WEBVTT - What Happens Now to All the Laid Off Tech Workers? 0:00:10.119 --> 0:00:14.040 Hello, and welcome to another episode of the Odd Lots Podcast. 0:00:14.080 --> 0:00:17.279 I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, have I 0:00:17.320 --> 0:00:20.680 ever told you like my idea for like a two 0:00:20.720 --> 0:00:24.040 part podcast or like a series of two part podcasts? 0:00:24.320 --> 0:00:27.520 A series of two parts? Is it the debate one? No, 0:00:27.720 --> 0:00:31.600 it's different. Okay, So I don't know about you, But 0:00:31.880 --> 0:00:35.599 most of the time, after we do these interviews, I 0:00:35.720 --> 0:00:38.279 usually have questions that I started kicked myself for not 0:00:38.440 --> 0:00:43.519 having asked oh, yes, yes. So this often happens on 0:00:43.520 --> 0:00:46.920 the podcast because we often touch on kind of wide 0:00:47.000 --> 0:00:50.839 varying topics and we're not experts in a lot of 0:00:50.840 --> 0:00:53.120 the things that we talked about, and often the first 0:00:53.159 --> 0:00:55.720 episode is sort of you get to know your subject matter, 0:00:56.080 --> 0:00:59.200 and then you leave it with even more questions. Yeah. 0:00:59.240 --> 0:01:01.560 So I often kicked myself, like, oh, I should have 0:01:01.640 --> 0:01:04.080 I should have obviously asked that obviously. And then the 0:01:04.080 --> 0:01:06.800 other thing that happens is you post then the episode 0:01:06.840 --> 0:01:09.200 comes out, and then like people on Twitter and elsewhere, 0:01:09.240 --> 0:01:10.880 they'll talk about it. They talked about it, they're like, 0:01:10.920 --> 0:01:13.119 what I'm curious about is actually like, oh, that's really 0:01:13.160 --> 0:01:15.400 good question too. I should have thought of that. So, 0:01:15.480 --> 0:01:17.360 like I thought, like a thing that we should do 0:01:17.440 --> 0:01:21.280 maybe one day is schedule, like, have all episodes be 0:01:21.360 --> 0:01:24.000 two parters where we do an interview with a guest, 0:01:24.600 --> 0:01:27.360 take a week, sort of magrinate on it, think about it, 0:01:27.560 --> 0:01:29.319 what are some questions we wish we would ask, and 0:01:29.319 --> 0:01:33.440 then have the second episode schedule. I really like that idea. 0:01:33.640 --> 0:01:37.440 It's sort of like it's almost the octopus model of 0:01:37.880 --> 0:01:42.920 podcast episodes, where like one one episode just springs forth 0:01:42.959 --> 0:01:45.520 a dozen you arms and legs that you can talk 0:01:45.520 --> 0:01:48.840 about forever. So today we're kind of gonna we're kind 0:01:48.840 --> 0:01:50.960 of gonna be doing that. We're this is I think 0:01:51.040 --> 0:01:53.440 we might be This might be close. I'm not sure 0:01:53.480 --> 0:01:55.840 what the record is, but this might be close to 0:01:55.880 --> 0:01:59.040 the soonest we've ever had a guest on so soon 0:01:59.160 --> 0:02:01.600 after they appeared the show. This is a pilot for 0:02:01.720 --> 0:02:04.400 podcast two parters. The only other time I can think 0:02:04.440 --> 0:02:07.800 of is we talked to Claudia Sam twice before the 0:02:07.840 --> 0:02:09.720 pandemic and was because it was sort of like her 0:02:09.800 --> 0:02:13.560 general views on how to like forecast recessions, and then 0:02:13.600 --> 0:02:15.760 like two weeks later, like the pandemic was in view, 0:02:15.840 --> 0:02:18.080 and it's like, oh, I shoot, this might be really bad, 0:02:18.360 --> 0:02:20.320 so he had her on really fast. But this is 0:02:20.320 --> 0:02:22.600 going to be close to that record. I think, yeah, 0:02:22.880 --> 0:02:25.000 sounds good. All right, let's do it. So we recently 0:02:25.040 --> 0:02:30.600 talked to Patrick McKenzie. He is a technology infrastructure financial 0:02:30.600 --> 0:02:34.720 infrastructure specialist. He worked for Stripe for six years. He's 0:02:34.720 --> 0:02:37.200 currently an advisor. He's the author of the Bits about 0:02:37.320 --> 0:02:40.400 Money newsletter, and we talked to him about like corporate 0:02:40.440 --> 0:02:43.200 I why it is the way it is? Why does 0:02:43.320 --> 0:02:46.200 it seem to be like years and years behind what 0:02:46.280 --> 0:02:48.239 we think of the cutting edge of software wise it 0:02:48.280 --> 0:02:51.079 off and clunky wise it off and have these big 0:02:51.080 --> 0:02:54.080 technical issues that can take a while to fix. That 0:02:54.160 --> 0:02:57.000 was a great conversation. The public loved it. But there's 0:02:57.040 --> 0:03:00.080 a lot going on in software these days. And the 0:03:00.120 --> 0:03:02.639 other sort of big trend that we haven't really talked 0:03:02.680 --> 0:03:05.400 about is that for the first time and I don't know, 0:03:05.480 --> 0:03:09.160 maybe like fifteen years, we've been seeing all these tech layoffs, right, 0:03:09.200 --> 0:03:11.240 And I think there was a little bit of tension 0:03:11.320 --> 0:03:13.399 in that episode in that we were talking about why 0:03:13.440 --> 0:03:16.480 corporate software is so bad. So it's almost like, well, 0:03:16.560 --> 0:03:19.280 obviously there's a need for better software, and yet all 0:03:19.320 --> 0:03:23.000 these big tech companies that ostensibly provide these services are 0:03:23.080 --> 0:03:27.680 laying people off, but also in the broader macro picture. 0:03:28.080 --> 0:03:31.800 Since we recorded that episode, we had a payrolls report 0:03:31.960 --> 0:03:36.800 that came out much, much stronger than anyone expected. And 0:03:36.960 --> 0:03:39.480 yet we've seen these big tech companies layoff people. And 0:03:39.520 --> 0:03:43.560 so the question obviously becomes, is this something specifically about 0:03:43.680 --> 0:03:48.000 tech or are these layoffs sort of the first sign 0:03:48.240 --> 0:03:51.120 of something broader to come in the economy. And the 0:03:51.160 --> 0:03:54.000 other thing that everyone points out to when when you 0:03:54.120 --> 0:03:58.600 see these announcements from Meta and Alphabet, at various startups 0:03:58.600 --> 0:04:01.160 and Microsoft and Amazon they all done it is like 0:04:01.320 --> 0:04:03.520 they edited so many jobs over the last two years 0:04:03.560 --> 0:04:07.080 that actually these layoffs are like fairly small in uh, 0:04:07.360 --> 0:04:09.800 the grand scheme of things, even for these companies, based 0:04:09.800 --> 0:04:11.840 on the amount of hiring that they've done. Yeah, but 0:04:11.880 --> 0:04:14.800 I saw I saw a figure from Goldman Sex I 0:04:14.840 --> 0:04:16.880 think it was Yannatsis, and he was talking about in 0:04:16.880 --> 0:04:19.279 the tech sector, most of the companies that have been 0:04:19.400 --> 0:04:23.440 laying people off grew their head count by over since 0:04:23.480 --> 0:04:26.240 the pandemic basically because they thought all the pandemic trends 0:04:26.240 --> 0:04:28.440 were going to keep going. Maybe there's a little bit 0:04:28.440 --> 0:04:31.839 of labor hoarding. But it's a big figure. Absolutely. You know, 0:04:31.920 --> 0:04:35.800 people in our industry, journalism, when journalists lose their jobs, 0:04:35.800 --> 0:04:39.160 there's always trolls on Twitter saying, oh, learn to code. 0:04:39.440 --> 0:04:41.000 You know, that's like a thing. I think at one 0:04:41.000 --> 0:04:43.120 point even like Twitter start banning people for saying that. 0:04:43.360 --> 0:04:45.240 But I guess the question is, right now, when you 0:04:45.279 --> 0:04:47.719 see these layoffs, like should we learn to code or 0:04:47.800 --> 0:04:50.720 is that not you know, is that not the career 0:04:50.760 --> 0:04:52.560 safety that that it used to be? So all kinds 0:04:52.600 --> 0:04:55.560 of questions about what is going on in the market 0:04:55.600 --> 0:04:57.960 for tech talent. I'm sure someone's going to tell us 0:04:58.000 --> 0:05:00.400 to learn to code. For the record, I can code 0:05:00.440 --> 0:05:04.000 just in like very non useful languages. I have no well, 0:05:04.040 --> 0:05:07.039 I coded in basic like yeah, yeah exactly, like C 0:05:07.160 --> 0:05:11.200 plus plus and like some really basic HTML. But all right, 0:05:11.480 --> 0:05:13.839 let's talk to someone who knows more about this question 0:05:13.880 --> 0:05:16.400 than we do. We're bringing back Patrick. Thank you so 0:05:16.480 --> 0:05:19.000 much for coming back on the podcast. Thanks very much 0:05:19.040 --> 0:05:22.560 for having me. Absolutely so. I guess the question is, 0:05:22.720 --> 0:05:27.000 before we even start talking about the recently off announcements, 0:05:27.480 --> 0:05:30.040 why don't we start with like the hiring boom that 0:05:30.120 --> 0:05:32.479 we really saw over the last two years, just massive 0:05:32.520 --> 0:05:35.039 amount of headcount added and all these companies, we know 0:05:35.080 --> 0:05:39.040 who they are, what drove that. So how about we 0:05:39.160 --> 0:05:41.960 rule back history to two thousand nineteen and if you're 0:05:41.960 --> 0:05:45.039 looking at recent history, as of two thousand nineteen, tech 0:05:45.120 --> 0:05:49.839 has been on sort of an uninterrupted series of a 0:05:49.880 --> 0:05:53.039 bunch of very good years, broad based expansion across the 0:05:53.160 --> 0:05:56.359 entire industry, basically writing continuing to ride the wave that 0:05:56.400 --> 0:06:00.960 had happened since the late pots. Is that how we 0:06:00.960 --> 0:06:05.760 was it in English with the consolidation of mobile gains, etcetera, etcetera. 0:06:06.920 --> 0:06:11.120 Then the pandemic happened and there was a brief pause 0:06:11.480 --> 0:06:15.640 of okay, is this going to be an absolutely catastrophic 0:06:15.680 --> 0:06:19.599 event for the entire world economy. Many bad things happened 0:06:19.640 --> 0:06:22.360 during the pandemic, the way it played out for tech 0:06:22.680 --> 0:06:26.240 was probably not how anyone would have expected one. There 0:06:26.279 --> 0:06:29.080 was sort of a one two punch of a combined 0:06:29.080 --> 0:06:32.360 fiscal response from governments built in the United States and 0:06:32.720 --> 0:06:36.520 worldwide to stave off a huge economic disaster, which had 0:06:36.560 --> 0:06:40.520 the effect of both putting money into consumers pockets and 0:06:40.600 --> 0:06:44.880 also using the markets for assets, for example tech stocks, 0:06:45.279 --> 0:06:47.000 which will come back to the importance so that in 0:06:47.000 --> 0:06:50.000 a moment to a lot of the customers were, due 0:06:50.080 --> 0:06:53.920 to various non pharmaceutical inventions, sitting at home with very 0:06:53.920 --> 0:06:56.800 little to do other than use the internet. And so 0:06:57.120 --> 0:07:00.040 a lot of commerce that had been possible on the 0:07:00.080 --> 0:07:02.680 internet before the share of it that was soaked up 0:07:02.680 --> 0:07:06.159 by the Internet in uh both sort of like semi 0:07:06.200 --> 0:07:10.280 discretionary places like food delivery, but also much less discretionary 0:07:10.280 --> 0:07:14.560 places like you know, core supermarkets suddenly shifted online in 0:07:14.600 --> 0:07:18.600 a very very fast way. And so this combination of 0:07:18.720 --> 0:07:20.960 there's more money slashing around and more of it is 0:07:21.000 --> 0:07:25.400 falling into the online bucket led to absolutely blockbuster years 0:07:25.440 --> 0:07:29.400 for tech companies, and it was a real like trying 0:07:29.480 --> 0:07:32.880 to keep your fingers onto the rocket internally at the companies, 0:07:33.000 --> 0:07:35.960 like the amount of new users that was on boarding, 0:07:36.560 --> 0:07:38.560 at the rate of growth of the business, the raw 0:07:38.720 --> 0:07:41.200 volumes of stuff that was going through the pipes made 0:07:41.240 --> 0:07:44.400 it like difficult to keep everything up and running. And 0:07:44.560 --> 0:07:47.840 a good news front, the business is largely successfully did 0:07:47.920 --> 0:07:50.120 keep up and running during a time where society very 0:07:50.160 --> 0:07:53.800 much needed them to. They also started to like readjust 0:07:53.880 --> 0:07:57.280 their projections of what the future would look like, and 0:07:57.800 --> 0:08:01.680 for a while it was looking like. Yeah. The phrase 0:08:01.680 --> 0:08:04.480 that was going around was decades of growth were happening 0:08:04.520 --> 0:08:06.600 every couple of weeks in terms of, you know, our 0:08:06.680 --> 0:08:10.200 anticipated long term shift of the offline economy into the 0:08:10.240 --> 0:08:14.840 online economy. And there was a big question of how 0:08:14.880 --> 0:08:17.440 long does that continue for and is that pulling forth 0:08:17.480 --> 0:08:20.080 growth growth that is happening in the future, is it 0:08:20.240 --> 0:08:24.320 a one time spike, etcetera, etcetera. To to various structural 0:08:24.360 --> 0:08:28.240 and competitive dynamics, a lot of firms spit simultaneously. This 0:08:28.320 --> 0:08:33.080 is a pretty durable change. We find ourselves crushed by 0:08:33.120 --> 0:08:35.400 the amount of demand we're seeing right now. We're going 0:08:35.440 --> 0:08:37.880 to need to hire and hire aggressively to deal with 0:08:37.920 --> 0:08:40.480 this and to position ourselves for what we see as 0:08:40.559 --> 0:08:43.040 the you know, eventual coming out of the pandemic future. 0:08:43.679 --> 0:08:46.880 And as a result of this, companies were mature companies 0:08:47.040 --> 0:08:50.680 the Google's Amazons Facebooks of the world. We're hiring on 0:08:50.760 --> 0:08:54.079 the order of like year over year growth across large 0:08:54.120 --> 0:08:58.439 portions of their business. Somewhat earlier stage companies, companies that 0:08:58.520 --> 0:09:01.439 might look like a stripe even though stripe as uh 0:09:01.480 --> 0:09:06.160 somewhat larger these days, or early stage startups were on 0:09:06.280 --> 0:09:10.679 boarding multiples of their pre pandemic had count as we 0:09:11.000 --> 0:09:14.320 used over the course of the pandemic, so huge expansion 0:09:14.400 --> 0:09:17.640 during the during the interval, and then as we came 0:09:17.640 --> 0:09:20.240 out of the pandemic, companies assessed a number of things. 0:09:20.360 --> 0:09:23.400 One the growth rates tended to go back to his 0:09:23.400 --> 0:09:26.360 historical norms rather than this shot in the arm that 0:09:26.679 --> 0:09:31.520 the pandemic was offering. Importantly, and you know, tech is 0:09:31.520 --> 0:09:34.240 a wide sector. It touches every part of the economy 0:09:34.280 --> 0:09:37.200 these days, so it's difficult to say with huge generalizations, 0:09:37.240 --> 0:09:40.440 but as top line level things did not decline back 0:09:40.480 --> 0:09:43.120 to two thousand nineteen. And again, two thousand nineteen was 0:09:43.160 --> 0:09:46.080 not a bad year for tech. It was a, you know, 0:09:46.120 --> 0:09:48.280 a pretty good year after a number of pretty good years. 0:09:48.679 --> 0:09:51.439 So we haven't gone back to the pre pandemic baseline. 0:09:52.120 --> 0:09:54.200 We haven't even stopped growing. In a number of cases, 0:09:54.480 --> 0:09:58.240 the growth curve has just spent downwards, and so the 0:09:58.600 --> 0:10:03.120 sustained like plus plus headcount growth over time didn't look 0:10:03.120 --> 0:10:05.040 like it could be that could be sustained. And then 0:10:05.120 --> 0:10:08.720 companies started to look at things that they had allowed 0:10:08.760 --> 0:10:12.199 to happen for the course of the pandemic to characterize 0:10:12.240 --> 0:10:15.480 these broadly. One of the things that happened during the 0:10:15.480 --> 0:10:19.800 pandemic was due to the lockdowns and advisability of having 0:10:19.880 --> 0:10:22.199 large numbers of people congregate in small pockets of air, 0:10:22.720 --> 0:10:25.840 a bunch of companies went to both remote work and 0:10:25.920 --> 0:10:29.160 remote hiring where they might not have had a huge 0:10:29.200 --> 0:10:33.200 amount of institutional experience with that model of working before, 0:10:34.040 --> 0:10:36.839 and after two to three years of working with these 0:10:37.040 --> 0:10:41.240 newer cohorts of people, they've found that there are some 0:10:41.920 --> 0:10:44.280 practices that they want to continue from this room at 0:10:44.280 --> 0:10:47.120 work world into the future, and that there's some amount 0:10:47.160 --> 0:10:51.040 of internal impetus to return to office and have sort 0:10:51.080 --> 0:10:54.920 of a cultural reset around the office or headquarters, etcetera 0:10:55.000 --> 0:10:58.080 as the sort of beating center of these firms. I've 0:10:58.080 --> 0:11:00.480 worked remote for most of my career, myself of a 0:11:00.480 --> 0:11:03.920 broad fan of the model. Let's say that there was 0:11:04.000 --> 0:11:07.040 some cultural tension and companies on where the locus of 0:11:07.080 --> 0:11:08.880 activity is going to be, whether it's going to be 0:11:09.160 --> 0:11:12.000 in this online in zoom meetings and slack all the time, 0:11:12.520 --> 0:11:16.000 or in the office high band with communication directly with 0:11:16.040 --> 0:11:18.720 trusted peers, and a lot of companies wanted to have 0:11:18.760 --> 0:11:21.640 a bit of a pullback towards the office, and then 0:11:21.800 --> 0:11:26.880 they're looking more granularly at the classes of people to 0:11:26.920 --> 0:11:29.400 the heart over the last couple of years, and found 0:11:29.480 --> 0:11:33.120 that in comparison to prior classes, there was a bit 0:11:33.120 --> 0:11:35.720 of cultural drift relative to where the companies want their 0:11:35.760 --> 0:11:38.880 baselines to be, and also in some cases a bit 0:11:38.920 --> 0:11:41.840 of a measured productivity difference versus where they wanted their 0:11:41.840 --> 0:11:45.400 baselines to be. That's sort of expected because when you're 0:11:45.440 --> 0:11:49.280 pulling out all the steps to hire, you like necessarily 0:11:49.280 --> 0:11:50.800 you have to be a little less choosy than you 0:11:50.880 --> 0:11:53.480 normally are. You have, you know, to the extent that 0:11:53.480 --> 0:11:55.880 you describe any value at all to the in person 0:11:56.040 --> 0:11:59.400 interview loop, which I describe relatively little value too, but 0:11:59.480 --> 0:12:03.560 hopefully like slightly greater than zero. You you lose that 0:12:03.600 --> 0:12:06.439 amount of signal and they're sort of hiring in a 0:12:06.480 --> 0:12:09.520 slightly more challenge fashion than usual. And so I think 0:12:09.600 --> 0:12:12.840 that companies will be pretty quiet about saying, but we'll 0:12:13.000 --> 0:12:17.000 we'll say to themselves is we probably have a few 0:12:17.080 --> 0:12:21.560 more regrets in like hiring classes than we did in 0:12:21.679 --> 0:12:26.520 the hiring classes as a percentage, Patrick, this actually leads 0:12:26.559 --> 0:12:28.680 to something that I want to ask you, but what 0:12:28.760 --> 0:12:33.320 does blow actually look like in the tech sector, and 0:12:33.520 --> 0:12:37.480 you know, is it something that only emerges as business 0:12:37.520 --> 0:12:41.840 activity actually slows down, or even in one would you 0:12:41.840 --> 0:12:47.640 have characterized tech as bloated. So it's difficult. This tech 0:12:48.840 --> 0:12:51.080 sort of subsumes more and more of the economy into 0:12:51.160 --> 0:12:55.760 its every increasing embrace to make like huge paint with 0:12:55.960 --> 0:12:59.720 raw brush assertions across all of it. But let's see 0:12:59.720 --> 0:13:04.760 where to start here. So one, the number of things 0:13:04.760 --> 0:13:08.559 that are done in these large companies are extremely varied. 0:13:08.640 --> 0:13:11.120 People might have a image that like most people who 0:13:11.320 --> 0:13:14.600 could google our engineers, that's actually not the case. Depending 0:13:14.600 --> 0:13:17.360 on the company we're talking about between twenty and the 0:13:17.360 --> 0:13:20.679 people who work at the company are technologists broadly written, 0:13:21.040 --> 0:13:25.560 they are software engineers, their system administrators, their designers at 0:13:25.600 --> 0:13:28.680 some companies reporting to the same division. And then the 0:13:28.720 --> 0:13:31.000 rest are every sort of worker that you would have 0:13:31.080 --> 0:13:35.080 in any company in the economy. Lawyers, regulatory people, customer 0:13:35.120 --> 0:13:39.320 sport agents, etcetera, etcetera, etcetera. Management layers upon layers of management. 0:13:40.320 --> 0:13:44.200 So what does what does company growth look like? In 0:13:44.679 --> 0:13:47.680 one case, it is staffing up more teams to work 0:13:47.760 --> 0:13:51.960 on products that already exist. Sometimes staffing teams that sort 0:13:52.000 --> 0:13:54.880 of like grow with the the rate of usage of 0:13:54.920 --> 0:13:58.679 your products. So like customer service teams typically grow relatively 0:13:58.760 --> 0:14:03.280 linearly with the usage of your service. Sometimes it's teams 0:14:03.320 --> 0:14:06.040 that grow relatively nearly with the size of your organizations. 0:14:06.120 --> 0:14:09.880 So as companies were having these sort of like unprecedented 0:14:09.920 --> 0:14:13.079 amounts of employees getting on boarded every year, they needed 0:14:13.200 --> 0:14:16.880 larger recruiting divisions to staff up there are other employees, 0:14:16.920 --> 0:14:20.120 and it's just based on like the productivity math of 0:14:20.160 --> 0:14:22.800 a recruiter. And you can, like finger to the wind 0:14:22.920 --> 0:14:25.480 that if you hire a recruiter, that recruiter will be 0:14:25.520 --> 0:14:27.320 able to hire twenty five people in the year. And 0:14:27.360 --> 0:14:29.880 so if you need to hire four thousand people, then 0:14:30.080 --> 0:14:33.520 you know, work math backwards, you require a hundred sixty 0:14:33.520 --> 0:14:36.440 recruiters that you didn't have previously. That will tend to 0:14:36.520 --> 0:14:40.320 cause your recruiting division to get larger as you are 0:14:40.360 --> 0:14:43.000 doing a rapid expansion, and then it will contract faster 0:14:43.120 --> 0:14:45.680 than the rest of your company will when you decide 0:14:45.720 --> 0:14:48.160 to take your foot off the gas bottle. So those 0:14:48.200 --> 0:14:51.600 are the the things that are sort of less inside 0:14:51.600 --> 0:14:54.120 of your control. You you just need to keep doing 0:14:54.120 --> 0:14:57.560 them to run the business, and then you're making some 0:14:58.520 --> 0:15:01.360 more speculative investments on like what are what is our 0:15:01.400 --> 0:15:03.480 new product line up going to look? Like? What features 0:15:03.520 --> 0:15:07.240 are we going to add? And so the basic unit 0:15:07.280 --> 0:15:10.160 of organization within an engineering organization these days is a 0:15:10.240 --> 0:15:13.680 single engineering team will typically be like five to eight people, 0:15:14.160 --> 0:15:17.080 and that team has a mental bandwidth to deal with 0:15:17.360 --> 0:15:21.120 three relatively narrowly scoped problems. And so the more that 0:15:21.160 --> 0:15:25.320 you want your software services suite, etcetera. To do, the 0:15:25.360 --> 0:15:28.200 more like narrowly scoped problems that come into its domain, 0:15:28.400 --> 0:15:30.680 more like five to eight people engineering teams you need, 0:15:31.400 --> 0:15:34.520 and so you might find yourself in a position where 0:15:34.960 --> 0:15:37.160 you've hired like five to eight people to work on 0:15:37.280 --> 0:15:44.320 three relatively narrowly scoped problems somewhat opportunistically, and then when 0:15:44.320 --> 0:15:48.560 you you know, come to three and are thinking very 0:15:48.640 --> 0:15:52.440 rigorously around like, Okay, we think we're a little bigger 0:15:52.440 --> 0:15:54.640 than we were when we were efficient back a couple 0:15:54.640 --> 0:15:57.320 of years ago. We think the economic environment not be 0:15:57.680 --> 0:16:00.280 might not be as strong and as we were model link, 0:16:00.800 --> 0:16:03.160 Which of all the problems in our company are the 0:16:03.160 --> 0:16:05.440 ones that we definitely need to keep focusing on, and 0:16:05.480 --> 0:16:08.360 which can we refer into later or just our corridor 0:16:08.440 --> 0:16:11.440 business right now, then perhaps like some of these nearroly 0:16:11.480 --> 0:16:13.920 scoped problems are not at the top of our list. 0:16:14.320 --> 0:16:17.400 And then if you consider, you know, like this product 0:16:17.400 --> 0:16:19.880 that we thought we would bring to market in three 0:16:19.880 --> 0:16:22.840 maybe it will not be brought to mark till then 0:16:22.920 --> 0:16:25.480 there might be like ten teams implicated by that that 0:16:25.520 --> 0:16:28.320 you do not have propletied for I have a lot 0:16:28.360 --> 0:16:31.000 of questions. You know, when Ellen bought Twitter, and he, 0:16:31.160 --> 0:16:33.680 like what you know, much more aggressive with the layoffs 0:16:33.720 --> 0:16:36.280 than anything else that we've seen. There were all these 0:16:36.400 --> 0:16:40.520 like vcs and stuff. A common to the Dirty Secret 0:16:40.520 --> 0:16:42.680 and Silicon Valley is that all these companies could do 0:16:42.720 --> 0:16:46.000 that they have fifty of their employees not really working 0:16:46.000 --> 0:16:49.040 on anything and not really contributing anything. And like, thank 0:16:49.080 --> 0:16:51.520 you Ellen for showing that this could be done. And 0:16:51.600 --> 0:16:53.680 Twitter still is operating. Although I don't know how the 0:16:53.680 --> 0:16:56.120 businesses or whether he cut too deep to the bone 0:16:56.200 --> 0:16:58.920 or whatever, but like, would you hear that, like is 0:16:58.960 --> 0:17:01.600 that the case that just like over the years, setting 0:17:01.640 --> 0:17:07.399 aside the unrealistic expectations of one and maybe two, was 0:17:07.480 --> 0:17:11.320 there just a wide scale over hiring relative to the 0:17:11.359 --> 0:17:16.000 needs of the business. So tech has been in sort 0:17:16.040 --> 0:17:18.480 of a land grab mode for essentially all of my 0:17:18.520 --> 0:17:21.080 adult life. We certainly haven't hit the asom to oute 0:17:21.119 --> 0:17:23.200 of how many things in the economy can be orchestrated 0:17:23.200 --> 0:17:25.879 by software. We certainly haven't hit the assom tote of 0:17:26.000 --> 0:17:28.920 how many human and human interactions will be intermediated by 0:17:29.040 --> 0:17:33.119 a technical system happening over a smartphone, etcetera, etcetera. In 0:17:33.160 --> 0:17:37.040 that sort of land grab mode, you aren't simply like 0:17:37.119 --> 0:17:39.480 trying to answer what is the minimal set of things 0:17:39.480 --> 0:17:41.280 we can do with the minimal number of people, but 0:17:41.359 --> 0:17:44.440 are sort of opportunistically looking at what are the next 0:17:44.600 --> 0:17:46.919 ten things that we can try such that one of 0:17:46.960 --> 0:17:51.680 them becomes a company defining product feature, etcetera, etcetera. I 0:17:51.760 --> 0:17:55.639 have a little bit of risk reflective contrarianism when people 0:17:55.640 --> 0:18:00.280 say all tech companies are overstaffed by Could you cut 0:18:00.359 --> 0:18:03.280 eighty percent of people who work at tech companies and 0:18:03.600 --> 0:18:06.600 still have something functional at the end of the day. 0:18:07.160 --> 0:18:11.199 Probably true, that would be extremely painful. But if you 0:18:11.240 --> 0:18:14.800 went into a very different mode of operation and just 0:18:14.920 --> 0:18:17.720 wanted them to continue the products and services they had 0:18:17.760 --> 0:18:21.959 three years ago, possibly that could be done. Probably wouldn't 0:18:21.960 --> 0:18:24.720 be optimal for any of them. That's one major reason 0:18:24.760 --> 0:18:28.840 why nobody does it. There's also some not gone like cultural, etcetera. 0:18:28.840 --> 0:18:31.239 Effects that make it virtually unthinkable. If you were an 0:18:31.240 --> 0:18:34.560 executive at at a tech company and you were sufficiently 0:18:34.560 --> 0:18:37.080 in your cups and had a had a heart to 0:18:37.080 --> 0:18:39.399 heart with someone and said, what's the true number of 0:18:39.480 --> 0:18:43.640 Like if I could wave a magic wand and no consequences, 0:18:44.000 --> 0:18:47.000 where would our staffing be? Would probably be like eighty 0:18:47.160 --> 0:18:49.880 five to ninetent of what it is currently. I think 0:18:49.920 --> 0:18:51.679 I think most people would say, like, oh, there's a 0:18:51.680 --> 0:18:54.760 bit of there's a bit of like I hate the 0:18:54.760 --> 0:18:58.120 word fat in this context about you know, a little 0:18:58.119 --> 0:19:00.480 bit of fluff around the edges, but we're not in 0:19:00.600 --> 0:19:04.879 systemically a terrible place. And I think you know you 0:19:04.880 --> 0:19:07.560 you would get different numbers from different people in different 0:19:07.560 --> 0:19:10.040 parts of the organization, but that feels like plus or 0:19:10.080 --> 0:19:12.439 minus right to me. Should be noted that I was 0:19:12.480 --> 0:19:15.240 a beer worker b rather than the sort of executive 0:19:15.280 --> 0:19:34.440 that would be tesked with making that kind of decision. Patrick, 0:19:34.640 --> 0:19:39.600 you mentioned the sort of impetus towards creating company defining features, 0:19:39.640 --> 0:19:42.160 and this is also something I've always wondered, is there 0:19:42.200 --> 0:19:47.320 a bias in tech towards creating new products and our 0:19:47.440 --> 0:19:52.240 employees and engineers you know, rewarded for doing new things 0:19:52.440 --> 0:19:57.560 rather than maybe maintaining the old ones and perfecting those. Oh, 0:19:57.720 --> 0:20:00.199 this is an extremely important thing to understand and the 0:20:00.200 --> 0:20:03.000 behavior of the large tech companies from outside of them 0:20:03.040 --> 0:20:06.000 that they all have what's called a PERF process in 0:20:06.040 --> 0:20:09.119 the industry, it's called PURF outside is a performance review, 0:20:09.680 --> 0:20:14.159 and the performance reviews are largely how a company takes 0:20:14.840 --> 0:20:17.439 creative work that is done over this time scale of 0:20:17.520 --> 0:20:20.680 like quarters and years, and it is often sort of 0:20:21.200 --> 0:20:24.320 indevigable and very area and reduces it to a number 0:20:24.440 --> 0:20:27.080 such that the company can dole out things of value 0:20:27.160 --> 0:20:32.119 like promotions and bonuses and career paths, etcetera, etcetera. And 0:20:32.320 --> 0:20:36.400 PERF happens on a semi annual or annual basis, and 0:20:37.280 --> 0:20:39.440 the way it PERF works that most large tech companies 0:20:39.480 --> 0:20:42.480 is heavily biases in the direction of getting your name 0:20:42.600 --> 0:20:46.040 attached to new things that shipped in the world versus 0:20:46.440 --> 0:20:48.720 you know, I was assigned to this legacy product, the 0:20:48.720 --> 0:20:51.080 product did not go down for six months, you should 0:20:51.080 --> 0:20:53.800 definitely give me a bonus on that basis. Oddly enough, 0:20:54.400 --> 0:20:57.440 this is not straightforwardly the things that is in the 0:20:57.480 --> 0:21:01.600 company's interests because all of the money is made by existing, well, 0:21:01.640 --> 0:21:03.840 not all the money. The supermajority of money in the 0:21:03.840 --> 0:21:07.359 tech companies is made by satisfying customers you already have 0:21:07.520 --> 0:21:11.200 rather than getting new customers, and the supermajority of money 0:21:11.240 --> 0:21:13.679 is made on your oldest and tourist products rather than 0:21:13.720 --> 0:21:18.000 the new stuff. But institutionally, tech companies biased towards we 0:21:18.080 --> 0:21:20.480 want our best people to be on the new things 0:21:20.560 --> 0:21:24.600 all of the time. And if your individual best people 0:21:25.000 --> 0:21:28.120 want to be, you know, doing the hard yards that 0:21:28.280 --> 0:21:31.200 keeps the old stuff running, they will quickly be dissuaded 0:21:31.240 --> 0:21:33.920 by their mentors and managers, etcetera, and say don't, no, no, 0:21:34.400 --> 0:21:37.560 that is not the way to exceed expectations. You will like, 0:21:37.920 --> 0:21:41.000 if you only do great maintenance work for the for 0:21:41.040 --> 0:21:44.639 the next couple of years, you will be, you know, 0:21:45.119 --> 0:21:48.600 severely career limited here. So figure out something new to 0:21:48.640 --> 0:21:50.439 do and make sure your name is attached to it 0:21:50.520 --> 0:21:53.439 in a way that is legible to your manager and 0:21:53.520 --> 0:21:57.240 your manager's manager and this performance roview process. So let's 0:21:57.280 --> 0:22:00.400 talk about the layoffs that we've seen. Because you said 0:22:00.440 --> 0:22:02.840 something interesting in your first answer, which is that's sort 0:22:02.880 --> 0:22:08.800 of like hiring discipline, hiring quality. During those crazy years 0:22:07.720 --> 0:22:12.720 of one part of may have been loose, maybe not 0:22:12.920 --> 0:22:15.520 as the standards were a little lower, or maybe people 0:22:15.600 --> 0:22:19.200 just didn't fit or something like that. When companies these 0:22:19.280 --> 0:22:23.000 days are now or recently making the decisions about who 0:22:23.040 --> 0:22:26.320