Big Tech companies are laying people off.
Big Tech companies are also hiring some people — AI superstars — by offering them pay packages worth tens of millions of dollars. Meta just spent billions to hire a single executive.
How do we square those two things?
MG Siegler, the blogger-turned VC-turned blogger again, spells it out this way:
These companies are essentially saying to some employees that they’re so valuable that they’re worth paying not just a lot of money, but more money than basically anyone in the world gets paid — including, often, their own CEOs. And yet to others, they’re basically saying they’re worthless — I mean literally not worth paying anything to any longer.
A slightly longer way of saying it: In the minds of tech CEOs, getting AI right is a binary proposition. If they get it right, they get to survive and thrive as the tectonic plates shift; if they get it wrong, it’s the end. So by that logic, they can’t really overspend on AI.
At the same time, cuts are meant to show Wall Street that just because they’re all-in on AI, Big Tech hasn’t lost its mind: It will find other people and projects that aren’t as critical, and jettison them to help balance the scales.
This is “the enigma of success” that Microsoft CEO Satya Nadella was getting at in his most recent memo — where he noted that Microsoft was firing thousands of employees while its business was thriving.
But let’s complexify this just a tiny bit by pointing out that just because Big Tech companies fire thousands of people, that doesn’t mean their head count stays frozen. These guys keep finding ways to hire more people.
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At the start of 2023, for instance, Meta had a little more than 77,000 employees. Then it went through rounds of massive layoffs, and its workforce shrank to 67,000 employees.
But since then, Meta has been steadily hiring. And as of the first quarter of this year, it was up to 76,834 workers — just about where it was two years ago.
You can see the same pattern play out at Google, another all-in-on-AI Big Tech company.
In the second quarter of 2023, Google employed 182,000 people, and then fired thousands of them. A year later, its head count was down to 179,600. But since then, it has swelled to 187,000 employees.
And Nadella’s Microsoft has fired thousands of employees itself this year. But Nadella says new hires mean the company’s head count is “relatively unchanged”.
Which should mean that when it reports earnings this week, it should have around 228,000 full-time workers — the level it was at a year ago. Don’t be surprised to see that number creep up in the future.
