Not the apology we need from big tech
It is par for the course to make mistakes in technology. A product goes nowhere so you shut it down and move on; regulators give you slaps on the wrist; you fight the odd lawsuit. Most costs amount to pocket change because when you are moving fast and breaking things in tech, the consequences are not that painful.
Except now they are. For the first time in their history, Facebook, Twitter and other tech firms are cutting thousands of jobs, killing tech’s reputation as a haven for employment, trussed up with free meals and high salaries.
It is the hardest thing their founders have done, they said in long, apologetic memos announcing the layoffs. Their statements were so similar in spinning the problem as a product of overenthusiasm and not just bad business decisions that they could have come from the same public relations company.
“We were much too optimistic,” said Patrick and John Collison, the sibling founders of payment provider Stripe, as they showed 14% of their workforce the door. “Buoyed” by product success, “we overhired”.
Facebook co-founder Mark Zuckerberg expressed a similar sentiment in his own memo.
“I made the decision to significantly increase our investments,” during the online pandemic boom. I got this wrong, and I take responsibility for that.”
He is cutting 11,000 jobs, or 13% of his workforce.
And last week, as Elon Musk laid off roughly half of Twitter’s staff, Twitter co-founder Jack Dorsey tweeted: “I grew the company size too quickly. I apologise for that.”
In other words, everything was going too well, the founders were swept up in the excitement and pushed things too far. But that is only half the story.
Zuckerberg did not deal with the billions of dollars he has sunk into the metaverse, a project he is pinning the entire company’s future on.
It would have made more sense to cultivate his virtual reality project in a smaller business unit, but the pivot has been too big and radical, a result of both Zuckerberg’s hubris and his unilateral control of Meta through supervoting shares, which he has shown no interest in changing. The metaverse project has cost Meta well beyond $10bn, and his staff are now paying the price.
It also feels disingenuous for the founders of big tech companies to blame their first major layoffs on growing too quickly when Silicon Valley for years has revered hockey-stick growth. Dorsey could have done more to stamp out much of the cultural dysfunction at Twitter while he was CEO, stories of which are now emerging from former employees. It did not help that he simultaneously ran another company, Square (now Block), a leadership strategy Musk is taking to the next level.
For Zuckerberg, a better way to show contrition would be to review the dual-class structure that has made him untouchable. Much as it is impressive to hear him take responsibility for getting it wrong, the words mean little when Meta’s shareholder structure lets him put the company on a path to create social harm or liberally invest in a quixotic venture.
AUTOCRATIC
Tech giants such as Alphabet, Shopify and Pinterest follow the same dual-class structure. But investors will probably be rethinking how wise that system is when it creates permanent sovereigns who can get away with writing long apologies instead of answering to shareholders.
While the wave of layoffs still does not surpass the carnage of the dot-com bust in 2000, when entire companies went to the wall, this is still the worst moment in big tech history since then. It should be a humbling occasion for the biggest players, and with any luck, mark the end of the era of visionary, autocratic tech founders who “grow too quickly” and more besides.