Tech’s troubles self-inflicted
Race for best talent coming back to bite companies hard as they let go of thousands
SAN FRANCISCO — When Stripe, a payments startup valued at $74 billion, laid off more than 1,000 employees this month, its co-founders blamed themselves. “We overhired for the world we’re in,” they wrote. “We were much too optimistic.”
After Elon Musk, Twitter’s new owner, slashed the company’s staffing in two weeks ago, Jack Dorsey, a founder and former CEO of the social media service, claimed responsibility. “I grew the company size too quickly,” he wrote on Twitter.
And last week, when Meta, the parent company of Facebook and Instagram, shed 11,000 people, or about 13% of its workforce, CEO Mark Zuckerberg blamed overzealous expansion. “I made the decision to significantly increase our investments,” he wrote in a letter to employees. “Unfortunately, this did not play out the way I expected.”
The chorus of conceding by tech executives that they hired too many people is ricocheting across Silicon Valley as the industry rushes to make cuts, blaming a worsening economy.
But at least part of the surge in layoffs was self-inflicted. When the companies enjoyed soaring profits and a belief that the pandemic-fueled boom times would keep going, they expanded by hoarding the most fought-over and expensive resource in the software business:
talent.
Silicon Valley tech companies have long seen hiring as more than just filling openings. The industry’s talent wars showed companies such as Google and Meta were gaining the best and brightest. Ballooning staffs and a long reign atop lists of the most-desired jobs for college graduates were emblems of growth, deep pockets and prestige. To employees, the work became something larger — it was an identity.
This mentality became ingrained at the largest tech companies, which offer numerous perks on lavish corporate campuses that rival universities. It was echoed by smaller startups, which dangle a chance at life-changing wealth in the form of stock options. Now these practices are giving the tech industry
indigestion.
More than 100,000 tech workers have lost their jobs this year, according to Layoffs.fyi, a site that tracks layoffs. The cuts range from well-known publicly traded companies such as Meta, Salesforce, Booking.com and Lyft to highly valued private startups such as Gopuff delivery service and the Chime and Brex financial platforms.
Tech leaders were too slow to react to signs of an economic slowdown that emerged in the spring, after many of the companies had already been on hiring sprees for several years, tech analysts said.
“They’ve charged ahead with these plans that are no longer based on reality,” said Caitlyn Metteer, director of recruiting at Lever, a provider of recruiting software.