Silicon Valley falls into layoff panic
"It's like a sword of Damocles, which has been waiting for a long time and finally fell down. When I learned the news (of being laid off), I was relieved. In fact, it has been passed on for a long time inside the company, and I also know that our group must be the hardest hit." said an employee of Meta Hardware Department who learned that he was laid off.
Although the autumn in Silicon Valley is still sunny, it is cold and cold in many people's minds. Not long ago, they were still working in a technology giant with a lot of money. They had enviable high paying jobs and enjoyed perfect human welfare benefits. But now they are unemployed at home.
In the past two weeks, with the announcement of layoffs by Twitter, Strip, Salesforce, Meta and other giants, Silicon Valley fell into a panic during the layoff period. Some Chinese programmers reported safety in their circle of friends and responded to the concerns and inquiries of relatives and friends; Some have set up a mutual aid WeChat group, hoping to help unemployed compatriots find new jobs in the winter job market as soon as possible through recommendation and information exchange.
For some unemployed people, the current reality is particularly cruel. Some people with H1b work visas must find the next work renewal visa within 60 days, or they will have to leave the United States; Some bought millions of dollars of real estate in Silicon Valley at the highest point of the housing market, bearing a heavy burden of repayment, while the value of their shares and options has shrunk sharply; Some are even laid off by both husband and wife at the same time, and the double employees with dual security become double risks.
A Meta programmer who learned of the layoff said reluctantly that it was the end of the year, and all companies were freezing recruitment. Although there were still some interview opportunities, they might not be offered. I am ready to spend half a year or more to find a job, and I am also ready for a big reduction in my salary package in the future. "At the end of this year, I don't know what I can do except to brush the questions."
However, even if there is no layoff in this round, it does not mean job security. A Silicon Valley HR employee revealed that Meta will conduct annual performance appraisal at the beginning of next year, and may dismiss some employees with higher salaries at that time, because it is too expensive to dismiss them now. When the employee is dismissed due to unqualified performance, there is no need to give high redundancy compensation.
Programmers are still rumouring that Google will be the next technology giant to lay off staff, and even has hired the same consulting company to help Meta lay off staff. At the analyst meeting after the release of Google's financial report last month, Google admitted that it would freeze recruitment and reassess the human resource needs of various departments, but also hinted at the possibility of layoffs.
100000 people may be laid off this year
In the current Silicon Valley job market, there is no longer the grand occasion that technology giants used to wave checks, offer high salaries and compete for talents. In the gatherings of Silicon Valley programmers and WeChat groups, the chat topic always revolves around where the recruitment is going, who gets the big package, and where the house is going after the stock boom.
The past two years seem to be the best time for Silicon Valley in more than ten years. All technology companies have released beautiful financial reports, and are expanding in a large scale. They should plan for future new technology fields in the face of expected business growth.
Not long ago, several giants were still expanding on a large scale. Google CFO Borat said that Google recruited 12800 employees in the third quarter. At present, the total number of employees in the world is 186800, an increase of nearly a quarter year on year. Meta had 87000 employees worldwide at the end of the third quarter of this year, up 30% year on year. Salesforce disclosed in its financial report in August that the total number of employees has increased by 36% in the past year.
However, from dog days to 39 days, it only takes six months. In the past six months, it seems that everything has stalled. The stock prices of the giants have fallen sharply. The financial reports are lower than expected. The most expensive staff costs have become the first budget to be cut. The originally hot recruitment market has turned into a cold winter.
In a few months, Netflix, Intel Stripe、Twitter、Meta、Salesforce、Lyft、Twilio、Docusign， One technology company after another announced layoffs. The tide of layoffs has swept the entire Silicon Valley, and the richest tycoons are also not immune. Even Google, Apple and Amazon, which have not yet announced layoffs, have frozen recruitment. Perhaps under the impact of this wave of layoffs, they are also preparing for the next move to cut costs.
According to Layoffs.fyi, a website of layoff statistics in the technology industry in San Francisco, 100000 people may have lost their jobs in the technology industry this year. Roger Lee, the founder of the website, said that recruitment, human resources and sales teams were the main layoffs, and engineering personnel were relatively safe. But he also stressed that no one knows how long this wave of layoffs will last.
Boots are falling one by one. The new wave of layoffs in November came from the field of social networking. On November 5, Twitter dismissed more than half of its employees at one time, and more than 3700 people lost their jobs in total. Musk originally wanted to give up this priceless acquisition in the depressed market, but under the pressure of Twitter litigation, he was forced to complete the transaction at the original price of $44 billion, of which $13 billion came from bank loans.
Musk must make Twitter turn losses into profits as soon as possible, and use Twitter's profits to repay the pressure of repaying more than $1 billion a year. Last year, Twitter lost $221 million on revenue of $5.1 billion, and another $270 million in the second quarter of this year. Reducing labor costs is the direct reason why Musk can't wait to make a big layoff. However, the brutal layoff method without communication and the stingy compensation standard also make Twitter the negative teaching material of layoffs in Silicon Valley.
Zuckerberg Announces His Own Punishment
Four days later, Silicon Valley ushered in the largest layoff storm. On November 9, Meta, a social networking giant, announced more than 11000 layoffs, 13% of them; At the same time, the recruitment will be frozen until the first quarter of next year. This is the first time in the 18 year history of Meta to significantly shrink its business.
The layoff was also expected earlier. Zuckerberg warned employees in July that the company was going through the worst period; In September, Meta froze recruitment and hired Bain, a consulting company, to make layoff plans; In October, Zuckerberg repeatedly hinted to employees and investors to cut costs. The HR Department has prepared a layoff list, and even the announcement time and compensation standard of layoffs have been disclosed in advance.
Compared with the minimum two months' salary severance pay (plus one month's salary after signing the waiver of power), Zuckerberg is obviously much more generous, and the layoff standard exceeds the average level of Silicon Valley. Meta employees who have been laid off will be paid for 16 weeks. After that, every year they work for two more weeks, their insurance and family insurance will be extended for half a year.
However, even though employees and the outside world had already made psychological preparations for the Meta layoff, when Zuckerberg personally announced the layoff of 13%, it still had an unprecedented impact on Silicon Valley. After all, 11000 people will lose their jobs, three times the number of layoffs on Twitter last week.
When Zuckerberg, 38, officially announced the layoff, he admitted that he would bear all the responsibility for these decision-making mistakes, and that he had been too optimistic about the growth prospects, which led to the rapid growth of personnel. However, he also said that he had to make the most difficult decision and felt deeply sorry for all the affected employees.
Before the outbreak of the epidemic in March 2020, the total number of Facebook employees at that time was only 48000. In the wave of layoffs in Silicon Valley after the outbreak of the epidemic, Facebook announced that it would recruit 10000 people (mainly product and engineering teams) that year, and continue to recruit 10000 people in the next few years. But only two years later, Meta now has a total of 87000 employees.
This layoff will sweep across multiple business departments of Meta. According to Sina Technology, the recruitment and business development department has become the department with the highest proportion of layoffs, and hardware departments such as watches and portal video chat screens will also be directly cut off. These departments that have no output returns have been abandoned by the Meta strategy.
In the whole Meta Group, the safest department is the social advertising business responsible for making money and the short video business department Zuckerberg hopes to compete with TikTok. It is worth mentioning that the team of MetaUniverse will also be affected in this layoff, but the extent is relatively small, which is not the focus of this round of layoffs. Faced with internal and external pressure, Zuckerberg had to start reducing his dream investment.
$15 billion smashes the universe
Last fall, Zuckerberg ambitiously announced his commitment to the metauniverse and even renamed the company Meta. In the past year alone, Meta has invested more than 15 billion dollars in the Meta Universe business. At that time, Meta's market value even exceeded the trillion dollar mark, becoming the fifth technology company of the trillion dollar club.
In just one year, Meta's market value plummeted by more than 70%. Now their market value is less than 300 billion dollars, returning to the stock price level of 2016. Although the sharp decline in stock prices was due to the sharp interest rate hikes by the Federal Reserve, Meta's performance also disappointed investors.
The third quarter financial report of Meta released last month showed that the revenue fell for two consecutive quarters year on year, and the net profit decreased by 52% year on year. While advertising revenue declined, Meta's expenditure soared by 19%. After the release of the financial report, Meta's share price plummeted again by 20%. Zuckerberg not only lost his wealth sharply, but also matured under the pressure from Wall Street.
In the third quarter's financial report, the Reality Labs department responsible for implementing Zuckerberg's dream of the meta universe suffered an operating loss of up to $3.67 billion, and VR equipment revenue was also sluggish. Meta predicted that the Reality Labs department would continue to make huge losses next year.
Moreover, investors do not recognize Zuckerberg's dream of the meta universe. Altimeter, an important investor in Meta and a hedge fund giant, issued an open letter urging Zuckerberg to reduce spending by at least $5 billion annually, limit the annual investment of Metaverse to $5 billion, and cut employees by at least 20%. Altimeter wrote in an open letter, "Meta needs to be more streamlined and focused."
A Meta employee who was not laid off complained to Sina Technology that although Zuckerberg founded Facebook and turned the company into a global social network giant, "he is a very bad product manager, and almost all the products he wants to do are failures. The Metauniverse project is Zuckerberg's must, and our employees feel that the product is far from mature, so there is no need to invest so much. "
Since the outbreak of the epidemic, Zuckerberg has rarely worked in the company. Most of the time, he stayed with his family on the lovely island of Hawaii, where he spent nearly 100 million dollars to buy a large amount of land. Although he will come to Meta's headquarters by private plane from time to time, his time in the company is getting shorter and shorter, and he no longer interacts closely with employees as before. Due to frequent protests against San Francisco residences, Zuckerberg has sold their luxury residences in the city this summer, leaving only the Palo Alto residence near the headquarters.
It is worth mentioning that Google has also hired Bain Consulting, which helps Meta make layoff plans. It seems that layoff plans have been put on the agenda. Google suspended recruitment for half a month last month and asked all project teams to reassess their current human resource needs. Google CEO Petraeus asked employees to increase their current productivity by 20%, and to show "a greater sense of urgency, greater focus, and greater hunger than" sunny days ".
What makes Google, Meta and Twitter under great pressure is that advertisers tighten their budgets. Advertising revenue contributed more than 80% of Google's revenue, and more than 90% of the revenue in Meta and Twitter. Google's revenue and profit in the third quarter were both lower than market expectations, and YouTube's advertising revenue fell for the first time.
Ruth Porat, CFO of Google's parent company, frankly admitted at the analyst meeting after the end of the financial report that the slowdown in the growth of Google's advertising platform and video advertising is due to advertisers' tightening of advertising spending, which reflects their growing concern about future uncertainties.
Philpp Schindler, Google's chief commercial officer and senior vice president, explained specifically that finance was the industry where advertising dropped more, and advertising in insurance, loan and cryptocurrency industries seemed to be near stagnation. He also stressed that the strengthening of the US dollar had a negative impact on the company's performance.
Panic or snowball
It is not only Internet companies that are affected by advertisers' tightening budgets. According to the statistical report of advertising market research company Standard Media, the US advertising spending in September has declined for the fifth consecutive month, down 5% at the same time. In the third quarter, the channel advertising expenditure dropped by 6%, involving cable TV, social advertising, search advertising and many other fields.
Even in the corporate market, the giants are shrinking significantly. Salesforce, an enterprise software giant, laid off nearly 1000 employees this week, only to be covered up in the overwhelming news of layoffs on Twitter and Meta. According to Protocol, the number of layoffs in Salesforce this round may be 2500. When Salesforce explained the layoff, with the slowdown of economic growth and the shrinking budget of enterprise users, Salesforce's performance was also significantly affected, and began to downsize and shrink to prepare for the winter.
Nikolai Roussanov, a professor at the Wharton School of Business at the University of Pennsylvania, said that although some companies' financial strength may be more resistant to economic downturn, it seems that no company can be completely unaffected now.
Lusanov believes that the current fear of economic recession is not without reason. As the fear becomes more and more widespread, it will directly affect consumer psychology and investment activities, thus becoming a (growing) snowball. What the technology industry is experiencing now may be the precursor of other industries.
Ahmed Banafa, a professor of electronic engineering at San Jose State University, believes that the reason why technology companies have recruited heavily in the past year is that they believe that the U.S. economy will accelerate growth after the epidemic subsides, bringing them more business and revenue. However, the performance pressure caused by severe inflation and the sharp interest rate increase by the Federal Reserve led to the sharp decline of the stock market have made these technology giants realize the reality.
In the view of Banana Law, this wave of layoffs this year is a way for technology companies to reduce their fever, return to the size of the company in 2020, and get ready for the economic recession. Those programmers who have been laid off can also find employment opportunities in non technology companies (of course, the salary level will decline significantly).
After the bursting of the dotcom bubble in 2000, Banafa himself experienced being laid off. With his own experience, he suggested that people in Silicon Valley should always have two plans.
When the tide receded, we knew who was swimming naked. (By Zheng Jun)
