Hacker News Reader

Comment by hn_throwaway_99 | Hacker News Reader

This feels like another semantic argument, this time over what "macroeconomic environment is tough" means.

You are correct in everything you say in your first paragraph. That said, it's fair to say that "sharply rising interest rates" are also part of the macroeconomic environment. You can say that it was silly for all these tech companies and investors to think the free money spigot would go on for so long, but the key driver for all of the fall in tech company valuations and employment levels is rising interest rates.

> If there are problems, they are Gitlab problems, not macroeconomic problems.

Yet literally every big tech company I can think of has had similar levels of layoffs. If these were Gitlab-specific problems you wouldn't expect the slowdowns and layoffs to hit everyone.

View on HN

It isn't every big company. Apple hasn't, and they're the biggest of all.

I think that is the point: it does not feel accurate to say that "macroeconomic conditions are tough" or that you expect slowdowns while recording record levels of revenue, and yet company after company after company is using these imaginary tough headwinds to justify laying off 6-8% of staff, often while paying dividends or issuing stock buy-backs.

If it really is rising interest rates, then be honest. Say "due to rising interest rates, we are going to lay off 7% of staff... while buying back stock using our record profits."

Apple isn't the best example. For instance their Safari development team is already severely underfunded, there is barely anyone to fire.

Or maybe Apple is a great example because they've resisted over-hiring in the fat times, so don't have to trim in the lean times.

Or maybe all these layoffs wouldn't be a problem if we in the US had a government that supported people more reliably with wages and affordable health insurance for a decent duration after a layoff.

Over hiring then laying some off shouldn't be a catastrophe in tech.

I also think people would have less issue with these layoffs if CEOs didn't make it sound like a short term critical business decision while being worth hundreds of millions of dollars.

I agree with you, but all else being equal, layoffs are stressful and... while I would prefer that companies have the flexibility to do so paired with a social safety net to lessen the impact, there's also an argument for employers who don't just plug in and then discard people like "resources".

That Apple doesn't agree with you on development priorities for Safari does not mean the Safari dev team is severely underfunded.

They could be, or not. They seem to issue a preview release every two weeks or so[0], so they are clearly making progress on something.

0. https://webkit.org/blog/

That's a long-term strategy to encourage native development and keep people in the app store.

Yesterday, Gitlab hadn't had a layoff.

While Apple did have a much smaller increase in headcount over the last few years, I wouldn't use Apple as an example while we're still in the midst of everything. In December, people were touting Google as an example of one of the layoff-proof companies. I didn't trust that logic, and I don't trust the logic that Apple is somehow immune when they're so closely tied into the tech industry. For example, I'm theorizing that a non-trivial part of their profits comes from supporting the developer ecosystem (who else buys max-spec Macs at scale?). Regardless of the underlying reason, mass layoffs and tightened budgets are going to dry up B2B profit streams.

To me, complaining about the reasoning used by companies while not currently at the head of such a company feels pretty darn foolish. You just don't have the numbers at hands to qualify what they are saying.

And I don't understand why you would care about layoffs from the tech industry (of all people) anyway, it's one of the best industry today and will probably for a while still (forever?). Maybe one of those engineers can help his local tech shop instead.

Pretty bad argument when we in fact do have many of the numbers for public companies and those numbers show growing revenue and record profits...

I'm not an accounting nor a forecasting expert, but I'm comfortable theorizing that the current quarter's financials of a company doesn't necessarily dictate its next moves.

I find people's tendency to generate outrage from nothing other than headlines to be very annoying.

This would make more sense if any quarter stood completely in isolation, but some of these companies have been making sounds about "economic headwinds" since before the last quarter started, setting expectations low, and then still managed to "somehow" deliver outstanding or even record results.

Hearing how bad things are going to be for more than three months as they continue to not, in fact, be that bad, I started to wonder if they even believe what they're saying.

And if they do, that's fine, but then why use the money for buybacks/dividends rather than saving it for the downturn they're sure is coming?

The sharply rising interest rates are a problem if you have a short runway that makes you reliant on debt or investor money, in which case yes you very well may need to cut costs just to keep the lights on.

But if you're Microsoft or Google? You're profitable. You're bringing in money hand over fist. Technically the high interest rates might benefit you because now you have more options of what to do with that giant pile of cash: you can lend it out and get a decent return!

So high interest rates maybe do justify layoffs in some cases. And even perhaps for GitHub specifically, though I'm not sure I understand the complex dynamics of how it generates value for Microsoft anyway...

This thread is about Gitlab, not GitHub. AFAIK Microsoft doesn't own them (I hope).

Yeah, the "GitHub to lay off 10%" thread is over here: https://news.ycombinator.com/item?id=34726735

It's Gitlab, not GitHub tho.

:facepalm: Ah yes, thank you for the correction, I definitely misread that. I also don't know Gitlab's specific financial situation, so perhaps the general point still stands haha.

> This feels like another semantic argument, this time over what "macroeconomic environment is tough" means.

Okay, but it has to mean more than “we wanted to do layoffs” because it’s being used to justify or explain why they wanted to do layoffs.

> Yet literally every big tech company I can think of has had similar levels of layoffs. If these were Gitlab-specific problems you wouldn't expect the slowdowns and layoffs to hit everyone.

Many might just take the opportunity because "everyone else" is doing it.

>Yet literally every big tech company I can think of has had similar levels of layoffs. If these were Gitlab-specific problems you wouldn't expect the slowdowns and layoffs to hit everyone.

That doesn't really mean anything other than they are all riding the same wave.

People say “free money spigot” but I don’t understand it. Google has 120b in the bank. How was it able to leverage nearly zero interest loans before? Why isn’t new risk free (nominal) growth on cash a benefit considering they have so much cash?

All of Google advertisers were able to make use of easy/cheap money to fuel their own business, in which they bought Google and YouTube ads with part of that money.

How much are interest rates relevant for Tech companies particularly growth oriented firms? They raise equity via stock not debt and VC firms aren't primarily raising money for their funds via debt either.

Reply on news.ycombinator.com