11/26/2022 | Yahoo! Finance
How many people should Elon Musk fire?: Morning Brief
Question: How many people does it take to run a tech company?
Answer: Elon Musk.
But seriously: How many people does it actually take to keep the lights on, or, heaven forbid, grow a tech business?
It’s a salient question these days, not only because of Elon and Twitter, but also because it speaks to the raft of layoffs now hitting Silicon Valley and the tech sector writ large.
Eliminating some jobs makes sense during a downturn, but cutting 50% of a company's workforce raises bigger questions — How were so many people hired in the first place? What were they all doing? And back to the first question, how many are really necessary?
Let’s start with Twitter, because the numbers there are truly mind blowing.
As you’ve probably read, Twitter had 7,500 employees when Elon took over last month and he almost immediately fired half of them. Weeks later he asked those remaining to commit to being “hardcore,” or leave, which resulted in 1,000 or so reportedly departing, leaving Twitter with some 2,700 employees, according to the Verge. All that has prompted many to predict Twitter would soon crash. So far, it hasn’t.
I’m not a huge fan of Elon’s management style — which seems in part to be about getting in touch with his inner 13-year-old boy — but it does make you wonder: if you fired half the workers at the local dairy, I bet some customers wouldn't be getting milk tomorrow.
In the midst of Musk’s bloodletting, Chad Hurley, co-founder of YouTube and, along with Elon, a PayPal mafioso, tweeted out: “I don't know who needs to hear this but Craigslist has being [sic] running for the last 20+ years with a team of ~50 people.”
True, but an apples to oranges comparison. Craigslist is smaller and has fewer features than Twitter. But Hurley’s tweet does point towards the question Musk seems to be asking at Twitter, which is how much functionality do digital consumers really need?
To help address that, let’s take a look at what’s going on at some other tech companies.
At Meta, 11,000 employees were recently laid off. Amazon will reportedly will lay off 10,000 workers.
Google could be next to announce cuts, according to Yahoo Finance’s Allie Garfinkle, with reports suggesting that the company may purge some 10,000 employees after activist investor Chris Hohn wrote to Alphabet CEO Sundar Pichai last week that his "company has too many employees."
As for Apple, with 164,000 employees, it appears to be holding steady for the time being, after cutting loose 100 recruiters in August.
Overall, some 137,000 tech workers have lost their jobs this year, according to Layoffs.fyi.
Many of these layoffs have likely been in marketing and staff functions, but I would argue that in some cases redundancy lies in line operations as well. It's an open secret that a fair amount of core technology work adds little or no value to customers, companies, or the economy.
Think of all the product enhancements and new features added to Gmail and other Google products that don’t make them better, just more complicated. Also, in his letter to Pichai, Hohn notes Google’s 'other bets' businesses have cumulatively produced $17 billion in losses.
As for Apple, setting up a new iPhone used to take twenty minutes. I just got an iPhone 14 and it took much longer. Even after the initial setup, the phone keeps prodding and prompting me. For instance, when I leave my apartment, it alerts me that my iPad is still at home. Is all the added time it takes to sign in and sign up commensurate to the added value I now receive from the new phone? I don’t think so.
Then there are the myriad products, features, and apps you never see because they quietly fail or are killed before they reach the marketplace.
I understand engineers and product managers need to experiment. It’s just that the process — an overly empowered tech culture where engineers are encouraged to “disrupt,” “pivot,” “move fast and break things,” and “fail fast” — has been taken too far.
Maybe this modus operandi makes sense for the smartest 1% of technical workers, but not for tens of thousands who have been given the keys.
“There's a law of large organizations,” says Julia Pollak, chief economist at ZipRecruiter. “You create a team to solve one problem that exists one moment, and then when the problem is solved, the team still exists. And so the team ends up becoming a team in search of a problem."
There is one area, however, where I believe many Silicon Valley companies are woefully understaffed: customer service. And Meta — née Facebook — in particular.
A Wall Street Journal article from May baldly noted, “Facebook and Instagram serve nearly 3 billion users a day with a help desk that numbers closer to zero.” Even worse, a more recent, under-the radar WSJ story describes a rogue cottage industry of hackers and Facebook employees, since fired, who surreptitiously helped customers, sometimes with bribes and cash payments, who had nowhere else to turn.
Meta has eschewed customer service personnel because they are expensive and perceived as unnecessary in a culture wedded to algorithms and software tools.
Also: what high-flying engineer or product person would deign to toil in customer service when they could instead create new features, products, and services with little oversight or accountability?
Ultimately, however, I’m wary of massive layoffs. Truth be told, almost every company has "too many employees."
Sure, you can fire 100 people at the factory that employs 500, and private equity operators have made tens of billions of dollars doing just that in America thousands of times over. But then what?
To me Musk and his radical job cutting smacks of twice baked-over Randism. Every generation produces business leaders like Musk, those with incredible ideas who also cloak power plays in the guise of economic revolution.
But somewhere between Elon’s Great Manism and Google’s other bets lies an optimal, ever-shifting level of tech employment. How about letting that sink in, too.