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After ChatGPT disruption, Stack Overflow lays off 28 percent of staff
(arstechnica.com)
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this post was submitted on 17 Oct 2023
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I've seen so far on Leemy today that a bunch of people have been laid off from Bandcamp, Stack Overflow and Linked In. What the shit. Did the industry just decide to shrink today or something
I'm afraid I don't have any good sources to back this up, but I've seen it said multiple times in other threads on similar layoffs that investment capital has dried up in tech, investors are starting to demand a return, which leads to companies doing layoffs to cut costs etc. I'm sure smarter people can come along and explain it better (if they so choose).
It's a result of the cheap (and during the pandemic, literally "free") borrowing hayday of the last few years being over (they ended around 2022, when the Fed started jacking up interest rates and banks had to also increase rates in order to cover their loaned to liquidity ratios as required by law). As such, investors and businesses can't just borrow a shitload of money cheaply, so what they choose to invest in is much more conservative and/or the ROI tantalizing.
Also, in my opinion, the frenzy to dump millions into tech is mostly kind of over. The big dogs have gobbled up all the promising start-ups and potential disruptors and then some. AI is the "new" hotness, but all the companies that really have immediately viable products/services are already heavily invested in. There isn't really anything that's poised to come in and become the next OpenAI that's not already owned by the bigger companies.
Lastly, due to the first thing I mentioned, many folks believe we're A) already in a recession or B) about to enter one in earnest. In either scenarios, investors tend to pull their funds into safer pots while they ride out bumpy economic waters.
Unemployment is low, wages are finally outstripping inflation, inflation is falling and there is huge investment in factories and infrastructure.
It doesn't appear that a recession is on it's way but rather the free money that was flowing into the IT sector is causing all these companies to become profitable fast.
Thus the lay-offs.
It's not always as simple as that, though.
https://fortune.com/2023/10/01/recession-still-likely-and-coming-soon-6-reasons-why/
And one that agrees with you:
https://www.reuters.com/markets/us/with-gallic-shrug-fed-bids-adieu-recession-that-wasnt-2023-08-16/
The truth of the matter? No one really knows. Large economies are very difficult to forecast reliably and consistently. I hope you're right and it's all continual growth for the next couple of years, at the very least. But, like the first article I linked mentions, fed hikes can have a 18-24 month lag time to see real world impacts on various industries and we're soon approaching the first of that timeframe.
The rich have way too much cash and desperately want another recession so they can buy cheap assets. Consumers, the overall job market etc. Are trending the other way and messing up the cycle of boom/bust. In this particular instance, I am fine with the layoffs... as long as they keep paying the people they laid off. Paying people whose jobs are automated should have started at least as early as the industrial revolution.
Exactly. We've been hearing "there's a recession coming, any minute now!" for YEARS, and yet every jobs report shows the economy is doing gangbusters.
Q3 just ended. These layoffs are because the books are not looking good. Everyone is hurting with inflation and higher interest, tech being particularly vulnerable to high interest rates.
I can only hope the execs cut correctly. A second round of layoffs at a company can destroy morale enough to sink the company. Who wants to continue working at a place that fired your close peers, wondering if you're next?
You can already tell they didn't cut correctly, as they didn't cut themselves.
They may have cut themselves. Usually high level cuts are announced as "leaving for an amazing opportunity" or to "focus on family" or similar. That happens a month or two later after a deep layoff round and reorganizing. We'll see if these recent layoffs included executives by Q1 next year. Watch LinkedIn if you're that curious.
Still, it's unfair to the lower levels, including line management, because they don't get that option. It's a "thank you for your service" and a boot out the door.
Note: not all tech companies are like this. Gumroad is an excellent example of a very open and ran-differently business.
Why is tech particular vulnerable to high interest rates?
Tech has been in aggressive growth mode since 2008 because the Fed was handing out free money (interest rate lower than inflation). That allowed investors to dump money into tech businesses in hope of rapid business expansion, which in turn makes the business more valuable.
The free money dried up. Now these tech businesses are going to find out if they're sustainable.
Right? How is Machinima doing these days? They were once the biggest YouTube channel in all of esports. They had a few rounds of layoffs back between 2010 and 2013. Closed up in 2019. I mean it was more than morale, but it was writing on the wall.
I'm not familiar with that YouTube channel, but the story absolutely repeats itself. A business will eventually die if it cannot turn around its finances and cannot raise money.
Exactly. They were the 14th largest channel in the world (that belongs to 5 minute crafts now). They were #1 worldwide in gaming. (In 2014)
And you've never heard of them.
No such thing as too big to fail.
IGN and G4 occupied Machinima's enormous shadow.
The whole year. Companies who lied off (meta, google, Microsoft) and did stock buybacks had a huge boost on the market.
Stock market is demanding layoffs, from even before chatgpt took over. That's it. AI is just another keyword to push market price even further
Can't get that quarterly bonus without showing "growth".
do you imply that the best economic system ever imagined by humans is not sustainable?
Who woulda thunk!?
And 1,200 layoffs at Qualcomm!
You'll always see the stories of popular companies doing layoffs.
But you rarely hear stories of tech companies going on massive hiring sprees. Because those stories don't get clicks.
i want to see who will pay for their garbage when no one has a job
Fuck Epic for many reasons, but for this one in particular