With savings comes extra cash.
And extra cash can only sit on the sidelines for so long.
Until company’s are lured once again in to making bigger, larger, scalable bets.
You need engineers to explore new hypotheses, to drive growth, to explore these new possible markets.
Greed always returns. Idle money, stagnant growth helps no one.
You don’t scale a company with savings. You scale up by spending.
First, there's no such thing as a "free" market. Any robust market requires strong regulation and thus a strong government. So for a labor market, you need things like workers rights for the entire thing to work, even for the companies.
Second, companies collude to dilute labor power. Years ago in tech it was the Steve Jobs anti-poaching collusion case [1]. Now, every company is in permanent layoff mode. Notice how pretty much every company decided to start doing that at about the same time? You ever wonder why?
Tech companies have basically adopted the Corporate America model of "up or out" culture. It's incredibly toxic. It even goes against Google's findings that the most important aspect to team productivity is psychological safety [2].
Lastly, it has long been observed that the tendency is for profits to decrease over time [3]. The only way to counter this is by cutting costs, raising prices or growing a market. The last one is incredibly difficult. The first two are incredibly easy, at least in the short term.
It is cheaper to constantly churn 5% of your employees if that suppresses the cost of the other 95%.
[1]: https://money.cnn.com/2014/08/11/technology/silicon-valley-p...
[3]: https://en.wikipedia.org/wiki/Tendency_of_the_rate_of_profit...
Sure, economic theory is just that. There's no true free market and no true socialism.
But I think a more charitable interpretation of GP's comment is "the market is free enough that customers can make a product successful if it makes their lives easier". Regulation in tech aren't so high that a few people can't make the next Whatsapp, if the market resonates with that.
>Second, companies collude to dilute labor power.
Yes, but ultimately new companies make sure they can't ever truly control the market. In some ways that is another sign of a "free (enough) market". There are more than 6 compnaies with money to throw at a good idea, and the current publishing mechanisms make it easy to ship.
>Notice how pretty much every company decided to start doing that at about the same time? You ever wonder why?
external stimulus. Money isn't free, R&D costs aren't easy to write off for taxes. investors are pulling out and putting money into savings. It's the perfect time for layoffs when you need to do a pseudo paycut, especially when it's hard right now for a new company to start scaling up (due to said investors pulling out).
From there, sure. There's a lot of trend chasing. Google does something and they know their stuff, clearly our much different company must follow suit!
>Lastly, it has long been observed that the tendency is for profits to decrease over time
sure, tech stabilizes and customers won't stay and spend forever. Very few products can grow year on year on their own merit.
Companies in the 2010s were indeed in "grow market mode", which is why they were hiring for every blue sky idea they had under the sun. That's obviously stopped, but doesn't prevent leaner startups from trying.