And sadly the easiest answer is "we ARE jumping off the bridge, see?"
It's up to companies to push back against market pressure to maintain long term progress, but it's a tough balancing act to do that while avoiding being punished by investors.
When sales drop, revenue also falls. When revenue falls, models get re-evaluated and numbers get re-calculated. Reducing expenses becomes a priority.
When reducing expenses becomes a priority, SaaS contracts get evaluated very closely. Unnecessary seats are removed. Contracts are re-negotiated. Income for SaaS companies like Confluent drop rapidly, and they may continue to drop more. So I don't think this is blind trend-following, I think this is a rational response to a rapidly changing market.
A company can be profitable and it can still make sense to lay off certain employees. In-house recruiter positions are some of the first to be cut right now because companies are pulling back on hiring. If you have a hiring freeze and very low hiring forecasts for the next year, why would you continue to employee a lot of recruiters?
Market conditions change. Companies adapt to the change. When you have people in positions that are seeing less demand for the coming year, it doesn't make sense to keep them on the payroll and have them sit idle. It's rational to readjust the workforce.
Nobody likes getting laid off, but no position is truly permanent.
This has been a long time coming. Some of the numbers I have been seeing for these contracts are truly mindblowing for the value delivered. The days of gouging enterprise on these random non-critical SaaS integrations is probably over.
The one that still really gets me is Slack. Even medium sized companies are paying millions per year for a glorified IRC client. It just doesn't add up.
A social contagion if you will. It doesn’t seem rational at all at this point.
Hopefully some of the more naive people in the industry learn something from this. Your employer would happily kill your if it were legal and they made a cent more doing so, let alone something less like fire you.
Layoffs are rational and are common in downward cycles.
I get the feeling that a lot of the shock and awe here is due to age and a lot of people starting their careers during an extended boom period, particularly in tech which was getting absurd. The last few years in particular were far from rational.
Now the Fed is raising interest rates, housing is cooling, cheap money is no more ... and as a result you get a downward business cycle resulting in layoffs.
I don't see anything new here that hasn't happened over and over again ... but I've been in the industry for decades with multiple companies and sectors.
These companies aren't charities, they aren't meant to retain jobs just because they are profitable, and they definetly aren't your friend. Many of them are publically traded, which at the end of the day are beholden to one and one thing only, the shareholders.
All these companies have no vision, and are run by people only interested in saving their jobs and/or preparing for their next one.
https://news.stanford.edu/2022/12/05/explains-recent-tech-la...
Whether the storm actually hits, what gets wrecked, what doesn’t. That is a completely separate issue to these people.
Inflation is almost down to normal, employment is still high and will remain so as long as the construction sector avoids layoffs due to the coming cash infusion from federal spending bills.
Seems to me the only storm coming is the one created by these same execs, though I understand each of them is incentivized to follow the crowd.
> Not surprising. Every company is going to take the opportunity to trim costs when it doesn't affect their PR as much as it would any other time.
I'm pretty sure this is really what's going on here. These CEO's are killing all of these jobs while they can (seemingly without any repercussions).
I was talking with my dad about these layoffs and one of the interesting things we talked about is how different the loyalty formula is nowadays. My dad grew up during a time when folks happily worked for, and were loyal to, one company sometimes for decades. Nowadays, sadly, it's not smart to trust any of these companies for more than a few years. These layoffs prove that. Whether it's companies laying off folks who've been at the company for 20 years (see: Google) or companies laying off new hires, any loyalty seems to be one-sided.
"Activist investor TCI Fund Management is calling on Google's parent Alphabet to pursue aggressive cost cutting on the back of a hiring spree during the pandemic, claiming the business could be more efficiently run."
- https://www.theregister.com/2022/11/16/tci_fund_google_cut_c...
I would assume Google was no the only one to receive such a letter, nor were TCI Fund Management the only investment fund sending out such letters
I don't want to give reactionary CEOs too much credit, but I dont think it's fair to describe it as blind.
If Confluent was building out new product features and "investing in growth" hoping to sell those features to expand customer uptake, should they just blindly keep going?
Sure, there are probably some 20 something CEOs right now running startups that are like OMG I guess we should lay off too, but it's such a naive take.
CEOs can't just will the market to bear whatever their vision is, they have to "make something people want". And if there are less people to sell to, well, you're gonna make less money...
The 4Q22 numbers are out. US GDP increased nearly 3%. The job market remains super tight for many classes of workers. There's simply no evidence of a broader recession.
Are there headwinds? Sure! Household debt is up, consumer spending is down as a consequence--but this is relative to a previous year when we were still feeling the effects of the COVID stimulus--and interest rates are up which will drive down debt-funded investment.
But, companies are cutting because 1) some got bloated during the COVID hiring surge and now need to cut back, 2) some always wanted to cut headcount but they didn't want to do it without air cover, and 3) some just follow the leader.
Say you've been wanting to close down an unproductive division and let go of low-performing employees in other divisions for a few years now. You sure as hell weren't going to do that in early 2022, when you'd risk a lot of other employees jumping ship at the first signs of cracks in the house. But in 2023, you can do layoffs and get away with it.
PS. No one employee was complaining when these companies were in a hiring spree and could see it was not sustainable. Startup had a hard time competing with the salaries offered by these orgs.
It seems much more likely to me that many companies over hired and/or have 2-4% of their staff they were planning on letting go anyway and now that so many other companies are doing layoffs it allowed them to cut other low performers without being the only company in the news.
We talk all the time about large company bloat. This just seems like normal annual pruning + a little extra from over hiring during covid + a chance to cut xyz projects that havent worked out or someone doesnt like or whatever without catching as much bad pr as they normally would.
This is absolutely happening, and if not from the C Suite then from the board and other investors.
Yes, virtually all companies have plenty of bloat that can be trimmed, but trimming it a year ago would be a negative signal to investors. Now it's a positive signal, so layoffs are happening. They will continue to happen until companies are punished for it rather than being rewarded for it.
that would be illegal.
Apple stands out as the contrarian that didn't panic hire. They will probably come out ahead at the end of all this as their reward.
The thing is, in a lot of the cases, the companies preserving cash by laying off workers aren't really saving a significant amount of cash, compared to the amount they have on hand. So, it turns into some sort of lemming behavior.
1) we just came out of a very long period of "easy money" that inflated valuations and gave founders/boards a sense that money would always be there
2) when your customers are laying off / reducing spend, your revenues usually go down
3) the future is very uncertain
Take all of these things together and boards are asking teams to be as prudent as possible which unfortunately means, bringing costs down.
These companies dont know more than you and I. They are acting in panic and in a bad faith towards their employees.
Alternatively, we are in a unique window where cutting underperforming projects whole-cloth can be done with almost no signaling risk (had this happened in 2021, people would assume the worst), so CEO's are cutting everything they don't like now, assuming they won't be able to do it as easily later.
They’d all have had to collude in December for this to happen. Laying off people in large companies takes a sufficient amount of planning, and isn’t accomplished in days. They need to hire external consultants to help, even.
The reality however,could be somewhere in the middle as always, IMO.
You are correct. And for some reason they call themselves "leadership."
You're not on your own with that idea. It's the blind leading the blind.
- FAANG started to offer free drinks in the office? Every startup begins to do the same
- Agile coaches are hired at FAANG? Every damn startup needs their own Agile coaches as well
- "Think customer first" was coined by... and then every startup made it its core value
- Staff, Principal, VP engineer levels are introduced at FAANG... you know the drill
- Microservices...
Every tech company out there dies to be Google or Facebook or Apple. They will copy every single thing from them.
This period is just giving us a chance to shed those people without cultural ramifications.
Layoffs suck-they hurt everyone involved (except maybe for the shareholders?) and are a big big deal for each individual that it affects.
That being said, it doesn't take a genius to see that they are very useful from a company perspective. Given how difficult it is to fire underperformers, layoffs allow them to cut a huge swathe of underperformers (and, realistically, people they don't like) without opening themselves up to endless litigation. Yes, the justification can be as simple as "the economy looks like there is an economic downturn and see? the other companies in our industry are doing it too."
Smart companies treat it as a tool and use it sparingly, dumb companies over use it and kneecap themselves for the future.
As someone who lived through the .COM crash and implosion and then 2008, any company with "strong cash reserves" and "trajectory to profitability" is not making more money than they are spending. They are, to use the SV term - losing runway. This is catastrophic because it's infeasible to raise money right now to extend the runway. If the plane is not airborne (making significantly more money than they are consuming) by the end of the runway, they crash and burn, taking themselves and the company's investors with them.
My experience has been highly capitalized, but running way in the red are the worst possible place to hide when a significant economic event occurs. Confluent has raised capital 11 times (from a quick crunchbase article) and has a product that is open source core, giving its customers an escape path.
I'd also point out that this is a bit snowflake. The average annual corporate turnover rate is way higher then this number. If not for the immediacy of the headwinds, almost every company could handle this by simply not rehiring after attrition.
The problem is that there's a selection bias for attrition. It's possible that your worst employees are the ones who stick around the longest.
That's another failure of management, rather than the line employees.
Keep a eye on linkedIn for connections who are hiring and make sure to stay connected.
Sunday - Stack | Queue | Priority Queue (Heap)
Monday - String | Math
Tuesday - Tree | Dynamic Programming
Wednesday - BFS | DFS
Thursday - Graph
Friday - Linked List
Saturday - SabbathAlso most importantly don't read the news. I had just started working in 2008 and honestly didn't really pay attention to the recession and luckily it never affected me materially or mentally.
If things get bad be prepared to make significant changes, like moving to an area with more opportunity, etc.
-or-
b) We are in trouble, so we are going to address this now by a sizeable layoff, but with generous layoff terms. We will also kill anything that doesn't have a clear trajectory to be sucessfull at runway length * 0.75.
Where you want to avoid is in a company that does sequential waves of 5-10% layoff. That means that that they didn't focus enough and are now past V1, without enough velocity to takeoff (https://en.wikipedia.org/wiki/V_speeds). That's when the company suddeny laysoff the vast majority of their workers with crappy layoff terms.
If you're making money and don't owe money, you can't go bankrupt.
Of course, profitable companies can become unprofitable, especially in a negative environment, so the more profitable it is, the safer it is.
The only thing that stops the timer on the bomb is taking in more money than you spend.
Someone watches GOT ;)
It's entirely possible to believe your job is transactional while expecting accountability for all underperforming colleagues, at all levels. Rather than just the rank-and-file.
In practice, accountability only seems to go up so far. I shortly did consulting for a company that did large layoffs in early COVID days. The board played the "we take responsibility" card, cut in their own salaries, but scratch a little bit under the fresh coat of paint and most of the board's income isn't that mostly symbolic salary. The ones effectively paying the price were the file and rank, as usual.
https://www.marketscreener.com/quote/stock/CONFLUENT-INC-124...
A company I consult for is decidedly guilty of this. Not one month ago it was blue skys and calm waters. This week? “Full responsibility.”
Did they get their end of 2022 bonuses? Absolutely. I fail to see how the first two weeks of 2023 could be so different from the last two of 2022. That’s because they had this in the planning stage for a while.
The second point, a job is always transactional, you exchange labor for money and at any given time, either party can stop that transaction
Also, if you are a tech person in any major city in the US, you are more than likely making at least twice the median wage in that city. If others can survive making half of what you’re making, you should be able to save enough to weather a brief storm.
Of course I understand things are different if you are here on H1B.
It's also worth noting many places enshrine in law protections for layoffs because of the power imbalance between employees and employers.
The company can also initiate a vote of all employees to remove this cut of CXO compensations, so that if CXO is really doing well overall I'm sure he will be recognized and his compensation defended by the whole company.
CEO makes a mistake, I get laid off. CEO takes full responsibility.
Precisely. Corporations made jobs always transactional. Now the employees and the public are making corporations transactional by affording them no sympathy or loyalty whatsoever.
If your comment ("CEO takes full responsibility") is suggesting s/he should be fired or compensation reduced because of their misread of the future, that would be quite silly.
Companies don't fire people for making mistakes (in fact if you make no mistakes you probably should be let go because you're not pushing the boundaries enough or taking sufficient risk). Reducing comp as punishment would also not make sense, for obvious reasons.
If leadership is financially incentivized for positive outcomes, why shouldn't they carry downside financial risk as well?
In your hyper-financialized viewpoint, the CEO's job should be to make as much money for him/herself as possible.
If he suffers no negative consequences then in what way is he taking responsibility? This is just meaningless psychobabble. He could not say it and it would be no different.
https://hbr.org/2022/12/what-companies-still-get-wrong-about...
We need to circulate this information as wide and far as possible. Perhaps at least some well meaning CEOs will grow a backbone to at least challenge the board.
That essentially rules out any VC-related startup. VC's basically are a huge force-multiplier during up markets and black holes in recessionary periods due to the growth expectations (and the willingness to blank-check funding until the revenue goals are met).
Start ups are 2 out of 3.
The thesis is that with layoffs the outcome is worse than without. So we can make all kinds of rhetorical debates, but the data seems to suggest for some causal reason companies that do layoff do worse off in the subsequent years.
When you're looking for a job, keep the companies previous layoffs in mind. Are they stable, or do they acquire and jettison?
Alas, money-printing machines emit strong reality-distortion fields. As long as it's working, they'll have no issue finding people to hire.
[1]: https://goomics.net
[2]: https://goomics.net/240/, 2018Q1
[3]: https://goomics.net/155/ 2012Q
Was this an "open-source folks will do it for free anyhow" or someone wanting to save their work from obsolence?
(Earlier flagged post) https://news.ycombinator.com/item?id=34527670
I doubt it. Open-sourcing anything is a lot of work. Managing open-source projects is a lot of work. There are no guarantees that that project will even get any external development traction or mindshare, and if this is still an important component to you, you'll be paying developers to build it out anyway.
Honestly, the tech industry was due for some churn from an employer perspective, and all this talent circulating is going to up the competition for company's products.
The US Federal Reserve literally says they are committed to bringing the US to a recession to curb inflation (if it is what it takes to do so). So while strong economic numbers are a "good thing", it just means the current numbers will keep getting worse until it's a recession. (Or the Fed will change course. Who knows.)
There's an increasing atmosphere of bacchanalia in the markets - buy every dip, long every thing because they don't believe that the money can be unprinted and inflation thwarted. Might as well pump it up and make some money and hopefully, swing into some meaningful assets before it all comes crashing down.
Personally, I believe American capitalism is in the ICU right now. There's too much money in the system, and there's too much concern over the long-term viability of the USD as the reserve currency. All that money printing coupled with the war in Ukraine, American sanctions, and increasing refusal of the non-Nato countries to play ball with America (espcially China) means that the demand for all the USD printed is never going to be the same.
It's going to get very, very interesting in the coming couple of years.
"Our products are better than ever" "Our revenue per employee is better than ever"
Why does cutting costs have to be the only way to please investors?
You don't cut costs if they aren't costs.
If you hired employees to do something and they're making you money hand over fist, you don't fire them. They're not an expense. They're a profit center.
[1]: https://www.technologyreview.com/2022/11/08/1062886/heres-ho...
Goal is to cut costs, projections are likely decreasing / stagnant revenue.
I think it's silly when companies present the nonsensical rationale of "due to prevailing economic conditions" without qualification. As if these conditions (everyone else is doing it for some reason, so let's ride the stock boost) is obvious, decided, and not worth talking about.
I think it's gotten to be a game of macro economic manipulation to get to fed to flood the market with lush money again.
I feel like that the statement that you are on a path to breakeven, means absolutely nothing. And that you should ALWAYS consider yourself to be in a high risk situation if your company is losing money.
Of course often the appropriate 5-10% aren't actually the target of layoffs, but that's an orthogonal problem.
Today we’re announcing a very hard change we have to make. We are rolling out a set of adjustments to our 2023 plan oriented around driving additional efficiency. As part of this we are reducing our workforce by about 8%. If you are one of the individuals whose role is impacted, you will receive a calendar invite for a conversation with a senior leader today. If you are outside of the U.S. there may be slightly different timelines based on local laws. If you are one of the individuals whose role is not impacted, you will receive a follow-up email letting you know you are not impacted.
Why we are doing this
This decision was not made lightly. However, I believe this is a necessary change to set us up for success in the year ahead.
To many, I’m sure this news comes as a shock, though those following the broader tech ecosystem closely may be less surprised. In this challenging economic environment, sales cycles are taking longer and many of our deals are more scrutinized by customers. This puts pressure on growth. Meanwhile there has also been a significant shift in the market, resetting expectations for the tech sector. This rapid change in the world around us, left our plans for the year increasingly squeezed between downward pressure on growth from a slowing economy and upwards pressure on efficiency from the rapid change in the market. Ultimately, we had optimized some aspects of our operations for a very different world than we found ourselves operating in. The responsibility for that falls squarely on me.
In light of this we reevaluated our plans for the year, and have made the decision to accelerate our path to profitability, while still delivering high growth. In our new plan, we expect to grow revenue by approximately 30% in 2023 and exit Q4 2023 with breakeven non-GAAP operating margin.
At my request, everyone on the executive team took a step back to look at our existing expenses and headcount. We wanted to ensure we had fully funded every essential aspect of our near term execution and longer term plans. But we knew that in the rapid growth over the last 8 years, there was room for improvements in efficiency without compromising our longer term plans. With this in mind we made a set of targeted cuts that enable a more rapid path to profitability while maintaining high growth. We’ll talk through these changes in the days ahead.
Our plan for departures
Unfortunately, we are saying goodbye to many friends and colleagues across the company. We want to do this in a way that ensures we are doing right by our departing team members.
In the U.S., impacted employees will be offered severance, healthcare coverage, outplacement services, immigration support as needed and some forward vesting of RSUs. Those outside the U.S. will receive a broadly similar package but with variations based on the requirements of local laws.
What’s next?
To those who are leaving, I want to say thank you. You have made important contributions to Confluent and I have the utmost respect for all of you.
To those who remain, I know a change like this is jarring and disruptive. We’ll be adjusting some team structures and our plans for the year in light of this change. We’ll be discussing this plan in greater detail at our company kick off next week.
Despite the difficult environment, I remain very optimistic about our future. We are a leader in a massive, highly strategic space. We have a huge opportunity to build a major new data platform that can be the central nervous system of every company.
I want to personally thank all of you for being here, showing up, and helping build Confluent into the enduring company we all know it can be.
-Jay
to soften the blow?
because they're speaking to investors, often institutional for whom it's more useful to know the rates and who don't particularly care about the lives of the employees joining the job-seekers?
Perhaps it is a disconnect about the audience. The people getting fired are not the audience of the message which communicates their termination. This is inhuman, but what else would one expect from capitalism.
I’ve fired people, for cause and in person, for generic layoffs, and for attrition targets. It is hard, and personal. I never talk about responsibility or blame, or how hard it was for me. I have bad news for you. No need to be flowery about it. I owe them a straightforward conversation.
This is highly personal for me since I was part of the early Confluent growth story, having seen the company grow from about 150 folks to 1600+ headcount. I was amazed to see the quality of people who joined the company as each person was highly skilled, motivated and talented in their trades across all the functions of the organization.
I treasured the time the team spent at the happy hour every friday and no pay thursday lunch in Palo Alto, as we bonded and built friendships for life.
I understand that this is a difficult time for everyone involved, and I want to express my deepest compassion for those who have been affected by the layoffs, including everyone in the technology sector as a whole. Losing a job can be a traumatic experience, and my heart goes out to all of those who are facing this challenge.
I hope that you can find new opportunities quickly and that this difficult period in your life is as short as possible. Please know that you are in my thoughts and that I wish you all the best during this difficult time.
If you need to speak to someone about how to navigate this cycle, feel free to hit me up. I want to chat with everyone.
I have seen market cycles both good times and bad times. I still remember back in the day when my graduation ceremony coincided with the 2008 market crash. As a new graduate, it felt like the end of the world, however once I refocused my energies to dissect the situation, I found an abundance of opportunities in the downcycle. I realized there is an opportunity in every change and that each opportunity is different and unique in perspective.
I also wanted to add that we need to capture this energy, across the technology sector in general, to reconnect, chat, share ideas and be there for each other, be part of this giant pack, be part of the confluent mafia, that everyone who is still wearing the golden handcuff will be one day regretful. I hope you do realize that this is a pivotal moment that we get to be a part of, that is to re-evaluate our strenghts and re-align expectations to explore new opportunities and position ourselves for the next stage of growth story.
As per the reports, Venture capitalists are burdened with hundreds of billions of dollars that they can't invest in later-stage companies due to economic conditions. There has probably literally never been a better time in history to work on solving real-world problems.
The acceleration of these highly competent people hitting the labor market at the same time is going to create an burst of innovation. This will create an opportunity that will certainly be a prominent pillar in the next economic recovery.
For example, here is a recent post on what others who have left Confluent have been upto: https://www.linkedin.com/feed/update/urn:li:activity:6953693...
I know some of us got more severance than others, and I know some of us are in more delicate circumstances than others, but let's take a minute to consider the possibilities with each other and at least have a little fun thinking out of the box about what the future could bring.
I hope the following verse from Bhagvad Gita will bring peace and strength to you in the current situation: "The friction between our desire for the predictable and the mutability of life makes us feel a bit lost. Rather than rail against change, which the Gita says is inherent in all things, the key is to broaden our view by becoming less self-focused, less ruled by our ego. Change the inputs and you change the story. That shift occurs when we deepen our level of consciousness. The only place of unchanging truth, says the Gita, is internal, where we come into alignment with the Self."
Use all your power to free the senses from attachment and aversion alike, and live in the full wisdom of the Self. —Bhagavad Gita, 2.68
> Ultimately, we had optimized some aspects of our operations for a very different world than we found ourselves operating in. The responsibility for that falls squarely on me.
[1]: https://www.publicnow.com/view/CEA41F7D5BB5C6CFF1144A3A9C462...
/s
[1]: https://www.mcsweeneys.net/articles/macroeconomic-changes-ha...
Interesting plan, too bad operating margin doesn't mean profitable.
In 2022 Q3 the 9month cumulative sums show a revenue of 417M with net loss of 346M. Growing 417M by 30% to say 550M still would be a loss of 204M. If they also cut operating expenses by 33% then they could become profitable though.
They will have marketing folks, lawyers, they will almost certainly do more testing than you, they are going to have to support many many more configurations than you, they have people all over the world, they have a support staff, they have upstream contributors, they have backoffice people, ...
Nothing against you or your team but what you're doing does in no way compare to building a fully fledget product for on-prem and as a SaaS.
Companies hire tech workers to stifle their competition; whilst keeping their workers 'sedated' on fake projects (i.e. projects that are paraded as important, but the 'inner-circle' knows well its just to keep the nerds happy). During tough times, its not unreasonable for a company to trim their fat. Personally, tech and academia has been bloated for over a decade now. So no foul here.