I think the unfortunate reality is that lots of companies in our industry have suspiciously inflated employee counts in the first place. Even when removing AI and the pandemic over-hiring, I wouldn't have been surprised to see corrections sooner or later.
Employee count seems to correlate to stock market incentives - which is how GitLab is like 5x larger than Valve.
> I think the unfortunate reality is that lots of companies in our industry have suspiciously inflated employee counts in the first place. Even when removing AI and the pandemic over-hiring, I wouldn't have been surprised to see corrections sooner or later.
It's funny to me that everyone talks about pandemic over-hiring, as if this hadn't been a thing for a decade before that. Like, when I started at FB in 2013, they probably had about 75% of the engineers they needed (and about 10% of the sales people). But they grew engineering much faster than sales for some reason (engineering in the broad sense including data and product).
That being said, it's easy for people to look at other parts of a company and think they are over-staffed, because we don't see all the work necessary to keep the balls in the air.
Exactly this - the late 00s and 10s we were riding the wave of the internet and smartphone adoption. Those markets have matured now and this is ultimately just the response. Covid was like some weird last hurrah for irrational spending. LLMs are just where all of that silly energy is going.
AI aside, if we just look at other engineering disciplines in mature sectors, the future is not bright(er).
No fully paid golden cadillac benefits packages (for your dog too!), no twice daily uber eats comps, no $150k entry level, no unlimited PTO, no 6 months leave.
If you go to your uncles engineering department at the boiler company, these guy's engineering roles are about as pampered as the warehouse managers.
The upside is that it will cull those in it just for the money/lifestyle, and concentrate it down to those in it for the love of the craft.
Unlimited PTO works great for someone like me who regularly takes half day and full day PTO every quarter for various commitments/life stuff. But I’m also a guy and I have no problem asserting myself/spending my benefits. People who are a little less comfortable with that end up just parking on it and would do a lot better if they were given a set number of PTO days. The ambiguity hurts them in the same way not having set raise schedules and discussions hurts them.
Edit: folks, I can assure you I take a lot more than 10 days of PTO. I didn’t even say how many half/full days I take, you’re assuming a lot though I get my language could’ve been more clear there. I probably take between 20-30 days total annually. I am saying that because of unlimited PTO, it is very easy to just grab half days and full days as needed routinely and not worry about my overall count.
Yeah exactly. For some of us that is not a problem but for most people it seems to create issues. Company culture also plays a huge factor in that. Grey areas tend to hurt employees the most!
To be clear we still get federal holidays. So I net probably 30-40 days a year.
Again, the system works for me. But it is also a constant negotiation/workplace culture consideration, so I am not advocating for it writ large. I’m just lucky I work at a company that doesn’t put pressure on people not to utilize their PTO.
At my current job I get 25 days of PTO a year, with a cap of 30 days, plus company holidays (12 or so?), plus 5 days the entire company shuts down. I have to be careful not to hit my cap even taking 4 weeks of vacation because it’s still less than I earn. You have “unlimited” pto and take half of the vacation I do. If you ever change jobs you’ll get $0, while I’ll get a bonus.
You have it backwards. You’d benefit tremendously from fixed PTO that pays out because you’re taking fewer than 10 days a year. Its biggest benefactors are low-seniority employees who take 20-30 days annually.
Ok… but that’s a larger conversation about the US and PTO. I’m not saying it’s some amazing situation that is the envy of the world. With federal holidays I get about 30-40 days off a year. In the US that’s pretty good, unfortunately.
I’m just telling you it’s not less than 10 days and unlimited PTO system works for my needs. Ease off the gas.
It's more than that. Unlimited PTO in practice also results in people taking less time off.
Some people have to be reminded to take time off for themselves (like me in my early years), and without a predefined amount of PTO and an expiration mechanism, there's nothing stopping them from going extended periods without taking any time for themselves.
Most people grow out of that eventually, but their gems turn black before they fully advocate for their own work/life balance.
The other side to that coin is that when employees take varying amounts of time off, it becomes easy for managers to pressure anyone taking more time off to conform with those who take less (and sometimes none at all).
Yeah wtf? If programming becomes a generic white collar job, it's not really accurate to characterize the people as "those in it for the love of the craft". After all, do you think the average accountant or analyst is doing it "for the love of the craft"?
You don't need to look at other engineering jobs, just look at software engineers out side the US. We make decent money compared to the local market, but we've never had the royal treatment that US devs seem to get.
Well they keep breaking main FB page with additions or redesigns nobody asked for.
I am in Europe but I must be some test bunny that made some personal enemy there somehow, since beginning (cca 2008) FB was by far the buggiest site ever. Uploads of images didn't work, sometimes it uploaded twice. Uploading album of 30-50 pics took on average maybe 10 attempts in the past. Comments didn't work, or twice again. many similar behaviors. Ie since cca 2 weeks now if I click on some picture to have it full screen, clicking close after 1-2 mins ends up in FB error page instead of returning to main feed. I keep seeing FB error page a LOT considering infrequent use.
So, how they hired salespeople was based on revenue per head. If there wasn't enough revenue in a particular part of the business, no new hires for you. Obviously, that's gonna be a lagging indicator.
And they were honestly leaving a lot of money on the table there, but honestly not as much as they were leaving on the table by having a really, really, really bad and buggy self-serve interface that made it hard for small advertisers to spend money.
When they fixed that, the small businesses all got good results (e.g. hairdressers etc) and those people then convinced all the agency people to put more money into the platform.
Up till 2015 or so, it was a real struggle to convince people to even try FB ads, but after that it was like shooting fish in a barrel.
Also, up to 2013 or so (when feed ads became a thing), most of that money was coming from payments for f2p games, so they had lots of partner managers there, but not enough ads sales people.
I’d say it differently though. The company who hired all these people are finding they don’t have enough value added projects to keep them employed. Most of the FAANG and larger VC backed companies have something in common. They typically have 1-2 huge cash cows and they have a bunch of moonshots, R&D type stuff, etc. They are at a point where most of the moonshots have been disincentivized financially and just overall don’t see high enough ROI to continue pouring money into; exception is AI, which is a different skillset and this personnel can’t just pivot to it.
The fact is, a lot of tech products have matured and kind of entered maintenance mode. Feature additions are smaller incremental improvements than ever. If you cut out AI, I don’t know if any of the products we all use daily look much different than they did 5 years ago.
So my argument is this simply represents a natural business cycle where these companies are shifting from growth to mature. This shift always comes with a recalibration of expenses.
I keep seeing this over hiring argument everywhere. What's the evidence for that?
And weren't the layoffs of 2023-24 supposed to correct that?
In my experience, in every big tech company for the past two decades, almost everyone always complained that they were understaffed to meet their goals/okrs.
IMO, the real explanation is:
- Some unprofitable companies don't want to raise money in a high interest rate world, and are using AI as a partial excuse, partial ambition to do layoffs to cut costs. Eg: NET
- Other companies are investing heavily into data centers (eg: META) and need to cut costs elsewhere to offset that.
And in both cases, there's some real productivity gains that they have already seen due to AI that will offset, plus they expect to see more gains as the remaining people will work harder and be more motivated to increase their productivity for job security.
It's largely also down to management hierachy. Valve and Jane street for example both have semi-anarchist managment structures. In normal companies like GitLab, your worth as a manager and compensation is usually tied directly to the hierarchiecal structure. This incentivises you to create a project to hire a team and so on.
Yup, it's certainly a mix. I think the stock market incentive is most obvious for the usual VC-style "this must look presentable to the stock market before IPO"-spiel. After that I'd expect management/corp politics incentives to play a larger part indeed.
But isn't tech a bit unique in how accepted this kind of self-serving corruption is at pretty much all levels? From the "This might require a few extra folks, but I want to pad my resume" IC level all the way up to "Let's make this look good for Wall Street" exec level.
My experience has been that this is not unique to tech, and is common in all large enough industries. I think it's just the natural emergence of reward hacking i.e. if you're an executive at Pepsi and your job is largely to increase the stock price, and you know that you can do something to change the way your numbers are presented such that Wall St will like it, you'll likely do it.
I do think tech certainly has its own flavor though, particularly because of how differently it is treated by investors.
I do think there's a certain level of vagueness and lack of rigor that permeate throughout (software) tech that enables self-serving to a greater extent than usual. I agree though that it's to be expected in most corps at a certain level where that vagueness also starts to appear.
The headline is backwards, the companies cutting headcount for AI have already lost, that's why they're cutting. Most of these companies are losing market share or are in dying markets and need to cut headcount. They're just blaming AI because it's convenient and forward-looking.
That’s the true answer. AI is just used as an excuse for “oh shit, we over-hired, and it would be nice if we had an excuse to shed these people”. Then suddenly AI popped up, and well, that’s a nice excuse.
Returning to office was the previous excuse, so now they have the next one ready to go.
There are companies of a certain size that hold on to thousands of people they don't really need just so they can but them at a moment's notice to appease the stock market if bad news hits. It keeps talent out of their competitors, and gives them a cheat code if earnings dip or bad news hits.
I think it’s simplest to view these companies 2020s layoffs cycles through the lens of a political battle between executives and middle managers. Middle managers always want to grow ICs because it’s their main stake to higher title and more pay. Executives are the intermitten contra to this, with their incentive being tied to the stock (high growth at high margins). AI gave executives more leverage, productivity had gone up so they could fire more without compromising operations.
Its also notable that over the last few decades the business community has normalized layoffs and layoffs while highly profitable as net positive for the company (stock). While all the engineering driven companies, GE, Boeing, etc that pioneered this management philosophy end up in strategic decline.
I agree with both the gist of the article and your comment.
In the case of the well known FAANG and other similarly structured large software companies, everyone working there or having approached them know how bloated and inefficient they are.
What is happening is likely a long-term plan to completely restructure themselves, progressively shedding headcount while using it as a disciplinary tactic.
I am sure they understand the cost and the effect on morale.
But they are foreseeing radical changes and they want to be ready and slim before the storm.
> which is how GitLab is like 5x larger than Valve.
Doesn't Valve hire tons of contractors? I don't think anyone except them knows how many people/agencies they're paying to work on stuff like proton, linux, mesa, vulkan, etc., not to mention internal projects.
Valve could not actually do all that they do with just the leaked headcount numbers.
I'd expect GitLab to have contractors as well like most companies. Unclear if there's a significantly larger amount at Valve. It's a large gap to fill with contractors though to reach GitLab numbers.
GitLab is also a smaller company than I'd expect Valve to be - given its products & reach - if it was public and went through the same kind of inflation process.
Employee count seems to correlate to stock market incentives - which is how GitLab is like 5x larger than Valve.