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What explains recent tech layoffs, and why should we be worried?

  • Why are so many tech companies laying people off right now
  • If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based
  • Do you think layoffs in tech are some indication of a tech bubble bursting or the company preparing for a recession
  • Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it
  • What are some myths or misunderstandings about layoffs
  • Layoffs often do not cut costs, as there are many instances of laid-off employees being hired back as contractors
  • Layoffs often do not increase stock prices, in part because layoffs can signal that a company is having difficulty
  • Layoffs do not increase productivity. Layoffs do not solve what is often the underlying problem, which is often an ineffective strategy, a loss of market share, or too little revenue. Layoffs are basically a bad decision
  • We ought to place a higher priority on human life

Tech Companies Are Irrational Pop Cultures

  • The symptoms of pop culture:
    • A "disdain for history" . Pop cultures believe history doesn't have anything to teach them.
    • Newer is automatically better. Pop cultures are built on the assumption that anything new or different is superior to established. Or in other words, older are inherently inferior.
    • What's next is going to be superior to what's now. Pop cultures exist in perpetual anticipation of the next trend. Their disbelief of history appears to outsiders as a belief in progress.
    • The "Pop" in "Pop Culture" stands for "popularity" . If it's popular, then it must be right
  • These traits are deeply irrational, but they are the tech industry's default mode of operation
  • A recent example of a pop culture trend taking tech by storm is layoffs
  • The effect is even worse for software companies because employee churn is lethal for software
  • The only way to win is to refrain from participating. Don't chase trends. Don't copy your competitors. Evaluate strategies, tools, and technologies on their own merits. Look at how they affect your organization, systems, products, and markets
  • Don't let the industry's pop culture drag you into making poor decisions

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