You can understand the 2020/2021 hiring at certain companies with a very clear pandemic-related angle like Zoom. But I've lost track of the number of non-answer answers, both public and private, to why companies apparently overhired. We hired more than we meant to. How does that happen?
Especially at a company losing large piles of money.
1. In the Internet era, we live with much bigger markets and hence much more of a "winner-take-all" (or at least winner-take-most) economy for companies that exist primarily on the Internet. You see this over and over in different areas - there is usually one giant leader that takes the lion's share of the money, then maybe 1 or 2 frequently discussed competitors, then everyone else.
2. With this "way fewer points for second best" dynamic, most investors and business leaders are biased much more towards FOMO than fear-of-losing-money.
3. Thus, when the pandemic came along, many folks did see it as the start of a new dynamic with how people used online services. And they weren't entirely wrong, e.g. remote work is obviously much more prevalent now than pre-pandemic. But again, from a business leader's perspective, I'm sure most of them thought it would be much worse to miss out on a paradigm shift in online services than to over-invest.
Of course, any discussion about this topic should lead with the huge sloshing of money due to low interest rates that abruptly reversed. Whenever that happens you see investors pour money into risky assets as they chase yield.
Excellent reply and I think you can add a number 4 - Remote work makes the barrier to hiring so much lower.
You no longer need to source people from specific Geos. You no longer need to provide office space, desks, parking, etc for new employees. Even the interviewing process itself is so much faster. No arranging flights, hotels, ubers, interviewing is 100% remote now for most tech companies.
Fair enough. I would say that looking around in general, the "new normal" looks a lot more like the "old normal" than a lot of people expected in 2020 or 2021. Business travel is essentially back to pre-pandemic levels. There's more workplace flexibility but--especially outside tech--there's relatively little full remote. A lot of food and meal delivery seems to have really tapered off.
And arguably it didn't cost companies that much to hedge for an upside. It's not even clear if employees now being laid off were in general worse off for having a job. (Modulo some things like being in the US on a visa.)
Do you have a source on business travel being back to 2019 levels? Everything I’ve seen about this shows it’s at only half to two thirds, but numbers seem to vary a lot.
That's not just business travelers of course but I can't believe there's been a huge spike in tourist air travel in the US in non-holiday season winter.
In-person tech events still seem to be down but that's probably sector specific.
I'm willing to bet every other company that can will be hybrid work, come in at least x days over y time.
You won't retain talent if your competitors are more flexible. Unless you pay an "absurd" amount to have me come in every day, and at that point you're just wasting money on me and your oversized office.
Well I am probably not your normal worker, but for me WFH is soooooooo far down on the list of "must haves" for an employer that it may as well not be on the list
my Top 10 for a new employer
1. Pay
2. Hours / On Call
3. Vacation / PTO
4. Health Insurance quality / cost
5. Team Fit / Corporate Culture
6. Total Work Load / Back Log
7. Tech Debt of the Organization
8. Financial Debt of the Organization
9. How many Layoffs have you had in the last 12 months t0 2 years
10. How many open positions do you currently have organization wide
I would put WFH at the top of my list but only because it is the only reasonable way to have 1,2 and 3 above. If I have to live in SFO or ATX, the pay would have to be so absurdly better than remoting in from small-town Michigan, that likely no one will pay it. Same for hours -- I'm not commuting 1.5 hours each way to the affordable housing in these areas. Same for PTO: I effectively have tons more living near family since I don't have to hoard it to use for family reunions, Thanksgiving, etc. I can do all these things without using PTO, and therefore am able to go on real vacations instead.
Sure, I'll come into your office every day if you
1) let me work 5 hours a day instead of 8 (to account for the commute)
2) give me double the vacation so I can spend Thanksgiving/Christmas/4th of July/Super Bowl Sunday/Labor Day/etc with family, never miss a wedding, and also have enough left for a week on Lake Huron in the summer and a winter-time jaunt somewhere warm
3) increase my pay to account for the housing cost difference in whatever post-industrial NIMBY hellscape your office is in and my current home.
There's also corporate culture. I find that I don't want to work with a team that has difficulty connecting via email/chat/videocon and feel they require constant meatspace contact. Usually this means a lot of "alpha" type personalities that need to press the flesh to get their half-baked agendas pushed through on others' backs. On the other hand, if you are disciplined enough to be able to collaborate via email and the occasional quick call, then you probably aren't a ripoff artist.
You'd be surprised how far people push commutes in the Midwest. I know at least one person that lives near Saginaw and works in Detroit. I have a relative that commutes nearly two hours each way in northern Wisconsin -- and they bought this house /because/ of the location of the job, so this wasn't an accident of history.
I can maybe see this, but I have had several kinds of long commutes in my life: long distances by country road, by interstate, by train, by bus. Rush hour driving in Austin is hellish compared to the same length of commute by country road in Michigan (at least when there isn't a blizzard) but they are still driving. It's not downtime. Commuting by coach-style (think Greyhound) bus in central Europe is probably the easiest hour+ commute I've had, but you are still trapped in a metal box: you might be able to answer some email or listen to an audiobook but it's not downtime.
When I had a job in Boston, I could commute mostly by train with about a five minute drive on one end and a 10 minute walk on the other. Much better than driving unless I was doing something in the evening. But it was still three hours out of my day. Fortunately didn't need to do it every day but it was still not sustainable.
I envy a good grid. Here on the east coast, in many cities only the very center core is gridded, with the rest being most of a hub-and-sprawly-spoke model. The only corridor through my 40-mile wide, 2M+ person metro area is a single Interstate that's basically a parking lot at rush hour, and also carries our bus-only transit system.
Yeah, as a native who recently returned because of remote work - it's insane that people think austin is worth what it costs to live here now. Even if austin was 50% cheaper than NYC its by no means 50% as interesting / provides 50% as much opportunity as NYC.
I think WFH is important as it shows deference to families bringing up children where WFH may be a vital part of being able to dedicate enough time to their children.
As someone without children myself, I judge an organisation by how they treat employees with divergent goals (such as wanting to spend time with their children) because it shows me how the organisation will treat me if/when I fall outside complete alignment with corporate goals (perhaps due to politics, age or health).
hmm I wonder if that is why I have a somewhat negative view of WFH, I dont have kids, and often times I seem people with children for go their work responsibilities or worse say something like "well phpisthebest does not have kids so they can be on call or work holidays"
to me your personal situation should have ZERO bearing on your job, I should not even know if you have kids or not.
>>I judge an organisation by how they treat employees with divergent goals
I judge organizations on their equality, and by that I mean they treat all employees the same regardless of their marital or child status.
You could say the same about being in the office, or not. If the work can get done remotely who cares about coming into the office.
Companies that are capable of succeeding with remote workers are going to have an advantage as they will have less real estate costs, and they can get value out of paying for both a wider geographic worker pool, and they won't necessarily have to pay them big-city rates if those workers will accept slightly less nominal (which translates to more real if they have lower cost of living). Not possible in all circumstances but those that do it will benefit.
>>Companies that are capable of succeeding with remote workers are going to have an advantage as they will have less real estate costs,
COVID did not change the economic metrics on that, so I am not sure why this is a continual talking about for justification of WFH in these "new times"
There have always been full time WFH organizations, and there have always been non-WFH organizations.
I dont see this having a huge impact on if an organization stays WFH post covid or not.
>>and they can get value out of paying for both a wider geographic worker pool
Yea... no. Companies tried that and found out real fast the problems with legal liability, and tax jurisdictions this is why you are seeing even companies that stayed Full time WFH post-covid have started to limit where they can hire from to only states / nations where they have business in already, already have Tax ID's already know and comply with the local employment laws.
>COVID did not change the economic metrics on that
I disagree with this assertion completely.
You are commenting on an article that illustrates the fallout from COVID having economic consequences that companies are working through. Inflation, higher rates, over-hiring, and I would add over-investment in expensive prime real estate. There have been plenty of reports about companies having to deal with new problems with higher rates necessitating cost cutting. One of which is re-assessing the need for huge amounts of expensive real estate. Facebook and Amazon come to mind in this regard. Others may follow.
The change here is we may be enterning a new economic cycle unlike the last 10 or so years of extremely low interest rates and huge VC money as well as companies running stock buyback and stock compensation schemes to paper over low or no profitability. You can claim the next few years will be like the last few years, I simply disagree with this. So in this light, WFH may be a variable in equation of lowering costs.
>started to limit where they can hire from to only states / nations where they have business in already
Ok, but the dynamic I describe can still be achieved by limiting workforce to US. You can still have a wider pool of workers who want to stay located in lower costs states near their hometowns and families and not need large footprints of expensive real estate.
I think you are taking the missteps of perpetually online companies like Amazon and Facebook and conflating that too much with the wider economy.
Did the tech sector screw up, yes... That is nothing new for them... the local psychic has a better track record at predicting the future than the Tech Sector
Do I believe the problems in the tech sector are indicative to the wider economy. No. NYC, Silicon Valley, and other Extremely "Hot" cities may have an outsized downturn, and a commercial collapse but I know people that live in those places do not like to admit it we here in "Fly Over Country" do exist, and have huge amounts of economic output. increasingly so based on the Investments in Ohio, Michigan, Texas, and other states.
The economic shift may be less WFH and more Shifting to other regions of the US as CA, and NY collapse
I'm not talking necessarily about the wider economy, rather only "Companies that are capable of succeeding with remote workers" as I stated, regardless of the label you want to apply to them. But certainly tech/software companies primarily.
So let's constrain our point of contention simply to these companies. The larger players have an outsized position in hiring, and a few cities have an outsized position in being the location where these companies and employees operate and live, so the trends in these companies and these locations is meaningful.
Even if there's a hybrid strategy where more companies locate in midwest/lower costs areas and they have some remote workers, my claim is there will be less real estate footprint than before covid and more WFH employees. And that this combination, even if just marginal, will be a net benefit for these companies vs themselves before pandemic if they didn't have this strategy before and going forward vs those that don't do it/are intransigent on remote work.
Fly over country does not have the same economic output as the big cities. It’s why most people flock to the big cities. Cities are economic powerhouses at the forefront of innovation and culture.
I worry that we're sliding towards employer divide and conquer tropes here, being at odds with fellow employees over this makes no sense. Rather the onus should be on the employer to ensure they create an environment that is accommodating for all sorts of lifestyles. Why shouldn't you be able to take time off in a similar fashion to pursue your own child-free but otherwise time-consuming activities?
That parents are able to WFH and work flexibly also confers YOU the rights to do the same. That is why I am personally extremely supportive of those rights despite not having children because it gives me the rationale to demand the same flexibility when I need/want it.
I have kids and I agree with this. Giving someone work on a holiday or weekend because of their parental status is pretty bad. I think I would quickly leave a place like that.
>to me your personal situation should have ZERO bearing on your job
I can't see for humans ever being the case. People have life events that change their productivity: depression, marriage, death, children, personal interests.
I completely agree that you having/not having kids should not dictate workload.
Working without any context of peoples life wouldn't be a place I'd want to work at, basically your personal situation has a fuck tonne of bearing on your job.
> "well phpisthebest does not have kids so they can be on call or work holidays"
I’ve worked in the industry for over 10 years, on teams with several parents and have never heard this sort of sentiment. Just throwing my anecdata out there. The most I’ve seen it brought up is for maternity/paternity leave and for someone adjusting their commute schedule to take care of picking up kids/avoiding bad traffic.
It depends on the company and the organization. I have seen it personally (all the parents have a soccer game to go to, the non-parents pick up on call).
> A senior lawyer working in the Bay Area told me how, prior to the pandemic, the parents of small children would file out at between 5 and 5:15 p.m. each day to collect their children from childcare and head home, while child-free colleagues stayed at their desks until the work was, well, done. “I know many parents also log on later in the evening, but if they’ve missed an important call or haven’t had time to read the latest documents we’ve received, it falls to me and my child-free colleagues to pick up the slack,” they told me. “There’s a disparity in expectation as to when the working day ends and what gets done during it. I’m given the message that my nonwork life is less important—sometimes explicitly.”
> A friend in Salt Lake City is a former competitive skier, and the topic of being child-free came up during a recent conversation. “Honestly, I’m starting to resent the fact that my colleagues who are parents are free to take slabs of time off to look after sick kids or log off early to attend recitals. The thing is, I fully support the fact that they can—being a present parent is so important. But sometimes I wonder why I’m not allowed to take a couple of extra days each year to ski, or spend time with my 97-year-old grandfather? Whenever I suggest this to HR they literally laugh.”
That just sounds like unrealistic work expectations from the org being redirected into anger at parent employees. The issue is surely with the org as opposed to the employees that happen to be repopulating the earth. i.e. the non parent-employees should have access to the same level of freedom and if the org doesn't permit that or punishes the remainder somehow then that's the issue at play here.
> to me your personal situation should have ZERO bearing on your job, I should not even know if you have kids or not.
This is just impossible. Trust me, if your baby is sick it will impact your job. If (s)he had a fight in the school and the teacher calls you in the middle of work, that working day is gone. etc. etc.
I'm the opposite. For me, WFH is table-stakes. There isn't a realistic amount of pay, PTO, benefits, or anything else that would make me work on-site right now. We're still in a pandemic, and the risk of contracting long-covid and no longer being able to do knowledge work due to impaired cognition are far too high for me to consider working in an office these days.
There are too many unknowns to say for sure. If we put aside technical definitions of pandemic vs endemic and focus on the practical matters of daily life, I don’t think I’ll ever go back to life as it was in 2019. Covid is here to stay and that means adapting to that. The types of adaption will probably change over time.
I have two goals: avoid any long term effects from getting Covid myself, and avoiding giving Covid to my immune compromised spouse. At the moment, the only way to achieve either of those things is to avoid getting Covid at all. With better treatments to either prevent contracting Covid after an exposure, or better treatments to reduce the risk of long Covid, I’d start to consider my risk budget. For now it’s “as close to no risk of contracting Covid as possible”. With better prevention and treatment strategies I’ll probably consider some things that I won’t do now, but I don’t see a realistic scenario where I ever return to conferences, and I imagine I’ll probably continue masking in public essentially forever.
In a lot of ways, the situation today is harder than it was a couple of years ago. Vaccines help prevent infection but not to a degree where you can really rely on that as a first line of defense, and they barely reduce the risk of long Covid, if at all. On top of that, masking is rare, people no longer test, and if they do they no longer avoid going out into public with an active infection. In any reasonably sized office there’s basically no chance you won’t be exposed to Covid at least several times per year now.
> Covid is here to stay and that means adapting to that.
Thanks for the response.
Respectfully, it sounds like you'll never return to public life with this perspective. (Big assumption: assuming you don't have any major commodities), the reason most people aren't taking Covid as seriously anymore is that they are comfortable with their current risk assessment. It seems this is paying off for many, at least in my anecdotal experience.
Again, I'm kind of just musing here, absolutely not telling you how to live your life. I'm just interested because I don't know anyone in my personal network who takes this perspective of yours.
I get that perspective. There aren't a lot of people who agree with my risk assessment. I'm _mostly_ not going to tell other people what they should or shouldn't do (I do wish we'd go back to universal masking in a few locations, like doctors offices and government buildings. Higher risk and more cautious people can avoid restaurants and bars, but you can't just not show up if you get summoned for jury duty, or need to get treated for cancer).
Ultimately, either I'm wrong and the opportunity cost is the extra years of quality I'm losing to continued caution, or other people are wrong and the cumulative effects of infections are going to greatly impact their quality and quantity of life. If everyone chose to take some extra precautions, like masking, better ventilation, and staying home when they were sick then I'd have to give up less, and other people might not be risking so much, but I know that's just not going to happen, and I'm going to deal with the world as it is rather than as I think it ought to be.
My guess is that, although covid isn't going away, in a few years I think things will improve. Long covid is real, and it's having a real economic impact already. It's going to have a bigger impact in the coming years, and there's going to be real incentive to do something about it when it becomes clear that it's a huge drag on productivity. Prophylactic nasal sprays, better post-exposure protocols, next generation vaccines, faster and more reliable testing (preferably something that detects covid in the air rather than relying on individual testing), improved ventilation- all of that is being worked on, and I think eventually a lot of things will be low enough risk that I'll resume some activities.
In the mean time, I'm lucky to be far enough in my career that the impact of a harder line stance on this isn't too bad. Technical collaboration has always been largely remote for me, and there are ways I'm able to maintain connections with friends and family even though we rarely see each other in person.
I think it very much depends on where you live. I live in a suburb of a medium sized city that is not a tech hub so WFH is a top priority for me. I don't want to have to uproot my family and move for a job. If I already lived in a NYC or SF I could completely understand. With WFH though I am able to pay mid city suburb housing prices while working for a company in Manhattan and getting NYC pay.
Most of the tech jobs are in an area of town that is an hour commute each way so no way I am going to do that. End up leaving for work at 8 and not getting home until 6 or 6:30. With WFH I can actually dedicate exactly 40 hours a week to work and no more. Plus get away with it.
So for my WFH is the number 1 item. Pay is top as well but if I cant WFH or have to move then the pay doesn't really matter.
Although I would absolutely love to have a local office I could go into once or twice a week.
The "work from home" part of WFH isn't the most important thing. Its actually a downside - I would love to have a nice office to go into a few times a week where I could chat to coworkers.
The real benefit is that your market for possible jobs expands nationally or even globally. For my current job, there simply isn't a job like it in my home town, and if it wasn't for WFH, I would have to move to California. I think there is something to be said for including folks from other locations into the cutting edge of tech.
Does it matter if your commute is 2 miles, 30 miles, 50 miles? 10 minutes, 30 minutes, 75 minutes? For many people, that is what makes WFH a big part of the decision. When they have kids, or for any other reason want a nicer home, in a nice area, that can be bought for half the price near offices that are typically metropolitan with high demand and low supply, then a commute becomes part of the equation. Do you want to spend 2 hours a day on top of your 8 hours of working, sitting in traffic? Or would you rather have 2 hours more at home, with family -- or even working for your employer because you feel like it?
Funny story: woman kept complaining that she comes to work everyday and she doesn't understand the big deal for those who don't want to and want WFH. Months later, the company moved offices from SF to the South Bay. She was very vocal about how her 10 min commute was now going to be 45 minutes or more. Don't you love it when people suddenly realize why other people had been fighting for something-not-that-unreasonable?
I could not even get paid half of what I am paid if I were limited to my local small-town market. I don't want to move. So WFH is a requirement for me to hit your #1.
Work from home is an extremely idiosyncratic benefit though. How you feel about it will be dominated by 1) your commute time, cost and unpleasantness, 2) your home office situation (ranging from empty mansion to tiny noisy apartment crammed with family), and further down the list your age, marital status and whether you like your coworkers etc. However you feel about it, clearly many people do like it.
That seems far and away the most common outcome for a lot of knowledge workers. More flexibility than the "bad old days" but not fully remote in the mountains somewhere either.
There will be fully remote jobs but it's not going to be the norm at most companies. And I suspect that people who are fully remote at companies that mostly aren't may feel at a disadvantage.
> at that point you're just wasting money on me and your oversized office.
Some industries and companies have so much margins that they are willing to spend that much more...
It may be only those industries which have really tight margins and/or large numbers of employees that benefit from having them remote or in different geos.
Right now as in this very moment? Maybe people are more careful what they wish for, but how many of these fired people will go unemployed? I bet most land a position pretty much anywhere they point, I'm still getting LinkedIn recruiter spam daily.
>> I'm still getting LinkedIn recruiter spam daily.
yea and they have not filled those positions for a reason....
>>Right now as in this very moment?
Ironically it is very regional. Some areas in the US are seeing very high unemployment numbers. Largely because most remote work has dried up, and the few companies still doing remote limit to states where they have an office so you can not just "live anywhere" like the promise of FT WFH was
No not really. I know people who were at multiples of FAANG who struggle to find jobs for months now (SWEs & SREs). Certainly noone's going to snub an offer for lack of remote.
Also, there is (a non-unsurmountable) hurdle of coming from FAANG in that hiring managers suspect that someone coming from a FAANG to a much less cushy position simply wants to sit out a downturn or a burndown before jumping back.
> Certainly noone's going to snub an offer for lack of remote.
I wouldn't take a non-remote job until it's that or homelessnes. I need to optimize for the long term viability of my career, and that means avoiding long-covid, which in turn means avoiding working in an office.
Certainly for most people there’s a point where there’s no choice left and if your only option is to work on-site then that’s what you’ll have to do. My point was simply that there are a lot of people, myself included, who would snub an on-sight offer as long as there are other options.
I see a lot of people assuming that remote work is merely a preference, but for a lot of people it’s a lot more than that. Avoiding contracting Covid in the office is a difference between life and death for some people- and the difference between a productive long term career or a struggle to eek out a living in the face of long term disabilities due to long covid for others.
Well, at this point, for a lot of roles, the choice between never going into an office, or attending a meeting, or taking a business trip does involve pretty severe career tradeoffs. I'm on a distributed team and travel is pretty locked down because of budgets but I still don't really have the flexibility to say I'm not leaving my house (though I want to get out in general).
It’s a trade-off for sure. There are companies where you can be successful without in-person events, but that’s not going to be every company or remote team. I’m comfortable with the trade-off. I’m an extrovert, and I miss meeting people I work with regularly (even though I’ve always disliked travel). Unfortunately, putting my feelings aside, a sober analysis of the state of Covid right now has me convinced that it’s still really really worth avoiding as much as possible.
What was their previous comp and what companies are they applying for? If you're looking for half a mil comp at top tech companies, yeah it's going to slim pickings.
> I'm still getting LinkedIn recruiter spam daily.
As long as it hasn't intensified, I guess. If you start getting a lot more recruiter spam then you'll know that the jobs are few and far between. The easier it is for employers to hire the picker they'll be, which makes things much, much harder for recruiters to find a good fit and more pressure to be the person responsible for filling the position to keep their own job.
There are lots of companies that sell stuff that is profitable - where the barrier for entry isn't putting up a web page and having a developer work on it but rather have something that you hold in your hands that you can sell to someone (and that is profitable to make).
Look for product based companies rather than service based ones.
And yes, that means that as a software developer you're not likely in the "engineering" part of the company or a profit center... and that will have a corresponding impact if you are looking for a salary based on being in a profit center.
The thing is, the companies didn't overhire given the expected growth rates they were forecasting. Companies doing layoffs now are doing so with the same reasoning they used when they did hiring during the pandemic - they are forecasting their growth based on current economic realities.
The pandemic years saw companies accelerate their growth, even those who didn't have a clear 'pandemic angle' like Twilio. 2020 Q4 saw Twilio revenue growth 65% which encouraged them to hire more. Again, this is just the flip side of the current growth they are seeing (20-30%) which is causing them to re-balance their cost structure for lower growth.
There is risk in hiring during high growth periods - the risk being potentially these employees either won't deliver the value you expect, your strategy is wrong, or your growth rates won't continue. If these things happen, you might have to do a layoff. There is risk is NOT hiring during high growth periods too - if the company doesn't structure itself to capitalize on the current growth it is seeing, competitors could come in and sweep up market share.
At the end of the day, no one has a crystal ball for when high growth rates will stop, or when low(er) growth rates will pick back up again. In these cases, companies will hire during high growth periods and might have to lay off during low growth periods.
Many people seem to want to frame "layoffs" as a de facto failure, but it really isn't a failure as much as it is a company responding to dynamic market conditions (again, the flip side of hiring when growth is high). It's hard to say if the pandemic era hiring was really a bad idea - that hiring did fuel many of these companies to rapidly expand their revenue base and capitalize on many growth opportunities. Now that their future growth is expected lower, they are re-balancing their cost structure to respond.
> even those who didn't have a clear 'pandemic angle' like Twilio.
Twilio absolutely had a pandemic angle -- they help provide telephony to people outside of the office. As people suddenly moved home, they needed a way to get their phone calls forwarded to all their employees and other related telephony.
Yes, and not to mention all the notifications for all these different communication apps that people were using more and more and all the new remote work tool startups that use telephone, texting, and other notification services that Twilio offers.
Parkinson's law, first written about in the 1950s, explains that work expands to fill the available time.
In his essay he noted that what that means is that managers work to expand the people they manage as that gives them more budget more prestige and more power.
He has an amusing anecdote about the British Navy in the early 1900s to illustrate his point.
They essay is very well written and I highly recommend it.
> companies apparently overhired. We hired more than we meant to. How does that happen?
Everyone here is replying with various explanations of why these companies made the "mistake" of over-hiring but no-one is stopping to ask if it was a mistake. Sure the announcements are full of apologies and stories of taking responsibility for mistakes made, they need to be: they're marketing. But cui bono, or more pertinently, the inverse: who is negatively affected by layoffs? It isn't shareholders. Meta just did massive buybacks after layoffs.
Over-hiring isn't a mistake because the only real downside is the subsequent layoffs, and layoffs don't negatively effect anyone that "matters".
Sure there's institutional knowledge loss but that only matters for product quality which, let's be honest, isn't any indicator of revenue.
IMO BigTech had the notion that for the most part you wouldn’t be laid off unless you “underperformed”. The fact that people with long tenures and good perf were still let go definitely has an impact on how these companies will be perceived by future employees.
> IMO BigTech had the notion that for the most part
I'm not sure this is "for the most part"
Sure, FAANG may have had this notion (or at least FNG; not sure if the As ever had), along with the sort of religious/dogmatic "drinking the koolaid" type culture they were trying to instill within their employee-base (helped to no end by outsourcing large portions of their sales operations so they'd have a smaller core to "spoil").
Thinking of BigTech more broadly though, & especially big old enterprise-y tech like the IBMs, Oracles, SAPs & telcos, layoffs being arbitrary & indiscriminate seems like nothing new.
That sounds reasonable but will it change anything? Pretty much every major tech company did layoffs, and they're all going to keep paying same relative to each other. I'm a guy who wants a big paycheck, so I'll still be working for FAANGs.
Sure, now I know my job isn't 100% secure and maybe I'm less inclined to go above and beyond, but I'm sure they'll address that by having bigger "differentiation" in pay between top and average performers.
We hired more than we meant to. How does that happen?
Every explanation here thus far misses one simple fact: interest rates.
Imagine the more people you hire, the more money you make and/or the more dominant of a market position you assume.
Now imagine the Federal Reserve has lowered the Federal Funds Target rate to 0 and is performing FOMC operations to buy $9 trillion of bonds to lower interest rates across the board. This is what they did:
So imagine firms can go on a hiring spree with almost-free money. Consider that WACC (weight average cost of capital) is one of the key factors in calculating the NPV of a project. Now consider that a positive NPV means you should do the project. This means a lot of projects (and hence hiring) get greenlit.
Now imagine the Federal Reserve says, “Party’s Over, guys!” and raises the FFT rate and stops buying bonds. Almost free money goes away, the WACC increases and now the NPV of all those juicy projects goes negative.
Add in an expected recession, the ability to cull the bottom x% performers and you get a recipe for widespread layoffs.
Companies hired because other companies were hiring.
If you're big, you would have to explain to shareholders and the board why Google and Facebook are doubling/tripling in size, but you're not - is it because the company is moribund? SELL SELL SELL!
If you're small, you would have to explain to investors and the board why other startups/unicorn wannabes are doubling/tripling in size, but you're not - is it because the company is moribund? SELL SELL SELL!
Here is my company leadership heuristic: what option requires the least discussion/interaction/explanation with the board? That's the one that will be chosen.
One way to think about 10% downsizing at a company that doubles in size roughly annually is its being off schedule about a month.
IF they go back to doubling in size every year, THEN its a short term one month layoff. Looking at the numbers, this specific company example is not going back to doubling every year.
I think it gets engrained into the DNA of the company that they double every X months or X years and its hard to shift the culture when the company flatlines or even slightly declines. "Why, we always onboard 10% of our workforce per month, its just what we do" and when you grow that fast there are literally people who's entire day job is onboarding, like typing in new W-2 and insurance forms all day long or whatever.
In my opinion, it's ok if it happens to rookies. Like, small mom and pop business owners who got excited during a "gold rush" (surge in sales during CoVID) or whatever.
But like... executives with net worths $20m who are like, elected (and kept quarter after quarter) by a board of massive publicly traded companies? I thought they needed to be next to perfect / the gold standard. "Eh, we messed up, sorry, we're human". I thought the bar was higher.
Maybe I'm over-exaggerating the whole thing anyway. If Microsoft is done doing 1 time layoffs past 3 years at 10k, people after CO=oVID, not a big deal. If it's just the beginning and every quarter or so they shed more and more, it'll be interesting.
Having a shortage of people is as debilitating as having too many people. Not only is a company not able to fulfill their goals for business development, but they also can't sustain their existing responsibilities and existing customer base. People were switching jobs left and right, and inspired a desire to retain people instead of adding people on demand, in the same way as the supply chain caused people to stock up on chips resulting in today's oversupply of chips.
In 2020, companies were envisioning that the way we worked was so drastically different from how it really turned out, surprisingly similar to before. That meant a lot more investment in new markets that would need a lot more services and goods (ex. remote work meant a lot of work for people to develop homes more, allow more to be done fully virtually, move many services originally in cities to suburbs). When things didn't turn out that way, and people started to get back to normal, projects that would have had a huge return if realized and need more people working suddenly different. Then it was a game of chicken of how to admit that they invested in the wrong efforts because things didn't turn out how they had expected.
> But I’ve lost track of the number of non-answer answers, both public and private, to why companies apparently overhired. We hired more than we meant to. How does that happen?
Overhiring isn’t “hiring more than we meant to”, its “hiring more at time X than is appropriate for the market conditions at X+Y”.
It’s what normal, capital-controlled firms do in times of easy money, the hire more when throwing more stuff at the wall to see what sticks is cheap, and then when a contraction occurs, they cut and milk the stuff that is already working. Its normal business-cycle things. When there is talk of cooling inflation by tightening monetary policy, one of the core mechanisms that that works by is causing firms to cut employees in roles that don’t contribute to short-term returns as much, reducing consumer demand and constraining price increases.
(“Overhiring” is something of a misnomer from any perspective other than the perspective of the time after the hiring when market situations have tightened.)
Companies generally only make detailed plans a year ahead based on data from the prior year or two. Which works out most of the time and the times it doesn't you can't really do anything about like financial crisis and covid boost then normalization.
If you were buying in the stock market early and didn't sell (or held on to vested stock), you probably felt the same and wouldn't have predicted such a precipitous crash. It looks obvious now but if you said mid-2022 that 2023 growth is gonna be lower than even pre-covid you get funny looks. Then the unplanned growth strains support, customers are complaining, your competitors are doing well too and are going to keep R&D expense ratios, so you do the same to stop your product falling behind. Investors are high on the bubble, you can spend money with much less scrutiny
My guess from what I've heard, or at least a factor.
A lot of cheap money (low interest govt loans, etc) as part of the market propping up in April 2020, and beyond lead to a lot of incoming capital for a lot of these companies. I think just over half or at least close to half of the money printed to assist people went straight to Wall Street. That flooded the market with money which while propping up the market, probably got used to hire a lot of people who weren't necessary for "growth" or not strictly necessary and wasn't sustainable.
One thing that seems to go unmentioned, unless I missed it, is that many of these companies bought other companies and brought over those teams. Initially, they probably needed more members of those acquired teams than they do now that those products are integrated. So layoffs are almost guaranteed in that sense.
Add in higher interest rates mentioned elsewhere, and instead of buying more and more companies (which means you can move staff around to new teams), there isn’t any buying so layoffs are the result.
Because technology is still in the "land grab" era of business. Say you don't hire during the COVID boom, well, ok, now you don't have to do layoffs but now you have to battle 2-3 new entrants into the market who snarfed up customers you were unable to serve because you were understaffed.
There only "downside" to not hiring is the chance you have to layoff 5-20% of your workforce in a year or so. The upside is tremendous.
And it's still relatively cheap. The dot-com era (1995-2001) had higher rates than we do now. When we get back to 8 or 9%, like we had in the 80's, start worrying.
Also, I would guess major grows are due to a massive influx of tech-sales people.
This is just an extrapolation, but I would bet when the pandemic hit their email boxes and phones blowup with people throwing money at them and begging to "fix" their telephony system in a scenario where most of their employees are at home.
Now the market is bigger but also mostly adjusted and the 2021 tsunami of free money is over.
I'm sure many technical people are affected by this but they are a minority because they were never the majority of hires ( my guess )
Twilio isn't a turnkey platform, quite a bit of this business went to platforms like Telnyx that make Teams Phone System and similar setups super easy.
Yes. When people talk about “turnkey” they are talking about higher level aggregate products though. For example, ZenDesk is a “turnkey” customer support product that is built on top of Twilio APIs. Dropbox is a “turnkey” file management product built on top of AWS S3 APIs.
These days, Twilio does have a lot more integrated solutions, but people still think of them as just the message transport layer that they started as.
As I've mentioned frequently before, it amazes me how many people looking at tech company financials will only look at Revenue and completely ignore profits.
What the revenue/profit plot you showed for TWLO clearly demonstrates is that there is no magic point there suddenly you increase revenue and profitably starts to increase as well. I think an assumption many people have is "if revenue keeps rising you have to be profitable soon", clearly that is not always the case.
Another pattern I've noticed is that many companies are not like Amazon, which is the model of a growth company. While AMZN does often reinvest its profits (historically to the dismay of investors) it has repeatedly demonstrated that it can be profitable. For companies like TWLO and UBER it's not obvious that they even can be profitable.
When I see this TWLO chart the message I get is that the only way to increase revenue is to increase net losses. It's not even remotely clear that TWLO can generate a profit at any level of revenue.
The Uber model can be profitable - we know this because of Bolt’s cash flow generation capabilities.
Unfortunately for Uber and Lyft, they massively over-hire and over-compensate (except for drivers) relative to the more financially healthy rideshare firms globally.
Unemployment spiked early in the pandemic, aggressively lowered back to pre-pandemic levels, and then stabilized slightly lower, at least until mid-2022.
Putting it in context: the US has about 160 million people in the labor force. It's shocking when we see companies laying off 10,000 people, but in the grand scheme of things this is really quite a small drop in the bucket. In all of 2022, tech saw ~150k layoffs, or about 0.1% of the labor force.
That's insane! I think a good future indicator before joining any company is their hypergrowth ... avoid at all cost. Smoke and mirrors. When you hear CEOs blathering on doubling, tripling etc .. headcount ... run ...
Absolutely! I’ve avoided hyper growth companies for many years and I’m very glad I made that decision. There are sometimes attractive salaries and roles at these places, but ultimately you are most likely to become irrelevant and disposable. Even if you’re a particularly talented and capable person, very few companies are run well enough to ever expose and utilize that. Your career is at risk of stagnating, I think.
There are exceptions of course. The risk to reward ratio seems pretty bad to me, though.
> sometimes attractive salaries and roles at these places
yeah, it is a lottery. Though more often than not is paper money that never realized into actual $$$. I did my fair share of it, but eventually went for steady long term income, slower growth but sustainable.
I see it as investing in single stocks or boring mutual funds.
SG&A, which includes sales & marketing, grew 3.06x since 2019 -- so linearly with revenue growth, as is typical for enterprise B2B.
And on the engineering front: If they're not investing substantially in R&D, then they're likely going to flame out in the coming decade. R&D expense grew 2.62x in the same timeframe.
How much of their revenue came in because of acquisitions like Segment?
That said, sustainable growth is ok, Twilio's head count growth was "wild" to put it mild.
Holy shit !
They make $3.5B/y of Revenu qnd they can't afford 9k employees ?
How much are they paying them ?
and what are they doing with the rest of that huge pile of money ?
I wonder if a company should hire as many people even though the Covid drove unexpected traffic. I mean, shouldn't we build systems that scale by adding machines instead of adding people? Even if a company wants to hire for growth, shouldn't they hire a team of 2 or 3 to test water first, namely hiring for results instead of for investment?
I think a lot of the time the bulk added is in sales and marketing, to capture the most of a 'wave' when it shows up. The penalty for over hiring remains less than for under hiring in these cases.
https://www.wolframalpha.com/input?i=TWLO+revenue+and+profit... isn't quite as readable for financial data, but shows the context with employees (as this is about a layoff).