HashiCorp just let go 8%
twitter.com
twitter.com
You start firing people, people start refreshing their CV instead. Cooperation at work dies, toxic competition takes its place. It becomes more important to look better than your peers than getting stuff done as a team.
Kills morale, kills productivity, bad for the future. Instead by simply freezing hiring you could "remove" a similar amount of workers in 18/24 months just by the natural turnover that most tech has without the correlated drama.
This is really going to be the start of the next big shift in who will be the leaders in tech. Many companies that are seen as leaders today will eventually join the group of companies that are no longer seen as leaders.
Now we're gonna see which companies are actually sustainable and which were coasting on dreams and cheap money.
IMHO such a correction was long overdue, but the central banks kept negative rates for far too long while everyone cheered them one because they saw their crypto, stonks and housing portfolios go to the moon and though this was great and nothing bad could happen because "line always goes up".
to be fair, this is likely the case for most large companies even outside SV.
You just have to talk to anyone in any industry to hear crazy stories.
1. Many of these companies had year+ long hiring freezes as a prelude to layoffs
2. Companies that overuse hiring freezes end up promoting over hiring in periods where there is open hiring as teams hire in anticipation of not being able to in the future when they might need to
Simply having a hiring freeze means you hamstring high priority projects you'd have allocated resources for, while letting others that may lower priority ride due to inertia.
Now they just use the old "never let a crisis go to waste" to let those who isn't good enough or overpaid go anyway
Do you think the ad sales guys can help with the Square integration?
Or let's say you've decided to bet your social graph / web / mobile app centric company on VR. How many of those existing devs are going to be useful in VR if you have a hiring freeze? Or when you realize it's a debacle and scale down VR, how many VR devs are going to be good iOS app update churners? Etc.
Wrong team sizes, wrong skillset matches, etc.
EMs become greedy and hoard whoever they have regardless of the quantity need or size fit.
To be fair, this is true in all fields.
If you chose to save a few bucks by hiring limited devs, that's a choice you made. In our orgs, the guy who moves CSS boxes for a living absolutely can write some SQL queries. Most places don't write database code, they write code that uses an ORM or other framework to interact with existing databases.
Got myself a call from some Meta recruiter just a week before the announcement in November.
And HashiCorp had opened positions listed on their site too.
Where are these companies you speak of?
Every place I’ve worked I’ve heard things like “you better hire someone for that req before it goes away”, “if you think you need 4, ask for 6”, “make sure you don’t lose that backfill”, "never leave unused budget", etc.
I'm not talking the large scale stuff like Meta assuming the metaverse was a trend that would require their company to grow 50%, but the medium scale stuff like a department in a 1000 person company putting in to hire 12 people instead of 8, etc.
Layoffs are a signal to the stock market that management is taking the problems seriously and cleaning house.
Look at Meta’s stock price. It crashed in 2022 right up to the first layoffs in November. That’s when Zuckerberg declared efficiency is a primary concern. The stock has nearly tripled from November.
I really think that there isn't a rational reason for doing so, it's just CYA all the way up.
You can change the rules, but probably not if you're publicly traded... unless you're Apple.
When the Twitter drama started yesterday I searched LinkedIn for posts from hashicorp employees announcing they have been cut. In the first hours it was recruiters, project managers, and customer success people
My guess is they will also freeze hiring more recruiters
Another point is there used to be natural attrition in tech, during the great resignation it was even higher than normal. You plan ahead assuming some people will leave, and when things get bad and no one leaves, you’re stuck with more people than you budgeted for
Unfortunately there is something extremely toxic about VC money(not saying it applies to Hashicorp) which is that growth is defined in headcount.
If it’s hard and/or expensive to measure, it’s likely better to just grab another startup instead.
If you are current at headcount X and want to be at headcount Y by the end of the year, you don't let go X-Y people: you need to take into account the expected voluntary attrition for the year as well as any critical hiring you may need to do.
I don't know about HashiCorp in particular, but usually, there's enough metrics for a company to see that they are headed into an overstaffing situation and work to correct that without layoffs. A true hiring freeze combined with natural attrition rates goes a long way. It varies, but a 5-15% for attrition is pretty common. And you can offer incentives for early departure to bump that up.
Also, depending on industry, there are other levers to reduce cost or boost margins that you could pull before resorting to layoffs. Including both labor and non-labor levers. Layoffs often feel like the lazy path.
Maybe just maybe they're aligned with the shareholders' very short term interests, but not with anything useful in the long run.
Having said that, I mostly agree with you. If they are selling the market on growth, there's no way to do that while simultaneously letting go 1 in 10 workers purely due to cost.
The market response seems inevitable.
If we don't like layoffs, then we should also not like crazy hiring sprees either because of their recklessness and waste.
How do you know they haven't had a hiring freeze?
Additionally from the perspective of employees - you are taking on most of the burdens of job change - learning new technology, having to familiarize yourself with new people, organization - without the benefit of a higher salary.
Nobody will leave voluntarily now if they joined during the 2020-2022 hiring boom and they know are sitting on ludicrous compensations which they know they won't get anywhere else in the current economy. So unless they're stellar engineers with top offers in hand, they're more incentivized to sit tight until the market recovers instead of leave empty handed in these uncertain times.
Waiting for natural attrition now means the poor/mediocre ones who don't have better options will stay, and only your best will leave voluntarily, which is exactly what you don't want. Ideally you'd want to cut loose the dead weight holding you back and prop up your rockstars so they stay.
Quite naïve to assume this. Speaking to the most recent round of tech layoffs at my workplace, the higherups said repeatedly it's not based on performance. They didn't elaborate on the methodology at all. We had people who had just been promoted get fired, and we had people who were long-time employees and high performing get fired.
Ours said the same thing. PIPs get axed on every round, but our last one was heavy on employees over the age of 50 ("long-time employees and high performing").
This isn't the sort of thing anyone ever admits what it is, only deny what it isn't.
People don’t like surprises, and they don’t like having plans messed up.
Just because you, personally, might have a role where you (?) aren’t part of plans or don’t do planning doesn’t mean that broadly speaking, you reflect the average of the teams in your company.
It’s far far more likely that if you dont care about your coworkers, you’re an outlier.
The whole industry switched to stack ranking. I wonder what potential long-term effects could emerge.
[1] https://www.businessinsider.com/layoffs-use-cut-low-bad-perf...
This kind of moralizing has become the bread and butter of his Twitter brand and it really is tiresome.
The problems with this idea:
1. It misses that morals can be criticised not just legality, and as economically advantageous as it is, it is still unethical to decieve
2. Even in a totally cold economic sense, the criticism you get if you go back on them is itself a risk that these companies should have considered when they produced these marketing values. This blowback should be an economic disincentive against acting that way in the future if it decreases trust in the company. This may materialise in economic effects as less free overtime and higher wage demands from prospective employees who adopt a similar ruthless attitude.
> Companies aren't the kinds of things that can meaningfully have values, and 'criticism' along the lines of the OP takes for granted that they can and do, in a way that makes outcomes like this Hashicorp layoff meaningfully surprising. This gets in the way of the correct critique— and thereby in setting the correct expectations.
The moralistic tone makes the event described seem somehow exceptional, when the crucial lesson is that it is not at all. It also directs people towards a useless simulation of politics (yelling at people, or in this case companies, to scold them) in place of the real thing (fighting institutions by disrupting their basic functioning, exercising power to change incentive structures, etc.). The stress on the economics is about directing people to the information of strategic significance, not narrowing the bounds of acceptable critique per se.
It might aid your understanding to consider that while companies behave out of economic self-interest, socially conscious human beings have their own vested interest in highlighting behavior that falls short of social standards. Companies like HashiCorp generate brand capital by co-opting the language of human values and social cooperation. It is not unexpected that people would try to hold them accountable to their own positioning on values.
> companies are acting rationally. They are protecting their own interests. Both in espousing values they may not actually hold
A value is only a value if you'll follow it against your own "rational interests". Claiming you hold a value and then ditching it as soon as it's convenient is a form of fraud. Not one necessarily with monetary damages, but fraud nonetheless.
Western society has got quite a lot out of being generally high-trust and it is not good whenever anyone corrodes it by making cynical promises which they do not intend to keep, and it is right to shame them for this.
I agree. The vast majority of times you pass someone on the street and don't expect that person to turn around and stab you in the back and take your wallet, is not because of the existence of laws, but because of the existence of trust. Laws (particularly criminal code) must exist for the minority. This is one of the reasons why I hate "trust-less" systems -- societies cannot function that way. It's as if a program was not trusted to access even the memory that was allocated to it, and the OS had to check permissions and run validations on every single CPU instruction issued by the program. Trust saves resources.
I don't work at Amazon, but their LPs are well-published, so I'll use them as an example. "Bias for Action" is in tension with "Dive Deep" and "Insist on the Highest Standards". If Amazon takes an action that is quick but didn't dive as deep as literally possible or achieve the highest possible standard, have they violated two of their LPs, or did they just use judgment and prioritize bias for action over those other two?
"Insisting on the Highest Standards" doesn't conflict with "Bias for Action" either. You can take a quick action, realise it's not up to a high standard and insist that it's improved; as opposed to saying "good enough, we're done".
[0] https://aws.amazon.com/executive-insights/content/leading-an...
That's ostensibly why Cantrill was going on [fairly entertaining] tirades about the difference between principles and values. By providing a cultural foundation of muddled and inarticulate precepts, and by ambiguating values and principles, leadership was being derelict in its duty to own the responsibility for discernment in scenarios where principles were in conflict with each other.
[0] https://oxide.computer/principles
[1] https://docs.google.com/document/d/1Xtofg-fMQfZoq8Y3oSAKjEgD...
Companies exist to make a profit for their owners. We work for them exchanging our output/time for money. We aren't family or friends. Companies aren't our church, social club, or local pub.
I've worked at companies that had simple 3 word values list of - Integrity, Discipline, Excellence.
In other words - work hard, get good results, don't lie/cheat/steal. That seems pretty good set of rules to live by.
I take offense at companies that have these lists of core values as if you are in the Miss Universe pageant or applying to an honors society. It's just not what they really want in practice out of you, nor is it how they will really treat you when the chips are down.
It's easy to say that the ZIRP time was the main drive of this decade for the crazy market where we are, but let's not forget that most of those companies lured people and part of the market based on some misleading "employer branding" optics like transparency, being a great employer, autonomy, inflated salaries, distorted incentives and so on.
They are co-responsible for these shaky times as well also.
Your freedom to do something does not stop my freedom of calling you an a-hole for doing so.
Personally if I was looking for a job I’d be sceptical of potential employers who handled layoffs notably poorly; it’s just not a great sign of their general competence. There’s nothing rational about advertising that you’re bad at this stuff.
> their goal is to provide services to people
Their goal is to make as much money as possible. "To provide services" is just a way to get there.
> fucked up immoral things, it will hurt their bottom line eventually, especially if they are called out
There are literally thousands of examples where this is not true, and where the "hurt" comes long after the fact, if ever (DDT, PFAS, plastic, oil extraction, deforestation, animal agriculture, ...).
> try to look good if this was not the case
Hence the popular term "wartime CEO" ... painting the situation with nice words to extend the extraction period.
This isn't a nitpick. It's the point under contention. Companies setting core values like Hashicorp has are ostensibly saying "we're not just all about profit, we care about how we obtain that profit." Positioning companies as having a singular goal of "making as much money as possible" is not a universal absolute. It's a choice we make. Let's choose differently.
For example, I'm not in business just to make money but because I think that what my company does is important, valuable to our customers, and good for the world. I also want to get paid and feed my family, but I have options and will walk if I feel like leadership at my company no longer cares about the values they established. I stay because I trust my leadership.
Money ruin everything, sooner or later.
> Let's choose differently.
Let's. Patiently waiting for it to happen somewhere.
> I stay because I trust my leadership.
You know what? You better don't listen to me. I'm too cynical for this.
He speaks of broad terms of "how things worked", like - there are thousands of EMs and Directors right here on HN with triple his experience who can only speak to their team/group/division, would never act like they know what happens on other engineering teams outside their org.
Other than his "expertise" his newsletter is pretty much the same as browsing Blind. Getting DMs from people with their personal opinions about their employer (im sure he doesnt even verify that) and reposts them
Orosz being Naive or not, there is a contrast to what Reid Hoffman and Netflix have been advocating. Hoffman advocated that a company and its employees form an alliance. When their values deviate, they depart. Netflix advocated something similar using the professional sports team as an analogy. Companies are not families. Companies are not there to "take care of" people. At least to me, the Hoffman and Netflix are more practical and more honest.
corporate "values*" always come with the small print of "*as long as it maximizes profit."
it is silly to think that any for-profit corporation is ever going to do something that is directly contrary to its financial interests.
you can (and i do) definitely argue that having strong values does contribute to long term profitability, but the purpose of the "values" is to maximize profit.
when a conflict arises between the values and profitability, profitability always wins.
Not saying one is better than the other, but if it took months to fire people, lots of US tech companies wouldn’t have grown 30% without thinking twice. Leaving many of then people let go today without an entry ticket to tech to begin with
However in the UK firing someone is much easier than this. There are protections, and in some jobs (like the civil service) it can be difficult to fire, but that's not universally true.
Fired is so negatives that companies will rarely fire anyone. They prefer to ask you to quit - you still don't get unemployment pay (varies from state to state, but it is your fault you are not working). If this happens it is in your best interest - while it is now your fault you quit (and you cannot sue them for it - which is why they do it and a downside to keep in mind!) they will then report that you worked there in good standing until you left. In practice most companies only fire someone when they discover actions that would go to the police.
Greater worker protections leading to greater stability rather than a boom and bust over-hiring and mass lay-offs sounds like a feature, not a bug, to me.
A much more effective approach would be to make loss of employment not be a big deal, e.g. through stronger social safety nets. That way you ensure people's lives are financially stable but without introducing friction to efficient allocation of resources. Ideally, losing your job would be no more than a mild inconvenience - like having to buy a different brand of milk because your usual is out of stock. That ideal isn't realistically achievable, but we can at least try to get closer.
Sounds like trickle-down risk to me, to just randomly hire and fire.
So what? Apparently that didn't work in any way, since their stocks are crashing and they need to mass fire. So what's the benefit of what you are saying at all?
And why would 30% growth be some goal just because its a high number, compared to a stable job market?
UK HR teams aren’t staffed with angels and in my experience are great at feigning ignorance of the law
And the government did not condemn fire and rehire by BA etc a couple of years ago
e.g.
> If there are 20 or more employees affected by redundancies, your employer must hold collective consultation.
Of course, it relies on affect people knowing their rights and being willing to stand up for them, which isn't always easy, especially if you're not being let go.
Individual firing takes months, and up to a year, with management papering the decision and only doing so during certain times of the year around the review and compensation cycle. Sort of like the FAANG PIP process. The person being fired still ends up getting severance, etc, they almost never bother with for-cause due to legal burdens. Quite often no one really gets fired but they play chicken with you by giving zero raises and cutting your bonus until you quit.
Mass layoff firing is usually announced and followed through on in weeks. Usually they go after low hanging fruit, but often that might just be out of favor teams/departments/divisions more than just poor individual performers.
It really puts weird incentives in place for people who might want to skate. If you do a bad job - you have many warning signs before you are fired, if ever. And then everyone has an equal risk of random layoff.
On a team of 15 laying off 2, do you really think that the highest performing employee has an equal risk as the newest joiner or the lowest performing employee?
So the incentive is to relentlessly chase promotions, but not so much that you reach a level you are incompetent. But also not too slow, such that you are at the top of the compensation band for your title. Also don't plan to work in this industry til your late 50s.
The idea that, all else equal, someone should be paid more to be a 50 year-old Senior Foo than a 40 year-old Senior Foo is just wrong and, when/if implemented, could easily be the source of this apparent ageism during layoffs.
At a typical bank it's like..
Analyst->Associate->AVP->VP. However from VP on up, the pyramid narrows sharply. The ratio of Analyst:Associate may be close to 1:1. The ratio of Associate:AVP may be 1.5:1 The ratio of AVP:VP also around 1.5:1 or 2:1. However from there the ratio of VP->ED and ED->MD are like 5:1 or worse.
ED&MD are far more executive management type roles. Zero coding, you may run an org of 100 people.
So the earliest you hit VP might be like 28ish. But you'll find VPs that are 45 to 50 easily.
It's an up or out level. Slowly accumulating raises as you age without seeking a management role means out eventually.
I'm arguing that it shouldn't happen and, if it does, that would explain that layoffs disproportionately hitting those whose return-on-cost is lowest means disproportionately hitting those whose candles-on-cake is highest.
> Slowly accumulating raises as you age without seeking a management role means out eventually.
At whatever the career level is for your org, some people should probably stop getting merit raises entirely. If their merit isn't increasing, there's no reason their pay should be either. They could drift up as the entire market wage drifts up, but if a 10-years-at-VP is just as valuable as a 20-years-at-VP, they should be paid the same. (I'd much rather start having that conversation when they're 11-at-VP and get no merit raise and it's still a good time economically than 9 years later when they're surprised to be shown the door with zero warning after a string of merit-free merit increases and a stack of "meets expectations" performance reviews.)
I have actually had a former employer do this once. I think it worked out best for those with 2-3 years of experience, some of whom got 20-25% pay rises, while those with 0 years of experience were closer to hire date and hence what the company considered market rate, while those with more experience were better at negotiating raises on an ongoing basis.
The incentives this create as well are perverse because performance becomes less a driver of a big raise in the short term.
In the long term of course, the performance probably drives the promotion which is the thing that gets you into the higher band in which you can be awarded random unearned raises.
However in the long term its easier to just jump ship for a guaranteed 20%+ bump than to pray for a random 10% every N years.
My current company does it similar to what you said and gives you time to find a new role or relocate.
The first company I worked for called people into a room and RIFed them out of nowhere. People still got hefty severances.
It’s not a one size fits all approach, start up’s are usually less caring and ruthless with layoffs.
Not complaining of course, this form of better behaviour is hugely preferable! But I think it's fear/loss-aversion, not kindness, driving it!
Maybe get your own house in order before giving friendly advice.
Also, can’t see where I gave any advice in my original post.
It really is quite a big stretch to assume that this is a causal mechanism. You only need to look to Scandinavia to find a counter-example.
I think it is more reasonable to argue that high salaries in US are fuelled by borderline slave wages for menial labour. And Switzerland's wealth comes in a historical context that is completely different from the US - it's almost impossible to blanket compare them side-by-side. The difference in population size is another huge issue with such a comparison.
So effectively, the burden of proof is on the employer to show that the reason for firing is a legal one, but that does include "orders drying up so we need to cut back on staff who would otherwise be idling".
Courts can and do award fired employees up to 6 months' salary as compensation if employers overstep the lines here. And because Switzerland has a well-working legal system, that means most employers don't abuse their firing powers, and making a facebook post on $CULTURE_WAR_TOPIC from a non-work account is unlikely to get you fired unless your role is "brand ambassador" or executive officer, for example.
Also, if you are fired in Switzerland and you're a citizen, you have very generous (by international standards) state redundancy/unemployment benefits.
I agree with the parent poster that the flexible labour laws are part of what makes Switzerland attractive for business, but I would much, much rather end up being fired under the Swiss system than the U.S. one.
* rupture conventionnelle, by mutual agreement, which requires at least 1/4 month salary per year on the job for less than 10 years, 1/3 month for more than 10
* licenciement économique, which has a mandatory procedure, and requires 1-2 months notice of the employee, with a compensation same as the above
Since the procedure for the second one is a bit involved and requires approval from the mini-union embedded in all companies over 50 employees and a government agency (since it's only intended when there's economic troubles), often employers would prefer to pay extra compensation in a rupture conventionnelle instead of wasting time with the procedure.
Honestly doesn't sound much more complicated than Switzerland, yet nobody would say this allows France to have low unemployment.
Post hoc ergo propter hoc. There are plenty of other reasons that the US and Switzerland have become wealthy, you can't simply assume that liberal labour laws are a factor.
Any form of this comes from abusing the temporary work and contractor system(not exclusive to Eastern Europe, but here it's common).
But still - even as a pretend temp worker you normally don't get fired on the spot without notice because with the current demographic situation employers can't afford to do this and will usually include some form of notice in the contract to protect their interests.
Also illegal employment, especially in construction, is still very much a thing around here and I would think that, if anything, is a greater factor.
Easier to get ahead when you're cheating.
As a SWE who's been in a couple of companies of small-to-medium size, and now in a relatively successful fintech scale-up that's running a (very long) hiring freeze, I can say that I've seen this layoffs season coming from a thousand kilometers.
Now matter how successful your company is, you can't start hiring bonobos with no clue about how a computer works just because your investors asked for an X% increase in head count and then be like "sorry, we didn't plan to fire you as soon as things got serious" with clueless employees. And people have been gifted tech jobs for years now. It's not people's fault if they're not good at their job yet they get hired for senior positions, just to realize something's not working as soon as the job market needs qualified professionals in tough times. Now we're all in a bad predicament: we have to waste countless hours interviewing "senior" engs with basically no skills to speak of, and they are getting depressed because nobody's gifting titles anymore, but have no clue on how the whole process actually works.
Now somebody has to tell Jessica that posting screenshots of code on Twitter is not devrel, and Guillermo that not knowing React 18 is not totally ok for a tech lead of a React shop. And I totally don't want to be that guy.
Instead of just being honest and saying "oops, we need to cut spending, they created bullshit KPIs and useless metrics to start marking people as underperformers"
So I suspect a lot of the VC funded companies have had 10%+ stealth layoffs.
"He who pays the piper calls the tune" is a saying that's over 400 years old. If your company is depending on VC funding for ongoing survival, the VCs are calling the shots. If your company is generating its own sustainable cashflow, the CEO is in a much stronger position to call the shots.
KPIs are a good way to make sure nobody overperforms or shows signs of cross-functionality. The moment KPIs take over a company, people get turned into bots.
In Germany, a termination is valid IFF the termination has been submitted to the employee in writing in a timely manner — that is, they need to have been able to receive it before end of month or it’ll delay the notice period by a month. The standard notice period is 3 months. (I had to do this quite a few times recently unfortunately).
Are worker rights really this bad in the US?
Overall it's just different societies making different trade-offs. The US values market efficiency, Germany stability.
From Hashicorp's latest 10-K[1] filed circa March 2023:
> As of January 31, 2023, we had over 2,400 employees operating across the world.
> As of January 31, 2023, we had more than 1,050 employees in our sales and marketing organizations.
> As of January 31, 2023, we had more than 670 employees in our research and development organization.
[1] https://www.sec.gov/Archives/edgar/data/1720671/000162828023...
I might be far from the 500 resources limit but I can't avoid seeing it as a Damocles sword on my infra :)