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After ChatGPT disruption, Stack Overflow lays off 28 percent of staff
(arstechnica.com)
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this post was submitted on 17 Oct 2023
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Q3 just ended. These layoffs are because the books are not looking good. Everyone is hurting with inflation and higher interest, tech being particularly vulnerable to high interest rates.
I can only hope the execs cut correctly. A second round of layoffs at a company can destroy morale enough to sink the company. Who wants to continue working at a place that fired your close peers, wondering if you're next?
You can already tell they didn't cut correctly, as they didn't cut themselves.
They may have cut themselves. Usually high level cuts are announced as "leaving for an amazing opportunity" or to "focus on family" or similar. That happens a month or two later after a deep layoff round and reorganizing. We'll see if these recent layoffs included executives by Q1 next year. Watch LinkedIn if you're that curious.
Still, it's unfair to the lower levels, including line management, because they don't get that option. It's a "thank you for your service" and a boot out the door.
Note: not all tech companies are like this. Gumroad is an excellent example of a very open and ran-differently business.
Why is tech particular vulnerable to high interest rates?
Tech has been in aggressive growth mode since 2008 because the Fed was handing out free money (interest rate lower than inflation). That allowed investors to dump money into tech businesses in hope of rapid business expansion, which in turn makes the business more valuable.
The free money dried up. Now these tech businesses are going to find out if they're sustainable.