When Stripe, a $74 billion payments company, laid off more than 1,000 employees this month, its founders blamed themselves. “We’ve exhausted the world we’re in,” hmm Wrote. “We were very optimistic.”
After Elon Musk, the new owner of Twitter, Cut the number of company employees in half Last week, Jack Dorsey, founder and former CEO of the social media service, claimed responsibility. “The company has grown in size very quickly,” he said Wrote on Twitter.
And on Wednesday, when Meta, the parent company of Facebook and Instagram, shed 11,000 people, or about 13 percent of its workforce, CEO Mark Zuckerberg blamed excessive expansion. “I have made the decision to significantly increase our investment,” he wrote in a letter to employees. “Unfortunately, this did not happen the way I expected.”
The chorus of condescension by tech executives that they have hired too many people rebounds through Silicon Valley as the industry rushes to make cuts, blaming the sagging economy.
But part of the increase in layoffs was self-made. As companies enjoyed high profits and in the belief that the booms fueled by the pandemic would continue, they expanded aggressively by hoarding the most costly and costly software resource companies battled for: talent.
Tech companies in Silicon Valley have long viewed hiring as more than just filling job vacancies. The fierce talent wars in the industry showed that companies like Google and Meta were getting better and brighter. A bloated staff and a long reign at the top of the lists of coveted jobs for college graduates have been emblems of growth, deep pockets, and prestige. Work became for the employees something bigger – It was an identity.
This mindset has become ingrained in the biggest tech companies, which offer many perks on lavish corporate campuses that rival universities. This has been echoed by smaller startups, dangling a chance at life-altering fortune in the form of stock options.
Now these practices are causing indigestion for the tech industry.
“When times are choppy, you get overruns, and excesses drive hiring and optimism,” said Josh Wolf, an investor at Lux Capital. “Over the past 10 years, the abundance of cash has led to an abundance of employment.”
More than 100,000 technical workers lost their jobs this year, According to Layoffs.fyiA website that tracks layoffs. Discounts range from popular publicly traded companies like Meta, Salesforce, Booking.com, and Lyft to high-value private startups like Gopuff’s delivery service, Chime and Brex financial platforms.
Many job losses have occurred in the most experimental fields of technology. Astra, a missile company, Cuts 16 per cent of its employees this week after tripling its number of employees last year. In the cryptocurrency industry, which has suffered a meltdown this year, high-value companies including Crypto.com, Blockchain.com, OpenSea and Dapper Labs have cut hundreds of workers in recent months.
Tech analysts said tech leaders have been too slow to respond to signs of an economic slowdown that emerged this spring, after many companies had already started hiring for several years.
Meta, which is worth over $1 trillion, has doubled its number of employees to 87,314 people over the past three years. Robinhood, the stock trading app, expanded its workforce nearly sixfold in 2020 and 2021.
“They set out to implement these plans that are no longer based on reality,” said Caitlin Mitter, director of recruitment at Lever, a company that offers recruitment software.
For many, it is a shocking moment. ‘Are we in a bubble’ panic in the tech industry over the past decade It was always short lived, followed by a quick return to the good times until frothy. Even those who predicted the pandemic behaviors that were enabled by the likes of Zoom, Peloton, Netflix and Shopify will now say they underestimated them.
Many believe that this downturn will last longer due to the macroeconomic factors that led to it. Over the past decade, low interest rates have driven investors to riskier assets that have offered higher returns. These investors valued rapid growth on profits and rewarded companies that took high risks.
In recent years, technology companies have responded to an influx of cash from investors and fast-growing businesses by pumping money into expansion across sales, marketing, hiring, acquisitions, and pilot projects. Excess capital encouraged companies to hire, intensifying the war for talent.
Eric Rachlin, the entrepreneur who co-founded Body Labs, an artificial intelligence software company bought by Amazon.
Expanding the number of employees has also been a way for managers to improve their careers. “It’s easier to get more people on the team than just telling everyone to work hard,” said Mr. Rachlin.
This has resulted in the tech industry gaining a reputation due to corporate bloating. Rumors often spread about workers who received high compensation Recorded a few hours of work per day or juggling Multiple remote functions simultaneouslyside by side Detailed desk perks Like free laundry, massage and Celebrity Cafeteria Chefs. This spring, Mita lowered its advantages, Including laundry service.
In the past, tech workers could quickly change jobs or get on their feet if they were cut because there were so many open jobs, but “I don’t think we know yet if everyone in this wave of layoffs would be able to do that,” Mr. Rachelle.
Some people see an opportunity to help those entering a difficult job market for the first time. Stephen Korson recently left his career in sales and strategy at Gartner, the research and consulting firm, and Salesforce to create financial content. He initially planned to focus on time management, but after several of his friends underwent painful layoffs, he began working on a course that helps people prepare for job interviews. It’s a skill that not many job seekers today have had to hone in times of flux.
“This is not going to get better quickly,” he said.
Amid the drumbeat of layoffs announcements, investors see an opportunity. They are quick to point out that the well-known successes of the past decade – companies like Airbnb, Uber and Dropbox – were built in the wake of the Great Recession.
This week, Day One Ventures, a venture capital firm, announced financier not separated, a program that aims to invest $100,000 in 20 new startups where at least one founder has been laid off from a technology company. Masha Bucher, founder of the company, said that within 24 hours, hundreds of people placed orders.
“Some people are saying, ‘This is a sign I’ve been waiting for,'” she said. “It really gives people hope.”
In the meantime, there could be more layoffs – delivered through the now standard form of a letter from the CEO being sent to the company’s blog.
These messages took a familiar form. Employers explain the bleak economic outlook, citing inflation, “energy shocks,” interest rates, “One of the toughest real estate markets in 40 years“or”Possible recession. “They are to blame because they are growing so fast. They provide support to those affected – termination, visa assistance, health care and career guidance. They express grief and I thank everybody.
They emphasize the company’s mission.
“Beer buff. Devoted pop culture scholar. Coffee ninja. Evil zombie fan. Organizer.”