Big Tech has always had a firing problem

The tech sector has long lived in a fantasy world of limitless cash and seemingly uncapped growth. Now as the facade crumbles and the shortcomings of the industry are laid bare, it is ultimately the tech employees who are left to suffer the consequences.

A line of people in businesswear carrying boxes

The layoff strategies that Big Tech has taken to date seem to careen between two extremes: cringe-worthy or Disney-villain level.

Photo: Compassionate Eye Foundation/Martin Barraud/OJO Images Ltd/Getty Images

As Elon Musk is proving yet again at Twitter, Big Tech has always had trouble with layoffs.

In fact, Big Tech has always had trouble accepting a reality in which it is not a deity basking under the glow of the California sun, somehow impervious to the ordinary plights of the common business.

But now, as the facade crumbles and the shortcomings of the industry are laid bare, it is ultimately the tech employees who are left to suffer the consequences. The rose-colored glasses are off, and workers can finally see past the rhetoric and marketing materials that drew them to the supposed promised land of Silicon Valley to the reality that, at the end of the day, even tech companies have just one audience to appease: Wall Street.

While there are, of course, some anomalies, the layoff strategies that Big Tech has taken to date seem to careen between two extremes: cringe-worthy or Disney-villain-level. Many have resisted even using the term layoffs to avoid sending a signal to investors that their business is in trouble — a reality that anyone would be able to see simply by taking a quick glance at the stock market.

But the industry has always been ruthless when it comes to firing. While it’s easy to forget given the growth of the tech sector over the past two decades, the dot-com boom left tens of thousands without jobs. Even today’s stalwarts like Microsoft had to let thousands of workers go at certain points under the guise of business continuity. And it’s not uncommon for a company to fire workers soon before or right after big fundraising rounds or record sales quarters.

Mass layoffs aside, Big Tech constantly shows that it has trouble when it comes to managing people. There’s the rampant sexism and racism that continues to plague even the most “inclusive” cultures, like Salesforce. Even in an industry known to offer big salaries, compensation has always been a challenge, particularly at places like Amazon, where employees have alleged discrimination based on pay. And it’s clear that companies like Google that consider themselves bastions of free speech seemingly throw that value out the window when it comes to any criticism of their business, instead opting to try to silence detractors through bungled firings that end up dominating press headlines.

The last several months should be a lesson to tech workers to not believe the hype peddled by so-called luminaries who have somehow convinced themselves they’re making the world a better place by pushing largely unnecessary technology on customers and consumers alike.

It’s easy to be swayed when companies, particularly private startups, dangle lucrative compensation packages — chock full of stock options and topped off with a fancy new title — that promise to make employees rich if they stick around long enough.

It’s the Silicon Valley fairy tale. But it’s a fantasy that can be very easily shattered. Look at Stripe. To CEO Patrick Collison’s credit, his recent note announcing layoffs at the payment processing platform was much more considerate than Musk’s inbox Russian roulette. But that doesn’t change the fact that, for years, despite ample pressure, Collison resisted an IPO. Now with the public markets likely closed through 2023 due to economic uncertainty, it’s the employees who were eagerly awaiting their paydays — not Collison, with an $8 billion net worth — who are bound to suffer.

Part of the challenge is that most tech workers, especially younger ones, have only known boom times. Even during the economic recession in the late 2000s, the sector remained largely resilient and used the time to invest heavily in growth.

That’s not true now, as the sugar rush that propelled the growth of so many Silicon Valley startups and behemoths suddenly evaporates, leaving behind bloated businesses that have significantly higher head count than existing sales can support. And instead of growth at all costs, investors are in their “show me the money” phase, forcing companies to take drastic measures like layoffs in a bid to finally post profits after, in some cases, over a decade of operations.

But it’s also a reflection of the fact that, in the minds of tech CEOs, it’s sunshine all the time. Yes, executives have struck a more dour tone lately as fears over a recession rise. But listen to the earnings call of any software vendor, particularly one that just posted subpar results, and it’ll feel like you’re in a different reality. Twilio, for example, is clearly facing a huge challenge ahead as it looks to finally become profitable. But you’d never know that hearing CEO Jeff Lawson talk to investors.

“Despite all the macro that’s going on, I’ve never been more excited about the opportunity ahead,” Lawson said on the company’s Thursday earnings call.

Laying off workers is never going to be an easy task for corporate leaders. But they only made it harder for themselves after spending the last decade pretending like tech’s Gilded Age would last forever.

It’s sadly too ambitious to expect the top brass of businesses beholden to investors to act any differently. But if there’s one positive outcome from all the layoffs, it’s that tech workers can finally view their sector with clear eyes.


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