Let’s talk about tech layoffs

Another day, another report of a tech company announcing layoffs. 😫 Job cuts in tech land are piling up, with Spotify joining Microsoft, Alphabet, Meta, Netflix, Twitter, and Snap (we could go on) to reduce headcounts. Starting in the northern hemisphere, followed by those of us in the southern hemisphere. Thousands of tech companies are seeing their once sky-high valuations go up and smoke in a reversal of fortune that seemed all so abrupt. After ten years of being the darlings of workers, investors and consumers, what gives? 

The highs were high

Who wouldn’t want to use their talents to build some of the most influential technology in the world? Generous pay packets with company shares. Cruising around gigantic Silicon Valley campuses catering to every need from food, sleep chambers, laundry, event tickets, and pilates classes.

Over the past decade, big investors wanting big returns piled their money into the tech rocket ships to the moon. 🤑 With cash readily available, companies made hay while the sun shone, and to build out bigger and bigger visions, they hired, hired and hired some more. 

And those lows are low

Last April, internet pioneer Marc Andreessen tweeted, ‘The good big companies are overstaffed by 2x, the bad big companies are overstaffed by 4x or more.’ Other chicken littles chimed in, warning of cracks appearing and an impending tech bubble correction. 

Tech companies hired up a storm during the pandemic when it seemed the world would hibernate with Zoom, TikTok, Shopify and Netflix forever. Oh dear. The world is righting itself, and this tech-centric future hasn’t quite panned out the way Silicon Valley thought it might.

And as you likely know (especially if you are buying a house), borrowing has gotten a lot harder. Big investors are less willing to subsidise growth companies without profits and are starting to push back on pie-in-the-sky projects. It didn’t help that advertising revenue makes up a substantial portion of big tech’s income, and when the business world is facing a recession, marketing spend is the first cut.

Tech companies had to quickly tighten their belts and shift their focus to making money. We’ve experienced the rising cost of groceries, and we’ll no doubt start to see our favourite apps, platforms, and tech products increase their prices to face these headwinds. 

How to lead through hard times

Did you note the statements of mea culpa from teary-eyed leaders? Like the most overused sentence in 2021, ‘in an abundance of caution’, sad tech CEOs are rolling out ‘take full responsibility’ in carefully crafted messages. They use the same boilerplate to portray a leadership image balancing empathy and strength. We understand…protecting brand reputation is a big deal when dealing with in-demand tech workers. Most only apply to a company with a good reputation, so it makes sense for CEOs to convey that the buck stops with them. 

But in the end, admitting fault doesn’t put food on the table, and it certainly leaves room for scepticism about how much big tech really cares about their people. Leah Tharin has challenged the industry to solve the cultural problems behind greedy growth at all costs – to stop celebrating companies that take aggressive approaches and then celebrate their accidental successes. It might be time to find a way to reward sensible risk profiles. 🫳🎤

Want more on the economy?

Listen to episode 4 of the PowrUp pod: Recession, you say?