That still leaves them with more than 4x the employees they had in 2020 (when the product had already reached massive scale and, IMO, very high quality):

> “We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,” Citron wrote. “As a result, we took on more projects and became less efficient in how we operated.”

I know someone always makes a comment about "wow, X company had Y000 employees? what do they even do all day?", and I don't wanna be glib, but it really does seem like they expanded beyond any kind of reasonable measure.

If I were at Discord, and I wasn't part of an extremely core team with a direct line to revenue generation, I would be sharpening up my resume.

---

Edit: Okay, I missed this:

> Discord has raised a total of about $1 billion in funding. It has more than $700 million in cash on its balance sheet and the goal to become profitable this year

That's actually a lot better than I expected. Clearly they are making non-trivial revenue, and still have quite a bit of cash; maybe keeping a still-pretty-high headcount to pursue new monetization projects is the right call.

We saw a huge amount of user growth during the pandemic, we massively increased the number of users that could be in a single guild (server), we launched features that asked a lot more from our AV backend (stage channels, camera video in guild voice), had to deal with a massive increase in spam during the crypto boom, expanded voice calls to Xbox and PS5 and had to deal with an increasingly fraught regulatory environment.

We also shipped a lot of user-facing features during that timeframe. Some of those ultimately got removed because of poor results and depending on your use of the platform I imagine some of those that stayed may not be particularly visible, but we really did ship a lot of stuff and I'm not going to attempt to list it all here.

Obviously, in hindsight we should have had a tighter focus and probably hired a bit less, but this sentiment that we are/were hugely bloated feels pretty wild to me from where I'm sitting.

My sense is that Discord was exploring a lot of different ideas for monetization all at once, and that maybe the sprawl of new projects got unwieldy, esp. in 2022-23; how accurate would you say that is?

I'd expect more like a 50% cut to really speed up the significantly fewer projects by eliminating coordination overhead and giving PMs the ability to really slash projects.

ps -- I'm not claiming it was bloated, that's (implicitly, and I believe fairly?) the ceo's claim.

If you are part of that 200 original group, you probably have a paycheck for another 5 years just answering tech debt questions

I've been in tech for a long time, but this is the first time we've had a significant downturn where remote/videoconferencing options have been so good. In the past it felt like executive cries of "we'll just outsource everything!" always backfired because the communication and management overhead (not to mention varying quality levels) had been extreme. Now, though, with everyone used to remote work, why bother looking to save a few bucks hiring in Wichita when you can save more, and get just as good if not better quality, hiring from Cordoba Argentina?

The people in the "real low cost area" aren't the same employee - I'm not saying they are less capable, but most companies are afraid of the significant hidden costs when trying to go too cheap this way.

Dear company, I did what you asked me to do. If my work doesn't have adequate impact, that is on you for planning poorly.

Leadership doesnt trust non-engineers to handhold engineers and spoon feed feature requests, all non-engineer types should be focused on selling/marketing product or customer support

But when you grow to the point of having a sizeable middle management layer that isolates engineers from one another, by enforcing strict area of interest for each team, you really shouldn't call yourself "engineering driven" anymore. And also, the more you scale, the more specialists you need. Specialists that aren't able, or just aren't willing to move from place to place rapidly

that's the collaboration part. But the final decision over prioritization of feature X over feature Y and planning is done by engineers, not salesmen

The part where managers who don't partake in these efforts refuse to believe engineering estimates, engineering challenges and unknown unknowns and yet feel empowered to blame engineers in performance reviews.

Anonymous shill calls named lived experience a liar. What a time to be alive!

Today’s layoffs are a direct result of the irrational exuberance of that era.

Now the Federal spigot has dried up (well, is back to normal) and interest rates are higher.

Then it’s painful when more people slow things down because there wasn’t much process in place before the blitz hiring.

This isn’t a problem unique to engineering, you see it a lot with sales too. Leaders aren’t experienced or self reflected enough to work smarter.

Discord has added a bunch of new features over the past couple years. Unfortunately, they don't seem to be very useful features (at least not to me). I still just use it for voice chat during video games.

I don't know how eng grew over that time, but it doesn't strike me as bloated given their scale and user base.

"Non-trivial" is a very low bar to clear. It's obvious that Discord simply does not need to be the scale it is. It doesn't need a billion dollars and it doesn't need a thousand employees. It's very clear that they only have the employees because the investors were stupid enough to give them that much money, and they need to find something to do with it.

Some products just do not need to be that big.

I'm sure that last one in particular had quite a lot of headcount associated, and it seems obvious that after they totally shuttered the project, they just reallocated the employees to new stuff.

You have yet to make an argument how campaign finance reform would change any of the above.

For the remaining stuff, you need federal bills passed, so we're talking about both chambers of Congress + president. So the one party that isn't opposed to all that needs to have a trifecta, for starters. Majorities are razor thin these days, especially so in the Senate, so filibuster in the latter is another hurdle (although it could be dropped for something like this).

That's why it's such a nasty deadlock - the system is in a state wherein there are no legitimate methods to recover its operation.

https://newsletter.pragmaticengineer.com/p/the-pulse-75

Made me glad our founders are so fiscally conservative, as other startups around had to lay off some people to have cash on hand to pay the increased taxes.

"Tech companies, specifically, have lots of money. How can we get some of it?"

I’m also fairly skeptical that this is all that much of a deterrent to doing business in the United States. The US had uncommonly high corporate tax rates until recently, and that didn’t seem to adversely affect economic dynamism. I mean, sure, one can avoid this particular taxation regime by (checks notes) moving the entire operation to another country, but that obviously sacrifices the advantages of doing business in the US (deep and liquid capital markets, well-known legal regime associated with investing in a Delaware corp, network and agglomeration effects, etc.) and the replacement jurisdiction is certainly going to have its own set of downsides.

The salary is not the asset, it's an expense that produces an asset.

If a company invests $1 million into an asset that earns $250k each year over 5 years, the company would otherwise see a $750k loss the first year followed by $250k profit for 4 years. By following an amortization schedule, they are taxed on a steady $50k profit each year. In other words, the taxable effect of the expense is "spread" through the years in which that asset is expected to earn income.

Of course, Congressional budget negotiations have been an unproductive circus show for a while, so this never actually happened and the thing that was never actually intended to go in place went in effect. With the current razor-thin majority in the House constantly getting derailed over budget negotiations, this is unlikely to resolve any time soon.

https://en.wikipedia.org/wiki/Tax_Cuts_and_Jobs_Act

Since Obama became president, all legislation basically needs 2/3rds of the senate to pass if it's remotely controversial and every tax change is controversial. There is one exception though: if the bill is of a budgetary nature, and is revenue neutral over 10 years.

Trump really wanted to pass some tax cuts in 2017. But as you'd expect, claiming that a big tax cut is revenue neutral is far more than the senate parlamentarian would believe. So instead, some tax cuts are made temporary, and some tax changes are made that would gain revenue. Then the whole thing appears to be revenue neutral over a decade, because nobody expects that the poison pills at the end will actually be allowed to happen. They tend to come in 6+ years later, as to make sure that all senators and the president might also claim said increases are not their problem.

So the expectation is that a future congress will just undo those tax changes, and push them further into the future, by again making another bill that looks revenue neutral in the long run, but is just kicking the ball down the road.

The congress since the midterms, however, is even less functional than in the Obama or Trump years: So the poison pills that are not supposed to happen are starting to happen. Other cuts that occurred, like the increase of the standard deduction, were also marked as temporary, and could come back if congress doesn't do anything.

So ultimately it's all side-effects of people trying to bypass congressional rules, because otherwise we'd not see anything other than emergency spending bills passing in congress. Changes to legislation that would make this kind of dysfunction stop happening are even harder to pass. Every incentive pushes politicians of all parties to play with fire. This time we got burned.

This is an odd way to mention (abuse of) the filibuster

> In 2017, then-President, Donald Trump, signed the 2017 Tax Cuts & Jobs act, which overhauled tax codes and reduced tax – for example, it reduced the top tax bracket from 39.6% to 37%. To make the bill pass strict budgetary rules, the Senate used a process called reconciliation: adding in tax code changes that delayed tax increases. These delayed increases “balanced out” the tax reduction.

> One of these changes was Section 174, set to come into effect 5 years later, in 2022. These parts deliver the blow by making it clear that software development costs need to be amortized over 5-15 years. Most experts expected Congress to push back the Section 174 amendment to a later date, or simply remove it. But Congressional negotiations to repeal the changes fell apart at the last minute in December 2022, meaning it became law.

> Amazon, Microsoft, Intel, Ford, Lockheed Martin, and other US companies created the US R&D Coalition in 2018 to advocate in reversing this change. This group concludes... "By diminishing the near-term value of R&D expenditures, the Tax Cuts and Jobs Act will reduce incentives for companies to invest in the development of new products, ultimately hurting consumers and businesses alike.”

> What about VC-funded companies? For loss-making companies this change doesn’t make much of a difference. But the change does impact VC-funded companies near to break even. Most VC-funded companies close to breakeven have big-enough cash buffers with which to pay unexpected tax bills. However, these companies might reduce hiring – or even consider letting go staff.

My 2c are that big tech companies with large amounts of cash on hand wanted to be seen optically as fighting against this change... but those with cash on hand would also benefit from being the only ones able to weather the storm relative to their would-be competitors. It's unclear that incentives were aligned here among those companies with lobbying budgets.

I don't think there's any real logic to it, it's just a way to balance the tax budget.

For 1, presuming that all software engineering is "research or experimental" is faulty. The vast majority of software engineers are implementing known things, and the "experimental" status reflects its reliability. Most "experimental" software isn't really doing experiments to answer questions, it's just checking whether an approach works correctly. I don't think anyone could honestly call writing an Okta integration for a SaaS app "experimental". You know that it will work ahead of time, you just aren't sure if your pass implements it correctly.

For 2, this would imply insane things if applied to other fields. What is the correct period to amortize a bridge engineer's salary over? 50 years? 100? We still have some Roman bridges around, maybe we need to look in the thousands of years. Patents are good for 20 years, so any salaries that lead to a patent clearly need to be 20 year amortization. Copyright is life + 70 years, so graphical designer salaries should be amortized over at least 100 years.

I don't think there's any real logic here, it's just a way to balance the tax budget.

if I understand it correctly it means the cost of this year would be written of over 5 year each year 20%, but if you keep your employees it means in the second year you have 20% write off from that year and 20% of the previous years and so one, so 5 years in still 100% write off every year

I wonder if that would motivate companies to have a more constant number of employees or more precise a similar income bill every year.

Through it would definitely mean if you had considered layoffs this year is the year to go.

If you spent $100M on developer salaries in FY2022, you'd create an amortization for that over the next 5 years.

And then in FY2023... even if you had fired your entire software department... you'd still get to claim that year's portion of that previously created amortization.

IANAL but have filed corporate taxes many times.

but when keeping a job position (not necessary the same person tho) through overlapping writeoffs it will lead to a consistent 100% writeoff

not doing so can lead to spkies of little writeoff when increasing company size and the opposite when shrinking it. This would make new hires on a limited budged harder and in turn should motivate more long term planing when it comes to head count and that might lead to less head count fluctuations maybe

Especially in vesting environments, where devs need to wait for the vesting to have made their R&D-heavy roles worth it from a monetary point of view. Well, large firms will need to give their devs enough runway now so that they can depreciate the costs over a longer period of time instead of only thinking in the short term. They can still fully deduct the salaries, just over a longer period of time. It is 5 years for domestic R&D / development and 15 years for foreign. I think that is good and will cause better treatment of developers in the long run.

Last startup I worked for is on round 7 of layoffs / restructuring right now.

Your mindset is only valid in the explicit context of a company

A) not having cut you

B) having cut others prior to you

As soon as that context is lost in the next two years when you get fired or find a new job, you're back to square one, except you're also competing against Joe Google Engineer.

I think this is a normal trade off. You left a team or a company for more money. There is nothing wrong with this, but you necessarily need to start from a new context since it’s a new team. When times are tighter because of economic cycles, this means that you should be more intentional with changing a team so that you are sure you will be able to compete with Joe Google Engineer. It’s still a competition in some ways, and that’s fine.

If you find a good place, stay a while in tighter economic cycles in order to build more skills and rapport and then hopefully, and realistically based on experience, you’ll have more runway within that company even if times are bad or if your performance sometimes is low because of life events.

Prior to this change in the tax code, your software labor costs for that year would all count against your income so you'd be taxed on $0 in profit.

With this tax code, you can only amortize 10% of software labor in the first year so now your business just had $900k in profit as far as the IRS is concerned. You now have to pay ~200k in taxes. You have to come up with that money somehow, and for most businesses the only short-term option is a combo of reducing costs (layoffs) and loans.

Let’s say you have $100 in revenue, $100 in salary expenses and $50 in other expenses.

Pre 174 you would be considered to have a loss and wouldn’t pay taxes on profits since you don’t have any.

However, post 174, since you’re amortizing salary expenses, you can only deduct $20 out of that $100 (actually the scaling is a little weird I believe, so it’s even worse and the first year you can only set aside 10%), so as far as the IRS is concerned you made $100 in revenues and $50 + $20 in expenses, so you had a profit of $30. So somehow you now need to find actual cash to pay for the $30 in profits when in reality you’ve paid out more than you’ve made.

This just means you have to raise more funds for something that is not returning any value to you.

Your competitors abroad don’t need to do this. Your deep pocketed large competitors don’t need to do this. They have cash to pay and they will get the money back in 5 years, a time which you may not even survive to receive that set off.

This is the worst kind of policy because it doesn’t even make the government more money (the overall tax deduction is still largely the same) but it makes things way worse for companies.

To take a simple example under Section 174 rules let's take a bootstrapped business with one US-based developer developing a SaaS product. If you pay them $100K and also bring in $100K revenue, prior to Section 174 the taxable revenue was 0. Under section 174 the business now can only claim $20K and the taxable revenue is $80K. Your tax bill is some fraction of that after you get done applying credits of various sorts.

The problem with the Section 174 change is 2-fold. It was unexpected--most people assumed it would be corrected. It also hits bootstrapped businesses hardest, which are exactly the sort of businesses we should be encouraging. VC-backed businesses have less of a problem early on because their expenses tend to be so high that even with Section 174 they aren't profitable. However even there as a founder there can be a substantial impact, because the Section 174 charges eat up your Net Operating Losses (NOLs) which you can use to offset the profit from selling the company or future tax bills.

Edit: as others have pointed out the amortization schedule is apparently not linear, so 20% might not be right. The other complication is that there are many deductions and adjustments that affect your taxable revenue. NOLs are the biggest in my experience but there are others.

When I bought a laptop for my business, it was amortized over... 3 years I think. Kinda nuts but, whatever. It's a couple thousand dollars.

But the example above (somewhere) with the 5 employees at $200k/each... only being able to deduct $100k of that, even assuming $1m in revenue... meaning 'profit' of $900k.... it's just crazy.

Take credit for "lowering taxes"... push the effects of the time bomb on to a future administration. Definition of stable genius... ;)

However, these are some crazy exit packages. Five months of salary? Health insurance through the end of 2024? That's a heck of a buffer.

January of last year had more than twice as many layoffs as any other month of the year, and the first quarter of '23 had nearly twice as many layoffs as the rest of the year combined. Not sure if we'll see the same trend this year, but it does seem like there have been an uncharacteristic number of layoffs this month already.

And to add insult to injury, there will inevitably be lots of sound bites from CEOs whining about a lack of engineering talent, so can we please raise H1B limits???

But then I actually looked at the H1B process. It's insane. Not only is there a limited lottery but it only happens once per year. It's not like you can get a job and then apply for a visa.

Is H1B abuse real or are are American HN's commenters way overplaying it?

The abuse comes from companies built entirely on this: Imagine we are running a contracting company from some cheap country. We have 6000 consultants we'll be able to bill higher from the US. So we ask our US subsidiary to just file said 6000 applications. Only 2000 got accepted? Who cares! those 2000 people get moved to the US, and are now working for us, and then we contract them out to normal Enterprise companies at relatively low rates. It's not hard to claim this is abuse, as ultimately one wants to make applications for anyone with a pulse.

Some commentators are definitely overplaying it, but any way you look at it, the system is not necessarily working all that well, precisely because the cap is relatively low, the number of random Indian contractors that would like to move in is very high, and those intermediary companies are rarely great, but they have a big advantage in the system compared to a small company that just really wants to hire one guy, or wants to keep someone that came in with a student visa, and has been doing practical training.

Unfortunately there are so many competing interests that any kind of sensible immigration reform isn't going to happen, as getting the majority of the house and 2/3rds on the senate to agree on something this contentious is almost impossible, especially when one of the parties has people whose idea of the perfect number of immigrants is zero.

But if you look at the overall visa numbers from a few years ago, they are dominated not by FAANG, but by "consulting" companies like Infosys. Those are straight up sweatshops who squeeze everything they can out of their H1Bs while underpaying them (and thus also undermining the local market).

Yes and yes.

The long and short of it is that many companies don't want to pay market salaries, or have unreasonable expectations, and the H1B system basically lets a company hire at a lower salary than market salary.

The H1B system also impacts immigrants' job portability. An H1B employee is less likely to leave a bad job for a better job, thus H1B employees are more desirable because of the lock-in.

Edit: The other half is that a lot of people "age out" of tech for various reasons and like to point a finger. Working in tech at 40+ years old is very different in an industry that typically hires people in their 20s and 30s.

Or just make companies to pay to win a slot ;)

Which jurisdiction requires 5 months of salary?

Equally businesses see employees as disposable, and work to maximise short term profit, not fairness. There's generally a lack of trust in one, or both sides, and that results in poor behaviour from both sides that spirals.

Sure there are great companies to work for, but all their greatness is tossed aside as soon as a better offer comes along. Employees look out for #1. Employers do the same.

In short, this is not a "both sides" problem.

Discord is wildly unprofitable, it is held up entirely through investor largesse.

The main character is nicknamed "Big Head", just referencing his big ol' dome.

It really had felt like things had stabilized a bit (at least for software engineers) in the fall. Was that just the lull before the storm?

Workers are defenseless. Save your money in case you're laid off. Work less if they keep you on.

Let management be rewarded by nothing more than short term monetary gain. Don't give them extra productivity.

https://layoffs.fyi

What? Lowering interest rates raises inflation.

> See today's print

Can you link? Not sure what your talking about

Markets are a technology, they don't come from nature. Markets are an intentional product of governments. Anthropologists haven't found a single stateless society that voluntarily chose markets.

In order for what you say to have meaning, "stateless" would almost tautologically require "no market." But clearly states are themselves a natural aspect of aggregate human behavior in resource limited environments.

ZIRP means that huge capital managers (sovereign wealth funds, pension funds, 401k managers, etc.) get very, very little money on the super-safe stuff they like to buy.

They need to make returns somehow, so if a VC is promising them 15% returns, that sounds quite promising compared to T-Bonds that return 1.5%!

But over the last two years, the yield on super-safe investments now looks more like 6, 7, 8, 9%. That makes a high-risk investment like VC much less attractive, by comparison.

If VC is less attractive, less capital flows to their funds; smaller VC funds means much more discerning, stingy startup investment.

No need to gamble it anymore on tech companies.

Does this mayhem actually ever happen or is it paranoia? I have seen several layoffs where people got advance warning of a few weeks up to almost a year. I have never seen people do anything bad once they got told they would be laid off.

Other than general goodwill, there is no incentive to give an employee a heads-up that they are being laid off. And lots of downside if the employee happens to be disgruntled and do something evil. Goodwill does not show up on balance sheets. But theft and sabotage do.

I'm not saying I like it, but I understand it.

"The value of a company’s name, brand reputation, loyal customer base, solid customer service, good employee relations, and proprietary technology represent aspects of goodwill. This value is why one company may pay a premium for another."

See https://www.investopedia.com/terms/g/goodwill.asp

More to the point, though, in this particular example I'm not even sure federal WARN notice requirements apply here - there are lots of loopholes people don't often understand. See https://www.schneiderwallace.com/practice-areas/employment/w... - looking at those bullets:

* "Layoffs of 500 or more workers at a single site or location." - doesn't apply, was only 170 employees

* "Layoffs of 50 or more workers when those layoffs comprise 33% of the total full-time workers at the location" - my guess is that doesn't apply either, as the 170 workers were spread throughout the company

* "Layoffs of 50 or more workers when closing a building or facility, or the layoffs include the discontinuation of an entire operating unit" - Again, I believe these discord layoffs were broad-based and not the result of entirely closing a single business unit.

They don't call it severance - it's just regular pay for 60 days. Technically they're still employed by the company. At the end of that 60 day period when the employment is terminated, that's when severance (if there is any) is paid.

IANAL, nor am I HR, but I have to imagine that if a company wanted to avoid the WARN act, those exceptions would give them creative ways to structure the layoffs to avoid it.

Am i reading this right? Once the pandemic hit headcount went 200 -> 1000 -> 830

What is different in the user experience since 2020? I can understand needing an army of SRE's but this feels extremely bloated for a company who was able to run their product on a 200 person crew

They also added a bunch of monetization stuff (discord nitro) and attempted to get more "community" based features like custom emotes/badges/profiles per server/watch party stuff.

The core experience is the same, I think they've done a great job ensuring that doesnt change! They have also done the usual software stuff, improving core outskirts like stability/performance/login methods/slash options. Its the same core product but better.

I think you're more on the money with the miscellaneous other projects. They were even trying to sell games through Discord at one point.

Unlike Twitter or Twitch, they have to diversify, as I believe they are burning money on their core product. The benefits of Nitro is not much. But they aren't going to become profitable by paying engineers $400K on bad ideas and keeping the engineers on reserve duty, which they have probably been doing.

As an SRE I can assure you, you don't need an army of SREs for a singular product.

Senior Executives experience? They look bigger as a company.

https://en.m.wikipedia.org/wiki/Vitality_curve

1. Rank everyone

2. Layoff bottom 10% or so

3. Reward the top

4. Keep it secret or the workforce will adapt by hiring bad people and sabotaging good people

Used at most companies with performance evaluations. Taught at MBA schools.

Trivia: MBAs have accomplished nothing throughout human history. Only creating overpaid executives that avoid taxes, corrupt the government, ruin the environment, make people poor, sick and make other countries richer. If all MBAs retired tomorrow 90% of obesity, pollution and corruption would stop.

Not to mention Jack Welch's very "Let Them Eat Cake" attitude to the middle and working classes and executive compensation.

I suspect this is not true. Evals are far more common that stacking.

Btw when you do do this, 4 pretty much never works, and generate a political layer around it.

Perversely, at the group level it raises the value of lower performers, mostly as "chips".

After surviving what feels like a dozen rounds of layoffs over the past year, morale is already non-existent. You can go weeks and sometimes months without even hearing a peep from the people you once thought were the brightest and hardest working. The whole thing just feels in need of a reboot. Is this consistent across all companies at the moment or is it just time for me to leave?

Strong performers from the teams around have been laid off, and people who really need to be gone have not.

So don’t play a part in it. Is doing it more or less crushing than being sacked?

Sucks to be on any team that delivers cyclical/lumpy value (with arbitrary windowing/snapshots).

Same with interviews: gotta keep things qualitative lest someone sues you for not being the successful candidate.

Because of bad math and pseudoscience.