I know the reality is more complicated, but it's always jarring to read a "company X had a great! quarter, is firing 20% of employees" headline. Very dystopian.
It seems like these two facts should at least go out in different press releases on different days.
For Shopify, does anyone know whether the 20% figure includes the people leaving with the sale of SFN to Flexport?
Edit: just heard in the earnings call that the 20% headcount reduction does _not_ include the logistics teams going to Flexport.
US recessions and bear markets happen most of the time because of mass psychosis, not because of some underlying cause. There can be a trigger, yes, but it's generally not that big of a deal. The government also plays a role in triggering these recessions, so that they can pop the bubbles before it's too late.
Yes, there can be recessions causes by world wars, worldwide droughts, pandemics and other cataclysmic events, but usually it's not the case for US.
Enough people losing their jobs, cutting spending habits, will create that mass psychosis.
Tech is a small part of the economy, but cities like Seattle that have built restaurants and services catering to the tech crowd will see further fallout. There was this idea that Seattle would be this next big metropolitan area, but tech implants have found it’s not for them after a few years
The idea that emotional investors moving large amounts of money can single-handedly cause recessions is naive, even if it is comforting. The world has been using ZIRP for a long time. This policy has led to overinflated stock prices and a significant number of worthless loans held by regional banks, now collapsing at a rate similar to the 2008 crisis. When equity assets lose value, companies buoyed by those previous values have to reduce their spending because they would not be able to raise enough money by selling those assets, and they'd otherwise end up underwater or going bankrupt.
They are terrified that workers might finally be getting fed up with the status quo and demanding higher salaries and better work/life balance, so they have to collude to conduct layoffs and feed the surplus pool of labor to hopefully force down salaries. This is capitalism 101 baby.
The ZIRP discourse is a bit facile, but there’s a lot of truth to it, and a lot of tech companies have been kept afloat solely by historically-low WACC and a frothy IPO market; due to their inability or unwillingness to impose financial discipline commensurate with their revenue we have a bunch of companies that are, functionally, unprofitable at any scale. Rough times for good folks, unfortunately.
> Shopify to cut 20% of its workforce, beats an already/comparatively-to-history reduced/calibrated quarterly revenue estimates for the current economic landscape
The headline is to pitch possible future investors that Shopify will prioritize investor returns over anything else (as ordained by the Prophets of capitalism)
Almost no one is going to agree with you here. Hacker News is filled with “temporarily embarrassed billionaires” who all think their shitty little app or the fact that they know some obscure useless programming language think will make them rich one day.
Why are you even here? It sounds like you have contempt for almost everyone here. This place was made for entrepreneurs and hackers, hence it focuses on curiosity. You seem to have none of that.
I have contempt for the shortsighted fools that are deluded enough to fuck over everyone and themselves for a .000000000001% chance of making it big. Go play the lottery loser.
That's such a vague statement that you might as well have said nothing. How does "fuck over everyone else" jive with your hate on languages like Rust and Elixir? How does that jive with startups, many of the people who have worked in startups made a killing over time, but there's certainly plenty of people who got pennies.
Anyway, I'd encourage you to step back and examine your rage. It seems misplaced.
Why the downvote? This comment is spot on. Anyone thinking otherwise is delusional. To see Toby’s give in to investors wholly saddens me.
When Bezos was still at the helm of Amazon in the 2000s, the investors demanded a profit (and a dividend?). Not giving in, he kept reinvesting any earnings back in the business for years to come.
The current flavour of capitalism is more heavily tuned for profits over other parameters such as employee satisfaction and morale.
Still, seeing the same response across all companies in every industry is bizarre. This gives more credence to the big-three-index-funds-control-most-companies theory[1].
> When Bezos was still at the helm of Amazon in the 2000s, the investors demanded a profit (and a dividend?). Not giving in, he kept reinvesting any earnings back in the business for years to come.
Lots of differences. #1 is Amazon was not losing tons of money. They were also doing something novel and building physical infrastructure. Investing in an online retail business when there were few others (none at Amazon scale) is far different than investing in one with tons of competitors and low barrier to entry.
>The current flavour of capitalism is more heavily tuned for profits over other parameters such as employee satisfaction and morale.
People have always like more money than less money.
If Shopify can deliver its software with less people, that’s better for society.
Put it this way - would you like to be paid to mow a lawn using scissors? I can pay hundreds of people to mow my lawn using scissors, and they will be employed as landscapers. Or I can pay one guy with a lawnmower.
Do more with less and less until you do everything with nothing....
The answer to your question is it depends, and is one of the big things that has people worried about AI and automation rapidly improving over time. If things like wealth redistribution don't occur in a highly automated society you end up with big problems really quick.
And even then economy would not be completely "done", as long as ownership of all that nothing that does everything is still distributed. But when that chapter is also over, imagine the succession drama!
> I can pay hundreds of people to mow my lawn using scissors, and they will be employed as landscapers. Or I can pay one guy with a lawnmower.
Right, but that's not the actual dichotomy. First, if Shopify can deliver its software with less people, then with the same number of people they could deliver more.
Second, realistically the dichotomy, in the short to medium term, is will these people be employed in a skilled job, or will they be unemployed? You might say, that's not Shopify's problem. But let's not pretend unemployed people is "better for society".
> if Shopify can deliver its software with less people, then with the same number of people they could deliver more
That is assuming everyone contributes in a meaningful way. That might not be the case for various reasons:
- Incompetence / lazyness
- You feel productive, but you impact is actually really low ("I am preparing an alignment meeting")
- You are working on a product / component that generates little to no revenue/interest (Hello "metaverse" team from Facebook)
- Your skill are not highly required at the moment and don't seem to be required in a short/mid term; someone else surely needs you more.
Sometimes, doing more is not necessarily the right thing. 37 signals is famously known to have far enough revenues to hire a ton of guys and probably launch many new products. Yet, they choose to remain at a fixed headcount for now and return the profits to their shareholders. They do not hesitate to let people / fire them if they feel the need to despite their profits. Why can't Shopify follow the same strategy; albeit at a different headcount ?
I have no idea of their exact numbers. But The CEO publicly said they generate tens of millions of profits every year [1]. This is for a company of around 30 to 40 employees.
You are assuming that there is an infinite number of people that can be added to Shopify’s payroll that will increase the product’s usefulness and increase revenue enough to justify their hiring.
The company leadership doesn’t believe that. There is a line where adding more people will not justify enough revenue increase, and that’s up to the company leaders to decide.
It’s worse for the people laid off, but ultimately wouldn’t they want to do something useful? In a new job they will be wanted. At Shopify they are not wanted.
To put it another way, you believe that a welfare maximizing equilibrium can not only be achieved in principle, but is routinely achieved in practice with minimal friction?
This is difficult to believe. I think everyone sees signs all around them of foolish decisions by firm principals that hamper consumer and worker welfare even in the short term, to say nothing of the effect of various kinds of hysteresis on the long term development path of economies (e.g. detaching people from the labor market in a manner that undermines their health, currency of their skills, etc.)
You're not taking into account that "deliver more" isn't an infinite type of thing that can happen. There is a threshold with market/product fit where "more" doesn't mean more revenue and benefit to shareholders.
I think this is something all companies struggle with: at some point you may achieve product/market maturity but the people that could determine this are fundamentally in conflict with ever communicating this because they or their peers would be out of work at that employer. In my opinion, this is when internal politics start to become more prevalent because its human nature to protect your well being/source of money.
Companies aren't limited to one software product. They often are, but they don't have to be.
How many software products has Google released over the years, which they're able to do so because they have a massive number of employees? More employees will allow for more products.
Whether it would be prudent or profitable to tackle more products is another story, but we're already talking about hypotheticals with 'infinite employees' here.
I do think there is room for 20% of its employees to work on other products that could integrate well with their vision and still be within the ecommerce realm. But that doesn't juice up their stock price right away.
Starting rather recently and suddenly, don’t you think? The company leadership did apparently believe that each and every time they made a hire. And I bet a lot of the people laid off today were hired fairly recently.
The fallacy is that organizations as a whole can only do so many different things efficiently. Capital allocation becomes less efficient if a single hierarchically structured entity has to decide on how and where to invest its capital, compared to the alternative of free market competition for capital (as usual ceteris paribus).
> this is not true to begin with. classic engineering fallacy
Are you assuming they'd be put onto the existing projects (which may slow down delivery, yes) rather than doing new projects in parallel (which will not and will in fact let them deliver more because there are more projects)?
you're simply doubling down on the fallacy. doing more projects does not mean you're delivering more. code is not value. there needs to be clear demand for what is being produced and management needs to have effective leadership to make sure the right people are doing the right things. all of which require effort. in lieu of that, it's better to lay people off from the company's perspective. if and when they understand the scope of the problem and the demand is there they will hire more people. that's more or less how to economy works.
You are falling into the trap of the Luddites. As a society we allow layoffs because it reallocates skilled workers to new areas that actually need them. Otherwise why not pay people to dig holes and fill them back in again, forever?
You are falling into the meta-trap of misunderstanding the Luddites.
The Luddites weren't idiots, nor they were against progress. They revolted because the way the new technology was applied was destroying their specialization, and in many cases, destroying their lives.
The promise of "reallocating skilled workers to new areas" is bullshit at the individual level. What's being reallocated is the new generation, the kids that grow to specialize in the new area instead of the old one. The specialists from the old area aren't being transferred along with rank and pay. They get to restart at the junior level, with commensurate pay, while they retain their age, their living costs, their families and other dependents. Even the kids of those "reallocated" old-timers aren't going to partake fully in the newly opened fields of work - they'll be weighed down by the fallout of their families suddenly dropping a level or two on the living standards ladder.
The Luddites rebelled because their lives were being destroyed. And the people who did the destruction? They didn't give two damns about what society will get out of it. They did it only because they saw a way to cut costs down and increase their own profits. You don't get to criticize Luddites for selfishness when the other side was just as selfish, if not more.
For hundreds of thousands of years, pre-historic man became very skilled at cutting rocks in order to make stone age tools. Generations upon generations of early humans learned, worked on, and passed down to their children the way to perfectly smash rocks against each other in order to cut them into pointy shapes. In this way they made arrow heads, knives, axes, and so on. It's hard to believe, but this primitive technology was revolutionary.
When metal working developed, all of the hundreds of thousands of years of skill in making stone tools was meaningless - it had been superseded by new technology.
I don't care one iota about craftsmen who can no longer conduct their craft in the way they want because a better technology came around. If one person can make 1000 shoes a day while a cobbler can only make 5, this is great for society.
This is why we live in skyscrapers rather than huts. This is why I don't pay people to cut my grass with scissors.
> For hundreds of thousands of years, pre-historic man became very skilled at cutting rocks in order to make stone age tools....When metal working developed, all of the hundreds of thousands of years of skill in making stone tools was meaningless
Also that's all well and good, but people won't necessarily take their skills being obsoleted lightly, just shrug their shoulders and disappear into the sunset. It could get to the point (especially if predictions about A.I. replacing a large swatch of jobs turns out to be true) that the people will get violent if unemployment gets too high. Just look at riots in Greece (when youth unemployment was 50%)[1] or France[2] for just a couple of examples.
Granted, that's not going to happen with this particular layoff, especially with the unemployment rate at a low 3.5%, but if it gets back into the double digits, it starts becoming more likely.
This is probably the real reason we gave out stimulus and PPP loans at the beginning of the Covid pandemic - to stop people from being so jobless, broke, that they take it out on the government. Not out of empathy.
This is actually a great description of a fascinating topic to ponder further.
Someone will make 1000 shoes, all the same, poor quality, nowhere near the fit but they are 1000 shoes while it use to be 5.
Someone will make 1000 inferior loafs of bread. Someone will make 1000 mcdonalds quality hamburgers. Someone will build many crappy houses and stack them until they touch the sky. A box will play audio recordings to thousands while we use to sing and play instruments ourselves. A box will show pictures in stead of us reading books and giving speeches. Someone will also [kinda] have 1000 babies in stead of 5.
But we price everything at a point where profit is maxed for what people can afford and we buy 1000 things in stead of just the 5 we needed. If there is any room in the budget we will make housing more expensive.
A coworker of mine always has pain in uhhh all parts of his body, everything is sore and worn out.
One a year he goes back to his country of birth, by plane, by train, then by bus, then by taxi then he climbs the mountain. There is the tiny village where he was born. He drinks the spring water, sits in the sun under unpolluted air, eats real vegetables grown on real soil, eats meat from animals who had a good life, eggs from chickens roaming around, milk from happy cows, he takes in the view, talks with relatives. And then, gradually the pains go one by one, the headache clears up, the joins soften, the muscles work again, his head moves back above his shoulders, his eyes work again, he can walk tirelessly.
I'm not trying to make a point, it is just something to think about.
The changes were over hundreds if not thousands of years. Everyone had time to adapt. Here the people are just discarded.
I'm not saying we should keep inefficient work. The society hopefuly adapts and creates a safety net for upcoming changes. I'm pissimist, so I think more pain is coming and no way are we going to be allowed to have a repeat of 1917 in Russia. Just more rejects, outcasts and general misery.
> I don't care one iota about craftsmen who can no longer conduct their craft in the way they want because a better technology came around.
You'll care when they actively subvert the rollout of the new technology. If the technology truly benefits society more than it hurts the craftsman then you can share some of the gains with them so they too can benefit.
You are honestly arguing that if I create a better widget factory, I need to pay everyone else who owns the means of producing widgets in inferior ways some of my money?
Directly? Maybe not. But no man is an island, and no one's factory is a continent either. Your widget factory wasn't created by you ex nihilo, it's built on the labor and skills of people in your community, it is possible for it to exist and be profitable thanks to the larger society being what it is and generating wealth it does. It's in your interest to care that the society supporting you thrives, and if your factory is threatening to damage it, then even if you're 100% selfish, you owe it to yourself and your children to help mitigate it somehow.
No this article was about layoffs. The employee-employer relationship is very different the one between competing companies. If you have created a better widget factory and need 90% less staff, I do think you have some responsibility to those employees that are no longer needed.
>They get to restart at the junior level, with commensurate pay, while they retain their age
the alternative to this is gerontocracy and stagnation. We actually have a real world example of this, Japan. Seniority as a leading principle and the inability to fire in the name of social stability sounds great on a 10 year time horizon and appears empathetic, on a 50 year time horizon you are going to be poor compared to an economy that accepts (but ideally cushions) the fallout that comes with economic churn. In 1990 Japan's economy was 50% as large as the American economy. Today it's 19%.
Even if the luddite motivations are more reasonable than the popular image suggests, we are much better off not being stuck in an artisanal mode of production.
> Even if the luddite motivations are more reasonable than the popular image suggests, we are much better off not being stuck in an artisanal mode of production.
We really should aim for both. That the society as a whole is better off when it receives the benefits of creative destruction, it also has a moral obligation to make sure the "destruction" part is only shifting labor and expertise allocation - destroying ephemeral constructs like companies and brands, not actual lives.
It is a moral issue first and foremost, but we can't be burying our heads in the sand here and pretending we didn't know - the issue carries with it a real threat of those whose lives get destroyed rising up to tear down the civilization that crushed it. It's in everyone's self-interest to be on the side of the Luddites.
straw man analogy. yes, if your end goal is something crazy and unthinkable like functional society with less crime and full of happy, mentally healthy non stressed people. only then keeping people employed even if in some cases it is not the most ruthlessly financially effective thing to do can be desirable
Not saying downsizing does not make sense, but its a stretch to say that its a service to our society to downsize one's company.
> As a society we allow layoffs because it reallocates skilled workers to new areas that actually need them
This more sounds like a trap mindset to me to be honest. Its associating some sort of morality to what is just regular part of running a business. Companies do what's best for the company and its investors first and foremost.
> Are you suggesting that all corporations actions are based on morality?
I believe the suggestion is that they certainly should be based in some moral system. Corporations are a convenient fiction we use to shield the actual humans from the effects of the actions they collectively take.
A restaurant can get away with giving everyone crappy part time work IF the restaurant knows that on demand it can request people to work more hours/extra days. It sounds like an efficient way to run in a grad school sense. But what happens when people start saying no or get sick? The restaurant is closed at odd times, people are inconvenienced and just start going somewhere else, has opportunity costs because it has to pass on that last minute phone in order from an office catering lunch because it's minimally staffed (to be market efficient). Cutting to absolute minimum viable is a horrific concept if you are building a business. You lose your best people, you have a ton of opportunity costs, and you basically give up on growth, productivity goes down as your remaining people have to do way more context switching.
If you are running a zombie company and just squeezing the last bits out it might be considered running a business I guess?
Landscaping is a perfect example of how an individual can instantaneously create value in the economy. Banks can create currency, but individuals can magically create value.
How? Decide you want your yard to look different. On a whim. Just decide you want a hill over there with a ring of bushes on top. Congratulations, you have created demand. Pay a local crew to have it done, money flows into the economy, everybody eats.
For greater effect, manufacture a cultural preference so that entire country clubs of people at a time decide that all hills need bonzai trees at their crest -- have all the clubbers pay all the landscaping crews.
Actually the good path, according to abovementioned prophets of capitalism, would be a new player undercutting the incumbent by being able to deliver comparably with less people. An incumbent so unchallenged that they can increase revenue while cutting staff is the economic equivalent of a bad code smell. Perhaps not that market outright failing, but clearly not working quite as advertised.
On the contrary it is useful to distill an idea into its essence in order to make a point. This is a logical argument, and is the same technique any teacher uses when trying to begin with base principles.
It’s tough when you have no counter argument, which is why you resort to arguing against the method rather than thinking of something intelligent.
"Bullshit jobs" [1] are a suboptimal and implicit mean to deliver on UBI without superficially changing the rules of capitalism. For exhibit 2, I'll bring in the US military and its economic impact on the midwest.
The US military is not capitalism. That’s socialism - a job and industry fully dependent on the government and thus is a politically created career.
Bullshit jobs don’t exist in the free market, as no capitalist would pay for someone to do something useless. If that is happening it would certainly be because a government regulator required someone to sit there twiddling thumbs.
> no capitalist would pay for someone to do something useless
The issue here is definition of useful/useless. If you manage to market regular rocks as magical and convince people to pay a lot of money for them, a capitalist will gladly pay for everything from digging to shipping of those rocks.
From a common sense perspective that activity is useless because it's purely wasting resources with no useful effect.
From a capitalist perspective the activity is not useless as it brings profit.
> Bullshit jobs don’t exist in the free market, as no capitalist would pay for someone to do something useless
And yet if you spend any time in any large corporation, you'll find countless examples of these, including in the tech industry. Don't you have any friend working for Google/Meta/${big tech co}?
Bullshit jobs can and definitely exist with capitalism: any successful and large business is filled with them.
They may exist for a while but when push comes to shove, they will be eliminated. The government is the one with the real problem - there are bureaucrats who gladly do nothing all day every day, or even actively harm industry, and they can never be fired and exist as barnacles.
I don't think we should be interested in the "asymptotic theoretical limit" of capitalism which is never reached. Let's discuss "capitalism in practice", not "capitalism in theory". If things self-correct in a time frame longer than your own lifespan, do you think it's an ideal scenario? I personally don't.
I don't see the government forcing Google to pay thousands of highly qualified workers to fill in BS jobs. This is a natural consequence of being a very successful business: complacency, empire building, etc all decorellated from economic incentives.
People spend decades with BS jobs in a very capitalist society.
Note that I've never argued that a socialist alternative is any better or that the government isn't filled with BS jobs either.
I just observe that the problem manifests itself regardless.
It’ll be a very confusing day for you when you grow up and have just one direct report, and you’ll need to face the reality of them calling you “management” on snarky Hacker News comments.
It seems like these two facts should at least go out in different press releases on different days.
For Shopify, does anyone know whether the 20% figure includes the people leaving with the sale of SFN to Flexport?
Edit: just heard in the earnings call that the 20% headcount reduction does _not_ include the logistics teams going to Flexport.