This Is the New Saying Among Tech CEOs: I Apologize

Mark Zuckerberg joined the ranks of tech executives on Wednesday when the chief executive officer of Facebook parent Meta Platforms Inc. said the company would cut 11,000 employees, or 13% of its workforce. Mr Zuckerberg told employees that he believed the rapid change online would be permanent after the onset of COVID-19. “I got it wrong and I take responsibility for it,” he said.

A few days ago, Twitter Inc co-founder Jack Dorsey, who ran the company until last year, offered remorse after the social-media platform’s new owner, Elon Musk, cut head count by nearly 50%. “I grew the size of the company too quickly. I apologize for that,” Mr. Dorsey tweeted on Sunday.

Sam Bankman-Fried, founder of cryptocurrency trading firm Alameda Research and troubled crypto exchange FTX, told employees on Thursday, “I’m sorry,” as he detailed in recent days.

The pattern has been repeated at companies in the tech industry as jobs have been cut in recent months. “I take responsibility for selecting my team to grow rapidly,” Jeff Lawson, CEO of Twilio Inc., said in a letter to employees in September. “And now, I’ve also made a decision to focus more — which has resulted in these layoffs.”

The statements from the CEOs partly reflect the aftershocks of the sharp downturn that recently befell the entire tech sector. They also express the illusion of permanence that can set in during boom times – especially in an industry that was on extended growth prior to the COVID-19 pandemic – despite long-term conventional wisdom, as investors often Be warned, past performance isn’t a reliable indicator of future results. For some of these executives, this is the first time they’ve needed to navigate a significant economic downturn.

Tech companies experienced a surge in the amount of time people spend online during the COVID-19 lockdown that began in 2020. Industry leaders quickly hired to take advantage of the opportunity and gather talent.

Mr Zuckerberg had expanded the head count at his company by more than 80% since the start of the pandemic to about 87,000 employees. Google parent Alphabet Inc added about 68,000 employees from the beginning of 2020 through this September, an increase of about 57%. Twitter’s workforce more than doubled during the first two years of the pandemic. Twilio tripled its workforce from the beginning of 2020 to 8,992 people as of this September.

Fast-forward two years and demand for everything from digital advertising to computer chips has plummeted, as people resume routines and the worsening economic outlook weighs on consumer spending. The tech-heavy Nasdaq Composite Index is down more than 30% so far this year.

Companies were staffing the moment to meet the moment and stay ahead of rivals, said Jeff Hunter, CEO of Talentism, an executive-coaching firm. “It’s all happening. They’re bringing in a ton of money. They don’t want to lose the talent war,” he said. “And then the party bus stops.”

Mr Zuckerberg, in his remarks on Wednesday, pointed to a spike in tech revenue growth at the start of the pandemic. “Many predicted that this would be a sustainable acceleration that would continue even after the pandemic was over. I did too, so I decided to significantly increase my investment,” he said. “Unfortunately, it didn’t go the way I expected.”

The cuts came after the social-media giant reported two consecutive quarters of declining advertising revenue for the first time in the company’s history.

Social-media companies alone have laid off more than 16,000 employees in recent weeks. But layoffs span a broad spectrum of the tech industry. Chip maker Intel Corp. has said it is cutting its workforce, Peloton Interactive Inc. has roughly halved its workforce in four rounds of layoffs, and online broker Robinhood Markets Inc. said in August that He is eliminating about 23% of his positions.

The motivation to rent quickly was strong during the pandemic, when many tech goods and services were in short supply.

Take Amazon.com Inc. As soon as the pandemic began, the online retail company became a lifeline for many Americans who depended on it to deliver daily goods while stuck at home. Amazon doubled its workforce from 2020 to March 2022 to nearly 1.5 million employees and opened hundreds of new warehouses, sorting centers and other logistics facilities to meet growing demand. Its profit almost tripled.

Lately, Amazon CEO Andy Jesse has been trying to move equally quickly to reset the business to a different reality after one of the worst parts of financial performance in the company’s history. Amazon’s blue-collar workforce shrunk by about 100,000 employees during the company’s second quarter, leaving the company with about 1.5 million employee members at the end of the period—though it has said it’s working to meet expected holiday demand. It is employing workers in its warehouses.

John Chambers, the former CEO of Cisco Systems Inc. who is now a tech investor, said some of the layoffs now reflect a somewhat natural effort by companies to reevaluate their businesses in a way that has been difficult during an extended boom period. It was difficult to do. “Growth covers up a lot of mistakes – 12 years of uninterrupted growth meant we got a little heavy,” he said.

“When you’re in growth mode, it’s always hard to find the time to make all the adjustments you need,” said Sundar Pichai, CEO of Google and Alphabet. year. “Moments like this give us a chance,” he said.

The officials who announced the cuts are hoping they won’t have to learn the lesson again.

After Snapchat owner Snap Inc. said in August that it was parting ways with 20% of its employees—the company’s ranks had grown by 65% ​​in two years—CEO Evan Spiegel said: “The extent of this reduction has been substantially reduced.” reduce the risk of doing this again.”

This story has been published without modification from a wire agency feed.