People

Tech braces for layoffs at startups, but the biggest firms keep hiring

A Boston startup laid off nearly one-third of its employees this week. Insiders and economists say others will follow.

Empty chairs at Google HQ

Large, publicly traded tech companies such as Google are more insulated from short-term economic downturns.

Photo: Glenn Chapman/AFP via Getty Images

A week ago, Susan Jacobs was wooing a new class of interns and interviewing engineering candidates for the Boston-based business-travel startup Lola. Now she's scrambling to line up her own interviews; Jacobs was one of 34 people Lola laid off this week as coronavirus wreaks havoc on the economy.

"I was shocked," said Jacobs, an engineering manager who previously worked for Oracle and Fitbit. "But I mean, I completely understand why."

Jacobs and her former co-workers are among the first full-time tech employees in the United States to lose their jobs to COVID-19. More will soon follow, especially at small and early-stage startups, say insiders and economists.

Sam Altman, CEO of OpenAi and an adviser to the Y Combinator accelerator, said he's particularly concerned about layoffs at startups that "are low on runway" and "cannot get profitable and don't think they can raise money fast enough."

He said he expects to be hearing about layoffs at those firms "in a couple of weeks."

Get what matters in tech, in your inbox every morning. Sign up for Source Code.

Even before coronavirus landed in the U.S., financial analysts were predicting a post-WeWork reckoning for startups with sky-high valuations and rapid cash-burn rates. And some tech incumbents like Cisco and Expedia were already warning of layoffs, testing what happens when a corporate restructuring collides with a crisis.

Now anonymous threads on Blind and platforms like layoffs.tech abound with gossip about looming cuts, and investors and startup founders are posting prognostications about how a recession could trigger widespread cost-cutting and layoffs. Spreadsheets are being circulated online to showcase the credentials of tech workers suddenly back on the job market.

But the situation looks very different for employees at the largest tech firms. Even in tech hubs hardest hit by COVID-19 — including Silicon Valley and Seattle — companies like Google, Apple, Lyft, Uber and Adobe have all posted thousands of new jobs in recent weeks as residents shelter in place.

Large, established companies are generally better equipped to withstand economic downturns. They can slash expenses by canceling projects or cutting ties with contractors, freelancers and hourly workers before they have to turn to layoffs for full-time employees.

And tech companies are better positioned than most. The ability of many white-collar tech workers to do their jobs remotely, combined with a surge in demand for many online services among users stuck at home, gives software-oriented companies a huge advantage over the travel industry, restaurants and other sectors, analysts at Glassdoor and LinkedIn said.

Guy Berger, an economist at LinkedIn who previously worked on Wall Street, said the inherent mobility of software-centered work gives the tech sector a big advantage right now. "Tech in general is more suited to this big shift to remote work than a lot of other industries," he said. This is particularly true of large, publicly traded tech companies that have ample cash on hand, such as Apple and Google. They're more insulated from short-term economic downturns.

"This is not going to last forever," Berger said, adding that when shelter-in-place restrictions are eventually lifted or relaxed, he expects to see high demand for many industries and an appetite among consumers of all sorts. "This is really about surviving for brief, intense periods" of distress, he said.

Protocol asked more than a dozen tech companies whether they had laid off any full-time or contract employees or had plans to do so soon, what resources they may be making available to staff concerned about their job security, and whether they had sought state or federal government financial support.

An IBM spokesperson said the company has not laid off anyone as a result of the COVID-19 outbreak, or sought state or federal assistance. "What we have done is to contribute to our communities, while also running our business as virtually as possible," said IBM spokesperson Edward Barbini.

An Amazon spokesperson, meanwhile, said the company remains committed to hiring additional blue-collar workers to staff its buzzing fulfillment centers around the country. As more and more people buy essential household supplies online, Amazon and many of its retail partners have seen an increase in sales in recent weeks.

Spokespeople for Airbnb, Oracle, Facebook, Google, Apple, Palantir, Uber, Lyft, Cisco, Microsoft and Intel either declined to comment or did not respond.

During the last recession, unemployment in Silicon Valley spiked more than 11% in the summer of 2009. In addition to tech sectors like sales and marketing, the cuts also hit professional services firms, vendors who provide office workers and other related fields.

Daniel Zhao, a senior economist at Glassdoor, has charted two straight weeks of decline in new job listings across the economy — including a 17% hiring drop in the travel sector — but he said the tech industry has remained relatively flat.

Google, Microsoft, Facebook and others have also committed in recent weeks to paying hourly workers during COVID-19 office shutdowns. Other companies have not made such commitments, and it's unclear how long shelter-in-place orders may remain in effect. When it comes to proposed government interventions like paid sick days or emergency unemployment benefits, labor groups fear that freelancers and gig workers could be left behind.

Goldman Sachs warned this week that the country will soon see a 2-million-strong surge in unemployment claims, even as the White House lobbies states to delay the release of weakening job numbers.

In California, employers of all types are rushing to file mass layoff notices, which are required by law to be sent to the state at least 60 days in advance of planned layoffs. Since March 10, the state's Employment Development Department has received hundreds of such notices each day, creating a backlog. Typically it receives fewer than a dozen.

"It's crazy over here," said EDD spokesperson Loree Levy. With previous economic downturns, Levy said, the agency has had time to ramp up for an increase in unemployment insurance claims. That's not the case now. "This has been a sudden slam. I don't think anyone was prepared for the economy to come to a crawl all at once," Levy said. "We're facing an unprecedented claim activity."

To process filings from recently laid off Californians, Levy said the agency is asking existing staff to work overtime (seven days a week, in some cases), as well as inviting back recent retirees who are familiar with the byzantine state rules for categorizing types of employees and their eligibility for temporary financial support. "It's all hands on deck, here," she said.

Glassdoor's Zhao said it will take weeks or months to fully grasp COVID-19's toll on jobs. The tech industry may be obsessed with data, but government job reports aren't built to track economic shocks in real time. National job numbers for March are expected to be released on April 3, and April numbers slated to post on May 8 could give an indication of the lasting impacts of COVID-19.

"Government data is very reliable, but it's also slow," Zhao said.

In the absence of updated government job numbers, companies like Glassdoor, LinkedIn and OpenTable are releasing their own data. Each platform has its quirks, but they all offer a more immediate insight into rapid declines in service and hospitality work, plus indicators of where professional industries like tech could go from here.

LinkedIn is tracking hiring trends in several key industries, many with indirect impact for the industry, such as hospitality and restaurants. LinkedIn's more than 660 million users give the company a near live-time window into hiring trends.

Data the company published Friday showed that hiring in China and Italy plummeted in the days after the countries issued quarantines for citizens. "We anticipate hiring growth in the U.S. will begin to show a similar sharp decline as soon as next week," LinkedIn economist Karin Kimbrough said in a blog post accompanying the data.

Get in touch with us: Share information securely with Protocol via encrypted Signal or WhatsApp message, at 415-214-4715 or through our anonymous SecureDrop.

Still, in times of downturn, LinkedIn faces challenges when it comes to obtaining accurate, up-to-date information, since its data is derived from when users update their profiles. Many people who are laid off don't update their profiles on the site until after they find their next job. And in the early days of the coronavirus pandemic here, that generally hasn't happened yet.

Outside Boston, Jacobs is taking video interviews for new jobs as Massachusetts navigates a state of emergency, malls close and restaurants shift to takeout-only. With kids at home across the country and school in many places shut down for the foreseeable future, she's shifted her approach to job hunting.

"What I'm more looking for is a recession-proof company," Jacobs said. "I'm thinking biotech or ed tech."

Podcasts

1Password's CEO is ready for a password-free future

Fresh off a $620 million raise, 1Password CEO Jeff Shiner talks about the future of passwords.

1Password is a password manager, but it has plans to be even more.

Business is booming for 1Password. The company just announced it has raised $620 million, at a valuation of $6.8 billion, from a roster of A-list celebrities and well-known venture capitalists.

But what does a password manager need with $620 million? Jeff Shiner, 1Password’s CEO, has some plans. He’s building the team fast — 1Password has tripled in size in the last two years, up to 500 employees, and plans to double again this year — while also expanding the vision of what a password manager can do. 1Password has long been a consumer-first product, but the biggest opportunity lies in bringing the company’s knowhow, its user experience, and its security chops into the business world. 1Password already has more than 100,000 business customers, and it plans to expand fast.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Sponsored Content

A CCO’s viewpoint on top enterprise priorities in 2022

The 2022 non-predictions guide to what your enterprise is working on starting this week

As Honeywell’s global chief commercial officer, I am privileged to have the vantage point of seeing the demands, challenges and dynamics that customers across the many sectors we cater to are experiencing and sharing.

This past year has brought upon all businesses and enterprises an unparalleled change and challenge. This was the case at Honeywell, for example, a company with a legacy in innovation and technology for over a century. When I joined the company just months before the pandemic hit we were already in the midst of an intense transformation under the leadership of CEO Darius Adamczyk. This transformation spanned our portfolio and business units. We were already actively working on products and solutions in advanced phases of rollouts that the world has shown a need and demand for pre-pandemic. Those included solutions in edge intelligence, remote operations, quantum computing, warehouse automation, building technologies, safety and health monitoring and of course ESG and climate tech which was based on our exceptional success over the previous decade.

Keep Reading Show less
Jeff Kimbell
Jeff Kimbell is Senior Vice President and Chief Commercial Officer at Honeywell. In this role, he has broad responsibilities to drive organic growth by enhancing global sales and marketing capabilities. Jeff has nearly three decades of leadership experience. Prior to joining Honeywell in 2019, Jeff served as a Partner in the Transformation Practice at McKinsey & Company, where he worked with companies facing operational and financial challenges and undergoing “good to great” transformations. Before that, he was an Operating Partner at Silver Lake Partners, a global leader in technology and held a similar position at Cerberus Capital LP. Jeff started his career as a Manufacturing Team Manager and Engineering Project Manager at Procter & Gamble before becoming a strategy consultant at Bain & Company and holding executive roles at Dell EMC and Transamerica Corporation. Jeff earned a B.S. in electrical engineering at Kansas State University and an M.B.A. at Dartmouth College.
Policy

Biden wants to digitize the government. Can these techies deliver?

A December executive order requires federal agencies to overhaul clunky systems. Meet the team trying to make that happen.

The dramatic uptick in people relying on government services, combined with the move to remote work, rendered inconvenient government processes downright painful.

Photo: Joe Daniel Price/Getty Images

Early last year, top White House officials embarked on a fact-finding mission with technical leaders inside government agencies. They wanted to know the answer to a specific question: If there was anything federal agencies could do to improve the average American’s experience interacting with the government, what would it be?

The list, of course, was a long one.

Keep Reading Show less
Issie Lapowsky

Issie Lapowsky ( @issielapowsky) is Protocol's chief correspondent, covering the intersection of technology, politics, and national affairs. She also oversees Protocol's fellowship program. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University's Center for Publishing on how tech giants have affected publishing.

Boost 2

Can Matt Mullenweg save the internet?

He's turning Automattic into a different kind of tech giant. But can he take on the trillion-dollar walled gardens and give the internet back to the people?

Matt Mullenweg, CEO of Automattic and founder of WordPress, poses for Protocol at his home in Houston, Texas.
Photo: Arturo Olmos for Protocol

In the early days of the pandemic, Matt Mullenweg didn't move to a compound in Hawaii, bug out to a bunker in New Zealand or head to Miami and start shilling for crypto. No, in the early days of the pandemic, Mullenweg bought an RV. He drove it all over the country, bouncing between Houston and San Francisco and Jackson Hole with plenty of stops in national parks. In between, he started doing some tinkering.

The tinkering is a part-time gig: Most of Mullenweg’s time is spent as CEO of Automattic, one of the web’s largest platforms. It’s best known as the company that runs WordPress.com, the hosted version of the blogging platform that powers about 43% of the websites on the internet. Since WordPress is open-source software, no company technically owns it, but Automattic provides tools and services and oversees most of the WordPress-powered internet. It’s also the owner of the booming ecommerce platform WooCommerce, Day One, the analytics tool Parse.ly and the podcast app Pocket Casts. Oh, and Tumblr. And Simplenote. And many others. That makes Mullenweg one of the most powerful CEOs in tech, and one of the most important voices in the debate over the future of the internet.

Keep Reading Show less
David Pierce

David Pierce ( @pierce) is Protocol's editorial director. Prior to joining Protocol, he was a columnist at The Wall Street Journal, a senior writer with Wired, and deputy editor at The Verge. He owns all the phones.

Entertainment

5 takeaways from Microsoft's Activision Blizzard acquisition

Microsoft just bought one of the world’s largest third-party game publishers. What now?

The nearly $70 billion acquisition gives Microsoft access to some of the most valuable brands in gaming.

Image: Microsoft Gaming

Just one week after Take-Two took the crown for biggest-ever industry acquisition, Microsoft strolled in Tuesday morning and dropped arguably the most monumental gaming news bombshell in years with its purchase of Activision Blizzard. The deal, at nearly $70 billion in all cash, dwarfs Take-Two’s purchase of Zynga, and it stands to reshape gaming as we know it.

The deal raises a number of pressing questions about the future of Activision Blizzard’s workplace culture issues, exclusivity in the game industry and whether such massive consolidation may trigger a regulatory response. None of these may be easily answered anytime soon, as the deal could take up to 18 months to close. But the question marks hanging over Activision Blizzard will loom large in the industry for the foreseeable future as Microsoft navigates its new role as one of the three largest game makers on the planet.

Keep Reading Show less
Nick Statt
Nick Statt is Protocol's video game reporter. Prior to joining Protocol, he was news editor at The Verge covering the gaming industry, mobile apps and antitrust out of San Francisco, in addition to managing coverage of Silicon Valley tech giants and startups. He now resides in Rochester, New York, home of the garbage plate and, completely coincidentally, the World Video Game Hall of Fame. He can be reached at nstatt@protocol.com.
Enterprise

Why AMD is waiting for China to approve its $35B bid for Xilinx

There’s another big chip deal in regulatory limbo. AMD’s $35 billion bid for Xilinx, which would transform its data-center business, is being held up by China.

AMD announced a $35 billion bid to acquire Xilinx more than a year ago.

Photographer: Chris Ratcliffe/Bloomberg via Getty Images

AMD has spent its entire corporate life as a second-class citizen to Intel. That’s just one reason why CEO Lisa Su seized an opportunity with a $35 billion stock deal to snap up programmable chipmaker Xilinx more than a year ago at one of Intel’s weakest moments in decades.

The full extent of a manufacturing stumble that delayed Intel's next-generation chips six months became apparent in 2020, to Su and AMD's considerable advantage. AMD’s share price soared as it became clear the longtime also-ran stood to gain significant market share, granting Su a considerably more valuable currency for acquisitions such as Xilinx, which makes chips for data center networking, cars, military use and satellites.

Keep Reading Show less
Max A. Cherney

Max A. Cherney is a Technology Reporter at Protocol covering the semiconductor industry. He has worked for Barron's magazine as a Technology Reporter, and its sister site MarketWatch. He is based in San Francisco.

Latest Stories
Bulletins