The Before the Bell: Tech Jobs Reconsidered as a Fading Problem with Inflation, Consumer Spending and a Possible Recession
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Friday’s jobs report came in strong: the US economy added 261,000 new jobs in October, blowing away analyst expectations of 200,000, even as unemployment ticked up to 3.7%.
“Tech has been clobbered so much precisely because it has been seen as very immune to fluctuations in the real economy, but in the end, nobody is immune,” Roussanov said. That realization, I think, is important and perhaps what contributed to these sky-high valuations coming down quickly.
The e-commerce giant is now freezing corporate hiring “for the next few months” and reportedly looking to cut costs in some of its unprofitable units. Amazon spokesperson Brad Glasser said senior leadership regularly reviews investment outlook and financial performance, adding, “As part of this year’s review, we’re of course taking into account the current macro-environment and considering opportunities to optimize costs.”
Late last month, Amazon forecast its revenue for the holiday quarter would be lighter than analysts had expected, causing its stock to fall sharply. Shares of Amazon are down more than 47% this year.
A hiring freeze has been instituted by Apple, only in research and development. Apple said that it will continue to hire and is confident in its future, but with the current economic situation it is taking a deliberate approach in some parts of the business.
Like other tech companies, Apple is worried about slower growth during the holiday season, higher interest rates and waning consumer spending. Production of the iPhones is being affected by coviduation in China. Apple stock is down about 25% so far this year.
Meta is far from the only tech company said to be rethinking staffing. Many tech companies have announced hiring freezes or job cuts in recent months, often after having seen fast growth during the Pandemic.
On Thursday, LYFT said it will lay off almost 700 employees as it rethinks staffing because of rising inflation and a potential recession. CNN has obtained a memo from the founders of the ride-sharing service, stating that they know today will be hard. In the next year or so, we will face a probable recession and as a result, rideshare insurance costs will go up.
▸ Online payments giant Stripe will lay off about 14% of its staff, CEO Patrick Collison wrote in a memo to staff Thursday. “We were much too optimistic about the internet economy’s near-term growth in 2022 and 2023 and underestimated both the likelihood and impact of a broader slowdown,” Collison wrote in the note. Just last year, Stripe became the most valuable US startup, with a valuation of $95 billion.
▸ Twitter on Friday announced extreme layoffs, noting that offices would be locked and badge access suspended as new CEO Elon Musk cuts about half of its 7,500-person workforce.
The challenges of advertisers on Facebook and Twitter: the wake of Musk’s takeover of Google, General Mills, Pfizer and Mondelez International
The headline jobs numbers and third-quarter earnings still show a strong economy. Tech companies say that businesses and consumers will have less demand in the future.
This is a crucial moment for Musk, who spent much of his week in New York trying to keep advertisers with the company. The uncertainty surrounding the platform is a bad time for tech companies reliant on ad revenue. Lower ad payouts were cited as a massive challenge in the most recent earnings reports by the two companies.
He attributed the decline to “activist groups pressuring advertisers, even though nothing has changed with content moderation and we did everything we could to appease the activists.”
General Mills and Volkswagen Group said that they have stopped their paid activities on the platform in the wake of Musk’s takeover. The names Mondelez International and Pfizer have been added to the list.
On Friday, a group of watchdog organizations increased their pressure on brands to rethink their advertising on Facebook and Twitter. The groups pointed to Friday’s mass layoffs of Twitter staff as a key factor, citing fears that Musk’s cuts will make it difficult to enforce Twitter’s election integrity policies along with other anti-hate speech policy.
The Future of the Metaverse: The Risk of a Divided Railroad Supply Chain and the Death of the Rank-and-Field Unions
In September, two rail unions had tentative deals with the railroads only for their members to reject them before a strike deadline. Now, US Labor Secretary Marty Walsh says that without a deal he expects Congress will step in and impose contracts on the unhappy rank-and-file union members.
If any rail unions were to go on strike, all the rail unions — which together represent about 110,000 members — would honor their picket lines and refuse to work.
That would spell bad news for supply chains. About 30% of US freight moves by rail. If the trains stop, the prices of gasoline, food and cars could go up. The factories could be forced to close temporarily because of parts shortages. Goods that consumers want to buy during the holiday season could be missing from store shelves.
On a conference call last month to discuss its earnings results for the third quarter, CEO Mark Zuckerberg said that he expects the company to end 2023 “as either roughly the same size, or even a slightly smaller organization than we are today.”
The possible cuts come as tightened advertiser budgets and Apple’s iOS privacy changes have weighed on Meta’s core business. The company reported that its profit was half of what it was the year before, after posting a second quarter revenue decline. The billions are the reason for the drop in profitability. The future version of the internet called the metaverse is likely to be years away.
Meta’s market cap has fallen from a peak of more than $1 trillion last year to less than $300 billion. Amazon’s market cap fell by $1 trillion from a peak last summer.
Mark Zuckerberg’s Digital Baby: Facebook and the Next-Generation Hyperbolicity: How Silicon Valley Grows and Jobs in the 21st Century
In the days since, however, Twitter
(TWTR) has reportedly asked dozens of laid off employees to return, according to Bloomberg.
In the early months of the pandemic, Facebook only grew bigger and more central to our lives. With lockdowns spreading, countless people began shopping, socializing and working on Facebook and other online platforms. As CEO Mark Zuckerberg said in March 2020, usage was so high that the company was “just trying to keep the lights on.”
The most significant cuts in company history occurred on Wednesday, when more than 11,000 employees were laid off. In a memo to staff, he told them some of the most hard-to-intelligible English words. He wrote “I got this wrong” and took responsibility for it.
The world rapidly moved online at the start of Covid and the surge of e- commerce led to outsized revenue growth. Many people predicted that this would not stop after the pandemic had ended. I made the decision to increase our investments. This wasn’t the way I thought it would play out.
One of the myths about Silicon Valley is that the founder can see upcoming trends decades in the future. But Zuckerberg is one of a growing list of prominent tech leaders who are cutting costs and issuing mea culpas after failing to anticipate a whiplash in the market between 2020 and 2022.
Many consumers have returned to their lives offline as the world has reopened. Meanwhile, high inflation and fears of a looming recession have cut into consumer and advertiser spending, disrupting the core businesses of many of the biggest names in tech, after years of rapid growth.
Patrick Collison, CEO of Stripe, one of the most valuable startups in the world, similarly told employees that leadership takes responsibility for the pandemic-era miscalculations that resulted in people losing their livelihoods.
We are sorry to hear that you are departing and John and I are fully responsible for the decisions that led up to it. We were too optimistic about the internet economy’s growth in the near term and underestimated both the impact and likelihood of a broader slowdown.
Since the beginning of the Pandemic, the founder of a startup based in San Francisco has been tracking layoffs in the tech industry via his website. Initially, his goal was to informally keep track of staffing reductions to help look for potential candidates to recruit for his own company, a digital 401(k) provider for small businesses. At some point laid off workers began to submit their own data, and spreadsheets for his website to be seen by recruiters.
Lee said some of the biggest trends he’s been seeing recently are major job losses across recruiting, human resources, and sales teams. While “engineers are still in better shape relative to the other roles,” Lee said his data indicate even these positions have suffered cuts in recent months.
There is a clear shift in the industry’s mood. Blind, a popular online forum that lets employees at major companies commune anonymously to share interview tips and brag about compensation packages, has emerged as a sobering forum where people are posting about layoffs rather then their jobs.
Some laid off workers are getting together on social media and using spreadsheets for recruiters. The workers created a bunch of documents with the names and photos of their former coworkers from social networking sites.
Source: https://www.cnn.com/2022/11/10/tech/tech-layoffs-analysis/index.html
The Snowballs on a Snowball: What Do Walls Really Want? Nikolai Roussanov and the Emerging Consequences
While some companies may be better prepared to weather the storm than others, it’s becoming obvious that no company is entirely unaffected by the storm, said Nikolai Roussanov.
Roussanov said current fears of a recession are not unwarranted, but in many ways, “there is a little bit of a self-fulfilling nature to this.” He added: “As these fears become more and more widespread, they slow down people’s consumption, they slow down firm investment, and that kind of snowballs on itself.”
Remember Libra, Meta’s ambitious plan to enter the cryptocurrency market? Or Lasso, Meta’s ambitious attempt to outdo TikTok? Meta tried to turn Facebook into an e-ommerce giant, as well as competing with the Apple Watch, but all of them failed.