The Pulse #100: Large AI Players Snap Up Smaller Ones

Also: why dev tools ask for work email, the “Big Stay” phenomenon, ChatGPT usage stalls then recovers, and more.

The Pulse is a series covering insights, patterns, and trends within Big Tech and startups. Notice an interesting event or trend? Send me a message. This issue is a minor landmark for the series: the centenary (100th) edition. Thank you to all subscribers and readers for making this possible!

Today, we cover:

1. Industry pulse. Tone-deaf job cuts at Intuit; GenAI creating more carbon pollution by cloud providers, Big Tech no longer wants to be on OpenAI’s board, late-stage valuations rebound, and more.

2. Large AI players snap up smaller ones. More AI startups are selling themselves to the larger players. Consolidation in a sector usually means rapid growth has finished, but these outcomes often benefit startups.

3. Why do some SaaS tools need work emails? Dev tools are considered business-to-business (B2B) products in how they are sold: and these companies often don’t want to deal with people who do not currently work at a company.

4. “Big Stay” in all sectors. Employees everywhere are more reluctant to change jobs across the US, not just in tech.

5. ChatGPT usage stalled, but is growing again. After a year of virtually unchanged web usage, ChatGPT’s launch of its new model and voice modalities seems to have doubled interest and usage.

1. Industry pulse

Intuit’s tone-deaf job cuts

Intuit is a large financial software corporation, best known for Turbotax, a market leading tax filing software in the US, and Quickbooks, a popular accounting software suite. The company made waves in 2021 when it acquired the email service Mailchimp for an eye-popping $12B. This deal made huge waves because Mailchimp was fully bootstrapped, and the acquisition remains the largest bootstrapped company purchase to date. The cultures of Mailchimp and Intuit seemed to clash at the time, in large part due to Intuit ending Mailchimp’s full-remote work model in 2022.

Intuit is now back in the news, with the announcement of a fresh round of layoffs at the software maker. Yesterday (10 July) the company announced letting go 10% of staff – 1,800 people, while also sharing that they’re hiring another 1,800 people to build GenAI products and features; mostly engineers, product, sales, and marketing people.

So Intuit is firing exactly as many people as they are hiring, which will surely be a blow to anybody being laid off. Still, given so many businesses are currently rushing to build AI-powered functionality, it’s not a total shock. What makes it tone deaf is an email from Intuit’s CEO, explaining the layoffs and the strategy shift behind them. (Emphasis mine):

“Taking care of our people

It is never easy to say goodbye to our colleagues and friends and we are committed to treating everyone who has been impacted by these changes with the compassion and respect they deserve. 

Let me first start with who is impacted by these decisions:

We’ve significantly raised the bar on our expectations of employee performance, resulting in approximately 1,050 employees leaving the company who are not meeting expectations and who we believe will be more successful outside of Intuit.“

With a single sentence, Intuit calls the people losing their jobs “low performers” in full view of the public, in a message labeled “taking care of our people.” If that’s what taking care of people looks like at Intuit, then I fear for its current employees!

This fully public message is incredible for a few reasons:

• It could harm affected folks’ employment prospects because most of them (read, all) have been publicly labeled “low performers” by their ex-employer

• What does Intuit’s CEO, Sasan Goodarzi gain from it? It makes Intuit’s leadership team look incompetent for having employed so many people who are apparently “not meeting expectations” (his words.) Shareholders could argue this was working against shareholders’ interest.

• Intuit claims 1,050 people did not meet performance expectations, but it’s still paying them all very generous severance of 16 weeks pay, plus two weeks for every year served, plus bonuses paid. Actual low performers rarely get such a package.

Basically, the statement seems incoherent and baseless upon close inspection. By comparison, Meta let go of around 25% of staff in 6 months, but didn’t feel the need to say publicly that a single one of them was not meeting expectations.

Anyone who has conducted layoffs knows that the group affected contains a mix of low performers, and those in the wrong team or organization at the wrong time. Companies do not comment on who is who, so hiring managers give people the benefit of the doubt and the chance of a fresh start elsewhere. This clumsy statement by Intuit’s CEO strips everyone of the benefit of that doubt, tarring them all as incompetent. Who’s being incompetent here?

As a reminder, we previously did a deep dive on how to execute layoffs humanely. Intuit seems to have used several of the practices mentioned in the article, like generous severance, additional insurance, and job placement services. It makes the needless lack of compassion in the CEO’s email stick out even more.

Is GenAI creating more carbon pollution by cloud providers?