Tech’s Talent Wars Have Come Back to Bite It

 

"Hiring the best, the brightest and the highest number of employees was a badge of honor at tech companies. Not anymore as layoffs surge.

When Stripe, a payments start-up valued at $74 billion, laid off more than 1,000 employees this month, its co-founders blamed themselves. “We overhired for the world we’re in,” they wrote. “We were much too optimistic.”

After Elon Musk, Twitter’s new owner, slashed the company’s staffing in half last week, Jack Dorsey, a founder and former chief executive of the social media service, claimed responsibility. “I grew the company size too quickly,” he 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 work force, Mark Zuckerberg, the chief executive, blamed overzealous expansion. “I made the decision to significantly increase our investments,” he wrote in a letter to employees. “Unfortunately, this did not play out the way I expected.”

The chorus of conceding by tech executives that they hired too many people is ricocheting across Silicon Valley as the industry rushes to make cuts, blaming a worsening economy.

But at least part of the surge in layoffs was self-inflicted. When the companies enjoyed soaring profits and a belief that the pandemic-fueled boom times would keep going, they aggressively expanded by hoarding the most fought-over and expensive resource in the software business: talent.

Silicon Valley tech companies have long seen hiring as more than just filling openings. The industry’s fierce talent wars showed that companies like Google and Meta were gaining the best and brightest. Ballooning staffs and a long reign atop lists of the most-desired jobs for college graduates were emblems of growth, deep pockets and prestige. And to employees, the work became something larger — it was an identity.

This mentality became ingrained at the largest tech companies, which offer numerous perks on lavish corporate campuses that rival universities. It was echoed by smaller start-ups, which dangle a chance at life-changing wealth in the form of stock options.

Now these practices are giving the tech industry indigestion.

“When times are flush, you get excesses, and excesses lead to overhiring and optimism,” said Josh Wolfe, an investor at Lux Capital. “For the past 10 years, the abundance of cash led to an abundance of hiring.”

More than 100,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a site that tracks layoffs. The cuts range from well-known publicly traded companies like Meta, Salesforce, Booking.com and Lyft to highly valued private start-ups such as the Gopuff delivery service and the Chime and Brex financial platforms.

Many of the job losses have taken place in tech’s most experimental areas. Astra, a rocket company, cut 16 percent of its staff this week after tripling its head count 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 leaders were too slow to react to signs of an economic slowdown that emerged this spring, after many of the companies had already been on hiring sprees for several years, tech analysts said.

Meta, whose valuation soared past $1 trillion, doubled its staff to 87,314 people over the past three years. Robinhood, the stock trading app, expanded its work force nearly sixfold in 2020 and 2021.

“They’ve charged ahead with these plans that are no longer based on reality,” said Caitlyn Metteer, director of recruiting at Lever, a provider of recruiting software.

For many, it’s a moment of shock. “Are we in a bubble” panics in the tech industry over the last decade have always been short-lived, followed by a rapid return to even frothier good times. Even those who predicted that pandemic behaviors enabled by the likes of Zoom, Peloton, Netflix and Shopify would ebb now say they underestimated the extent.

Many believe this downturn will last longer because of the macroeconomic factors that created it. For the past decade, low interest rates pushed investors into riskier assets that offered higher returns. Those investors valued fast growth over profits and rewarded companies that took big risks.

In recent years, tech companies responded to the flood of cash from investors and a rapidly growing business by pouring money into expansion via sales and marketing, hiring, acquisitions and experimental projects. The excess capital encouraged companies to staff up, adding fuel to the war for talent.

“The pressure is to just spend the money quick enough so you can grow fast enough to justify the kinds of investments V.C.s want to make,” said Eric Rachlin, an entrepreneur who co-founded Body Labs, an artificial intelligence software company that Amazon bought.

Expanding head count was also a way for managers to advance their careers. “Getting more people on the team is easier than telling everyone to just work super hard,” Mr. Rachlin said.

That led the tech industry to gain a reputation for corporate bloat. Rumors often circulated of highly compensated workers who clocked just a few hours of work a day or juggled multiple remote jobs at once, alongside elaborate office perks like free laundry, massages and renowned cafeteria chefs.

This spring, Meta scaled back its perks, including laundry service.

In the past, tech workers could quickly change jobs or land on their feet if they were cut because of the plethora of open positions, but “I don’t think we know yet if everyone in this wave of layoffs will be able to do that,” Mr. Rachlin said.

Some people see a chance to help those entering a difficult job market for the first time. Stephen Courson recently left a 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 many of his friends went through painful layoffs he began working on a course that helps people prepare for job interviews. It’s a skill that many of today’s job hunters never had to hone in flush times.

“This isn’t going to get better quickly,” he said.

Amid the drumbeat of layoff announcements, investors see an opportunity. They are quick to point out that well-known successes of the last decade — companies like Airbnb, Uber, Dropbox — were created in the aftermath of the Great Recession.

This week, Day One Ventures, a venture capital firm, announced Funded Not Fired, a program that aims to invest $100,000 into 20 new start-ups where at least one founder was laid off from a tech company. Within 24 hours, hundreds of people had applied, said Masha Bucher, founder of the firm.

“Some of the people are saying, ‘This is a sign I’ve been waiting for,’” she said. “It really gives people hope.”

In the meantime, there may be more layoff announcements — delivered through the now standard form of a letter from the chief executive posted to a company blog.

These letters have taken on a familiar format. The bosses explain the grim economic outlook, citing inflation, “energy shocks,” interest rates, “one of the most challenging real estate markets in 40 years” or “probable recession.” They take the blame for growing too fast. They offer up support to those affected — severance, visa help, health care, career guidance. They express sadness and thank everyone.

And they reaffirm the company’s mission."

Visa politika gali būti vietinė, tačiau šiais metais politinius lyderius visame pasaulyje skandina pasaulinė problema – infliacija

    „Apklausose prieš antradienį vykusius JAV vidurio kadencijos rinkimus rinkėjai, kaip didžiausią susirūpinimą, nuolat minėjo infliaciją, o respublikonai susiejo ją su prezidento Bideno politiką. 

 

Respublikonams įmanoma perimti Atstovų rūmų kontrolę, nors trečiadienį rezultatai vis dar buvo neaiškūs.

 

    Bidenas nedalyvavo gegužę Australijoje vykusiame balsavime, tačiau pragyvenimo kaina buvo tokia, kad rinkėjai atmetė valdančiąją centro dešiniųjų vyriausybę. Infliacija ir energijos sąnaudos taip pat turėjo įtakos, kai birželio mėnesį Prancūzijos prezidentas Emmanuelis Macronas prarado parlamento daugumą, liepos mėnesį žlugo Italijos technokratinė vyriausybė, o rugsėjį Švedijos kairiųjų centro valdančioji koalicija pralaimėjo dešiniųjų koalicijai.

 

    Tai turėtų nedaug nustebinti; per visą istoriją infliacija buvo socialiai ėsdinanti ir politiškai destabilizuojanti.

 

    Amerikiečiai natūraliai ieško amerikiečių paaiškinimų dėl infliacijos. Respublikonai ir kai kurie ekonomistai kaltina prezidento Bideno 1,9 trilijono dolerių paskatą 2021 m. pradžioje dėl ekonomikos perkaitimo.

 

    Tačiau istoriškai infliacijos tendencijos buvo sinchronizuotos visame Vakarų pasaulyje: aštuntajame dešimtmetyje ji smarkiai išaugo po kelių prekių kainų sukrėtimų, nukrito devintojo dešimtmečio pradžioje, o dešimtmetį prieš pandemiją infliacija buvo nurimus.

 

    Paskutinis ciklas niekuo nesiskyrė. JAV infliacija grįžo anksčiau ir greičiau, kai ekonomika atsidarė, bet ji nebėra išskirtinė. 

 

Naujausios sankcijos Rusijai padidino energijos sąnaudas visame pasaulyje, o ypač euro zonoje. 

 

Tačiau net ir neįskaitant nepastovių kategorijų, pvz., energijos ir maisto, „pagrindinė“ infliacija Švedijoje, JK, Kanadoje ir Australijoje pakilo iki 6–7 %, o tai galima palyginti su JAV, teigia ekonominių duomenų teikėjas CEIC Data. . Vokietijoje ir Prancūzijoje ji yra maždaug 3 procentiniais punktais didesnė, nei prieš pandemiją.

 

    JAV eksportavo dalį savo infliacijos; prezidento Donaldo Trumpo ir pono Bideno pasirašytas stimulas padidino tiek tarptautine prekyba parduodamų prekių paklausą, kad dėl pasiūlos trūkumo kilo kainos kitose šalyse. Neseniai atliktas Federalinio rezervų banko darbuotojų tyrimas apskaičiavo, kad JAV skatinimas prisidėjo prie Kanados infliacijos 2,3 procentinio punkto, o prie Didžiosios Britanijos – 0,3 procentinio punkto. Kadangi Fed šiais metais padidino palūkanų normas, doleris smarkiai pakilo, ypač padidindamas importo išlaidas besivystančioms rinkoms.

 

    Tai vis dar palieka daug infliacijos be Amerikos ryšio. Daugelyje šalių pastogės kaina, kuri beveik visiškai priklauso nuo šalies, sparčiai auga. Labiausiai iškalbinga tai, kad darbo rinkos, kurios didžiąja dalimi yra izoliuotos nuo tarptautinių įvykių, yra visuotinai įtemptos. Daugumoje Vakarų ekonomikų nedarbas yra toks pat mažas arba mažesnis, kaip pandemijos išvakarėse, o neužpildytų darbo vietų yra daugiau. Tai neseniai pradėjo rastis į darbo užmokestį. Kanadoje, kur nedarbo lygis svyruoja prie beveik per keturis dešimtmečius žemiausio lygio, o laisvų darbo vietų skaičius nuo 2019 m. padvigubėjo, metinis darbo užmokesčio augimas spalį paspartėjo iki 5,6 % – greičiau, nei JAV.

 

    Infliacija visame pasaulyje iš dalies išaugo dėl to, kad tiek daug šalių politikos formuotojai vadovavosi tuo pačiu principu: pandemijos pradžioje užrakino savo ekonomiką, o tai iškreipė išlaidų ir darbo modelius. Įvairių šalių išrinktieji lyderiai ir centriniai bankininkai taip pat sugeria tas pačias intelektualines sroves. Štai kodėl septintajame ir devintajame dešimtmečiuose infliacija kilo ir sumažėjo tuo pačiu metu. Kadangi pasaulinė finansų krizė lėmė silpno augimo dešimtmetį ir per mažą infliaciją, jie nematė didelės rizikos, susijusios su dosniomis fiskalinėmis lengvatomis, palūkanų normų mažinimu ir obligacijų pirkimu.

 

    Šiandien net jų pomirtiniai tyrimai skamba panašiai. „Suprantama, kad kai kurie žmonės abejoja, ar buvo suteikta per daug paramos“, – rugsėjį sakė Australijos rezervų banko gubernatorius Philipas Lowe'as. „Tomis tamsiomis pandemijos dienomis [bankas] nusprendė, kad didesnė politikos klaida būtų padaryti per mažai, o ne per daug. Iždo sekretorė Janet Yellen 2021 m. pradžioje išsakė panašius argumentus dėl paskatų.

 

    Infliacija taip pat atspindi įprastus ekonomikos gamybinio pajėgumo sukrėtimus, kurie mažai susiję su fiskaline ar pinigų politika. Nepakankamos investicijos tiek į iškastinį kurą, tiek į atsinaujinančios energijos infrastruktūrą visiems sukėlė kliūčių tiekimo sutrikimams. 

 

„Covid-19“ sutrikdė darbo ir važinėjimo į darbą ir atgal įpročius, todėl milijonai žmonių vis dar per daug serga, kad galėtų dirbti. Didžiosios Britanijos darbo jėga šiuo metu yra mažesnė nei 2019 m., todėl Anglijos banko vadovas Andrew Bailey liepos mėnesio kalboje stebėjosi: „Ar daugiau žmonių išėjo į pensiją, nei tikėtasi, ar ilgalaikių ligų padaugėjo visam laikui, ir kiek žmonių gali grįžti į darbo jėga ir per kiek laiko?"

 

    Veiksnių, skatinančių infliaciją visame pasaulyje, santaka yra iššūkis kiekvienai šaliai, bandančiai ją išspręsti. Centriniai bankai aplink pasaulį kelia palūkanų normas, bet mažai ką gali padaryti dėl energijos rinkų, demografinės ar fiskalinės politikos, stumiančios kita kryptimi.

 

    Jei respublikonai perims Kongreso kontrolę, jie gali priversti prezidentą Bideną sumažinti išlaidas. Tačiau norint kitais metais sumažinti infliacijos lygį tik 1 procentiniu punktu, vien mažinant išlaidas, kasmet savo nuožiūra tektų sumažinti išlaidas beveik perpus arba 750 mlrd. dolerių. Tai maždaug prilygsta visam JAV gynybos biudžetui.

 

    Tokio masto išlaidų mažinimas būtų toks politiškai nepopuliarus, kad beveik neįmanomas. Nepriklausomoms išlaidoms, tokioms, kaip socialinei apsaugai ir medicininei priežiūrai, netaikomi metiniai asignavimų įstatymai, todėl jas dar sunkiau sumažinti – ir, nepaisant respublikonų kalbų apie pokyčius, dar labiau politiškai šventa. Tiems politiniams lyderiams, kurie rinkimų atlygį skynė, pasiremdami didele infliacija, gali būti ne lengviau išspręsti, nei žmonėms, kuriuos jie pakeitė.“ [1]

 

1. U.S. News -- Capital Account: Inflation a Headache for Leaders Everywhere
Ip, Greg. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Nov 2022: A.2.

 

All politics may be local, but this year political leaders around the world are being cashiered by a global problem: inflation.

 

"In polls leading up to Tuesday's midterm election, voters regularly cited inflation as their top concern, and Republicansflooded the airwavestying it toPresident Biden's policies. Republicans were favored to take control of the House of Representatives, although results were still unclear Wednesday.

Mr. Biden wasn't on the ballot in Australia in May, but the cost of living was as voters tossed out the ruling center-right government. Inflation and energy costs were also at work when French President Emmanuel Macron lost his parliamentary majority in June, Italy's technocratic government collapsed in July and Sweden's left-of-center governing coalition lost to a right-wing coalition in September.

This should come as little surprise; throughout history inflation has been socially corrosive and politically destabilizing.

Americans naturally look to American explanations for inflation. Republicans and some economists blame President Biden's $1.9 trillion stimulus in early 2021 for overheating the economy.

Historically, though, inflation trends have been synchronized across the Western world: it rose sharply in the 1970s in the wake of several commodity price shocks, fell in the early 1980s, and was quiescent to the point of being worrisomely low in the decade before the pandemic.

The latest cycle has been no different. The U.S. saw inflation come back earlier and faster as economies reopened, but is no longer an outlier. Recent sanctions on Russia has raised energy costs globally, especially in the eurozone. But even excluding volatile categories such as energy and food, "core" inflation has climbed to the 6% to 7% range in Sweden, the U.K., Canada and Australia, comparable to the U.S. rate, according to CEIC Data, an economic data provider. In Germany and France, it's about 3 percentage points higher than before the pandemic.

The U.S. did export some of its inflation; stimulus signed into law by both President Donald Trump and Mr. Biden fueled so much demand for internationally traded goods that the resulting supply shortages drove up prices in other countries. A recent Federal Reserve staff study estimates U.S. stimulus contributed 2.3 percentage points to Canada's inflation and 0.3 point to Britain's. As the Fed has raised interest rates this year, the dollar has climbed sharply, raising import costs for emerging markets in particular.

That still leaves plenty of inflation with no American connection. In numerous countries, the cost of shelter, which is almost entirely domestically driven, is rising rapidly. Most telling, labor markets, which are largely insulated from international developments, are universally tight. Unemployment is as low or lower in most Western economies as on the eve of the pandemic, while unfilled job vacancies are higher. This has recently begun to find its way into wages. In Canada, where unemployment is hovering near a four-decade low and vacancies have doubled since 2019, annual pay growth accelerated to 5.6% in October -- faster than in the U.S.

Inflation rose worldwide in part because policy makers in so many countries followed the same playbook: locking down their economies early in the pandemic, which distorted spending and work patterns. Elected leaders and central bankers from different countries also absorb the same intellectual currents. It is why inflation rose and fell at the same time in the 1970s and 1980s. Because the global financial crisis led to a decade of weak growth and too-low inflation, they saw little risk from implementing generous fiscal relief, slashing interest rates and buying bonds.

Today, even their postmortems sound similar. "It is understandable that some people are questioning whether or not too much support was provided," Reserve Bank of Australia Gov. Philip Lowe said in September. "In those dark days of the pandemic, the [bank] judged that the bigger policy mistake would have been to do too little, rather than too much." Treasury Secretary Janet Yellen made much the same case for stimulus in early 2021.

Inflation also reflects common shocks to economies' productive capacity having little to do with fiscal or monetary policy. Underinvestment in both fossil fuels and renewable energy infrastructure exposed everyone to crippling supply interruptions. Covid-19 scrambled work and commuting patterns and continues to leave millions too sick to work. Britain's labor force is smaller now than in 2019, leading Bank of England Gov. Andrew Bailey to wonder in a July speech, "Have more people retired than was expected, has long-term illness risen permanently, and how many people may return to the labor force and over what time?"

The confluence of factors forcing inflation up around the world pose a challenge to any country trying to solve it. Central banks around the world are raising interest rates but can do little about energy markets, demographics or fiscal policies pushing in the other direction.

If Republicans take control of Congress, they may push President Biden to cut spending. Yet to reduce the inflation rate just 1 percentage point next year via spending cuts alone would require slashing annual discretionary outlays by nearly half, or $750 billion a year, the Penn Wharton Budget Model, a nonpartisan think tank, estimates. That's roughly equal to the entire defense budget.

Spending cuts on such a scale would be so politically unpopular as to be almost unfeasible. Nondiscretionary spending, such as on Social Security and Medicare, isn't subject to annual appropriations legislation and is thus even harder to cut -- and, despite Republican talk of changes, even more politically sacrosanct. Those political leaders who have reaped the electoral rewards of high inflation may find it no easier to solve than the people they replaced." [1]

1. U.S. News -- Capital Account: Inflation a Headache for Leaders Everywhere
Ip, Greg. 
Wall Street Journal, Eastern edition; New York, N.Y. [New York, N.Y]. 10 Nov 2022: A.2.