> Like many companies, our business has been impacted by the current macroeconomic environment, and user and revenue growth has not kept pace with our expectations. In order to run our business sustainably, we’ve made the very difficult decision to shrink the size of our workforce.
Let's just take a moment to admire this paragraph.
> "our business has been impacted by the current macroeconomic environment"
There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity.
> "user and revenue growth has not kept pace with our expectations"
So, they are growing, but not growing faster than some [arbitrary] goal?
> "In order to run our business sustainably"
Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line.
> "we’ve made the very difficult decision to shrink the size of our workforce"
This is what I don't get about all of these layoff letters. It's always the same thing: We're growing, our revenue is growing, and [usually unsaid] our costs are growing. So why not just arrest the cost growth? Stop the bleeding, don't start amputating limbs. I can understand layoffs when your business is running at a loss, not when it's growing.
> Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line.
Come on man, if you don't understand how a business can be showing signs of unhealthiness while still increasing revenue then don't post. That's such a trivial superficial analysis of reality.
I'm not going to pretend to know or understand enough about Twitch's business to agree or disagree with whether they need layoffs. But a shallow comment of "revenue go up" is lowbrow nonsense.
Or, the investors want their returns. If you don't understand how perfectly healthy business can be gutted just because investors want better number on next year's sheets and don't care about long term then don't post.
I just want to say, investors getting returns should be a goal of every for profit company (whos taken investor $$). Thats why investors risk their capital. That capital is responsible for the growth of most major tech companies. Its responsible for most jobs at tech companies.
Not saying this is an excuse to treat employees poorly. They're just as vital as the capital (employee hours is often quite literally whats bought with the capital). But I get tired of hearing only poo poo being thrown on investors.
They are the same thing! Money is just a store of work. All money was earned via work. Investors give that stored work to companies. They’re essentially energy credits
And that’s exactly the problem - risk does not confer inherent value. The employees are also taking on significant risk - clearly, if things go even slightly south for investors, they fire the employees first!
But we are in fact in the early stages of a slow train-wreck of a global economic meltdown.
Investors wanting value out of stock is one thing, especially if the stock has a dividend. But this is not a dividend stock, so that tired trope doesn't apply. Also, this is Amazon, famous for channelling revenue back into the business, effectively making the stock neutral value in a fiat sense. It would be one thing if it were any other company, but it's Amazon. The only value in the stock is the perceived value of the stock holders, and Amazon doesn't play that value-game like other corporations.
Considering they previously cut 19K jobs, and this is just a piece of the additional 9K job cuts across all business units... it strongly indicates Amazon is preparing for an even worse economy to come. Consider the Biden Administration printed about ~$10 trillion USD since 2020, and if Inflation were comparable to Dune sand-worms, this would be the Shai Hulud of Inflation. It takes a while for the economy to realise everyone is being payed less, and prices need to rise in accordance with increasing costs, but oh wait... people are still paid the old income they always earned, and so they buy less stuff, and around and round the cycle goes.
Amazon isn't selling as much as they used to, so please with all due respect... get the fuck out of here with the ShArE hOlDeRs WaNt VaLuE nonesense. A bunch of corporations are cutting jobs, because payroll is typically the #1 cost of doing business, for any business.
The truth of the matter is that companies aren't monetarily incentivized to avoid layoffs.
Layoffs cost almost nothing. Companies aren't required to pay full salaries or provide any healthcare/benefits for any reasonable period of time after a layoff.
I think even the 3 month notice period from the WARN Act is a pretty crap amount of time to provide for employees who have been terminated.
For a software company especially, they can pull a Twitter and leave the business on autopilot with the code that has already been written and axe most employees. It's not really a big deal to get rid of employees then hire them back 6 months later, but it really should be.
Also, companies like Twitter prove that the WARN Act can just be outright violated while employees are left to fight court battles they can't afford nor have time to fight.
Then you look at unemployment benefits where in most states the whole process is overly bureaucratic and wasteful system that doesn't come close to anything resembling a replacement for salary. I think that whole system would work better and be able to send more money to the unemployed if it was just automatic payments without all the overhead of having people on staff processing applications and answering phones to deal with questions, appeals, etc.
Instead, just continue all terminated employees' salary and healthcare benefits for 3-6 months after termination automatically on the employer's dime. Implement something like that and watch as our boom and bust economy gets a lot less mountainous. Companies would actually have to try and make an educated choice about whether or not to hire someone.
Companies should only be able to dispute unemployment in cases of clear and obvious misconduct. I don't even think that low performing employees who showed up and made some level of half-assed effort should have unemployment benefits revoked. Isn't the hiring of a low-performing employee the fault of the employer for not sufficiently vetting the candidate?
Maybe what I'm proposing is too extreme, I don't know, but I think the status quo is way too lenient on businesses.
How do we fix that? Require companies to pay a large severance? Then companies will be heavily disincentivized to hire in the first place due to the risk.
If we required companies to pay a massive severance, then it would disincentivize hiring to an extent. You'd still need to hire as your business grew, it's unavoidable.
If you made hiring more risky, companies may keep their employees for longer, and treat them better since hiring was a gamble. Why hire someone, who could be a liability, when you can retrain an existing employee and invest in their future with you.
I could just as easily see companies treating their employees worse if hiring is made more risky. You won’t get the big severance payout if you quit. At the same time, it’s harder to get a new job somewhere else if employers are more reluctant to hire. This situation seems like it could lead to employers mistreating you and you having fewer options to get out.
No, I think barriers to hiring lead to market failures. This includes everything from severance to health insurance and other benefits. This is part of why the U.S. has such a hard time trying to introduce a public health care system: it takes away from employers’ ability to keep people working at a job they don’t want.
If there was no friction at all for employment, if people could join a company one day and quit the next day — and if employers could do the same — without worrying about losing health care or the ability to pay rent, then the labour market would be far more of a free market than it is today. Working should be 100% voluntary and free from coercion. That would also lead to higher pay for workers because those who don’t want to work could not be forced to do so.
You would move to a different jurisdiction. US has plenty of those.
Looking at places like France or Italy, where protection of existing employees is very strong, yes, it makes companies wary of expanding. It also motivates automation, which might not be a bad thing.
They’d be heavily disincentived to hire unsustainably. Every business has to hire to some degree. The issue is when businesses hire masses of people the don’t need in hopes of it somehow translating to growth, only to pull the rug out from said employees when it doesn’t. Especially in the US, where healthcare is tied to employment, and at a time where upper management is adamantly insisting that in person work is necessary, meaning employees must physically uproot their lives to be in proximity to their job, there needs to be more assurances for employees, and not just leaving them to the whims of whoever happens to be in charge that quarter as they throw spaghetti at the wall and hopes something sticks that will please investors.
Accurately describes the public costs of private for-profit businesses' whipsawing the labor force, and foisting all the consequential costs of periodic waves of unemployment onto the public.
You want to make it even harder to get a job? The better the benefits you mandate for firing/leaving employees, the more onerous companies become about bringing on more manpower (and eventually, lower wages as a whole since they have to fund an additional 10% or whatever whenever someone leaves).
You're arguing that companies should implement these measures at the cost of just hiring people? "Companies would actually have to try and make an educated choice about whether or not to hire someone." - Isn't it already a meme that people get 3-6 interviews just to get hired at some places nowadays? and you want to make that worse? Maybe I'm reading that wrong, but employees aren't the big losers in situations where companies are doing layoffs - companies are. If they had more disciplined hiring practices they wouldn't be hired (or, more likely, wages as a whole would be slightly lower because of reduced demand)
These kinds of benefits aren't free, and I don't think it's unreasonable that employees bear some responsibility in terms of saving up or whatever if they have to be let go.
All that being said, I'm not against a couple of months of wages/warning, just realize there are costs to this (really, I'm probably arguing most against 3-6 months - that sounds like a really long time to me; It feels like a couple of months should be sufficient in most cases).
Every corporate downsizing is an example of a "private decision" with clearly visible public costs, unemployment insurance payouts among them.
Social and emotional distress have a cost, not just to the employee, but their social group and family.
But, did I catch your opinion correctly? You believe we(society) are(is) providing unemployment benefits for too many months?
In your mind, who benefits from decreasing that assistance benefit? Cui bono?
Obviously the employee being let go gets the biggest benefit - but those rights aren't free, is all i'm saying. It leads to more onerous interviews, a more stagnant and slow-moving economy, etc. eg. 6mo of guaranteed severance if the company lets you go just seems huge to me. Obviously degrees to the implementation, but still, I feel like it's a huge loss in flexibility to the company, and economy as a whole.
My presumption is that companies will generally be more reluctant to hire when severances are higher, and vice-versa. You're probably not really winning anything on average, with the inexperienced losing out the most in terms of just trying to get any job at all given the possible expense to most companies. Small companies even more so, given they'd be less able to absorb the cost of those benefits.
Anyway, can speculate all I want, I'm just saying there's no free lunch.
This idea you bring up that the jobs will evaporate when businesses are regulated sounds logical, but it’s a trap.
McDonald’s didn’t wait for the minimum wage to go up to be motivated to install automated drink dispensing machines and self-service kiosks. In fact, the minimum wage adjusted for inflation was decreasing during the entire time period in which those innovations were deployed.
On the other end of the labor spectrum, companies like Meta had no problem hiring thousands of excess employees during a period of high wage growth and scarce tech talent.
When labor generates revenue, companies will hire regardless of regulations. When labor is unnecessary for revenue, no regulation will prevent a company from downsizing.
Extra, guaranteed severance pay and a reduced unemployment insurance bureaucratic burden would be a godsend for terminated employees. I argue that for most businesses it would be a minor adjustment to their standard operating procedures.
An analogy to your point: “Cars will be too expensive if safety standards are required.”
While it’s true that cars are more expensive than they would be without those safety features, the market has adjusted just fine and the societal benefits outweigh the drawbacks.
Ultimately though nothing is free. The cost of those extra rights will come from somewhere else.
In Australia we have superannuation. The government is raising the mandatory super contribution soon from 9% to, idk, 12%. Some people act like that change is free, but that's obviously not the case if you think about it. All that'll happen is regular wages are reduced a little such that a person's total compensation is basically the same in the end.
I contend the same will be true of generous severance policies, especially those imposed on a global scale. Some of these things are worth fighting for, I'm not sure huge severance periods are one of those things, personally. At best something that scales with experience/time at a company (eg. half a month of severance per year of experience, or whatever value fits your conception of the idea), so those more attached to a particular position have more time to adjust if they are let go.
I'm not keen on the whole US model of "mandated psychopathy".
From what little I hear, the Germans seem to have found as good a balance as ever is likely to happen. There is good worker protection whilst industry is still being strong economically. Perhaps we should be looking at the way they do things.
Formerly in the UK, the chocolate-makers Cadbury was founded by a Quaker who had a strong sense of social responsibility motivated by Christian convictions. They were a profitable company who were taken over by Kraft.
We should be holding the president of a multi-billion dollar corporation to a higher standard than a random HN commenter. If Dan Clancy wants to lie to our faces with this egregiously milquetoast corpo-speak, he does not deserve serious or good faith analysis of his words. He's bullshitting us, plain and simple, and I see no reason to smile, lick my lips, and ask politely for seconds.
Hum... This one is easy to answer. Nobody is supposed to be doing that.
The entire thing is a non-statement (I dunno about the GP's accusation of lying; you can't lie if you don't say anything), so it should be one small paragraph. Or, two, if you want to say you are sorry for both employees and customers.
Nobody gains anything by the chatGPT-like decompresion of the message.
I propose a weekly lottery. Each week we select 1 billionaire and one person making less than 50k. The peasant gets a gun, 1 bullet, and a free shot from 30ft. Lottery continues until the social contract is restored.
There was a time when corporations had principles ahead of maximizing stock holder value. Maybe we should re-examine that.
While I think the original comment on a CEO, a peasant, and a gun to be crass, I want to note that society wasn't always valuing "shareholder value" so much.
First, I want all companies, regardless of who invests in them, to hold some level of social responsibility to the society around them. Sometimes layoffs are necessary, and companies can't maintain excess costs forever, but there's some value to society to maintain employment.
Second, investments that return a profit to their investors is great, and as an investor, it's something I would want. That said, it's unreasonable to expect exponential growth forever, AND it compromises their ability to focus on other principles. How much return on investment is enough before a company can focus on being a force of good? 10%, 100% 1000%, 1M%?
Third, as an investor, I question if paying execs so much more than rank-and-file employees is good. So thats another example principle. I assume a well paid exec is incentivized to increase short term value, while as an investor I value long-term growth. Having a healthy employee base full of bright talented workers (incentivized by top-tier salary) seems a better solution.
there's nothing that makes the HN comment section happy about these corporate communications. if some CEO literally fell on his sword in personal apology to these folks, they'd gripe about the blood stain.
> Everyone else is firing people. So it seemed like a good time to fire some people.
> We found 400 people to fire, which sounded like a good number because it's not as big as 500. None of them seemed to be doing anything useful, so we fired them.
> The product will not be affected and as a user you will notice no difference whatsoever.
> Signed, some anonymous guy who took over after our CEO stepped down this week so you can't blame him for firing people.
> there’s a looot of employees here we don’t like. Instead of going through the whole PIP/HR dance we’ve decided to give every manager a blank check to fire a few of you. The whole ‘economy’ situation is a perfect cover to do this now. Adios.
As someone laid off from a FAANG, it's not random. They don't lay-off the top performer. They don't lay off the woman who keeps winning peer bonuses, or the one who plays golf with the VP, or the one doing cross-team knowledge sharing sessions. They're not laying off the guy that got an out-of-band pay increase because they're so valuable to the company.
They may not use it as a PIP alternative, but it's not random. If you're an IC, you want your manager to be sharing documents with your name on it to the VP/Director. You want to be getting CC'ed in emergency product discussions. You want the senior leadership to know your name for a good thing. If your manager doesn't include you in meetings, and doesn't talk about your work, and doesn't make your presence known then your in trouble... when layoffs start and a director gets an excel spreadsheet with everyones name on, you want them to recognize your name. They're not axing the people they recognize first.
Probably I'd say something about increasing efficiency and focusing on our core product. I'd still use some buzzwords but would avoid using the passive voice as a crutch to imply it's not our fault, even though we've increased revenue and it was our choice to fire people.
I still think that what you're describing would sound like the vague passive general corporate-talk that everyone complains about. I personally don't find any problem with it, since if I were in their shoes, I'd write the same thing. But I'm always skeptical when people say that they would do it differently as the CEO. Once you actually have that responsibility, your perspective changes. There is no point in doing anything different than what pretty much every CEO writes, and that's because they do write the most optimal thing from a business perspective, as "lame" as many may find it.
I think the companies have employees to try to make more money. When things are going really well in the economy it's easy for employees to create/capture lots of value, so the companies hire lots of employees to do that. But when the economy slows down a bit, suddenly it's a lot more difficult for employees to create value, so it doesn't make sense not to reduce the number of employees.
My team at work hasn't created any meaningful value in a year. We've shipped nonstop but the things were tasked to work on just don't work out or even if they are well received simply don't add up to our salaries.
This is going to get a lot of hate, but the common refrain about WFH is "my productivity is up." That might be true, but it doesn't mean you're producing the right things, and I've found that harder to do remotely.
What does this have to do with WFH? The point is that teams are tasked with meaningless projects, which they deliver on, but because the project was meaningless, they get axed for not producing value. They were doomed from the start, due to the strategic initiatives management mistakenly decided they should work on. This is occurs for both WFH and in person work.
Not really, we keep moving from project to project because we're discovering no value in the initiative or it's outcomes after testing things out.
It's not necessarily failed management, it's just the nature of big tech. You have the OG money maker. Then you have all the other stuff to try and continue to grow or expand revenue streams.
It's fine in a good economy and hopefully you get a few big wins in amongst all the failures (think of it like vc / angel funding).
But in a downturn those excess experiments are weighing you down when you just need to stay afloat to the next upturn.
The problem here is increasing growth. That's unsustainable. Having growth is already a linear positive. Companies seek to continuously increase growth to placate shareholders, but that's a magnitude greater, quadratic.
Eventually you simply can't keep increasing. In a panic to keep up the in short term, companies are cutting their lifelines. This is just leading to failure.
Or, so long as revenue growth is increasing (first and second derivative being positive), companies are inclined to pour on as much fuel on as they think they can productively use.
Once the second derivative turns negative, they are naturally much less interested in keeping the gas turned all the way up, so they trim back on spend.
So why didn't they do it a year ago? Or two years ago, or three? It would have increased profitability at that time, too. How did dozens of already-profitable companies all suddenly decide together to cut costs within 6 months of each other? I wish they would be more specific than the "macroeconomic environment" excuse.
I swear these CEOs are like soccer players running around the pitch, just waiting for Mister Macroeconomic Environment to run near them so they can dive, clutching their calves, crying "impacted! impacted!"
Because 3 years ago (2020), their average concurrent viewer count increased from 1.26 to 2.12 million and average monthly streamers grew from 3.6 to 6.9 million. Both nearly 100% growth. Then the next year they both grew by about 30%. The company, for good reason, probably thought they needed more people -- more support staff, more payments to process, more server admins, more HR people to support those other people, etc. But in 2022 growth declined, both viewers and streamers. It is still Q1 of the next year, a perfectly reasonable time to lay people off as future projections have been lowered.
I know it's more fun to rant on HN and try to make corporate executives seem evil and nasty and selfish, but if you did a bit of research you'd see it is all pretty justifiable.
You can be reasonable from your point of view, and still be evil and nasty and selfish.
I'll bite the bullet: damn maximizing profits. It's a bad, inhuman goal. You got people creating things other people enjoy and are making money. That is more than enough, more than most people get. When you maximize profit at the expense of your workers, instead of just keeping it sustainable, you are acting like an evil, nasty, selfish bastard.
How the hell do we get coders, mostly workers, defending the POV of the employer like that?
Coders of the world, *ing unite :P
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But if they don't maximize profit, another company will, and eventually it'll eat them for dinner.
Well, lets get some laws then? Say, lets *ing cap profits. Company sizes.
Again, workers of the world and all that
Communism was a resounding failure, and one sad consequence of that failure is that now we seem ok with growing concentration of power and wealth, and everyone seems to think like a capitalist, when so few actually are.
An important goal for a decent democracy is to counterbalance the inherent tendency of concentration that comes with capitalism, so that common people keep having cash and capitalists keep working for said common people.
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But then other countries will...
(see above. Laws and all that. Free movement of capital, low tariffs without regard to other democratic and social goals, they stop democracy on its tracks while concentration grows)
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While we are at it? The whole 'build a moat' startup thing? Well, it can (maybe?) protect you from google and facebook, but is also a call to reduce competition in a way that specifically harms users and workers
(coders of the world, unite with the workers and stop pretending you are not workers yourselves?)
(coders of the world, kindly notice that your employers are actively trying to reduce your share of the pie, and, well... At least think about it? Call me maybe?)
Maximising profits might come at the expense of the worker, but it benefits the economy as a whole. The reason maximising profits is such an excellent goal is because it indirectly leads to maximising profit per worker (especially in lean times, when there's less cash to go around and you focus more on efficiency as opposed to revenue). The highest net benefit to society comes from having the highest possible productivity per person. Layoffs suck, but they also improve business efficiency since in general the less productive workers are laid off. It's a bit harsh to say, but those freed-up workers eventually end up somewhere else, where hopefully they fit in better, be more productive etc.
A big reason other systems fail is because they don't focus on that metric. There's no feedback loop from per-person productivity, resulting in either stagnancy or even degradation in living standards.
If the metric is important (and it might well be! -- I bet it is) it needs not translate into more profit for amazon.
Say you want to maximize efficiency, and you think revenue per worker is a good proxy. Then you can use the extra resources for:
* charitable donations
* keeping the employees and putting them in an open-source charitable division
I agree that market forces are powerful and can be used to do good things. I disagree that this fact should be used to justify evil behavior and greed
(also, laying A off and hiring B is ok -- they are not, they are reducing the workforce)
(also, the argument is symmetrical. If they had not hired, and were profiting too much, I'd think that almost as greedy and evil -- the difference is the disruption of the life of the person fired)
(also, firing A and giving the money away to some charitable cause is ok)
(also, profit maximization pure and simple is ok, as long as the government has the balls to take a lot of it and redistribute, to keep capitalists from concentrating too much money -- concentration leads to distortions, in the sense that the needs of the ultra rich are prioritized. The point of having a healthy economy is to have people in general live more and better lives.)
How is any of that different to just paying out the money to shareholders, who can individually choose to champion said causes themselves? I don't see why the company should do so.
I suspect the biggest difference in how I see this compared to the feeling I get from you is that most things are positive-sum games in capitalism. One man's profits is another company's capital is another employee's wages. The profits of the company don't disappear, locked up in a bank never to be seen again. They get invested by the shareholder somewhere else, or spent on something, and so on. There's nothing inherently "greedy or evil" in this process.
This process can be very indirect (how does an investment in Apple today help? By providing the incentive for many of these companies to be built and made public in the first place, sharing their profits across many people), but it is there. Some explicit redistribution may be necessary, as in many countries with public healthcare or strong welfare systems, but having a stable core of a private market helps generate the overall resources to run everything.
Maybe there's a better system that can distribute the wealth more evenly - but the best examples we've seen thus far come from welfare-state western democracies, which all grew up on the same basis (and are all poorer on an average basis than America, who has a much weaker welfare base). These aren't necessarily related of course, America is stupendously rich in a lot of other ways, but it's food for thought.
It is possible to both understand why businesses operate the way they do and to sympathize with people who have lost their jobs as a result of how businesses operate.
If you really hate how businesses operate you have a couple of options. You can go work for a non-profit, a public university, or somewhere similar. They generally are lower stress, higher retention, but significantly less pay. That's the tradeoff.
You can unionize to get some worker protections, but of course this is Hacker News where no one wants to unionize because they think it's beneath them; nevermind that even film actors who make orders of magnitude more money have even unionized.
The vast, vast majority of actors in SAG make far less money than software developers. Only a small percentage earn enough to not require some other job.
Yes, famous actors get paid millions, they aren't really the people SAG is trying to protect.
Most famous actors didn't start out that way so I would still argue it is.
It also doesn't change the fact that software engineers largely tend to be anti-union while simultaneously protesting things unions are designed to protect.
what evidence do you have that Twitch is making money?
why do you seem to think employees should have a job for life, anything else is "evil"? can you concede that some percentage of employees, for a variety of reasons, are not providing value to the company?
And you can’t fire all of the engineers and replace them HR drones and expect to maintain the revenues and profits. Under you theory, companies should start laying off at the top and work down until the proper $/person metric is obtained
That is preposterous the big tech companies would never do anything like cullouding with one another to depress salaries and reduce expenses, that is absolutely insane and conspiracy minded, I mean they super swore pinky promised they wouldn't do it after that one time Google and Apple did.
They don't exist to maximize profits. Publicly traded companies try to maximize profits in the short term. If it was over long-term they would be doing things people would generally like more.
> There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity.
Well, everyone ion the business knows what's going on with twitch and the streaming-market at the moment. So no reason really to explain further I guess?
> So, they are growing, but not growing faster than some [arbitrary] goal?
Actually, in the last months they were shrinking. Partly because viewership around this time of the year is always shrinking for reasons, but this time even more, because pandemia inflated the market, and now as it's ending, the inflation also disappears. Overall, there is still growth compared to the time before the pandemia, but nobody really knows how it will hold until the end of the year. Additionally, the gaming-markted is being a wild mix at the moment, and most attempts of twitch to diversify their content have failed. So they are a bit clueless at the moment I guess how the ship will move and grow.
Mass layoffs aren’t the same as revisiting a personal budget. They are fairly drastic measures.
To use your analogy, a layoff while revenue is growing is like continuing to get raises at work, but when this years raise isn’t as high as you expected, you start pawning off possessions for the cash. If times were dire, perhaps it makes sense. If you are still making money, it seems more prudent to tamp down on new purchases than to try and take back old ones.
Companies don't use their budget only for profit and not to "buy food", that's a ridiculous assertion. Companies get income, the use it to pay for all the operations that went into making that income, usually mostly salaries. Only what's left over is profit.
And if a company sees that next year, when it expected income of 100m, it instead will only get 80m, that difference has got to affect it somehow.
I think we are confusing derivatives here. No, when my income is growing from year to year, but just growing a little slower, I don't revisit my personal budget. I think these company leaders are seeing the second (or third) derivative starting to go down, and are panicking without actually losing money (base measurement) or revenue (first derivative).
Jack welsh school of management: you've got to reward the top 20% and layoff the bottom 10%, about once a year. this is very much possible when there's an oversupply of labor.
You would also be angry if they wrote "we fired our 400 worst employees because we decided they're not worth their salaries" which also happens to be exactly true.
Up there with anti-whiteboard-interview screeds, the critique-the-tone-of-a-layoff-post comment is a mainstay of the hacker news comment thread: as tiresome as it is uninteresting.
Everyone is going through two things. Correcting irresponsible hiring over the last couple years, and a strategic inflection point. While the former has mostly happened, the latter is going to continue to happen until new business models are found.
It is very common to see new CEOs at this time to “make things more contemporary” and with that is the redundancy of roles and even people who may not adapt to the new culture.
Much of the business speak here is trying to say “we’re reducing our workforce to make room for new roles and new people who will match our new strategic direction”. Every company is confused internally and need strong leadership to get through it.
Literally all ordinary rules of business go out the window and people are firing from the hip right now. Pun intended.
Leave costs where they are? Inflation likely causing many of their inputs to increase. Employees tend to want raises, bonuses and stock options. Health insurance basically always goes up. Customers demanding more features/quality (i.e. faster streams, 4k) while bandwidth/server costs rising. Marketing visibility often set via competitive bidding or auctions. They already reduced what they pay to their content creators late 2022.
> I can understand layoffs when your business is running at a loss
>> "user and revenue growth has not kept pace with our expectations"
> So, they are growing, but not growing faster than some [arbitrary] goal?
Actually the absence of a direction in this sentence is specifically vague language that allows the implication of, but not statement of “negative growth”.
Setting targets for your business is not arbitrary. No business with investors just dials in an easy forecast. All investors demand growth with profit, otherwise they would put their money elsewhere. Goals are not set to make employee lives easy.
There is a lot going on the back-end of these big streaming sites and also they have "support over 25 languages, in order to provide 24/7/365" so I'd guess it's in the thousand+ range.
> What cash back do you get on your credit card? 2.625%? High yield savings account? Money market fund? 4.6%?
None of these actions by me directly result in the loss of livelihood or uprooting of lives of other people.
If you told me that by moving my money to a high yield savings account, it would result in my friends or family members losing their jobs, you bet your ass I wouldn't do it, "personal profit" be damned, and that isn't a hard decision to make in the slightest.
Twitch's leader are making a conscious decision: profits over people.
Yes, agree. Of course, it could alternatively create a poor customer support experience. Driving a harried reaction like hiring outside help costing more than you saved and distracting the whole org, creating more undesired side effects.
Or "while the Fed had the punch bowl out, we drank heartily like everyone else; when they took it away, we grabbed out coat and headed home to sleep it off a while..."
Because we’ve set up the incentive structures to make growth the most important thing. Shares increase when you grow - the revenue barely matters to the people in control
> Like many companies, our business has been impacted by the current macroeconomic environment
I must be living under a rock because, outside big tech self-inflicted wounds, I don't know what they are talking about. Is it Ukraine? SVB? Chinese housing market?
When interest rates are low, money flows more freely. When interests rates are up, it's harder to lend/borrow, money flows less freely, and the economy cinches up as a whole. This is a major simplification to a very complex system, but it happens because e.g. as someone with money, you'd rather just put it into a government bond that will for sure pay you 4%, rather than chasing speculative investments. When that same bond is only paying out 1%, you might be more inclined to put your money in a start up and see what happens.
If this is the case, why are layoffs currently mostly in the tech sector and not everywhere? Unemployment budged .2% from Jan - Feb but this is hardly indicative of anything.
Is the commonality tech companies or high-growth companies?
(Virtually all high-growth companies are tech companies but I don’t think the inverse is true - unless that’s how we define “tech” now which is plausible.)
High-growth companies include both those that plan to grow fast and those that are growing fast. The general theory is nobody really knows how big such a company can grow. (eg, Amazon circa 2006 is dominating e-commerce. Can it get any bigger? Spoiler: yes it can.)
So these companies offer an opportunity: invest money to build more teams doing effectively random trials and see what sticks.
This is the investment opportunity the parent comment described and that’s the calculus that’s changed.
What I find interesting is the same trade-off applies to both profitable and unprofitable companies. Unprofitable startups are deciding where to burn their runway, weighing against the projected cost of raising on more. Profitable companies are deciding where to re-invest profits or whether to pay dividends to shareholders.
Because tech ballooned the most during the covid reaction.
e.g. META has roughly doubled in headcount since 2020. Now it is laying off a fraction of that new headcount.
I'm sure there's a similar stat for Amazon/Twitch.
And think about how much stuff people were buying on Amazon when everything was closed. Think about how many hours of twitch were watched when it was illegal to do anything else.
You can't look at e.g. Walmart and say "hey they doubled in 2 years". Thus, no lay offs needed
Everyone responded with essentially the same thing: that tech over hired, which is not something I am disputing. But parent comment mentioned the economy cinching up as a whole when interest rates rise, but we are not seeing that(yet).
The tech sector is doubly impacted. First, a lot of these ZIRP jobs are in technology as that’s where the returns are. Second, there’s another class of tech jobs that are themselves dependent on tech companies (Cloud providers, managed SaaS products, etc.)
1) more excessive hiring during 2020-2021-early 2022 in tech than in most sectors
2) some sectors such as domestic manufacturing are ramping up capacity, thus need more people than they expected to, whereas tech companies that thought pandemic-induced changes would stick need fewer people than they expected to
3) lots of excess liquidity went to investors who liked to invest in tech, hoping to get the next FB/Apple/etc., thus it is more of a change for them when that stops happening
4) let's face it more bogus business ideas in the last 10 years were tech than anything else; when interest rates go up is when they face a reality check
because tech was was the biggest beneficiary of monetary expansion, at least by percentage gains in a sector, and would have to be a close second in absolute dollar amounts if not first.
basically TINA principle: there is no alternative, which means that an infinite amount of money was created for a finite amount of assets, people that are paranoid about beating a couple months of high inflation didn’t know where to put the money
established industries with clear revenue trends already had stretched and unattractive valuations
real estate already went to unconscionable price levels
government bonds at record prices and lowest yields, in Europe people would accept negative interest rates literally willing to pay the government instead of investing in unproven businesses
but between the unproven entrepreneur there was still lots of big tech that was the recipient of cheap money and high valuations.
now people are rebalancing. new money isn't being created and existing money is purchasing treasuries at 5%
Same way Google and Facebook are hit by the reduction in advertising spend. Twitch is, from a business perspective, an advertising company. The streaming is a means to that end, just as search or social media is for Google and Facebook.
And their other side is discretionary spending. Probably of the lowest order as many are likely to pick other discretionary things over donations to streamers. How many will pick donating to streamer instead buying maybe a cheeseburger or some other treat...
Why would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale.
Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.
Because their income comes from advertising. Because the economy sucks in general, companies in all industries are being more careful with where they spend their marketing budget.
You can see this reflected in the revenue of other advertising companies as well such as google and meta.
But to be clear the economy does not currently "suck in general" hence the confusion over blaming "the current macroeconomic environment".
These companies (including advertisers) are trying to get out in front of an economic downturn that hasn't yet materialized. And if it does materialize, all these companies will have a hand in causing it due to their reduced spending and layoffs which we know has potential to cause an economic slowdown.
> But to be clear the economy does not currently "suck in general"
To be clear, what you say has little effect on reality. The decreased discretionary spending, housing market approaching a complete freeze, layoffs (those not being publicized in the news), inflation impacting every vertical, and the various shuttering businesses (survived covid, but died anyway), are what makes it "suck". This is not quantitative, but it is the sentiment.
>This is not quantitative, but it is the sentiment.
I'm looking forward to our first "just bad vibes" recession in which all the quantitative numbers behind what you describe are mostly fine, but we are just going to "sentiment" ourselves into a recession anyway.
Belief in a coming downturn can cause one just as easily as some more tangible factor. Intro econ was a long time ago, but I think this is one of those It Is Known type things.
So, Google still grew, and I’m not convinced the performance of Facebook says anything except that people are tieing of Facebook (and techbros like Zuckerberg)
The owner of Amazon was the prime beneficiary of VC funding to tech companies, because oftentimes a large chunk of that went for AWS. In that gold rush, Amazon was the one selling shovels.
The gold rush is now over, for a while at least, so Amazon is probably seeing a lot of their big AWS customers cutting back, or in some cases disappearing. Essentially, AWS is in the same position as SVBank. If your money comes from lots of tech startups that don't want to have their own infrastructure, and didn't used to need to worry about cutting costs, but now they do, then you can see big "outflows" (except unlike SVB it's more decreasing revenue).
If they laid off 400 employees, it’s probably because they could afford to (nice way of saying: they were not necessary to keep the business functioning), likely a bet on innovation. As the economy struggles and the prospects of such innovation happening seem far, it makes sense that even a big company like Amazon may choose to cut their losses.
Amazon needs to provide attractive returns to shareholders just like a unicorn. If you $AMZN is not up 5% YoY, then sell it and park it in a 6 month T-bill or I series bond. And as holder of $AMZN, I can tell you that they are definitely not up 5% YoY, let alone the 15% that they generally try to get to.
MYbe it’s time for them to realize there is a point where you have all of the customers, and it’s ok to be boring and just pay a dividend instead of constant growthgrowthgrowthgrowth.
Huh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?
Bonds are essentially the "free" rate of return. Assuming you trust the government, there's no reason to earn anything less. That means that everything needs to return something above the bond rate. That goes for debt too, why would you write a riskier loan to someone at a lower rate than the government?
LPs looking to put their money somewhere (or many somewheres) will reconsider as rates change. It might not be "vc or bond" but it will cause every part of the financial system to re-calibrate. Maybe a rich person takes out debt against their assets to invest in a VC fund in 2020, but now that the rates rose and stock values fell, the interest rate on that (or comparable) debt is too expensive. For example, Elon's loans for twitter range from 6% to 11%, and would likely be higher if written today.
TLDR Interest rates don't need to compare 1:1 to a VC fund's returns to have an affect on the decision by LPs to invest in it.
I don’t understand how this is affecting AMZN’s cash flow though. Seems like both their costs and revenues would scale similarly with inflationary effects, leaving a similar profit margin %.
I don't know, so I'll offer a plausible, to me, story: Consider that AWS is Amazon's income [0]. VC funded companies may well be a significant portion of its customer base. Hence, if its customers are tightening their belts, they may take short and long term measures to limit their spend on AWS. Amazon presumably prepares for this by lowering twitch's budget.
Once you realize that sometime in the past 10-20 years the economy started having nothing to do with actual goods and services and instead turned into some sort of weird game played by the powerful and the rich it makes more sense.
Personally I peg it happening sometime around 2008 when it became clear the rules didn't matter, consequences were for the poor and party hearty. Explain how else a company like Uber that was losing money on every ride was able to raise billions in VC funding.
All of that is a direct consequence of low interest rates. If money is cheap and easy to borrow, there is less pressure on a business like Uber to turn an actual profit. Instead, investors will encourage them to grow aggressively in the hopes of capturing the market. Once liquidity dries up, there will be more pressure to actually make money.
But the economy is working as intended and it's actors are merely reacting to incentives. The question is whether the wrong incentives have been set that have created large sectors of the economy that are completely dependent on permanently low interest rates.
It's not 100% retail investors, and whoever owns it today surely wants money. I don't know Uber's actual finances, but as long as you make enough money every month to cover last month's bills, you don't need to make a profit.
There are a lot of games that can be played with money to keep a company unprofitable but alive and healthy for a while. Look at amazon, a famously "unprofitable" company for almost 2 decades.
VCs want to capture markets. That's why they pour money into launching what could be the next market leader, even if the model won't work at predatory prices. Because once they own the market they can raise the prices to whatever they want.
I don't know for sure, but it seems to me that advertising spend must be way down, due to interest rates and (related) the expectation that consumer spending will / should be pulling back over the next X months. All the biggest layoffs seem downstream from consumer spending in some way or another.
In case of twitch it's more simple: pandemia is ending, people move back to their normal life outside of twitch. Revenue in the last months has been shrinking for streamers, and thus also for twitch. Their business was blowing up in the last 2-3 years, when so many viewers were at home. And this also resulted in Twitch hiring many new people, like so many other tech-companies. And like so many others, they are now shrinking again, adapting to the new situation.
Advertising, which is how twitch makes money, look at GOOG, FB, Snap revenues, companies are bracing for a recession so have dialed back ad budgets. Enterprise tech spend and consulting/professional services budgets are also being put on hold, it's not the whole economy but the slowdown is clear and obvious in these industries
SVB as an excuse for any company turmoil is criminal. Literally nothing happened. Everyone got all of their money. If any company uses SVB as an excuse they must be named and ridiculed for lying.
There is something romantic about it, but make sure you don't accidentally admire it more than the captain who keeps their ship safe and thus neither of them go down at all. All those captains out there who are faceless/nameless because their ship didn't get blown to pieces.
It was known for a while that he will leave, so it's not like he left because the company has problems. I mean, they are also "only" firing 3-4% of their workforce, which in my understanding is a pretty low number for a mass layoff. And it's mostly a reaction to their massive growth and hirings in the pandemia, which is now over as the company is shrinking back to a normal size.
A bit unfortunate that their blog format has "In other news" in giant letters right under their announcement about laying off 400 people. Maybe a blog isn't the right place to make news like this public.
Every one of these companies doing layoffs says something like what's in this update: "user and revenue growth has not kept pace with our expectations." I find it really hard to believe that all of these companies assumed that growth during Covid was sustainable and would just continue into eternity. I have a small restaurant supply business. Our revenue was up almost 50% above our best year ever. We knew there was no way it was going to last forever. All of these companies just sound so disingenuous when they say their growth didn't keep up with their expectations. They knew this day would eventually have to come, they just don't want to come out and say that.
Just index funds for the most part. I don't attempt to time the market really. I assume you're implying that if I had known things were going to slow down I should have made a fortune trading stocks. I'm not saying anyone had a crystal ball for when the market was going to slow down. I think that's kind of a fools errand for most retail investors. All I'm saying is these companies keep making statements saying that growth didn't meet expectations. It just feels really disingenuous to me is all I'm saying.
unlikely as AFIK Amazone hasn't fully folded Twitch into it's structures additionally:
Firstly Twitch due to historic reason is less likely to have any personal bloat.
Secondly running a streaming platform isn't cheap (media live cross decoding, high data transfer, more requirements for the data transfer due to less buffering, still moderation and copyright detection, some licenses with big copyright holders etc.) and from why I have heard twitch isn't doing that well (through not terrible).
Thirdly there was a influx of live streaming usage during COVID which now likely is receding.
Fourthly it relies a lot on people not just subscribing but "gifting" money (bits, subs) to streamers for little return besides bragging rights, a thanks maybe some emotes and feeling good because of the gift. In a economy which feels more unstable people are less likely to want to spend money this way, or can't even if they want to.
I would guess Twitch has more reasons for cost cutting then Amazone, but at the same time I would guess in different to Amazone Twitch is more likely to be negatively affected by the layoffs.
So they took in an extra 200 million $ in revenue in 2022, great. Though that doesn't necessarily mean they'll continue to take in more revenue given that 2022 was the year lockdowns pretty much disappeared everywhere and I'm guessing Twitch's model benefits from people being stuck at home.
But let's ignore that, and say they'll keep making that 2.8 billion. Did they hire 1000 new employees between 2021 and 2022? Because if so, that probably means they're making less profit even with an additional 200 million $ in revenue. Assuming the fully loaded cost per employee is ~200K/year, which according to Levels is on the low end (their L4s make 209K, L5s and up make much more)
Couple that with investors now clamouring for returns, and from the business side you can see why reducing their cash out-flows is at least appealing.
And 2023, most likely this will go down hard. Revenue for streamers has already been down the last months, more than usually around this time of the year. 2021 and 2022, Twitch had a massive growth because of the pandemia, so many working from home and not being able to spend the money on other things like events or travel. This is now over, and their revenue is shrinking.
If I was more suspicious I’d be wondering if the sudden huge rise in ai was at all linked to the sudden huge waves of layoffs. Maybe all these big tech companies have seen something before the rest of us?
I'd be curious to see how the sudden surge of available workforce is affecting the average salaries in the IT, compared to other fields that weren't touched so badly by the layoff wave.
There had been a huge deficit of qualified worker due to SV/FANG/.. sponging them up.
So we likely won't go to a oversupply situation.
But as under-supply decreases and in turn saleries should fall.
But then salaries had been in some contexts so high that most startups couldn't afford paying it, so just by accepting this salaries without them falling the average would fall.
So I don't expect the salaries for mid to high qualified IT workers to fall too much outside of SV, and especially outside of the US. Like it still will be a pretty well paying job, just not necessary through the moon high salaries.
Through it might get a bit harder for low qualified IT workers, much harder if they are unlucky wrt. current AI development.
Let's just take a moment to admire this paragraph.
> "our business has been impacted by the current macroeconomic environment"
There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity.
> "user and revenue growth has not kept pace with our expectations"
So, they are growing, but not growing faster than some [arbitrary] goal?
> "In order to run our business sustainably"
Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line.
> "we’ve made the very difficult decision to shrink the size of our workforce"
This is what I don't get about all of these layoff letters. It's always the same thing: We're growing, our revenue is growing, and [usually unsaid] our costs are growing. So why not just arrest the cost growth? Stop the bleeding, don't start amputating limbs. I can understand layoffs when your business is running at a loss, not when it's growing.