November 30, 2022

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Over-optimism has cost tech companies

Hi-tech groups have long viewed hiring as more than just holding positions amid fierce competition for talent.

When ribbon, a digital payments company with a market capitalization of $74 billion, laid off more than 1,000 employees a few days ago, whose founders blamed themselves. “We’ve done too much, given the world we live in,” they wrote. “We were very optimistic.” Ago Elon Musknew owner Twitter, cut the company’s headcount in half last week, with Jack Dorsey, founder of the social media platform and former CEO, taking charge. “The company has grown so fast,” he wrote on Twitter. And on Wednesday when? deadthe parent company of Facebook and Instagram, laid off 11,000 people, or about 13% of its employees, CEO Mark Zuckerberg The situation is attributed to excessive enthusiasm for the expansion of activities. “I have made the decision to significantly increase our investment,” he wrote in a letter to employees. “Unfortunately, this did not happen the way I expected.” Across Silicon Valley, high-tech executives are acknowledging excessive hiring, quick to attribute current cuts to the sagging economy.

One by one, Silicon Valley executives are admitting their mistakes and overestimations in the post-pandemic era.

When companies were enjoying high profits and believing that the good days would continue thanks to the pandemic, they expanded aggressively, mobilizing the most combative and costly software resource, talent. Hi-tech groups have long viewed hiring as more than just holding positions. The fierce wars waged by the industry over raw talent showed that companies like The Google and the deadThey won the best and brightest professionals. And for employees, work has become something bigger than it used to be, an identity. This mentality is ingrained in the biggest tech companies, which offer many perks on luxury corporate “campus” that compete with universities. This model has also been copied by smaller startups, which provide a life-changing opportunity to enrich their employees in the form of stock options. Now these practices are causing “zero tolerance” in the tech industry. “When times are good, you exaggerate, and you get overly optimistic,” said Josh Wolfie, an investor at Lux Capital. “Over the past 10 years, the abundance of cash has led to an abundance of employment.”

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More than 100,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a website that tracks layoffs. The cuts affect a wide range of groups, from large and well-known public companies like Meta, Salesforce, Booking.com and Lyft to high-value private startups like delivery service Gopuff and financial platforms Chime and Brex. Finally, it should be noted that many job losses are also observed in the most experimental sub-sectors of technology. Astra, a missile company, laid off 16% of its staff this week after increasing its workforce three times last year. In the cryptocurrency industry, which has suffered a meltdown this year, high-value companies — such as Crypto.com, Blockchain.com, OpenSea and Dapper Labs — have laid off hundreds of workers in recent months.