It’s Time To Tighten Your Belt
Some of the tech industry’s biggest CEOs warned this week that while they’re back all summer, it’s time to tighten their belts: It basically means mass layoffs and cuts are coming. .
“The party’s over,” Yahoo’s senior market editor Miles Udland said in his morning report on Friday. “It’s unclear whether investors are listening. Or if they really care. Or if the message is for them,” he wrote.
The alarms went off during the Code Conference in Los Angeles these days and was attended by Sundar Pichai, CEO of Alphabet (GOOG); Snap CEO Evan Spiegel; and Amazon CEO Andy Jesse.
All have, in one way or another, pointed to the need to restructure the way their companies have been spending and hiring so far. This is the latest notice in a months-long campaign to make it clear that times have changed.
Alphabet
Pichai said his company feels “very insecure” about the current macroeconomic scenario and is working to figure out “how to make the company 20% more productive,” as CNBC reports. At the end of the second quarter, Alphabet employed approximately 174,014 people.
Pichai’s remarks – perhaps most shocking to the tech industry – were followed by a report by The Information, citing an email sent to Google managers last week. The courier spoke of the need to better control expenses, especially business travel.
crack
Speaking at the Code conference on Wednesday, Snap’s Spiegel echoed executives’ sense of defeat, saying, “We don’t see a lot of things that make us optimistic, so what we have to do is really restructure our business. “
In late July, Snap announced that it had cut about 20% of its workforce and reversed several initiatives as part of a plan set to save the company about $500 million annually.
“We intend to substantially reduce our hiring rate, as well as the growth rate of operating expenses. We will re-prioritize our investments and put a renewed focus on productivity,” Snap said in a statement. said in its quarterly letter to shareholders before the layoffs.
The company, which owns Snapchat, Spectacles, Bitmoji and Genly, said it may incur “short-term transition costs” as it executes these changes, “but we expect to emerge with a more focused cost structure as a result.” ” Its shares have fallen 70 per cent so far this year.
heroine
Jassi’s comments at the Code conference were somewhat more encouraging: “I don’t think they’ll hire us at the same rate we hire. But we’ll keep hiring,” the Wall Street Journal reported.
During the pandemic, Amazon first raised its average minimum wage to $18 an hour, then went on a massive hiring spree, fully adopting the remote work model at the corporate level, especially in its warehouses.
When asked about the possibility of a higher minimum wage of $25 an hour, Jassi said at the Code conference that it would not be fair. “There’s a limit to what you can afford in the economy and a business that can be profitable,” he replied.
Netflix
Meanwhile, The Wall Street Journal reported this week that Netflix is looking to cut costs in its business, specifically cloud computing costs paid to Amazon Web Services, but also in other areas such as those paid to company employees. number of gifts. every year.
Netflix said it lost nearly a million subscribers in the June quarter, citing increased competition. The company has laid off more than 400 employees this year and has said it will keep its spending on new movies and TV programming stable. But cost-cutting efforts run deep and touch most corners of the business, and the company has decided to apply more financial discipline.
meta y tesla
In June, Mark Zuckerberg, the CEO of Meta Platform, also spoke about it, asking his employees to prepare for “one of the worst recessions they’ve seen in recent history.” That same month, Elon Musk admitted he had a “super bad feeling” about the global economy and announced plans to cut Tesla’s workforce by 10%.
Miles Udland does not believe that the audience for these comments are investors, but rather employees. “Rising interest rates increase the cost of capital for all businesses, requiring teams to make more deliberate spending decisions,” he wrote.
For many tech companies, the growth numbers are enough to keep investors and employees excited about the business and keep accountants in the finance department away.
High salaries, flexible budgets and an ever-growing team are ideal when capital is plentiful and the business is growing. But, as the “screws tighten” across industries, leadership has tried to articulate the harsh realities of this new environment: severe budgets and staff cuts.
“Look at the stock market and we know investors have their say in the tech sector,” Udland says in Yahoo’s morning report. However, there is still work to be done when it comes to actually getting the message across to employees.
Gloss