Microsoft: the PC, Apple: the iPhone. Anything else?

I'm talking about the next category of innovation down, whatever you want to call it if you feel "revolutionary" needs to be reserved for generation-defining technologies. Because with your current definition, the vast majority of even large tech companies will never have a product that meets it.

Disruption and innovation would look like:

1. There’s ML research that clearly shows that you can convert video streams into neural nets that only need to transmit a very small amount of bandwidth for a high quality construction on the remote. Why didn’t this research come out of Google which has gobs of people working on the space? Why hasn’t the Meet team figured out how to get this into customers hands? Certainly the hardware for it exists and it would drastically change what a video call experience looks like.

2. They abandoned Google glass (correctly - that was a terrible product) and their VR in favor of sitting back and watching what others accomplish to then copy cat what a successful product would look like. Why didn’t they wait for in-lens displays while continuing to invest in the R&D of the product itself?

3. Android is a know memory hog. Android phones require 2x the amount of RAM as an iPhone for the same performance. Why hasn’t Google figured out how to bridge this gap? This is also a big reason why they’re watches struggle.

4. I was advocating to an SVP that Google should release a wearable digital watch/fitness band that’s a very basic experience focused on actual value add instead of a smartwatch: an SE so that Google Pay works without needing internet connectivity, mDL integrated, BT phone calls for the cellular enabled version, basic fitness sensors. It was shot down because he didn’t think it could make his P&Ls only for the SVP to later publicly call out the Android SVP for “why did Apple get to mDL first” ignoring that I was the first Bay Area engineer on the ISO committee.

5. Google took a long time to materialize their in-house CPU and it’s largely been underwhelming I think compared to what Apple’s been doing. Of course they started not too long ago (very late) and are copying Apple’s playbook so not sure how innovative. But for a company that’s been making their own HW since forever…it took them a long time just to make the decision to copy. There’s a lot of cool buzzwords but hard to compare value. Disruptive play: compete with Qualcomm here.

6. Fiber: gave up instead of figuring out how to outcompete telco business practices only to resurrect it again.

7. Stadia: instead of going with a disruptive Netflix-like business model and eating the upfront costs to publishers, they tried and failed. There’s a theme here that Rick is not cut up for anything more innovative than managing mature P&L products.

Then there’s all the dead end projects that they refuse to can because they are unlikely to deliver on the vision. Most of their efforts around “health” are vanity efforts that don’t require the amount of man hours being invested (certainly not rolled up under the commercial health app product line). Or at least this was the case many years ago - not sure about now. They talked a huge game about all the things they were going to enable and have a proven track record of not being able to deliver on any of them. X is neat pie in the sky ideas that never materialize. Moonshot ideas actually require you to get to the moon once. Don’t think any of that has ever come out of X.

Deep mind is probably the best innovative jewel in Google’s arsenal. Most of their magic comes from keeping Google disease at arm’s length. It might be interesting to see a Google with Demis Hassabis at the helm and a mandate to bring back some innovation to Google.

I expect a retort like this because it’s so common.

And to be clear. I’m not talking about technical infrastructure pieces (eg k8s was kept in house for forever as Borg and then an open source version was built when it was clear they could sell it). Google has a lot of good pieces there and whether or not you can scale is mostly (but not fully) question of being right. When it’s a question of being right on a binary question, these soft politics phenomena disappear because reality is immune to that.

However.

Search: yes. Their first product alongside ads. Today it still represents something like 80% of ALL Alphabet revenue (and probably a much larger share of the profit provided). Anyway, bad example because search and ads were developed when the company was a startup. By necessity that’s your high risk bet.

Gmail: yes. Still early enough in the company’s DNA to take a bold bet. They’ve totally failed that space though by failing to invest and take gambles. Back in the day this also captured almost all IM traffic because EVERYONE had gmail. Now you might get a fresh can of paint every once in a while but there’s nothing bold. The reason? You have billions of users: if you make any meaningful change you’ll lose the ones that aren’t early adopters, especially if a change in direction has instability or feature loss (see Inbox). See their total incoherence on what to do about messaging, a problem they wouldn’t even have if they continued to take risks and innovate a decade prior.

Orkut: they could have had a social network. Gave up on it before truly figuring out how to make it work. Then G+ as an emergency Hail Mary that went nowhere for many reasons, not least of which is that bold risks need to still start small and grow and they went immediately for the billion+ market (notice the copy of GMails rollout strategy that was a poor imitation and failed to realize why that worked - cache and buzz driving “must have this” demand instead of a product copy that was meh and invitations that were more just how far away you were from the elite).

Speaking of social. Google Wave. See: Slack eating their lunch here. Heck, even FB workplace is miles ahead of Google Chat which still can’t figure out scrolling, scheduling posts and reminders, and requesting messages to be silent.

Maps: yes, fantastic. They’ve failed to keep innovating and taking bets here though. Notice the acquisition of Waze. In the long run, expect Maps to falter. The only saving grace is that Maps is important to their ad strategy so as long as users and revenue are aligned they won’t let it get too bad.

Android: first, acquisition. 2. Bold bet that had leadership buy-in for same reason as Oculus at FB - you have to own the platform if you’re an advertising company as otherwise the owner of the platform has you by the balls. See Chrome.

Chrome: yup. Fantastic innovative bold product at launch. Since then, mediocre incremental value with no new bold risk-taking ideas (unless you count pissing off loyal users and enthusiasts).

Ads/Adsense: see above. Too early in the company’s life + it’s 80% of their revenue. They don’t take any bold bets with this cash cow.

YouTube: acquisition. See above - failure to capitalize on social graph, failure to take meaningful innovation risks instead of slowly and methodically growing the business.

MapReduce: neat technical idea that actually preexisted Google’s idea. Google has largely abandoned it anyway afaik as other techniques work better / have better modern tools.

Spanner: this one has some staying power and is innovative but it feels like they continue to fail to innovate here.

TPUs: not bold or revolutionary. Take existing embarrassingly parallel problem you’re running on GPUs and build an ASIC. They’ve done excellent innovation and technical work here. Don’t get me wrong. But it’s not been a huge risky bet leading the market (and they don’t even sell TPUs as standalone units you can buy which would be truly a risky bet to eat their own cloud offering).

So in essence, they’ve always been slowing down for a long time and most of the things you listed as big risky bets just aren’t that. Certainly none of the technical stuff - that’s driven by in-house demand / obvious market demand. I’m talking about changing the rules of the market. If you own the market you’re not going to change the rules because you might not end up on top. See Clayton Christensen. I do think we should limit the ability for a market leader to enter new spaces though and how much they can charge. Once you’re big your ability to manipulate the markets creates meaningful market inefficiencies. The common belief is that these get sorted out over time but I’m not so sure / I’m not sure that regulations can’t help shorten how long market inefficiencies promulgate.

If you are almost surely going out of business, have some revenue but no good option for reducing your costs, yes a mass layoff has a higher chance to save you than doing nothing.

If you had a healthy business and do a mass layoff, you don't have a healthy business anymore.

And it's very reasonable for the board to at least ask: "Why do we think we're so special?" Which may have a good answer. But also may not.

Presumably answered when they were hired to the board?

What if the answer was "There's data to show layoffs are counter productive, not just for us but for most of these companies. They're jumping off a cliff and we don't have to follow" ?

Presumably some number of companies arrived at that answer and thus won't do layoffs, while others dispute the data or think that they're in the minority of companies where layoffs are good.

I wanna learn more. Do you have a reference / pointer to this data?

I saw this posted a little bit ago: https://news.ycombinator.com/item?id=34480314

Here's an article and it's "update" (continuation of the same)

https://hbr.org/2018/05/layoffs-that-dont-break-your-company

https://hbr.org/2022/12/what-companies-still-get-wrong-about...

Board members are not selected for their ability to follow reason.

This is also why so many tech companies hired-up in 2021.

Interesting that everyone is so certain that we're jumping off a bridge now with layoffs, instead of that we jumped off a bridge before with the hiring spree based on Covid-stimulus.

I don't think that a covid-related hiring spree should have affected a company like Confluent. Yeah there were probably many product companies that got more money due to Covid that wanted a managed Kafka solution, but Covid also took down other kind of companies who might have been Confluent's customers.

I think it has more to do with cheap money not being cheap anymore.

The money was cheap because of COVID. https://www.brookings.edu/research/fed-response-to-covid19/

Covid made it dirty cheap but money was cheap before as well, or at least cheaper than it is now [1]. Anyway what I meant was that Confluent is not the kind of company that hired more because it thought that Covid changes in business where going to last forever (a la Shopify or Meta).

[1] https://www.fxempire.com/macro/united-states/interest-rate

Money has been cheap since the aftermath of the 2008 crisis, it wasn't just COVID, it's been that way for more than a decade.

Money was never cheaper in the history of the US than during Covid... with 10% inflation and 0% interest rates, and a 10% deficit spending on stimulus.

Overhiring doesn't affect the common people (except positively) - overfiring of course affects those fired.

Given how much overlap there is between boards at these companies, it might not just be them seeing others doing it, it might also be that members of the board at company x are already involved in layoffs as board members of company y.

I can’t comment on whether this is blind following or not. But it’s a real fact that the market will punish you less for layoffs when others are doing it too. It’s like how the best time to reveal a scandal is after someone else has revealed a bigger scandal.

That's wrong. If everyone is doing something irrational that is a big inefficiency in the market and whoever does the opposite eg. hiring will get better outcomes as opposed doing it when all do.

Yeah but in general if you're trying to minimise disaster instead of maximising being the winner, you opt for doing things that avoid revealing you as the being the only wrong one. Being wrong in a crowd is fine. Being the only one wrong is a big deal, "what were they thinking, they knew better than everyone else?!". If everyone does the same mistake, it's just shrugged off as "honest mistake, everyone was doing it."

Plus either way you're cutting expenses and maybe getting rid of some under performers.

Being wrong alone means you had a flawed thought process.

Being wrong in a crowd means you have no thought process at all.

All the big companies doing layoffs are in the stagnation phase. "minimise disaster instead of maximising being the winner" is exactly that.

Market values aren't driven by outcomes, those are in the future; they're driven by beliefs about outcomes.

It's not just that the market will punish you less. Companies are hoping that the market will actually reward them for layoffs. Unfortunately, these moves can and will be damaging to long term prospects at some companies. But long term thinking isn't something markets generally care about.

It's up to companies to push back against market pressure to maintain long term progress, but it's a tough balancing act to do that while avoiding being punished by investors.

Honestly, I don't think these layoffs (broadly speaking) are dangerous long term.

In fact, and this may be unpopular, I think they will be greatly beneficial long term.

Consider:

- These companies grew at greatly-expanded rates over the past few years. Google notoriously added 20% per year for 7 years straight, doubling their staff from 2017-2023. After layoffs, Google will still be right near ALL-TIME-HIGHS in staffing. Same with most of these firms. Small layoffs following the fastest growth period in their history isn't some catastrophe for their business

- Most roles being reduced at most companies are not product-creating but administrative. Lots of HR, hiring, marketing, middle managers, getting axed. If companies predict less hiring or lower ad budgets... then reducing those divisions makes sense. If you doubled your hiring team while you were hiring 20% per year, but now you expect to stay steady and only replace attrition ... what would you do with all that hiring staff?

The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem.

> The real damage to their long term prospects was over-hiring the past 3 years and saddling their businesses with a major problem.

So, the real damage was the people who ordered to over hire (usually top-level executives). If any, they should be lay off to actually mitigate long-term damage.

I think this is all basically true, but what is interesting to me is that these incumbent tech companies were greedy when everyone was greedy and in so doing they created an opening for someone who is greedy when others are fearful to come and eat their cake.

I don't know about Confluent, but I can tell you that sales (and therefore revenue) have seen significant drops in most industries. This is wholly expected in a rising rate environment.

When sales drop, revenue also falls. When revenue falls, models get re-evaluated and numbers get re-calculated. Reducing expenses becomes a priority.

When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. So I don't think this is blind trend-following, I think this is a rational response to a rapidly changing market.

A company can be profitable and it can still make sense to lay off certain employees. In-house recruiter positions are some of the first to be cut right now because companies are pulling back on hiring. If you have a hiring freeze and very low hiring forecasts for the next year, why would you continue to employee a lot of recruiters?

Market conditions change. Companies adapt to the change. When you have people in positions that are seeing less demand for the coming year, it doesn't make sense to keep them on the payroll and have them sit idle. It's rational to readjust the workforce.

Nobody likes getting laid off, but no position is truly permanent.

On a macro-economic level though this is a negative doom loop.

>When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more.

This has been a long time coming. Some of the numbers I have been seeing for these contracts are truly mindblowing for the value delivered. The days of gouging enterprise on these random non-critical SaaS integrations is probably over.

The one that still really gets me is Slack. Even medium sized companies are paying millions per year for a glorified IRC client. It just doesn't add up.

Slack is an interesting one. Suppose you're a company spending a lot on it, too much. What are your options?

Replacing slack with a comparable like Teams or Gchat is at least a step back in user-friendliness that will be grumbled about by engineers and others, and if you use a lot of integrations there might be significant switching costs.

Moving away from instant messaging as a communication pattern sounds great to me, but good luck convincing folks to change company culture that significantly.

It’s millions a year and ms teams is near free. In a cost cutting environment this is near perfect.

How big of a team costs that much? Looks like the highest listed price is $180/person/year before it becomes "call us" pricing. Im sure that enterprise plan can get expensive, but even at $500/person/year that's at least 2000 users.

I'd hope there's lots of things higher on the list of effective cost savings before trying to migrate that many users, and integrations, and history.

Such migrations are happening and will continue to happen, but I expect most will go about as well as the one discussed in a sibling comment.

This is exactly what's happening at a previous employer. We used slack for near a decade with tons of integrations. It's now being unceremoniously ripped out because Teams is "free". Will probably cost them more than they're saving from the contract just because of the migration cost.

Nah noone's going to make a fuss out of it when people get axed left and right.

+1 on this. I know for a fact at a couple F100 organizations, CFOs now want final sign-off on contracts valued around $20k-30k/year and above, whereas before that would be left to a VP. There is a lot of belt tightening happening

Does recruiting ever comprise more than 3% of a company's staff?

There exists a contingent of people who insist that whenever a big company does something it is because they have gotten all the smartest people to do all the research and run all the numbers and they have determined with absolute confidence that it is the most profitable thing to do. I think about those people sometimes.

> I really get the feeling that many companies are just blindly doing whatever other companies do.

A social contagion if you will. It doesn’t seem rational at all at this point.

Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.

Lets give some good companies credit, they value their employees more. They would hold out for at least a dollar before killing you.

> It doesn’t seem rational at all at this point.

Layoffs are rational and are common in downward cycles.

I get the feeling that a lot of the shock and awe here is due to age and a lot of people starting their careers during an extended boom period, particularly in tech which was getting absurd. The last few years in particular were far from rational.

Now the Fed is raising interest rates, housing is cooling, cheap money is no more ... and as a result you get a downward business cycle resulting in layoffs.

I don't see anything new here that hasn't happened over and over again ... but I've been in the industry for decades with multiple companies and sectors.

These companies aren't charities, they aren't meant to retain jobs just because they are profitable, and they definetly aren't your friend. Many of them are publically traded, which at the end of the day are beholden to one and one thing only, the shareholders.

I'm curious why you are calling them rational? They will lead to reduced morale. And will lead to more attrition afterwards. And probably won't lead to any sort of increased income. So, what makes them any more rational than going straight to bankruptcy?

Layoffs are rational and are common in downward cycles.

What downward cycle?

All I'm hearing is panic and hand-wringing about the economy, but I don't see what the problem is.

We had a "recession" in Q1 and Q2 of 2022. GDP dropped from 20,006 to a low of 19,895, then it went right back to its previous growth path.

Inflation is high, but it's dropping. It maxed out at 9.1% in June of 2022. Now it's down to 6.5% and expected to drop in the upcoming update (Feb 14).

We weathered a global pandemic, subsequent supply chain issues, and a war on the other side of the world that disrupted the energy economy. We're doing great, but people are fretting like it's 2008.

These companies are using forward-looking metrics to make these types of decisions, it really isn't follow-the-leader.

I don't have access to the data, but it's quite possible with interest rates rising, high inflation, and tightening monetary policy that they are seeing slowing growth/sales. Companies want to get out ahead of that, especially with the massive (and frankly absurd) hiring that these companies did over the last 2 years.

I'm not buying that Microsoft laid of people because Google laid off people, and Spotify laid off people because Microsoft laid off people. Somewhat unfortunately, these public companies are expected to show constant revenue growth, and they will "trim the fat" at a moments notice.

These companies are using forward-looking metrics to make these types of decisions

Such as? This seems super hand-wavy.

The pandemic already happened. Inflation peaked last summer, after the Fed responded. The supply chain crunch is resolved or resolving.

They had the bad news months or years ago. What are these forward-looking metrics that are worse than what we already experienced in the last few years, and why isn't the entire market panicking over them?

It's not just here, but "we need to have a blockchain division / we need to have an AI powered product / We need to have a cloud services strategy / We need to etc"

All these companies have no vision, and are run by people only interested in saving their jobs and/or preparing for their next one.

This post agrees that it’s essentially copycat behavior.

https://news.stanford.edu/2022/12/05/explains-recent-tech-la...

Viral contagion. Code RED. Put all the CEOs in lockdown. Disable internet access.

I would venture that word of mouth is spreading among the elites who are on the boards of all these companies - a storm is coming so everything needs to get tied down - so the CEO’s as captains of the ships are following the advice.

Whether the storm actually hits, what gets wrecked, what doesn’t. That is a completely separate issue to these people.

What is the storm they're worried about, if not mass layoffs concentrated within an industry?

Inflation is almost down to normal, employment is still high and will remain so as long as the construction sector avoids layoffs due to the coming cash infusion from federal spending bills.

Seems to me the only storm coming is the one created by these same execs, though I understand each of them is incentivized to follow the crowd.

> Inflation is almost down to normal

Huh? Normal inflation in the US is 2% - that's the Fed's target.

Last month, inflation was 6.5%.

Being 250% above target is not "normal".

That's an unweighted trailing average where the bulk of the increase came from earlier months.

Instantaneous inflation in December 2022 annualizes to 2%.

"The index for all items less food and energy rose 0.3 percent in December, following a 0.2-percent increase in November. The shelter index continued to increase, rising 0.8 percent over the month."

Food inflation increased over November. Shelter index increased at an annualized rate of nearly 10%.

Sometimes, you have to dig deeper than the headline.

Source: https://www.bls.gov/news.release/pdf/cpi.pdf

The rest of that same page you quoted from mentions we actually had _deflation_ in December (-0.1% CPI-U), because energy costs fell so much, specifically gas.

"Last month, inflation was 6.5%" is not correct by any reading of this data! Your link makes it clear that was inflation over the course of 2022, as I said in clunkier language. The graph on that same first page shows most of that inflation happened in the first 6 months of 2022.

The average of the last 6 months in that graph is 0.15, or ~1.8% annualized. That's an arbitrary cutoff (including July's 1.3 shoots up to 3.9% annualized!), but it seems clear we're on the right track. If the next 6 months look similar to the last 6, we will look back and say inflation was already under control before 2022 ended.

I'm sorry, but I fail to see nearly 1% monthly inflation in the biggest expense category - shelter - as a sign of "being on the right track".

I agree that's high, even for the last year, and certainly not a good or welcome thing, but I'm very glad it's offset by gas prices coming down.

If "being on the right track" means that an increase in one category can't be offset by a decrease in another, that seems like an impossible bar to clear.

It's not obvious to me why inflation there has increased even as mortgage rates have skyrocketed due to the fed; people/institutions feel safer betting on housing prices than on stocks, lately?

Shelter and wages are the two core sticky categories of inflation. You don’t negotiate your lease or employment terms every month. Even if there is a change in supply/demand dynamics, it won’t be visible in the market immediately.

This is also why the Fed has been trying to engineer a soft recession. As long as labor markets are tight, there will be sustained wage inflation. And as long as there is wage inflation, there will be people willing to pay higher rates for longer.

The dominant unspoken narrative in the financial markets is that the Fed will overplay its hand and cause a hard recession, at which point they’ll reverse their rate hikes. And when that happens, all the money sitting on the sidelines will reenter the market, leading to sustained inflation. No one really thinks that this beast can be tamed so easily.

it’s not just money sitting on sidelines, there is also risk appetite on the sidelines, reserve work capacity on the sidelines, the ability and willingness to lever up on the sidelines.

I’m not one of those elites. So I would not know what the real forecast is.

I’m just stating a hypothesis on the perspective of, say such CEO’s. To them it’s not pack behavior based on hearsay.

To quote HN user @badhombres from the original thread:

> Not surprising. Every company is going to take the opportunity to trim costs when it doesn't affect their PR as much as it would any other time.

I'm pretty sure this is really what's going on here. These CEO's are killing all of these jobs while they can (seemingly without any repercussions).

I was talking with my dad about these layoffs and one of the interesting things we talked about is how different the loyalty formula is nowadays. My dad grew up during a time when folks happily worked for, and were loyal to, one company sometimes for decades. Nowadays, sadly, it's not smart to trust any of these companies for more than a few years. These layoffs prove that. Whether it's companies laying off folks who've been at the company for 20 years (see: Google) or companies laying off new hires, any loyalty seems to be one-sided.

Yep. Vest and move on.

A lot of this is sourced in the 2021-2022 job seekers market, when everybody and his brother could get a job. There were hiring sprees not because there was an obvious need for a/that particular level of skills and experience, but because there were a lot of companies thinking "if we don't get this guy/gal now, someone else, maybe even a competitor, may". I've witnessed it especially in the blockchain/web3/cryptoBS areas. I know of a company which had a target of min 25 hires/week, and kept that pace for three-four months. When I tried to insert a cost analysis process in their Infra organization, part of an operational model meant to get them to a more mature level than forever startup, I was told that "money was no object", so I should focus my advice in other areas. Of course I left them, soon thereafter, and now I see them in the news, alongside all others, letting people go. Oh, well...

The dominoes started falling with Elon laying off half the company without much problems. Copycat managers thought if Elon can lay off half the company, they can surely get away with 10% layoffs.

You’re giving him too much credit. Also there we large cuts at tech companies like Twilio, Coinbase and Snapchat etc in the summer.

From November, 2022

"Activist investor TCI Fund Management is calling on Google's parent Alphabet to pursue aggressive cost cutting on the back of a hiring spree during the pandemic, claiming the business could be more efficiently run."

- https://www.theregister.com/2022/11/16/tci_fund_google_cut_c...

I would assume Google was no the only one to receive such a letter, nor were TCI Fund Management the only investment fund sending out such letters

I think it's less blindly doing and more seeing your attractive friends dieting and becoming more self-conscious about your own weight.

I don't want to give reactionary CEOs too much credit, but I dont think it's fair to describe it as blind.

Yeah, this CEO technology is interesting but ultimately going nowhere, it's only remixing existing decisions and not having any original innovations. Plus, as CEO decisions get fed back into the models, it's going to get even worse, like a photocopy of a photocopy.

I'm constantly amazed at how people fail to see that in B2B if your clients are downsizing, well, you should expect less money coming your way. Yes, there is a "follow on effect" as one should expect.

If Confluent was building out new product features and "investing in growth" hoping to sell those features to expand customer uptake, should they just blindly keep going?

Sure, there are probably some 20 something CEOs right now running startups that are like OMG I guess we should lay off too, but it's such a naive take.

CEOs can't just will the market to bear whatever their vision is, they have to "make something people want". And if there are less people to sell to, well, you're gonna make less money...

Absolutely.

The 4Q22 numbers are out. US GDP increased nearly 3%. The job market remains super tight for many classes of workers. There's simply no evidence of a broader recession.

Are there headwinds? Sure! Household debt is up, consumer spending is down as a consequence--but this is relative to a previous year when we were still feeling the effects of the COVID stimulus--and interest rates are up which will drive down debt-funded investment.

But, companies are cutting because 1) some got bloated during the COVID hiring surge and now need to cut back, 2) some always wanted to cut headcount but they didn't want to do it without air cover, and 3) some just follow the leader.

I'm sure there is a "monkey see, monkey do" peer pressure aspect to the current wave of layoffs, but don't forget that hedge funds and activist investors have been actively lobbying for these job cuts: https://www.marketwatch.com/story/hedge-fund-billionaire-goo...

I disagree that CEOs aren't thinking for themselves. In many cases, they are thinking perfectly rationally. Companies don't live in a vacuum. If everyone else is raising salaries, it's to attract and retail talent. If you don't do the same, you will lose current employees and not attract new ones. If everyone else is doing layoffs, then it's a good time to do layoffs that perhaps you were considering anyway.

Say you've been wanting to close down an unproductive division and let go of low-performing employees in other divisions for a few years now. You sure as hell weren't going to do that in early 2022, when you'd risk a lot of other employees jumping ship at the first signs of cracks in the house. But in 2023, you can do layoffs and get away with it.

People where hiring because their valuations were large. All the organisations now had to grow into that valuation. Expansion and contraction of head count is a normal thing in an orgs life-cycle that reflects the economy. CEO's job is to think about the stakeholders first and then employees. There are not many levers to play with to adjust the net revenue, growth and valuations. Growth have become stagnant or even lower, revenues are impacted and valuations are down. Only lever that is in control is head count others are dictated by external forces.

PS. No one employee was complaining when these companies were in a hiring spree and could see it was not sustainable. Startup had a hard time competing with the salaries offered by these orgs.

Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too?

It seems much more likely to me that many companies over hired and/or have 2-4% of their staff they were planning on letting go anyway and now that so many other companies are doing layoffs it allowed them to cut other low performers without being the only company in the news.

We talk all the time about large company bloat. This just seems like normal annual pruning + a little extra from over hiring during covid + a chance to cut xyz projects that havent worked out or someone doesnt like or whatever without catching as much bad pr as they normally would.

> sending off emails to someone saying hey we need to do layoffs too?

This is absolutely happening, and if not from the C Suite then from the board and other investors.

Yes, virtually all companies have plenty of bloat that can be trimmed, but trimming it a year ago would be a negative signal to investors. Now it's a positive signal, so layoffs are happening. They will continue to happen until companies are punished for it rather than being rewarded for it.

> Do you actually believe that CEOs are seeing other companies doing layoffs and sending off emails to someone saying hey we need to do layoffs too?

that would be illegal.

You likely have to go on a hiring spree and pay large bonuses to stay competitive when others are doing the same. Without the benefit of hindsight it was not obvious that the free money era would end so abruptly. Even the Fed did not expect to raise rates until 2023. It has been about the length of one finance professional's career since the Fed was last forced to hike into a growth slowdown, so few have experienced this environment.

Apple stands out as the contrarian that didn't panic hire. They will probably come out ahead at the end of all this as their reward.

There's a lot of performance in hiring and firing, even outside a supposed 'recession' CEO's are rewarded for 'cutting the fat' through firing via stock bumps because at the very least it's going to temporarily cut some costs in a very surface level analysis. Couple that with the constant recession talk that never seems to materialize and boards and shareholders are looking at companies thinking they need to trim down some for the recession that's seemingly been just around the bend for a whole year now.

If you think about it, CEOs are just people that are influenced by events like the rest of us. They are also a group that usually socialize with other CEOs and I have noticed this time the mantra of "preserve cash" has been a strong signal being shared in that group.

The thing is, in a lot of the cases, the companies preserving cash by laying off workers aren't really saving a significant amount of cash, compared to the amount they have on hand. So, it turns into some sort of lemming behavior.

This is silly. If a business is sustainable there's no reason for layoffs. Simple math. If they rely on investment or loans and only have money to get down the runway but not takeoff without coming back to investors or banks, they aren't sustainable and will fail when the economy fails. The economy is currently failing big time. Expect a major culling of companies that rely on investment and growth because there's no speculative investment in growth for the foreseeable future.

I get why public companies like google, meta or even confluent is doing layoffs when the stock price falls 50-75%, the employees are unhappy and the shareholders are unhappy. Layoffs is a way to tell shareholders that the leadership is doing something to curb the costs and try to increase profit. But there are also pre-ipo private companies laying people off, that part I don't quite understand, since they have no shareholder pressure.

Those companies don't have public shareholder pressure but they do have investor pressure. The market downtown and cost of raising money changes investment calculus

Could be blind, but could also be that laying off when everyone else is laying off protects a company from being the odd one out and distributes the blame.

0) Macroeconomics is macro. Everything is connected.

1) we just came out of a very long period of "easy money" that inflated valuations and gave founders/boards a sense that money would always be there

2) when your customers are laying off / reducing spend, your revenues usually go down

3) the future is very uncertain

Take all of these things together and boards are asking teams to be as prudent as possible which unfortunately means, bringing costs down.

Bunch of horse…excrements. You are trying to find logical explanation where there is none. My company laid off hundreds of people during corona while knowing the business will recover and receiving incredible amount of money. 5 months after the lay offs they bought bunch of companies and restarted hiring in different locations.

These companies dont know more than you and I. They are acting in panic and in a bad faith towards their employees.

>I really get the feeling that many companies are just blindly doing whatever other companies do.

Alternatively, we are in a unique window where cutting underperforming projects whole-cloth can be done with almost no signaling risk (had this happened in 2021, people would assume the worst), so CEO's are cutting everything they don't like now, assuming they won't be able to do it as easily later.

> I really get the feeling that many companies are just blindly doing whatever other companies do.

They’d all have had to collude in December for this to happen. Laying off people in large companies takes a sufficient amount of planning, and isn’t accomplished in days. They need to hire external consultants to help, even.

I would say a large part of it is that layoffs are terrible for PR, so many companies are jumping on the layoff bandwagon while it's "acceptable". Being one of 40 large companies doing mass layoffs is much better than being an isolated incident on the news curve at some other point.

Is there any chance that we're dealing with a form of confirmation bias? In an economy as large as the US's there will always be companies laying off workers. Current unemployment is low so I'm not sure if there's any major, new trend other than reporting it on HN.

I don't think so there's been a string of tech layoff's right here in a row totaling 40,000+ just from the ones at Amazon, Microsoft, Meta, and Google. These are companies that don't generally shed huge numbers of employees all at once.

Possible, but it could also be that they see / foresee / know that upcoming quarters are just down (in terms of revenue or whatever their respective KPIs are).

The reality however,could be somewhere in the middle as always, IMO.

...I'm surprised this shit wasn't apparent to HN when everyone literally uses the same leetcode interview process despite the fact that it makes no fucking sense.

I really get the feeling that many companies are just blindly doing whatever other companies do.

You are correct. And for some reason they call themselves "leadership."

> I really get the feeling that many companies are just blindly doing whatever other companies do.

You're not on your own with that idea. It's the blind leading the blind.

Indeed.

- FAANG started to offer free drinks in the office? Every startup begins to do the same

- Agile coaches are hired at FAANG? Every damn startup needs their own Agile coaches as well

- "Think customer first" was coined by... and then every startup made it its core value

- Staff, Principal, VP engineer levels are introduced at FAANG... you know the drill

- Microservices...

Every tech company out there dies to be Google or Facebook or Apple. They will copy every single thing from them.

I don't think this is the case at all. Companies are rethinking the future a bit and forecasting a downward trend more than initially thought. This means preserving cash and reducing burn. This has a trickle-down effect with other tech companies, as they will cut back on saas subscriptions.

Market forces are behind it. Luckily it is very simple to fix. Just bring the interest rates to zero

But then the poors get paid too much and we can't have that. Interest rates rise because the 1% want a larger part of the pie.

A financial stampede

To be honest, most executives wish they could fire 10% of their staff. Once you get to even 30-40 people, 10% of your staff are almost inevitably dead weight. Unfortunately you can't mass cull without causing morale issues.

This period is just giving us a chance to shed those people without cultural ramifications.

Reading these comments reminds me of how old (and jaded?) I am. We saw the same thing in previous recession-type environments (2000, 2008, etc).

Layoffs suck-they hurt everyone involved (except maybe for the shareholders?) and are a big big deal for each individual that it affects.

That being said, it doesn't take a genius to see that they are very useful from a company perspective. Given how difficult it is to fire underperformers, layoffs allow them to cut a huge swathe of underperformers (and, realistically, people they don't like) without opening themselves up to endless litigation. Yes, the justification can be as simple as "the economy looks like there is an economic downturn and see? the other companies in our industry are doing it too."

Smart companies treat it as a tool and use it sparingly, dumb companies over use it and kneecap themselves for the future.

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