from Hacker News

Mark Zuckerberg explains why so many tech companies are doing layoffs

by Octabrain on 2/17/24, 8:47 AM with 50 comments

• by BMc2020 on 2/17/24, 8:57 AM

  Zuckerberg said that companies are no longer shrinking their employee size simply because of overhiring — they're now realizing there can be benefits to being leaner.

  While a lot of tech companies were reluctant to make cuts at first, they realized it didn't spell the end, Zuckerberg said.

  Translation: They all saw Twitter cut 80% of its staff and yet is still online.

• by smurda on 2/17/24, 9:30 AM

  When public markets rewarded growth, you could let costs balloon and hire teams without worrying about profitability. Now, public markets reward profitability so you need to cut costs. Isn’t it that simple and this is just Zuck’s corporate spin on it?

• by hiddencost on 2/17/24, 10:35 AM

  Okay. I hate management more than your average person, but actually I think there's some truth here.

  There's a certain organization size at which coordination costs dwarf everything else.

  Suppose the following toy model:

  New Engineer is the Nth employee.

  They add Value of 2, and coordination costs of N^.06.

  There will come a point (around 100k employees) where each additional employee reduces productivity.

  Better to have 10 organizations of 10k people, than one of 100k, imo.

• by michelb on 2/17/24, 10:23 AM

  it's still because of overhiring. Can't trust whatever a CEO of a public company says, there are simply too many stakeholders. There is just less money floating around in couches. Ad spent is down, and will probably go down significantly once AI tools browse the web for me, negating any display ads. A lot of companies with no clear vision are booting employees since the unlimited money train has slowed down.

• by j-krieger on 2/17/24, 10:35 AM

  In my (unpopular) opinion and experience, companies are realizing that workshop / course trained employees who were after tech industry salaries as well as middle management types can be largely trimmed off after post-pandemic growth. I guess you don‘t need as many unmotivated employees / management / DEI types as previously thought.

  All of my friends who feel real love for their work and live and breathe tech are still employed or have no problem finding employment. It‘s these people who drive innovation if managed competently and I guess companies want to go back to that. This is not to say that it‘s all fun and roses. A lot of tech employees that love tech in itself work long hours, are stressed and are unable to not think about work at home. I‘m that type of person. Companies really profit of these types.

• by deepnet on 2/17/24, 10:41 AM

  Efficiency can be seen as doublespeak for 'those who remain must work harder'.

  It could well be that some degree of inefficiency is a good price to pay for all the intangibles that make for a great workplace that produces great work and attracts talented people.

  For layoffs to not result in employee disillusionment, actual efficiency must be created - e.g. less people can achieve more with similar effort.

  The danger is the new wage bill efficiency is actually creating overwork and mounting technical debt that is unsustainable.

  The decision makers are rewarded in the short term for seemingly creating 'efficiency' value when in fact they may have doomed their business by destroying institutional knowledge and lynchpin employees that were not measured on the balance sheet.

  The delayed effects are business functionality slowly falters, eventually past tipping points, then cascades to irreversible intermittent faliure.

  Shareholder value is maximised in the short term and the policy makers leave well rewarded before the negative implications of the decimation are perceived.

  The difficult questions for companies are :

  - how to layoff the least ( or negatively ) performant employees instead of a random selection,

  - how to not have the best employees leave in the wake of layoffs because the layoffs created a culture of fear and uncertainty,

  - how to maintain the motivation of remaining employees so that they remain aligned with company goals, especially in light of the now increased workload for those who remain.

  Probably the answer is to share ownership and increase reward with those that remain to increase their engagement.

  Currently the majority of companies never do this.

  Certainly the remaining employees have to, at best, raise the overwork with management as a problem whereas the management see it as efficiency. At worst the employee will have to fight their corner so as prove their workload is now unsustainable. Without proper support, it can be, that the employee must cut corners to keep up and trust relationships can become adverserial.

  One would hope these CEOs have real insight into creating efficiency but in some cases the suspicion is that the real issue is upper tiers who have absolutely no idea how their business actually runs on the shop floor.

  The wider societal implications are unemployement and a lack of the (perhaps) vital social function the business provided, and the loss of customer faith in the company to deliver as before.

• by the_gipsy on 2/17/24, 9:24 AM

  The "employee count = growth" metric has been gamed.

• by yakito on 2/17/24, 1:38 PM

  I'm a co-founder of a small startup, and my co-founder keeps telling me that we need to hire more people because (beyond helping with the company's tasks) "the more employees you have, the more valuable the company is" (in the eyes of investors).

  I never believed that was the case, am I wrong?

  Which is more valuable: a company with a thousand employees that generates 100 million in profit, or a company with 5 employees that generates the same amount? Beyond the question, I understand it's very simplistic and that the value of a company goes far beyond the number of employees, but I'd like to understand how investors view employees.

• by WhatsName on 2/17/24, 9:49 AM

  > Meta's CEO said more recent layoffs are because companies realized being leaner can make you "more efficient."

  So the real reason is the cargo cult Musk started at Twitter. Everyone now wants to proof that they also can keep the lights on with minimal staff.

• by John23832 on 2/17/24, 11:01 AM

  Which is funny because I’ve been reached out to by two different meta recruiters for swe positions in the past year.