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Comment by colinmorelli | Hacker News Reader

Regardless of individual opinions on whether CEOs should be terminated for layoffs or not - there's a surprising amount of comments here that seem to not understand that growing companies don't hire for today, but for where they want to be tomorrow. Where you want to be tomorrow is based on where you and your investors believe the world is going. If the world materially changes enough to shift your expectations about where it's going, then you change your plans (and headcount) accordingly.

In other words, when COVID hit and tech companies saw large surges because investors and CEOs saw industries leaping 5-10 years into the future overnight, they hired to support that growth. As the market has shifted and inflation combined with an end to the public health emergency has tempered growth expectations, investors and CEOs cut head count to match.

It sucks, and I'm not saying this is how it should be to those people who are impacted. But if you wait until the world is already where you thought it might be before you react and start building for that world, you're behind. Whether or not CEOs should be punished for getting the call wrong is what this post is about, but getting the call wrong sometimes is expected/necessary if you want to have a chance of getting it right.

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>when COVID hit and tech companies saw large surges because investors and CEOs saw industries leaping 5-10 years into the future overnight, they hired to support that growth

Yes, they all egregiously failed. A massive, widespread, collective failure for which they should lose their jobs, as many other people do. On the face of it, it was obvious, that's not even hindsight bias - it was the topsy turvy world that bad news meant good news for stocks and S&P 500 CEOs that persisted for nigh on 15 years that was weird and had to end sooner rather than later.

If it was obvious, did you initiate any shorts while it was happening?

Just to gather small data: yes.

The market can stay irrational far longer than you can stay solvent...

That logic only applies if you have unlimited potential downside. If they were really certain, they could have bought put options.

I would say the same logic still applies to puts. They all have expiries, and you will have to buy new puts once they expire.

You could just let the puts expire and have capped losses, but that feels like another form of the market staying irrational to your loss

> If it was obvious, did you initiate any shorts while it was happening?

Hard to prove, but as a data point: I tried to.

I just couldn't figure out how, access to that kind of banking is more difficult in Sweden, especially if you don't speak Swedish.

I have IRC logs of that period though, since I asked around on how to do that.

Just to say: it was quite obvious in my circles.

> On the face of it, it was obvious

If it was obvious, then the market would have priced it in.

But it didn't. So the crowdsourced collective wisdom was indeed that industries were leaping 5-10 years into the future overnight. That was the thing that was "obvious" to most people.

You may have disagreed at the time, and if you'd shorted stocks you could have made some money. But the idea that "on the face of it, it was obvious" is blatantly untrue. You're able to say this only with the gift of hindsight.

> If it was obvious, then the market would have priced it in.

Bubbles don’t exist? I’m sorry, but to paraphrase an old quote, the market’s can remain irrational, longer than your faith in a rational market.

Yeah, markets can be irrational, and markets know it, and play crazy games over themselves.

I think that's a different question then if it's obvious.

I don't really understand the obvious claim. If it was obvious to investors and executives then what? They knowingly spent money they knew was a waste?

It's not that complicated -- it was obvious to some people, and not obvious to others. Clearly then, the wrong people were in charge.

OK, I guess it is just a communication issue around the what obvious means. If obvious simply means somebody somewhere knows, then sure.

I wonder if for those who it was very obvious for "put their money where their mouths were" and bought a set of securities that would make them a ton of money on what was obvious when the obvious materializes in real life.

then, with that ton of money, they could buy enough shares to influence the board to implement their agenda.

in theory, this would quantify the definition of "obvious".

A very famous investor once said: "When I see a market bubble forming I quickly rush towards it".

And yet, another said "we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful."

Actually, hiring for a future that is based on economic predictions that are notoriously inaccurate due to many factors, including simple personal biases of the experts making the predictions is quite foolish if you think rationally about it.

Not when the downsides are unbalanced. If the future does not come to pass and you acted on it, you have to lay-off 10% of your workforce. If the future does come to pass and you didn’t act on it, other companies that did act on it eat your lunch and you may end up with many more people losing jobs than just 10%. So the question is if there should be truly zero level of faith in economic predictions, or if there statistically enough truth there for it to be worth steering towards the options with the best upside/downside ratio.

Ultimately CEOs of large companies are paid tons of money to be the person responsible for the company direction, so holding them responsible for making a wrong decision is fine. Just wanted to say that while hindsight is 20/20, it’s not necessarily the case that it was a poor decision in the moment when sometimes you have to play the odds.

> If the future does not come to pass and you acted on it, you have to lay-off 10% of your workforce. If the future does come to pass and you didn’t act on it, other companies that did act on it eat your lunch and you may end up with many more people losing jobs than just 10%.

These hypotheticals are way too favorable towards all of the non-Apple tech companies that gorged themselves during the irrational exuberance of the past two years. Since when was Google or Meta in danger of being outcompeted by a rival company who overhired to eat their lunch, rather than by their own mistakes? Were all of these overhired personnel really being put on vital projects necessary for the survival of these companies?

Perhaps some companies this analysis held true. But in most cases it seems just like a reactionary keeping up with the Joneses overhiring spree. Companies saw others doing it, and they imitated, not out of some sound financial policy.

You are absolutely correct. No economic prediction is perfectly accurate, therefore they are always at least somewhat inaccurate. So calling them inaccurate is a truism. In reality, some predictions are more valuable than others, based on their evidence, methodology, etc.

Moreover, it doesn't pay to be a hero on Wall Street. Like you hint at here, it's much safer to go with the crowd and be wrong than to go against the crowd and be wrong. That's just a fact of life in business.

Apple not overhiring isn't paying off for Tim Cook personally in terms of compensation terms, but seems to be paying off for that company on Wall Street.

Apple figured it out. Again. They didn't over-hire, and they still haven't done a major layoff since 1997.

So, maybe it was not obvious, but there are some people who were able to figure it out, apparently.

Maybe the profit motives of rich people are just a bad source of truth and we shouldn't dogmatically believe they'll somehow always be right?

> If it was obvious, then the market would have priced it in.

Look, right now market is pricing in a soft landing and FED reversing the fiscal policy in the second half of the year, which is highly unlikely (i.e. "obviously" not going to happen). Yes, there are several people pointing this out. No, I'm not selling my (imaginary) house to short stocks and make some money from it.

> Yes, they all egregiously failed. A massive, widespread, collective failure for which they should lose their jobs, as many other people do.

I am all for thoughtful discussions on how tech CEOs could be held responsible outside of empty mea culpas in blog posts, but "they should lose their jobs" feels like cutting off the nose to spite the face. Does ousting a CEO really help the company, or the workers who didn't get laid off? And where does the line get drawn? % of layoffs or absolute number of layoffs? How does the absolute size of a company get factored in?

I think the fact that so many CEOs got it wrong is actually an argument for why the shouldn't be fired.

If one or two CEOs got it wrong, you could argue that they were incompetent, ignorant, or greedy and they should have been better informed because plenty of other CEOs were. Everyone getting something wrong says to me that the failure wasn't down to individual mistakes and there was something larger at play.

If your CEO is a lemming, they are not capable of leading a company. They should be fired.

If you want to see a real leader, look at Tim Cook. He made decisions based specifically on where the company is, where it's going, and already factored in external factors (such as the pandemic growth). Contrast this to dozens of other "CEO"s who made a horrible decision hastily, executed layoffs horribly wrong, and then vaguely blamed a pandemic. The exact same lazy gameplan because these CEOs cannot lead, might as well replace them with chatgpt, maybe they'll write better layoff emails.

As a reminder, the CEOs core role is to steer the company. When that ship slams into an iceberg, you have failed your core role. What happens when workers fail their core role?

why would a company like apple need to hire more people because of covid though?

Why would Meta have needed to either though? Or really Alphabet, Microsoft, Twitter, or a bunch of other companies? Maybe a handful more people to deal with scaling issues on products specific to pandemic needs, but the pandemic was always going to be temporary. They hired heavily in excess of just pandemic related concerns, it was more about expecting a paradigm shift. (Even now they almost all have substantially more people than before the pandemic though ,so you could argue it is less an error of type and more an error of magnitude)

I can appreciate your point, but you have to also consider that a characteristic of Apple is the sheer size of the business. Apple can afford to be more conservative with their business plans because they can weather storms more readily.

If Apple failed to plan for a huge economic event that let competitors gain some ground, they can survive that misstep because they have such a huge moat. Conversely, if Apple did over-hire, they can also survive that climate due to their size and stay the course while others falter.

If you're captaining an ocean liner (Apple) you don't worry too much about 5-10' seas and 10 knots of wind. If you're captaining a 50' yacht (eg. all the mid-sized SaaS businesses announcing layoffs) you definitely pay attention to that sea state.

But it's not just mid-sized SaaS - Google, Microsoft, Facebook are also _massive_. So this feels like a spurious argument.

I think that's a bad take. Tim Cook is arguably the best CEO out there right now. Saying all CEOs should just do what Tim Cook did is like saying all swimmers should just be more like Michael Phelps.

> When that ship slams into an iceberg, you have failed your core role.

I agree with your line of thinking, but I don't think any of these companies failed in their core role. Looking at the FAANG companies, stock prices are down a bit, but none of these companies are on the verge of collapse and all are still market leaders in their respective areas.

Hell, for all we know, this could have been the plan all along. Hire a bunch of people while interest rates are low and let them all go when interest rates go back up. I realize that layoffs are not a good thing and they affect real people, but the reality is that they are not a sign that a CEO is failing in their core role.

> What happens when workers fail their core role?

It depends... If I've got one employee on my team who continually fucks up our deploy process causing outages. Yeah, they probably need to be fired. If every developer on my team fucks up our deploy process causing outages, then issue is probably that our deploy process is bad and firing people isn't going to fix anything.

Which brings me back to my original point.

The consequences of all swimmers not being like Michael Phelps are significantly lesser than the CEO example to the point that I don't think this comparison could ever be a fit one. If a swimmer swims more slowly, big deal, nobody cares. If a CEO makes bad decisions people's lives can be uprooted. There's a key difference here.

> If a swimmer swims more slowly, big deal, nobody cares. If a CEO makes bad decisions people's lives can be uprooted. There's a key difference here.

You've completely missed the point of my analogy. If you compare everyone else the the person who is the best in the category, then everyone else will pale in comparison. Using "You're not as good as The Best" as a reason to fire someone is stupid since there's only one person who can live up to that bar.

I absolutely did not miss your point. I don't think everyone needs to be the same as the "best". I do think that when we operate an economic system we need to have a certain level of quality in important positions-- one that has not been met. This isn't a game and our lives hold more weight than a swimming competition.

I'd much rather eliminate scarcity and the need for people to have a job to provide their basic needs. Accomplishing that is even more difficult though

All of the C-suite MBAs got hooked on the same meme. That's why monoculture is dangerous.

Or maybe there just wasn't enough information to make an informed decision and the safest thing to do in that situation is just stay with the pack.

It's like if someone asked you to open a car dealership in a town you knew nothing about. The safest thing to do is just pick the area where all the other dealerships already are. You don't gain a competitive from doing that, but you also ensure they don't either.

It's not the ideal strategy, but doing what everyone else is doing so you don't fall behind makes the most sense some times.

Wasn't the subprime mortgage crisis similarly caused by an entire industry engaging in practices simply because "that's what everyone else is doing"? Wasn't the irrational exuberance of the dot-com bubble also propped up by groupthink? Why can't bad decisions be called out for what they are and not be excused as rational economic behavior?

> Why can't bad decisions be called out for what they are and not be excused as rational economic behavior?

My point is that we only know it was a bad decision after the fact.

The economy is incredibly complex and anyone who tells you they can consistently predict what comes next is lying to you or lying to themselves. Even experts who dedicate their lives to studying economics get things wrong regularly. Calling for a CEOs head because they failed to predict something that pretty much everyone of their competitors also got wrong seems stupid.

To be fair, I think the culpability of CEOs has to be balanced with the corporate boards that appoint them and give them direction, and the major activist shareholders who were the ones who gave them marching orders to the tune of unrealistic growth targets into a volatile skewed economic situation in the first place.

But the point is when everyone gets something wrong, there should be time for at least reflection and steps to remediate such a mistake from happening again in the future. Just saying the "economy is complex" is no excuse. If anything, it is defeatism.

> there should be time for at least reflection and steps to remediate such a mistake from happening again in the future

I agree with you there, but when almost the entire industry got something wrong, I don't firing your CEO does anything to prevent that mistake from happening again. If you ask yourself, would it be reasonable to believe another person would have done better in this situation, I don't think the answer can be "yes" when pretty much everyone got it wrong.

Maybe the shareholders should stop and reflect upon whether their expectations of exponential growth, even in a booming market, especially in a booming market propped up by abnormal conditions, are reasonable. Because sure they lose money but they're not losing their jobs.

I could see an argument for locally rational in the same way that no one gets fired for using IBM, but it's usually pretty clear to the lower level employees that something isn't right. Middle management and lower level employees all knew the economy was messed up, it's hard for me to conclude that the C*O's don't rationally know the same thing.

> You don't gain a competitive from doing that, but you also ensure they don't either.

In fact, you may gain a competitive advantage from doing the opposite of the herd if the herd is about to run off a cliff.

> collective failure for which they should lose their jobs, as many other people do.

Only bad companies fire people for taking risks and failing. Good companies reward that behavior if the risk was reasonable and the learnings were positive. They fire people who take unnecessary risk.

Hiring into the pandemic was a good risk in my opinion.

Why was it a good risk? The writing on the wall that tech was overinflated, that TC was insane, that the money printing was going to have a severe correction eventually. It should have been common wisdom that it was a temporary state of affairs because the growth in tech was not built on irreversible trends. Lockdown would end eventually. All of those food delivery apps, at the very least, could not expect exponential growth once restaurants opened again.

> The writing on the wall that tech was overinflated, that TC was insane, that the money printing was going to have a severe correction eventually.

Sure, and then you lay people off when that correction comes in. In the meantime you're hiring the best people and having them do great work. And when they layoffs come, maybe some of them stay.

> All of those food delivery apps, at the very least, could not expect exponential growth once restaurants opened again.

Sure, but if they didn't build market share during the pandemic, they would never catch up afterwards.

When the market is on fire, you need to ride the rocket. You always know that you have layoffs in your back pocket for when the market cools.

It's not like these layoffs should be a surprise to anyone -- it happens after every hot market. Sure it absolutely sucks for those that are affected by it, I know because it happened to me in 2001. Barely got through it. But it's not a big surprise.

It is a big surprise because tech was in its own superheated bubble for about fifteen years ago and human beings have short memories. So perhaps that's why Warren Buffett's dictum of being fearful when others are greedy is so important to remember, even in greedy times.

But 1) it seems rather disingenuous for companies to posture one way and then pull the rug under their workforce who are being sacrificed in the name of a cooling market, and 2) perhaps companies should consider other ways to pursue profitability without massive layoff sprees?

I'm seeing a lot of this "screw up = get fired" narrative lately and I think it's a bit ironic.

Talk about screwing up in engineering contexts and suddenly the tune changes: now people will talk about improving processes, blameless postmortems, and how the individual is not at fault.

Imagine a youtuber saying googlers should be fired because some decision was made that affected the youtuber's income negatively. Or imagine an Uber driver saying that. Or a small business owner dealing w/ a Stripe mishap or whatever. If you are the one being targeted by these calls for loss of employment, then comes out the "I'm not the responsible person here" card.

So on the one hand, you hear people with pitchforks about how CEOs or whoever need to take responsibility in some movie-esque "bad guy ending" fashion, but turn the tables and nobody wants to step up to be responsible for their own shit shows.

Even if we entertain the idea of firing CEOs, is the implicit assumption that companies can run fine without one? By that logic, anyone could just give a bunch of money to a bunch of fiverr code monkeys and that business would run just fine? I don't really get what the logical conclusion of this whole line of argument is supposed to be.

Executives should be held personally responsible for kinds of things that low-level employees aren't. That's why executives get paid so much more.

Do you want execs that never take risks and simply milk cash cows until they die?

Do you want golden parachutes?

This is how you get these.

If we don't let them be bad in the job in one way, they'll be bad in the job in another way, therefore why bother.

I reject these defeatist attitudes and question the engineering skills of anyone who thinks this way.

It is always better to try something. Human created systems are inherently problematic and do not fix themselves.

The dream is to engineer a system that does not have faults.

Have you ever tried personally? Because it’s a hell of a lesson.

I get the sense that when it comes to innovations in organizing and leadership, there is very little solid innovation. We’re pretty much working with the same dictatorial hierarchy that has existed since forever.

Some exceptions are perhaps Valve. Most other companies try to make a change at the margins and even that is heralded as a great innovation but generally fails to get adopted widely.

That's exactly where every single big corporation goes to: risk-averse and being milked as cash cows. Being a corpse in the way of others.

So why not speed up the process and at least cut the suffering from thousands of lives and skip the step when those risk-takers inevitably fuck up and overhire? Let all companies be boring cash cows after the initial stage, might even improve innovation from smaller players.

I vote for punish the CEOs.

Yeah it’s a bit silly to push workers at a Big Tech behemoth to work like they’re at a startup. This is completely delusional and leaders who propose these things should get fired.

Ok, then fire them from not improving quarterly expectations. Seriously -- this is a real functional system that can work. You're acting like C-level accountability is an edgy suggestion. It very much isn't.

That happens all the time.

I suspect people would be more sympathetic to the plight of CEOs if they didn't make hundreds or thousands of times as much money as everyone else, even and perhaps _especially_ when they commit random acts of economic violence on their staff.

> now people will talk about improving processes, blameless postmortems, and how the individual is not at fault.

That makes me wonder why investors, particularly activist shareholders who drive the direction of boards, are never under scrutiny. Maybe their decisions to chase unrealistic growth, which forces the hands of CEOs and lesser executives, should also be reviewed. Maybe they should be somehow penalized or sanctioned for driving companies towards failure. Shouldn't a massive event like mass layoffs trigger a change in corporate boards? Why shouldn't responsibility go all the way to the top, why stop at the CEO level?

The investors you refer to typically manage money on behalf of their investors and are actually under constant scrutiny. If they run mutual funds, their performance is measured every day, and if they underperform for a number of quarters in a row, their investors will absolutely “fire” them by withdrawing money from their funds.

Then sounds like their incentives are inherently not conducive to the business of running businesses built on reasonable growth, and causes them to fall prey to the groupthink of expecting unrealistic macro environments to continue indefinitely.

Their role is not to run businesses. Their role is to allocate capital while weathering the macroeconomic environment to create returns.

Sometimes the best way to do that is to invest in a business, other times it’s to buy other assets, and other times cash is king.

Lastly, they are only involved because the shareholders of said companies involved them. Going public is not mandatory.

When you've been subjected to decades of drivel asserting loudly and repeatedly that the reason CEOs get paid big money is specifically because they are the ones who hold the responsibility for screwups like this, you start to think that maybe they should actually be held accountable, just like they say they deserve.

When an individual engineer screws up, if the processes in place are working correctly, that screwup should only cost some time and possibly a bit of money—most likely within an order of magnitude of a few days and $100. This is why we have processes in place: because people are fallible, and it's not good to give any one person that much power.

When a CEO screws up, there's no one to catch that screwup. The buck stops there. So many of these companies are structured specifically to give the CEO some significant degree of autocratic power—the power to say "this is what we will be doing, because I say so", whether or not they have other justifications backing them up—and now that we're saying, "Hey, that kind of power is supposed to come with accountability," you try to tell us they shouldn't?

As for "companies can run fine without one," I'd say that's a very useful hypothesis to test. But your strawman of "give a bunch of money to people on fiverr" isn't the logical way to test it: it's "set up a system with democratic processes in place, create a management committee, possibly with a rotating chairship, and in general give the employees more say over the direction of the company they work for".

> create a management committee, possibly with a rotating chairship, and in general give the employees more say over the direction of the company they work for".

this sounds very similar to a government where politicians are elected (un)fairly. likely, this just presents another set of trade-offs.

Whenever you have to make decisions involving multiple humans, tradeoffs are pretty much a guarantee.

However, over the past few hundred years, we've been gradually coming to the collective conclusion that autocracy is inferior to democracy for systems involving larger numbers of people and decisions of larger stakes.

I don't see why that should apply any less to replacing the hierarchical model of companies, where a CEO can walk into any room and say "You're fired," with a (more-)democratic system, than it did to replacing kingdoms, where a king could walk into any room and say "Off with your head," with a representative democracy.

It's a very different situation. In a country you cannot escape the king, he will be the absolute ruler until he dies. Since there was no escape eventually they were replaced with democracy. You can willingly leave a corporation at anytime you want. Autocracy have an advantage over democracy when it comes to speed of change. Sometimes it's good change (progress) and sometimes it's bad change (i.e. over-hiring). Large corporations that become democratic will lose the ability to react quickly. In order for such companies to survive, the environment must remain consistent (no competition, no new technology).

You can willingly leave a corporation the same way you could willingly leave a kingdom: easily if you're rich, and with great effort and danger if you're not.

> Large corporations that become democratic will lose the ability to react quickly.

Not really clear that corporations that stay autocratic do much better. As with kingdoms that turn into sprawling empires, all you're left is a bunch of middle management petty kings who the CEO-emperor delegates power to, who might not be much better. Bureaucratic rot sets in.

now people will talk about improving processes, blameless postmortems, and how the individual is not at fault.

I’ve seen lots of public post mortems for engineering screw ups. Can you point me to a Fortune 500 public post mortem for a bad acquisition or something else CEO driven?

Earnings calls are post mortems for the performance of the previous quarter. A post mortem itself is just an analysis, it doesn't even have to be about a screw up. Screw ups are something else. When you think about cases like WeWork or Theranos, then I think we get into more familiar territory: gross negligence is a widely acceptable reason for firing, no matter if you're the CEO, Joe developer or a janitor.

An operational mistake by a SWE might be something like picking the wrong technology, and for a CEO, an operational mistake might be something like a bad acquisition. Just as a technology is a tool for the dev, an acquisition is a tool for the CEO. Both of these are examples of getting bad outcomes from their tool usage decisions, but they're still categorically operational mistakes, as opposed to gross misconduct.

So my two cents is that if one wants to argue that operational mistakes categorically warrant firing personnel, then yeah, I think I'm gonna have a problem with that line of thinking.

Earnings calls are post mortems for the performance of the previous quarter. A post mortem itself is just an analysis, it doesn't even have to be about a screw up.

This is bullshit. An earnings call is nothing like an engineering post mortem for an outage. There’s zero introspection or root causing.

It’s typical Silicon Valley style hypocrisy, where founders and CEOs claim there’s a certain company culture but never walk the walk themselves.

Give me a NY bank any day. At least they aren’t constantly blowing smoke up employees’ asses. Everyone knows the score.

> There’s zero introspection or root causing

You mean unlike the Experian breach post mortem, or the numerous "everything is green" Slack outages? IMHO, Costco talking about container costs is introspection. I'll grant that taking analogies too literally does indeed lead one to conclude the other party's arguments are bullshit, but I think that's just a matter of perspective and unwillingness to engage in good faith discussions.

So far as I'm aware blameless postmortems don't really exist for project level failures. If I propose a new system, say a new load balancing scheme, it staffed and built and then is a failure as a system I am actually going to get blamed for that failure.

The same is true for directors and CEOs.

In theory Pichai took the blame but in practice that means nothing. On the one hand there were no job repercussions, on the other there was no attempt to break down the factors that lead to the errors and discuss what changes would be made to prevent similar errors. So not blameless or blamefull, nothing at all.

Another variable to consider: the 2020 - 2022 market was rewarding growth (as opposed to profitability or being cash-flow positive). The Corporate loan interest rate was practically 0%. Companies which could show growth, even at the expense of lighting cash on fire, were rewarded as far as the stock market is concerned. CEOs are expected to bias towards shareholder value, lest they be replaced by someone who will. And so, with these variables in play, many took the decision to rapidly expand their operations (costs) in any way that produced marginal growth. They lived and died by their ability to, on each quarterly earnings call, share the message of QoQ and YoY growth. For many companies this required rapid hiring.

The market now is demanding flesh and CEOs are either expected to provide it, or else get fired. Just like in the former time period, they would get fired had they not shown growth. I personally do not think a CEO should be fired now for having to hire employees, when they would have been fired in the first place had they not rapidly hired.

they are accountable to shareholders not employees. This it is up to shareholders to decide whether CEO they employ failed or not.

How did they fail? The spent 1 year salary times 15,000 people times $333,333/man-year. So $5 billion. That's a pretty big cost. On the other hand, it was a hedge against losing significant opportunities/market share. The question is "was it a good bet".

Exactly. Just because they ended up reducing headcount doesn't mean they failed.

Success isn't measured from the employee perspective.

Everyone here calling for their heads is using the wrong measuring stick.

It's also a success from the employee perspective. Those people got FAANG salaries for a year when they shouldn't have been hired.

It is a very odd discussion to have since, even when running a company well, no public company should be compensating its CEO to the tune of even 1 million a year. It is absolutely a ruling class leeching off society that this happens. It doesn't happen everywhere or even in america in the past, big companies can be run without this behavior. It isn't supply and demand, it is cronyism.

Should a CEO be allowed to get calls wrong, sure. Should they get paid 200 million when they do? No. Should they get paid 200 million ever? No.

Shareholders should be suing every company that does this until it stops, imho.

Isn't it up to the shareholders to decide this?

It's mostly up to the boards' compensation committees. The board members are mostly C-suite themselves in their day jobs. Go figure. The power of the majority of shareholders is diffuse, except for large funds and activists: decision makers in both groups tend to be from the same high-compensation executive in-group - so they will not rock the boat.

You are replying to someone who is saying "I don't think it's good that things are this way" with "things are this way". I hate these kinds of comments. The other guy knows how it's not up to him to make this decision. That doesn't mean he shouldn't voice his opinion.

Shareholders gain by these moves too. Individually they gain less than the CEO, but they'll simp for them as long as it pays out. The free-market cannot control/contain these outsized compensations. Regulation/taxes would do a little better. Especially if USA returns to high-taxes on income/wealth.

Some ICs/devs make 1 mil a year

Your argument is nonsense unless you can explain why you pick your cutoff point at $200 million.

Plenty of people in the USA would argue that $200k is a bad number: those overpaid software developers with their share incentives need to be stopped /s. Shareholders should revolt against those rich software developers?

> It is absolutely a ruling class leeching off society that this happens

I mean, the same argument can be made for US tech companies leeching off the world (or just leeching off USA citizens if you wish to be parochial).

A relevant simple thought experiment: what would you do if you won lotto?

> Shareholders should revolt against those rich software developers?

Of course they should. Hiring a few, strategic, expert developers at those rates might make sense. However, paying 200k+ for a newly graduated student with no experience should have been questioned firmly.

Yes, it would be much better for inequality if everyone's salaries were low and the trillions of value created in tech to go to a couple VCs, their LPs and their trust fund kids.

Some of that goes to workers with vested options too plus 401k and pension investors as well. Also, we are not talking about low salaries with the FAANG companies; the rest of the industry gets paid much less and noone is crying a river for them.

Maybe that newly graduated student provides more than 200k in value?

Ok, but did the company have to pay that much to get that same value? I saved a company from losing a $5 million dollar sale when I was 6 months out of university, but should I have received $5 million for my value? Plenty of other people could have accomplished the same thing.

Who are you to say what the company thinks is fair pay?

Aw thanks for asking. I am the all-knowing oracle of fair pay, but you can call me cudgy.

And yet Steve Jobs transformed Apple from 90 days to bankruptcy to the biggest company in the world. Was he worth $200 million in compensation? Hell yeah. Because he is responsible for that wealth creation.

This kind of turnaround also happened at Barnes & Noble, all due to one man - the CEO, James Daunt.

https://tedgioia.substack.com/p/what-can-we-learn-from-barne...

CEOs get paid a lot because they are crucial to the success (or failure) of a company. Yes, they did build it.

But even poorly performing CEOs get paid 100s of millions. Why?

Because they have a track record in the past of making highly profitable decisions. If you have a track record of doing a great job, you get a high salary offer. If you do a bad job at your new job, you still get paid the high salary.

Why do middle of the road quaterbacks get paid $35 million a year?

Yes, the poor shareholders that don't work for their money should be given more of it. Tim Cook doesn't deserve any of the $2T value Apple created during his tenure... it should go to the trust fund kids.

Instead of complaining about executives earning so much, why don't we find ways for you and I to emulate their bargaining power instead?

Do professional athletes and entertainers next.

Shareholders can sell there stock and I'm sure many did - that's how they send a message that they don't like the path leaders are on. Shareholders buy/hold/sell stock knowing the contractual obligations. As a shareholder, albeit a tiny one, I don't see how I'm harmed.

When you say CEO compensation isn't tied to supply and demand, what data do have to support that? We pay football/basketball/baseball players well more than 1M dollars. Do you think the impact between a good and mediocre CEO for a large company is less than 1M? Even tiny drops in performance due to decisions at the CEO level would cost millions at the biggest companies. As companies scale larger, bad decisions will cost more and more. I think a rationale case can be made that many of these CEOs are generating more value than they cost in compensation.

It's truly insane to see. HN has been filled, for the last decade, with stories and advice about hopping jobs every two years to garner 20-40% pay increases, completely oblivious to the bubble that was SO OBVIOUS to some of us. Armies of self-interested careerist strivers doing everything imaginable to optimize their income, in the midst of the biggest tech bubble since 1999, giving precisely zero fucks about the impact their actions had on either their employer, or on broader society (morally disgusting adtech and social media platforms work in particular).

And now these same people have the audacity to bitch that the very employers they've been strategically milking with their Machiavellian labor market plays would realize their mistake.

No. Full stop. To these people I say:

You've been paid $300-400k in total comp for a decade to build platforms that have DEGRADED the society we live in. You have extracted maximum rents from a job market that favored you, to provide NEGATIVE value to society, all while looking down your nose at lowly plumbers, carpenters, and those subhumans in flyover country who grow your food, mine your copper, and produce your electricity. Now the job market no longer favors you, and you, of course, regard this as the fault of everyone else. Fuck off. Fuck right off, right now.

That’s fine and all and I agree about CEOs reacting and needing to be ahead of the curve but when they do fail they still get the golden parachute and I still get the “we’ll write you a good letter of recommendation”.

This is the measured take.

What happens if the COVID lockdown demand surge happens and companies don’t hire?

Customers don’t get what they want. Businesses that want to move online can’t or have a worse experience. The companies themselves are under-resourced for the actual demand and can’t invest in the future of their business because they’re struggling to keep the lights on.

I understand people are pissed about layoffs. Entirely reasonable, and as someone laid off I can empathize. But at the same time, COVID was kind of a black swan event. No one know what would happen and companies made their best guesses. Many were wrong! And that’s fine.

For public companies, there was public information about their strategies and the bets they were taking. For private companies, it probably depends on what they’d share during hiring. I knew going into Stripe in January 2022 what their bets were, my confidence level in leadership, and my personal risk tolerance for an uncertain future.

We shouldn’t be ripping companies apart when they’re wrong. At least not with over-hiring that had a plausible justification behind it. I don’t want to work for a CEO who doesn’t take risks. I don’t believe that’s better for the world.

Why hire and not use contractors.

I'm not sure how "farm this out to the 1099's" is a solution to this problem. You're shedding the expense either way, and the same group of people who are frustrated about the layoffs now are also frustrated at organizations who find loopholes to use "contractors" instead of "employees" to avoid benefits, taxes, etc.

But, the bigger issue is, knowing that you should give this to contractors would have required the same foresight that would lead to you not hiring anyway. In other words, if you knew enough to know that you shouldn't hire full time people because you might lay them off, then you probably knew enough to not do this in the first place...so you wouldn't have to let anyone go.

The bets were long-term.

Agreed. I'm all in favor of holding CEOs accountable for bad decisions, as we've all seen companies' value (both real and stock) destroyed due to idiotic short-sighted management decisions, only for them to insanely well compensated. But that's not what this is. They made reasonable decisions based on the information they had, and then markets changed.

I think where this is really stemming from is that these market swings hurt people, and those being hurt feel the CEO should share in that. And there is merit to that argument, that austerity measures should impact CEOs and upper management just like they do the lower ranks, regardless of fault. These people are in a better financial position to weather the swings. Their compensation has a lot more margin or "fat" to cut into before it becomes painful, and thus can save a number of jobs that might otherwise have to be cut. Most importantly it shows solidarity with the workforce. It makes it feel more like this is an external event that is happening to us, not something that the CEO is inflicting on the staff.

I just hate the CEO's saying "I take full responsibility for what happened"

I call bullshit. If you did you'd quit in shame.

If the bar for asking a CEO to quit is "you did not correctly predict the future" then we're going to have to ask most CEOs to quit at some point. And most employees for that matter.

The issue I have is with broad strokes generalizations that layoffs indicate a failure of a CEO. They don't necessarily mean that. Any more than shipping a bug to production indicates a failure of an engineer who should now be fired. Similarly, not laying people off is not an indicator of success. Nor is not shipping a bug to production.

The question is not "can we predict the future," but rather "did we do the right things to capture the right data to make the best decision" and if the answer to that question is yes - then any other reasonable person in the same position would likely have made a similar (if not the same) choice, and it's not clear what firing anyone does besides being punitive. Again, same for any employee that makes a mistake. This is not me giving a free pass to CEOs.

The CEO job is to choose the best prediction of the future from those available to them, and make sure the company executes on it. So yes, that's the bar.

But as you just said, it's to make the _best_ prediction of the future based on those available, not necessarily the right one. You hope that over time of making enough educated bets, enough pan out correct for overall company success. Companies are often wrong about many (perhaps most) things. They're just right often enough to keep succeeding.

As the markets clearly priced in during the pandemic, this was the best prediction of the future. As measured not just by the CEO, but the response of consumers and the public markets. You would be hard-pressed, without the benefit of today's hindsight, to make a reasonable argument for why this wasn't the right decision to make based on the data in front of you.

Apple's CEO made the right decision, (Alphabet|Meta|Salesforce)'s CEOs did not.

I think it's reasonable to argue that Apple's CEO made the better decision, as opposed to the "obvious" one.

And they're paid handsomely to get it right, when it matters most. We pay them enough to comfortably retire when they get it wrong.

To get it right, even when there's a cost to themselves. Consider Parag Agrawal, who took and push for a decision most beneficial to most then-current shareholders, even when it was clear to all that he won't be CEO because of it.

If you think the CEO is making bad decisions, you should fire then before the decision, not based on the outcome.

>If the bar for asking a CEO to quit is "you did not correctly predict the future" then we're going to have to ask most CEOs to quit at some point. And most employees for that matter.

Fine. But that’s not the CEO “taking responsibility”, it’s the employees who fall on the sword who take responsibility.

If I build your house out of wood and it burns down, and I say I will “take responsibility” while doing nothing while you have to buy a new house, I’m not really taking responsibility am I?

> If the bar for asking a CEO to quit is "you did not correctly predict the future" then we're going to have to ask most CEOs to quit at some point. And most employees for that matter.

I think level of responsibility for CEO should be different compared to regular employees. They get paid fuck you money and never need to work again afterwards.

There was a thread about google layoffs recently where people discussed L9s being laid off and how such people are expected to "redefine the industry" every year and walk on water in general. Yet, somehow the responsibility that seems to increase exponentially with level goes to almost junior level "oopsie couldn't predict what would happen after covid when free money stop flowing, no biggie I guess, let's just fire all these people we have hired during previous two years" for execs. It seems that the only way for them to get fired is if one of employees they sexually harassed talks and even then they get golden parachute.

I thought what they meant was just "you are laid off not because you had performed poorly". Of course, it is still the CEO's decision to over-hire, but the parent suggested that over-hiring was not CEO's fault either, but a necessary move to capture the additional growth.

Again it's the statement like they some how lost something.

Now if they hired those people by saying "well he hire for the quarter so you know bad quarter your probably gone."

No they made big statements about how they hire for the long term.

And return the money you earned to be spend for good of the company...

Stepping back from any emotional assessment, the growth of these businesses was not commensurate with the hiring. You can look at both the financial reporting and the economic indicators from that period and a reasonable measure of growth was warranted but not at the level these companies [edited from "comments"] hired at. It was more of an irrational tragedy of the commons, where companies were hiring because they were afraid of losing access to talent due to other company's hiring. It was not rational through the lens of business growth.

This is an interesting take, and on the surface I'd buy this. I think the assessment from many companies was "we're hiring because of where the world is clearly going" (ecom sustains a 20% lift overnight, healthcare sees a 37x increase in telemedicine use, etc), but perhaps a lot of this was just "we want the talent because other people want the talent."

I'll definitely dig into this take further!

Just saw this today and it bears out this out a bit more:

https://news.ycombinator.com/item?id=34740322

Those companies expected a major societal event to become the new normal without strong data to support it, and chased growth that was not going to be sustained.

> there's a surprising amount of comments here that seem to not understand that growing companies don't hire for today, but for where they want to be tomorrow

This can be simplified to market reading. People in finance get fired for getting this wrong all the time. Michael Burry was told investors lacked confidence in his ability to read markets and was on the brink of divestiture during his short.

I think it's fair to say that's what we pay CEOs the big bucks to do, and if they fail to do it it's fair we ask for ramifications. I'm more startled by the comments who would like to preserve someone who makes millions, is already set for life, and often displays an inability to relate to the front line workers they're supposed to represent.

Was it rational given the information we had at the time to think we would sustain that kind of rapid growth, the public health emergency wouldn't end, we wouldn't get inflation from the supply chain issues and the money printing?

To be clear, in my original post I'm not making a stance on whether I think CEOs should have made the particular calls they did or not.

If you want my opinion, though, it's easy with the benefit of hindsight to say they shouldn't have. But some industries were, in fact, thrown several years into the future and there wasn't a compelling reason at that time to assume they'd just fall back as things returned to normal. Others should probably have reasonably expected growth to slow down (or reverse) as people could get out in the world again. I don't think there's one broad answer to the market overall.

Frankly, it's a little odd to me that we would expect companies to just be able to weather whatever the economy throws at them with no changes needed. Companies fail. They grow, they then shed headcount. Sometimes its right, sometimes its wrong. But I'm not sure how we could ever live in a society where there could be a complete upheaval to entire industries over a single quarter, and then again 2 years later back in the other direction, and everyone trucks on like nothing happened.

The fear of another company outspending you out of business in the interim could also be a factor, so… maybe?

Outspending alone is not sufficient though. I prefer a “pull” model for hiring: hire gradually as more people are needed.

What is the cost benefit for acting or not acting? Everybody seems to be treating this as a binary decision which it is not.

When running a business, it can be entirely reasonable to invest in something you think is unlikely to actually happen if the potential reward times the low chance is greater than the cost.

If you strip away all the bad armchair economics, I think what people are really upset about is the idea that gambling with people's jobs is an acceptable cost.

I think this sums it up perfectly. Companies are wrong all the time. They kill product lines, often times even shed customer revenue, to avoid having to further invest in a space that doesn't make sense.

The real question is "should we tolerate shedding jobs" and it's an interesting question. Without stating a personal opinion on the matter, it's interesting to think about how drastically this would shift the economic structure of the nation if the answer was "no"

> In other words, when COVID hit and tech companies saw large surges because investors and CEOs saw industries leaping 5-10 years into the future overnight, they hired to support that growth. As the market has shifted and inflation combined with an end to the public health emergency has tempered growth expectations, investors and CEOs cut head count to match.

I guess the question is whether leadership could have anticipated a retraction of the economy just a few years later. But this made me think of another question. How much job security can we reasonably expect in the first place? If we want jobs to be secure, then that needs to be legislated or people need to unionize (and take the pay cut). I'm aware that I have no say in how the business is run and I can basically be let go either anytime or within a short time and I need to prepare myself for that.

> growing companies don't hire for today, but for where they want to be tomorrow

If this were true, should not companies hire now, thinking long term, like Google did in the last crisis circa 2008?

It looks like most companies hire or fire not for today, but for next quarter.

My take? They hope these actions show that they can lead “strongly” through times of “adversity” and make “tough decisions”. And in doing so, hope the stock market will reward them for it.

They are not doing the strategic long-term thinking here but optimize for short-term results.

> when COVID hit and tech companies saw large surges

This sounds like what you said it wasnt, "hiring for today."

Yes, changes happened today which impacted expectations of the future. Of course this should be fairly clear. All of our perception about what will happen in the future is informed on events that have already happened or are happening now. There's no other information to base it on.

It's not like Google/Meta/Microsoft were barely hanging on by a thread just able to get through their core workload before COVID hit. They didn't need another 10,000 employees to get through today. They needed (or, incorrectly, thought they did) them to support where the business would be going in the years ahead.

> inflation combined with an end to the public health emergency has tempered growth expectations

You don't need to be paid a +$200M salary to know that pandemics end.

Nobody was debating whether the pandemic would end. The only debate was whether industries would snap back to operating how they did before, or if they changes would sustain. And the reality is that there was no correct answer for all industries. Some are permanently (or at least well beyond the end of the PHE) changed by this. Others went back.

But when you post insane profits and still laying off people? come on. good luck hiring people next time your looking for people.

It's FAANG companies who are firing, not your local webdev agency.

As soon as they start looking for people and offering salaries starting at 150k, tens of thousands will jump straight in.

maybe. maybe not.

I imagine one of the selling points of recruiters was we haven't had layoffs.

> saw industries leaping 5-10 years into the future overnight, they hired to support that growth

This is the kicker for me. C-levels assuming that a once-in-a-lifetime pandemic leading to online growth would sustain for the next decade. They should make 10Y plans, not 1Q based ones.

And not just c-levels, but the shareholders influencing their decisions.

What you’re missing here is that it’s their job to be correct.

Covid was, perhaps, unpredictable but the end of Covid wasn’t.

Of course, accurately predicting the future is very difficult but these are the highest paid people in the entire world. They should be able to do very difficult things to dramatically help their businesses, that’s why they make the big bucks. If they aren’t performing they should be replaced by someone better. Otherwise what we have is cronyism and not capitalism.

None of this addresses the responsibility part.

Who holds the ceo responsible? The board. If the board themselves would have made the same hiring calls, it's unlikely they could fault the ceo for making those calls as well.

By extension -- who doesn't hold the ceo responsible? The court of public opinion, which is what all of these comments and articles spilling barrels of ink on this issue think should be the case, but is not actually the case (and for obviously good reasons). A company is not a democracy (again, for obviously good reasons).

Who holds you responsible for your actions?... For me personally, I don't have a board of directors I can deflect to. I self regulate.

But they operate in a democracy, and part of a healthy democracy is having policy debates in public, exactly like this.

Sure, not going to argue with that.

On the other hand, these debates seem quite one sided. The boards of these companies aren't firing their CEOs. Why aren't any of the op-ed authors curious enough to ask about this? This author literally links to another one of his own op-eds in order to dismiss any such arguments about whether or not this is pertinent! They've clearly already made up their minds on this point.

Or is the real point not to have a debate, but to get people riled up and indignant about something that will always have bad optics (even when it's necessary)?

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