Facebook parent company Meta, Twitter and other tech companies have recently begun laying off employees. Founders and CEOs in the tech sector who have been eager to expand their companies for years are lining up to deliver the same message: Sorry, we’re moving too fast.
On Wednesday, Meta CEO Mark Zuckerberg admitted to all employees that he was at fault. Zuckerberg said the company would lay off 11,000 employees, or 13 percent of its current workforce. Zuckerberg told employees that he had thought the dramatic shift regarding online business after the outbreak would be permanent. “I was wrong, and I’m responsible for that,” Zuckerberg said.
Days earlier, Tesla CEO Elon Musk cut his staff by about 50 percent after taking over the social media platform Twitter. Jack Dorsey, the company’s co-founder and the man who ran Twitter until last year, apologized to the company. Dorsey tweeted Sunday, “I went too fast in scaling the company. I apologize for that.”
Sam Bankman-Fried, founder of cryptocurrency trading firm Alameda Research and cryptocurrency exchange FTX, spoke at length this Thursday about what has happened at the company in recent days. He also told employees, “I’m sorry.
The formality is being repeated by companies across the technology industry as layoffs at tech companies have intensified in recent months. Jeff Lawson, chief executive of cloud communications company Twilio, announced in a letter to employees in September that the company would be cutting 11 percent of its workforce. “I’m responsible for choosing to expand the team faster,” he said. “Now is also the time for me to make the decision that the company is going to focus and cut jobs.”
The CEOs’ rhetoric reflects, in part, the impact of the recent sharp downturn in the technology industry. The technology industry has long been growing at a rapid pace. But as investors are often cautioned, history is not a reliable indicator of future performance. The statements by top tech company officials reveal the persistent illusion that people can have during boom times. For some of these executives, this is the first time they have had to deal with a severe downturn in the economy.
Two years ago, tech companies found that the number of time people spent online increased dramatically after they were homebound because of the epidemic. As a result, executives in the technology industry quickly organized hiring to take advantage of this market opportunity and build up talent.
Since the outbreak, Zuckerberg has increased the company’s workforce by more than 80 percent, to about 87,000 employees. From the beginning of 2020 to September, Google’s parent company Alphabet added nearly 68,000 employees, an increase of about 57 percent. Twitter more than doubled its workforce in the same period, and Twilio tripled its workforce to 8,992.
But two years later, demand for products and services ranging from digital advertising to computer chips has plummeted, and the poor economic outlook has kept consumers spending less. So far this year, the technology-based Nasdaq Composite Index (Nasdaq Composite Index) has fallen more than 30%.
Jeff Hunter, chief executive of executive training company Talentism, said companies are deploying people to deal with the situation and get ahead of their competitors.
“It’s all happening. They’re making a ton of money. They don’t want to lose the talent war yet.” Hunter said, “and then the frenzy suddenly ended.”
In his remarks Wednesday, Zuckerberg recalled the tech industry’s revenue surge at the start of the epidemic. “Many predicted that this would be a permanent acceleration. I thought so, too, and decided to invest significantly more.” “Unfortunately, things didn’t go the way I expected.”
Earlier, Meta said that for the first time in the company’s history, it saw two consecutive quarters of declining revenue from its advertising business.
Layoffs have been taking place across the tech industry in recent weeks, with social media companies alone firing more than 16,000 employees. Chipmaker Intel said it was laying off employees, and interactive fitness platform Peloton Interactive cut its workforce to about half after four rounds of layoffs. Online brokerage Robinhood Markets has also said it is cutting jobs, announcing in August that it would cut about 23 percent of its positions.
During the epidemic, many tech products and services were in short supply, and companies had a strong incentive to hire quickly.
That was the case with Amazon. Amazon has become somewhat of a lifeline for many Americans as they buy everyday items online when their homes are quarantined. From 2020 to March 2022, Amazon doubles the number of employees to about 1.5 million. The company has opened hundreds of new warehouses, sorting centers and other logistics facilities to meet the burgeoning demand. Amazon’s profits nearly tripled during the same period.
Recently, Amazon’s results were the worst in its history. Company CEO Andy Jassy (Andy Jassy) has been trying to quickly adjust the business to a different environment. In the second quarter of this year, Amazon’s blue-collar workforce fell by nearly 100,000. But Amazon said it is now increasing warehouse staffing to meet the demand of the holiday shopping season.
Technology investor and former Cisco CEO John Chambers (John Chambers) said the ongoing layoffs also reflect the natural tendency of companies to reassess their business prospects, which is difficult to do during a long boom. “Growth has masked a lot of mistakes, and 12 years of uninterrupted growth means we’re a little bit fat,” Chambers said.
In July, Google’s parent company Alphabet announced it would slow down its hiring pace for the rest of 2022. “When you’re in the middle of growth, it’s hard to take the time to make the adjustments you should,” said Sundar Pichai, the company’s chief executive. “Moments like this also give us the opportunity.”
Executives at tech companies that have been forced to announce layoffs are hoping they won’t have to go through that lesson again.
Snap, owner of the photo social platform Snapchat, announced in August that it would fire 20 percent of its workforce, after growing its workforce by 65 percent in two years, and Snap CEO Evan Spiegel said, “Layoffs of this magnitude will greatly reduce the risk of having to do it again. “