Pure speculation, but I wonder if it's not so much AI as tech companies realizing they actually can do more with less. And, again, I have no evidence to back this up other than "feels," but I swear when Elon bought Twitter and cut so much of the workforce that's when sentiment seemed to shift materially. I wonder if that wasn't a bit of an "aha" moment for mega tech and tech in general. It's like all the major companies said maybe we don't need as many people as we have. Of course people are going to debate whether the changes at Twitter had a monumentally-negative impact (they may very well have in terms of revenue, but I'm not so sure in terms of absolute or even relative profit).
Of course, as a sibling comment, I think, said it could be the end of ZIRP. But maybe the truth is it's end of ZIRP, seeing a "peer" shed employees en masse and not fail outright, and AI.
Twitter deal in 2022. Headcount by year for a few (not suggesting this data supports my theory; just sharing to reality check)...
https://www.macrotrends.net/stocks/charts/META/meta-platform... https://www.macrotrends.net/stocks/charts/GOOG/alphabet/numb... https://www.macrotrends.net/stocks/charts/AAPL/apple/number-... https://www.macrotrends.net/stocks/charts/MSFT/microsoft/num...
Edit: grammar
A huge amount of staffing cuts were to teams working on things like moderation or combating bots, which are areas Elon doesn't care about continuing development on. He's not so much doing more with less but rather doing less with less. We can debate about whether or not the projects he cut were worthwhile, but given the company's disastrous finances I wouldn't give him the benefit of the doubt.
The bull case is that he sacrificed Twitter capital in exchange for political capital, which I think is pretty sound. But that doesn't really apply to most CEOs running most businesses.
Good point. I shouldn't have said more with less. I should've said Twitter lost 80% of its employees and somehow still exists (I thought it was "only" 50%). 80% is nuts. That said, if 100% of those reductions were outside of engineering (they weren't, I realize) then I'd mostly agree with your point. But I do think that even in that case it would cause every other company to ask some hard questions about staffing that could lead to layoffs and/or have implications for hiring.
All feels on my part just to hopefully add to the dialogue. Nothing scientific here.
I'm sure some CEOs followed the Twitter lead, but I also think the entire industry was already shifting with regards to headcount. A lot of companies were hiring excessively going into that period and middle management bloat was a well-known phenomenon.
The overstaffing problem was painfully obvious at many of the companies I spoke too as a consultant during that time. They'd have bizarre situations where they'd have dozens of product managers, project managers, program managers, UX designers, and every other title but barely a handful of engineers. It was just a big gridlock of managers holding meetings all day.
One friend resigned from Twitter prior to anything Elon related, specifically citing the fact that it paid well but it was impossible to get anything done. Not all of Twitter was like this, but he was outside of engineering where he was one of scores of people with his same title all competing to work on tiny features for the site or app.
The pendulum seems to be swinging to the other direction, where companies are trying to do too much with too few people. I still see a lot of growing (or shrinking) pains where companies are cutting in the wrong places, like laying off engineers to the point of having more people with {product,project,program}-manager titles combined than engineers. I hope we settle out somewhere more reasonable soon.
This all rings true to me. I would take it a step further and say that during normal times throughout the history of corporate America, and especially in boom times, management will let fiefdoms grow fairly unchecked. Then an external trigger causes them to re-evaluate and that's when they're like "holy shit we don't need nearly this many people."
For those of us who have been around the block (i.e., are old), the only times I've personally seen companies aggressively cut personnel is during economic shocks (dotcom bubble and housing crisis as two examples) and only then were the companies running lean (I wouldn't even say they were running bare bones; it's the only time I've seen headcount actually optimized for the work being produced).
I think the Twitter purge was actually an example of a major trigger. Not on par with the previous two I mentioned (obviously), but it was so high profile that anyone in tech took note of it, which is why I made the original comment. I've never seen so much discussion around a layoff for a company that was not imminently imploding (some may say Twitter was about to implode, but if you said that at the time I think you were wrong regardless of the state of its financials).
Yes, that was the turning point. You have to remember, in addition to the end of ZIRP this also happened after a few years of an extremely strong employee's market. Jobseekers were asking for and getting some pretty wild packages.
Elon's actions were a clear signal to the industry and investors that it's time to "fight back" and show the labor market who's really in charge.
It goes beyond Elon. PE was (are?) pressuring Google to lay off more employees because their pay was so high. And the Fed said that worker pay was "too high," in the context of inflation.
Basically, the ownership class was pissy that some people were able to actually get away from exchanging time for money.
Yep, precisely! But all that was happening on a slow burn. Elon's deliberately public actions at Twitter were a (very intentional, I suspect) match to the powderkeg.
Do people see Elon's takeover of Twitter as a success? I think he leveraged Twitter as a social media platform to make himself wealthy, but as far as I can tell, the actual company has been losing a ton of money.
I was trying to stay away from the debate about the success of it by making that comment about it not failing even with a fraction of the former employees. My sarcastic reply to your question, though, is it depends on which side of the aisle you sit on. More seriously, there is something extremely telling about a tech company cutting half or more of its workforce and still living. I can guarantee you every major tech company took note of that reality and so I have to believe it begged some questions about headcounts.
It brings you back to that old HN saw "why do these companies need so many people to do that?" Maybe the answer actually was they didn't/don't.
>there is something extremely telling about a tech company cutting half or more of its workforce and still living.
this seems a gross misunderstanding of how software companies work at scale. Twitter doesn't hire engineers to run a monitoring system cause they need it to stay alive (there are alternatives to building and running their own!), they chose to do it to save money or increase revenue.
Twitter doesn't need an ad network, they can use Google, or build their own and take more profit. They might know that for every 3 engineers they hire on their ad network, they increase their click rate and thus revenue.
The same can be said for any infra team. You don't need to build much infra, but companies do it because sometimes it's a way to save hundreds of millions of dollars in cloud costs or licensing fees.
Are we disagreeing here? I'm not sure how you took my comment, but it seems like what you're arguing here doesn't really rebut what I was saying. Or at least is not directly related. FWIW I agree with everything you're saying, except for the tone, which, to be honest, I don't love.
>" Maybe the answer actually was they didn't/don't.
I'm disputing the claim that the above statement was ever in question. FAANG doesn't employ people because they mistakenly thought they needed that many, they do it because adding more employees has either lowered their infra costs or increased their revenue.
Typically cutting is a top-down decision, while hiring is organic. If they think they can justify budget for it, managers want to hire. Managing more people has direct rewards apart from anything the headcount is doing for the organization overall, so incentives are misaligned.
All the big FAANG companies that did major layoffs have rehired to the original amount since then.
I really believe the layoffs were not about needing less people, it was about gaining some ground in the employee/employer dynamic.
From a pure economics perspective, this is healthy for the business.
There are always low performers. Periodically transitioning out the bottom 10% or so, and rehiring different people, possibly in a different departmental distribution, is always net beneficial to the company.
Using regional/national/global events as the explanation is always better than blaming yourself.
Of course, it's impossible to segregate people into performance bins with perfect accuracy, and it's always bad for individual humans in the short term.
Arguments are made that it's good for society in the longer term, and wars are fought between opposing sides of that opinion. :)
> More seriously, there is something extremely telling about a tech company cutting half or more of its workforce and still living. I can guarantee you every major tech company took note of that reality and so I have to believe it begged some questions about headcounts.
I just don’t understand how it’s possible. I admit I was one of the skeptics predicting Twitter’s immediate demise after laying off so many. Everywhere I have ever worked had at least 3X more work to do than staff to do it. You can’t get rid of even one person without feeling the pain. I just can’t fathom working for a company that can get rid of so many people and not struggle! My current company wouldn’t be able to even keep the lights on in the offices if it lost 80% of its staff.
Ignoring the financial aspects, I agree to some extent with OPs opinion this trend of doing more with less engineers really took off following Elon reducing Twitters headcount.
It's worth remembering Twitter was a buggy mess before Elon bought it. Sure it's still a buggy mess today, but the staffing costs are dramatically lower.
Losing a ton of money was something Twitter was also pretty good at even before Elon too - only profitable 2 years out of the 8 leading up to the acquisition while it was still a public company etc.
To be honest if it wasn't for Elon's hand in various other ways and he was somehow perceived by most to be apolitical many people would call the cuts a success and it would be losing a lot lot less or be making money.
For every engineer who sees things not working on the site and going unfixed, there's a manager who sees how many people still use it.
We don't know if it is losing money. It's a private company.
He reduced the headcount to roughly what it was in 2017. At the time of the acquisition, many of the employees were in non technical roles, contributing nothing of value, posting videos about their empty work day on TikTok. Jack Dorsey admitted that he made a mistake by over hiring - more than doubled the headcount from 2017 to 2021.
https://www.statista.com/statistics/272140/employees-of-twit...
We know the value as perceived by investors has dropped. We know usage and revenue has dropped. There are now several competitors in the same space, some fairly successful.
Meta is probably the better example, here - dropped 20% of it's headcount (11% in Nov-22 and another ~9% subsequently, plus whatever's happened since Jan-24) and then 7x'd it's stock price. You can probably argue about decommitting from the "metaverse" fever dream idiocy, but a lot of companies looked at the deep cuts to headcount and certainly thought "AI or no AI, a lot of these people aren't adding value and Meta (and possibly Twitter, depending on what you believe) prove(s) it."
I’ve heard this Twitter example bandied about tons of times, but I’m always confused. To be clear, I’m generally sympathetic to the view that there is tons of bloat at tech companies and big companies in general.
But I’m confused by Twitter being an example because:
1. Twitter went private so we don’t really know how well or poorly the business did after making the massive cuts
2. The little information we do have indicates that advertising revenue significantly declined after the acquisition
Since Twitter financials are private we can only speculate, but my best guess would be that Elon took a bloated, unprofitable business and turned into a lean, unprofitable business, which doesn’t seem all that impressive to me.
What about this story warrants it being dragged out into every conversation about businesses cutting bloat, I cannot understand. People seemed genuinely amazed that Twitter was able to keep the site online without ever acknowledging what an absurdly low bar this is. Like I can light money on fire and keep a site online too; it’s the making money part that is the tricky bit.
Just to clarify, I didn't trot it out initially because it's amazing (though at the size of Twitter I personally am kind of amazed; I thought it would be hard to keep it as stable as it's been with that much of a headcount reduction, but you're right about the opaqueness of the financials, although, really, not completely opaque re Fidelity write downs; it's been... not great).
That said, the trotting out was just to point out the coincident timing between when Elon started the cuts, and how aggressively he cut, and when other mega cap tech started slowing or even laying off workers. You might say "but none of those other companies clipped 80% of their folks," but that would be somewhat suicidal to do as a public company. But a high-profile trigger like that influences folks to take a harder look at how and why they're deploying personnel.
Last comment, when you heard what Elon was doing were you just like "wow, that's a lot of layoffs" and then went about your day? Or did it reinforce your view that "there is tons of bloat at tech companies..."? Do you really think the leaders at these companies are ignorant about that reality and that your opinion is unique? No offense, but I don't. They knew they were bloated. To steal another commenter's metaphor, there's all this overstaffing in the air, a combustible vapor of sorts. And Elon's reduction at Twitter lit a match.
Maybe it was a catalyst, I buy that because CEOs and thought leaders are still talking about it.
I just don’t understand why it would be. It’s an example you can’t learn anything from (since the company is private). But even if Twitter were still public, all the variables are confounded with the fact that the CEO is also a chaos agent, political operator, and potentially insane.
Sorry if my comment came off as attacking your post. I think your observation of the effect the Twitter cuts had on others is probably right. I am more criticizing the unscientific thinking of the people that claim to have taken a lesson from Elon’s management of Twitter.
No need to apologize. I thought your reply was thought-provoking and I think that’s why we’re all here—to share and learn from each other.
People were very skeptical that the site could even be maintained with that drastic a headcount reduction. Seems to me like the outcome was:
- site stays up and has sufficient ability to recover from outages
- can still deploy features in the frontend
- can't deploy features in the backend (look closely; mind you, Old Twitter absolutely sucked at product innovation too)
- moderation deliberately cut down
- due to some combination of increased unpleasantness, boycotts, and the personal brand toxicity of Elon, the advertising revenue is down
- site was levered into an unofficial US cabinet position (!), we have yet to see how lucrative that is. Maybe it includes a free jet.
The part missing is that Musk massively over payed for the bloated unprofitable business.
I would think Twitter is profitable with the cuts that were made it is just not nearly profitable enough to justify the investment.
Non-negative cash flow from operations but lighting money on fire when you add on the debt that was used to purchase the company.
I'm sure companies are realizing this - and tech unemployment is still on the rise - but if this trend was as pervasive as people seem to suggest, it doesn't really explain why tech unemployment is still significantly lower than the national unemployment rate. Maybe it going from 1.5% to 3.4% or whatever is what people are feeling, but it doesn't seem like that should result in massive amounts of people spamming resumes with no response. I'm sure some jobs/careers are gone forever now, but it can't seriously be that many.