Comment by Apreche | Hacker News Reader

Comment by Apreche | Hacker News Reader

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The same thing that always drives layoffs.

You are a company. The system we have demands growth. Even very stable and reliable profits are seen as failure. There must be growth.

The people who run a company can not press a magic button to increase revenues. They can't just pull a successful new project out of nowhere. Anything like that is going to be a risk, and will probably fail. It will also take time.

The one thing they can always do is cut costs. Projects can be cancelled. Divisions can be sold off. The biggest cost at most companies is labor, and labor can be let go.

When someone controls a company, they own a lot of shares in that company. Their bosses are all shareholders who only care that the stock price goes up. Nothing the company is doing is generating huge new revenue streams. Time for layoffs.

And when some people do layoffs, everyone does them. They're all subject to the same market pressures in the same industry. One company doing them gives all the other companies in the sector permission to do likewise. If a company doesn't follow suit the market might even start to question why.

You may have seen some news that Microsoft passed Apple briefly in terms of most valuable company on Earth. You may have also noticed that Apple is much more restrained in its layoffs than the others. Not doing as many layoffs, not doing as well in the market. These things are not unrelated.

This doesn't seem to me to explain why the layoffs are happening now. AFAIK Google has never done a true layoff until last January in the entire history of the company. Now it seems to be already routine.

As someone who grew up in the 80s-90s, my historical sense of layoffs is that they were a response to economic hard times, whether industry-wide or company-specific. Companies laid off when profits fell or disappeared, which then drove a need to search for ways to cut costs.

But the major tech companies are all seeing continuously growing revenues and profits within the context of very healthy general economic numbers, yet they are all laying people off.

The simple answer would be AI. That’s been the major change in the past year. I find it odd that everyone thinks Uber’s end game is automated cars, but no one seems to be talking about how tech companies end game is automated coders. LLMs are not even close, but what’s to say internally, they don’t have something that works. Or they have enough data to show they need fewer workers since they can leverage AI now.

I work at a FAANG, I can't speak for all companies divisions but I can pretty comfortably say that I have seen next to no evidence that AI tooling has become so productive that we "need" less engineers.

Actually it's somehow kind of the inverse, any AI related code has been subpar which has been putting a lot of stress on the core systems in terms of reviews and performance.

From my personal perspective, things overall seemed more productive pre ChatGPT for FAANG level companies.

OK, thank you for saying this.

Whats interesting is I think there might be a disconnect between AI capabilities and tech executives. I'm guessing executives believe AI will catch up to be good enough to multiply engineers productivity say 120% within the next few years - hence the 20% layoffs everywhere.

Maybe this will be the case. But for me on the ground its producing a lot more work. I now have to code review everything starting at a very high level working my way down and there's just so much MORE code now.

> Actually it's somehow kind of the inverse, any AI related code has been subpar which has been putting a lot of stress on the core systems in terms of reviews and performance.

My experience is that AI tooling just means engineers can do more, which means product managers want more… resulting in more work with the same engineering team…

> The simple answer would be AI. That’s been the major change in the past year.

What about short term interest rates (in the USA) going from close to 0 to 5 percent over the past 2 years?

https://fred.stlouisfed.org/series/DFEDTARU

Even if you have no debt, your customers might. And your stock returns are being compared to a risk free rate that has increased rapidly.

This is really it right here. Recession fears and large layoffs correlated directly with the raising of rates, as they always do.

It's the hammer the fed knows how to use to fight inflation.

Hopefully this time it won't tip the entire economy into recession, but I feel for all the folks who are being laid off.

We already had a revolution of automating coders, when Fortran first appeared. And a revolution of automating accountants, when a spreadsheet first appeared.

If anything, these revolutions increased the demand for programmers and specialists in finance. A person wielding a right automation tool is producing much more revenue, while demanding nearly the same salary; it makes sense to hire more of such people, as long as there is a market for the product or service your company provides.

The layoffs are a signal of this not happening. The AI is not helping enough to increase production and revenue per worker. Companies are out of new and efficacious business ideas. The companies don't know where to apply the intellectual / productive capability they have, so they are cutting it down, to save on its (substantial) upkeep.

It’s a fair hypothesis but is it true? Are companies actually replacing engineers with ChatGPT? I haven’t heard anything about this.

No, they're replacing compiler engineers with data scientists.

A counterpoint would be: if you kept the same number of engineers and increased their productivity with AI, rather than keeping output the same and reducing the number of engineers, wouldn't you be producing more value overall?

Maybe the rate of diminishing returns as they realized too many cooks in the kitchen just slows down everyone.

"You are a company. The system we have demands growth. Even very stable and reliable profits are seen as failure. There must be growth."

But take a software company like McNeel. They make a popular but extremely niche market product called https://www.rhino3d.com. They've been around for decades. They have extremely low turnover. Many developers have worked there since the beginning.

They are used around the globe by architects, product designers, industrial designers, etc.

What are they doing right? Why/how do so many others get it wrong? Are humble software companies like this unicorns? Why?

Their about page [1] provides a good clue.

> TLM, Inc. dba Robert McNeel & Associates is a closely held employee-owned Washington corporation funded solely from retained earnings.

So they're a private, employee owned company with a strong niche product that doesn't depend on outside money. They took the slow road, something that is antithetical to VCs but perfectly acceptable for bootstrapped founders that want to live comfortably but don't care about striking it rich.

[1] https://www.rhino3d.com/mcneel/about/

McNeel is not a public company. Public companies are driven towards prioritizing revenue and growth much more than private companies because growth is a shared goal of all shareholders. I suppose it could be said that companies with outside PE or VC funding would also prioritize growth, but that would be in the same vein of getting to an exit or IPO rather than just making the stock go up.

idk what their profit structure or founding story is, but the poison pill for every company is investment capital. The second you take VC money you are beholden to someone other than your coworkers and clients. If you can get off the ground and become sustainable on sales alone, you are golden. Stability is possible but the problem is that most VCs demand 10x return, not 1.25x return.

They are employee owned

Which means it’s more syndicalist organized rather than purely for profit

Not perfect but as close as you can get to ideal organizationally

Rhino is an amazing product that I use every day. The developers are active and responsive on their forums and I’ve had feature requests and bug fixes go from forum posts to shipping in a couple weeks. You can also pick up a telephone and immediately talk to a knowledgable tech support person. It’s amazing and I wish more companies operated like McNeel.

Edit: They also do that thing that everyone says is impossible and sell perpetual licenses. Every 18 months or so they offer paid upgrades to the next version and I always buy it because the price is reasonable and they're jam packed with useful new features.

  > Rhinoceros (typically abbreviated Rhino or Rhino3D) is a commercial
  > 3D computer graphics and computer-aided design (CAD) application
  > software that was developed by TLM, Inc, dba Robert McNeel &
  > Associates, an American, privately held, and employee-owned company
  > that was founded in 1978.

So not a public company subject to the fickle stock market's expectations of constant growth...

"The system" is either the stock market or VCs. McNeel is privately owned without VC funding (AFAIK.)

How are people still paying for this when blender exists?

Do you know the difference between CAD and polygonal 3d modellers ?

btw, blender always existed. Like since 1998?

This is a CAD program? Strangely enough this is mentioned absolutely no where on the official website.

Hmm now I am considering buying a license...

> You may have also noticed that Apple is much more restrained in its layoffs than the others. Not doing as many layoffs, not doing as well in the market. These things are not unrelated.

Apple stock is down because Apple's hardware revenue is down. Simple as that. https://sixcolors.com/post/2023/11/apples-fiscal-2023-in-cha...

There isn’t anything in life that’s “stable”. Not one single thing. Even rocks on the ground erode.

Because of inflation, stable is actually shrinking. If you raise prices perfectly in lock step with inflation, trends and tastes of your customers still change, necessitating innovation if only to maintain the exact same level.

In reality, you have to grow to ensure when the ground shifts from under you, there is still some buffer. Growth is insurance against an ever changing, unpredictable world.

The people who think things never change are people without imagination. They want safety and security, but that is an illusion.

Fair point!

> And when some people do layoffs, everyone does them. They're all subject to the same market pressures in the same industry. One company doing them gives all the other companies in the sector permission to do likewise. If a company doesn't follow suit the market might even start to question why.

I'd like to try and simplify this - it's simply the new "normal" and companies can get away with it(meaning the labor side does not punish it, yet - no unionising etc). In the EU layoffs like this are not as easy to pull off by companies.

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