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Layoff storm sweeps Silicon Valley, panic may snowball

Silicon Valley in a scare of layoffs
“It’s like a sword of Damocles, after waiting for a long time, it finally fell. After learning the news (of being laid off), I felt more at ease. In fact, it has been passed on within the company for a long time, and I also know that our team is sure It’s the hardest cut,” said a Meta hardware employee who learned that he had been laid off.

Although the autumn in Silicon Valley is still sunny and warm, in the hearts of many people, it is a severely cold winter. Not long ago, they were still working in the tech giants, which were rich and rivals, with enviable high-paying jobs and enjoying the benefits of perfect human nature, but now they have become unemployed at home.

In the past two weeks, as several giants such as Twitter, Strip, Salesforce, and Meta have successively announced layoffs, Silicon Valley has fallen into a panic of the period of large layoffs. Some Chinese programmers report safety in their circle of friends and respond to the concerns and inquiries of relatives and friends; some have set up mutual assistance WeChat groups, hoping to help unemployed compatriots through recommendation and information exchange to find new jobs as soon as possible in the job market that has entered the winter. .

For some unemployed people, the current reality is especially cruel. Some hold H1b work visas and must find the next job within 60 days to extend the visa, otherwise, they must leave the United States; some bought multi-million dollar real estate in Silicon Valley at the highest point of the housing market and the stock market, carrying heavy debts. The value of the shares and options held has shrunk sharply; some couples have both been laid off at the same time, and the dual-employee who originally had double protection has become double the risk.

A Meta programmer who learned that he was laid off reluctantly said that it is now the end of the year, and various companies are freezing recruitment. Although there are still some interview opportunities, they are likely to be passive water (that is, they will not really give offers). . I am ready to spend half a year or more looking for a job, and I am also ready for a big shrinkage of the salary package in the future. “At the end of this year, I don’t know what to do other than to write questions.”

However, even if there are no layoffs in this round, it does not mean that their jobs are safe. A Silicon Valley HR practitioner revealed that Meta will conduct annual performance appraisals early next year, and may also lay off some higher-paid employees at that time because it is too expensive to lay off them now. At that time, if the performance is not up to standard and dismissed, there is no need to give high compensation for layoffs.

Programmers are still rumoring that Google will be the next tech giant to lay off workers, and has even hired the same consulting firm that helped Meta cut jobs. At an analyst meeting after Google’s earnings report last month, Google acknowledged a hiring freeze and reassessment of HR needs across divisions but also hinted at the possibility of layoffs.

100,000 laid off this year
In the current Silicon Valley job market, there is no longer the grand occasion of tech giants waving checks, offering high salaries, and competing for talent. In the gatherings and WeChat groups of programmers in Silicon Valley, the topic of chat always revolves around where they are recruiting again, who has got a big package, and where are they going to change their house after the stock has risen sharply.

The past two years seem to have been the best time for Silicon Valley in more than a decade. Various technology companies have released splendid financial reports one after another, and they are all expanding aggressively, coping with the expected business growth and deploying new technology fields in the future.

Not so long ago, several giants were expanding massively. Google CFO Borat said that Google hired 12,800 employees in the third quarter, and the current total number of global employees is 186,800, an increase of nearly a quarter from a year earlier. At the end of the third quarter of this year, Meta’s total global workforce was 87,000, an increase of 30% year-on-year. Salesforce revealed in its August earnings report that it had grown its workforce by 36% over the past year.

However, from dog days to 39 days, it only takes six months. In the past six months, it seems that everything has come to a standstill. The stock prices of various giants have fallen sharply, and the financial reports are lower than expected. The cost of personnel with the largest expenditure has become the first budget to be cut, and the originally hot recruitment market has also turned into a sharp decline. Cold winter.

Over the course of a few months, Netflix, Intel, Stripe, Twitter, Meta, Salesforce, Lyft, Twilio, Docusign, tech company after tech company announced layoffs. The wave of layoffs has swept across Silicon Valley, and the most deep-pocketed giants are also not immune. Even Google, Apple and Amazon, which have yet to announce layoffs, have frozen hiring. Perhaps under the impact of this wave of layoffs, they are also brewing the next move to cut costs.

The tech industry may have lost 100,000 jobs this year, according to Layoffs.fyi, a San Francisco-based tech layoff statistics website. According to Roger Lee, founder of the site, the most layoffs are mainly in the recruitment, human resources and sales teams, and the engineering staff are relatively safe. But he also stressed that no one knows how long the wave of layoffs will last.

The boots are falling one by one. The new wave of layoffs in November came from social networking. On November 5, Twitter fired more than half of its employees at one time, and more than 3,700 people lost their jobs in total. Musk originally wanted to abandon the sky-high acquisition in the downturn, but under the pressure of Twitter’s lawsuit, he was forced to complete the transaction at the original price of $44 billion, of which $13 billion came from bank loans.

Musk must turn Twitter into a profit as soon as possible, using Twitter profits to pay off the more than $1 billion annual loan repayment pressure. Twitter lost $221 million on revenue of $5.1 billion last year, and lost another $270 million in the second quarter of this year. Cutting labor costs is a direct reason why Musk can’t wait to make big layoffs. However, the brutal layoff method with no communication and the stingy compensation standard also made Twitter a negative teaching material for layoffs in Silicon Valley.

Zuckerberg convicted himself
Four days later, Silicon Valley ushered in the largest layoff storm. On November 9, the social networking site giant Meta announced that it would lay off more than 11,000 employees, or 13% of the workforce; at the same time, it will freeze recruitment until the first quarter of next year. This is the first time in Meta’s 18-year history that it has significantly shrunk its business.

The layoffs were also expected as early as the outside world. Zuckerberg had warned employees in July that the company was going through the worst period; Meta froze hiring in September and hired consulting firm Bain to develop layoff plans; in October, Zuckerberg repeatedly sent employees and investments The operator hinted to cut costs, the human resources department has prepared a list of layoffs, and even the layoff announcement time and compensation rates have been disclosed in advance.

Compared with Musk’s severance package of two months’ minimum salary when he tweeted about layoffs (signing a waiver of power plus one month’s salary), Zuckerberg is obviously much more generous, and the layoff standard exceeds the average level in Silicon Valley. Laid-off Meta employees will receive 16 weeks’ pay, plus two extra weeks for each year they work, and their and their family’s insurance will be extended by half a year.

However, even though employees and the outside world had already prepared for the big layoffs at Meta, when Zuckerberg himself announced a 13% layoff, it still brought an unprecedented shock to Silicon Valley. After all, 11,000 people will lose their jobs as a result, three times the number Twitter laid off last week.

When the 38-year-old Zuckerberg officially announced the layoffs, he admitted that he took full responsibility for these decision mistakes, admitting that he had been too optimistic about the growth prospects, which led to the rapid growth of personnel. But he also said he had to make the toughest decision and was deeply sorry to all affected employees.

Before the pandemic hit in March 2020, Facebook had just 48,000 employees. In the wave of layoffs in Silicon Valley after the outbreak, Facebook announced that it would hire 10,000 people (mainly product and engineering teams) that year, and continue to expand by 10,000 people in the next few years. But just two years later, Meta now has 87,000 employees.

The layoffs will sweep across multiple Meta business units. According to Sina Technology, the recruitment and business development department has become the department with the highest percentage of layoffs, and hardware departments such as watches and Portal video chat screens will also be directly cut off. These departments with no return have been abandoned by the Meta strategy before.

Across the entire Meta group, the safest divisions are the money-making social advertising business and the short-video business Zuckerberg has high hopes for competing with TikTok. It is worth mentioning that the Metaverse team will also be affected in this layoff, but the magnitude is relatively small, and it is not the focus of this round of layoffs. Facing internal and external pressures, Zuckerberg had to start cutting back on his dream investment.

$15 billion smashes the metaverse
Last fall, Zuckerberg announced ambitious plans to go all-in on the Metaverse, even renaming the company Meta. In the past year alone, Meta has invested more than $15 billion in the Metaverse business. At that time, Meta’s market value even surpassed the trillion-dollar mark, becoming the fifth technology company in the trillion-dollar club.

In just one year, the market value of Meta has plummeted by more than 70%. Now their market cap is less than $300 billion, back to where they were in 2016. Although the sharp decline in stock prices has been attributed to the Fed’s continuous sharp interest rate hikes that have led to the overall decline in the stock market, Meta’s performance has also disappointed investors.

Meta’s third-quarter financial report released last month showed that revenue declined year-on-year for two consecutive quarters, and net profit decreased by 52% year-on-year. While ad revenue fell, Meta’s spending soared 19%. After the earnings report, Meta shares plunged another 20%. Zuckerberg has not only shrunk sharply in his own net worth, but also matured under pressure from Wall Street.

In its third-quarter earnings report, the Reality Labs division, which is responsible for implementing Zuckerberg’s metaverse dream, posted an operating loss of $3.67 billion, and revenue from VR equipment was sluggish. Meta at the time expected the Reality Labs unit to continue to make huge losses next year.

And investors don’t buy into Zuckerberg’s metaverse dreams. Altimeter, an important investor in Meta and a hedge fund giant, issued an open letter urging Zuckerberg to reduce spending by at least $5 billion a year, limit the annual investment in the Metaverse to $5 billion, and cut at least 20% of its employees. Altimeter wrote in the open letter, “Meta needs to be more streamlined and focused.”

A Meta employee who has not been laid off complained to Sina Technology that although Zuckerberg started Facebook and made the company a global social networking giant, “he is a very bad product manager, and the products he wants to make are almost the same.” They all failed. Zuckerberg had to launch the Metaverse project, and our employees felt that the product was still far from being mature, and there was no need to invest so much.”

Since the outbreak, Zuckerberg has rarely appeared at the company, spending most of his time with his family on the Hawaiian island of Kauai, where he spent nearly $100 million on a lot of land. Although he flies to Meta headquarters from time to time, his time at the company is getting shorter and he doesn’t interact with employees as closely as he used to. Zuckerberg has already sold their downtown mansion this summer, leaving only the Palo Alto home near its headquarters amid frequent protests over the San Francisco home.

It is worth mentioning that Google has also hired Bain & Company, which helped Meta formulate the layoff plan, and it seems that the layoff plan has been put on the agenda. Last month, Google has suspended recruitment for half a month, requiring each team project team to re-evaluate the current human resource needs. Google CEO Pichai asked employees to increase their current productivity by 20%, and to show “a greater sense of urgency, higher concentration, and greater hunger than ‘sunny days’.”

What is putting pressure on Google, Meta and Twitter is advertisers tightening their budgets. Advertising revenue contributes more than 80% of Google’s revenue, and it accounts for more than 90% of Meta and Twitter’s revenue. Google’s third-quarter revenue and profit both fell short of market expectations, and YouTube advertising revenue fell for the first time.

Google’s parent company CFO Ruth Porat candidly acknowledged in a post-earnings analyst meeting that growth in Google’s ad platform and video ads slowed as advertisers tightened ad spending, a reflection of their concern for the company. Concerns about future uncertainties are mounting.

Google’s chief commercial officer and senior vice president, Philpp Schindler, specifically explained that finance is the industry where advertising has fallen the most, with advertising in the insurance, lending and cryptocurrency industries appearing to be nearing a standstill. He also highlighted the negative impact of a stronger dollar on company performance.

panic or snowball
Advertisers tighten their budgets, and it’s not just internet companies that suffer. Ad spending in the U.S. fell for the fifth straight month in September, down 5 percent, according to a report from advertising market research firm StandardMedia. In the third quarter, channel advertising spending fell by 6%, involving cable TV, social advertising, search advertising and many other areas.

Even in the enterprise market, the giants are shrinking noticeably. Enterprise software giant Salesforce laid off nearly 1,000 jobs this week, only to be overshadowed by the massive layoffs on Twitter and Meta. According to Protocol previously disclosed, the scale of Salesforce’s layoffs in this round may be 2,500. When Salesforce’s layoffs were explained, as economic growth slowed and corporate users shrank their budgets, Salesforce’s performance was also significantly affected, and layoffs and contractions began to prepare for the winter.

While some companies may be more financially resilient to the downturn, no company now looks completely immune, according to Nikolai Roussanov, a professor at the Wharton School of the University of Pennsylvania.

Lusanov believes that the current worries about economic recession are not without reason. As the worries become more and more widespread, it will directly affect consumer psychology and investment activities. ) Snowball. What the tech industry is experiencing now may be a precursor to other industries.

Ahmed Banafa, a professor of electrical engineering at San Jose State University, believes that technology companies have been hiring aggressively in the past year because they believe the U.S. economy will accelerate after the epidemic recedes, bringing them more business and business. receive. However, the performance pressure brought about by severe inflation, and the continuous sharp increase in interest rates by the Federal Reserve led to a sharp drop in the stock market, all made these technology giants recognize the reality.

In Barnafa’s view, this year’s wave of layoffs is a fever-reducing behavior for technology companies, returning to the size of the company in 2020 and preparing for a recession. And those programmers who have been laid off can also find employment opportunities in non-tech companies (of course, the salary level will drop significantly).

After the dotcom bubble burst in 2000, Barnafa himself experienced layoffs firsthand. Based on his own experience, he advises people in Silicon Valley to always be prepared (Always have plan B).

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