this post was submitted on 17 Oct 2023
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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.