The tech industry has been going through a hiccup. It may be getting worse before it gets better. I wanted to share some tips and thoughts because layoffs are top of mind.
I haven't been laid off, but people I know and care about have. This is as much for them as it is for you :)
The situation
Layoffs are impacting the tech industry. Estimates put it over 150,000 people laid off in USA last year. layoffs.fyi says we're at ~20,000 for this year ... it's January 10th 😅
This is likely to get worse.
But it's uniquely impacting tech. The rest of the economy is doing fine with the lowest unemployment rate in 50 years. Part of this is because life is returning to restaurants, shops, bars, and services. Good.
That doesn't explain everything. The underlying reason is how tech valuations work – discounted future profits. Your company is valued on its promise, not current results.
As interest rates rise, tech valuations plummet. And woo have the interest rates been rising! Why put money in a growth stock with lots of risk, if you can buy super safe bonds with high yields? 🤨
Investors (VCs) and their investors (LPs) are not dumb.
Default dead vs default alive
That impacts post-IPO companies because executives care about stock price. Stock price is a big component of everyone's salary.
The problem is worse for pre-IPO startups.
Startups are in a race against time. You burn funding to build revenue. If nothing changes, a default dead startup runs out of money before revenue covers expenses. A default alive startup is either profitable or likely to become profitable before the money runs out.
The harder and more expensive it is to raise funding, the more you want to be default alive. Layoffs slow down your progress, but they also extend your runway.
Last year investors didn't care about profit or even revenue. Now they want startups who are default alive.
In case of layoffs, break glass
So, if you or a friend gets laid off, what do you do?
First: Don't panic.
Typical layoffs have been in the 10% to 15% range. Companies are staying bigger than pre-pandemic!
Meaning most layoffs are a regression to the mean. A correction of exuberant 2020/21 hiring back to historically average growth.
Salesforce announced a layoff of 10% of their workforce today (~7.3k). But they increased headcount by 17k employees last year alone.
— BuccoCapital Bloke (@buccocapital) January 4, 2023
Management in tech let these companies get insanely bloated, and now employees are paying the price pic.twitter.com/Bodcy0715X
We'll see if that trend continues.
Tech unemployment rate is 1.8%. It's going to be okay. You and your friend will find a new job.
But start looking now. Yes, you got a nice severance package, full pay for a while. Finding a job you like always takes longer than you think! Hard truth #2 about being laid off.
Replying to all those recruiters who sent you email over the past few years is a good start 😉
Help your friends
Your friends just lost access to all their work history. Help them build a brag sheet and add it to their LinkedIn.
What was that project where they saved your butt? Tell them.
The project you shipped last summer that bumped metrics by a huge amount? What was it again? Look it up, tell them. Share the metric if you can.
Got a nice network because you've spent a decade in the industry? Pull a few strings for your junior friends, eh. They get hit the hardest.
Leave a nice endorsement on LinkedIn. Yes, recruiters look at those. Sing your friend's praises to anyone who asks. Now is not the time to talk about how they like to indent code by 3 spaces instead of 4.
If you survived a layoff
Get back to work.
Best you can do is:
- Keep a brag sheet
- Show ownership
- Succeed at critical projects
Put the brag sheet on your LinkedIn every few months. That's how you get those recruiter emails.
Cheers,
~Swizec
PS: if you could use a wonderful junior engineer, I know 2 that are looking
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