The Scoop #36: Microsoft’s layoffs and its impact on the industry
The Scoop #36: Microsoft’s layoffs and its impact on the industry
Microsoft, Amazon, Salesforce and Goldman Sachs all announced mass layoffs. What do these events suggest about the outlook for the tech industry?
The Scoop is a bonus series covering insights, patterns, and trends I observe and hear about within Big Tech and at high growth startups. Have a scoop to share? Send me a message! I treat all such messages as anonymous.
Although I try not to touch too much on layoffs, some are too big in their impact to ignore. Wednesday, Microsoft announced large cuts, and Amazon commences their elimination of 18,000 roles. Today, we cover the impact on these cuts on the industry. But it’s not all gloom and doom: in the middle of layoffs, some companies are doing very well, and I bring some exclusive details about one of these startups, Linear. Today's topics are:
Microsoft’s layoffs. The tech giant announced eliminating 10,000 positions on Wednesday, which is about 5% of staff. The company made a $72B profit in 2022 - which is more than the revenue it had in 2011. So why does Microsoft need to do layoffs? Analysis.
What Big Tech layoffs suggest for the rest of the tech industry. Layoffs at Microsoft and Amazon worry me because both companies have excellent track records in predicting how their business will grow or shrink. Could we see these companies being the early movers, and the industry following with more cuts, because it’s the sensible move? Analysis. Access a non-paywalled version of this section.
Layoffs at Goldman Sachs. The investment bank cut 6% of staff, and is the first major non-tech company to do deeper cuts. Is this cause for worry? Analysis.
Layoffs and hiring freezes: it’ll get worse before it gets better. Amazon, Salesforce and a bunch of other companies made cuts in January. I analyze why we’re likely to see a spike on layoffs and hiring freezes in the coming period. Analysis.
Will we see a focus on sustainable growth for startups? Profitable, has lots of money in the bank, and growing the team deliberately slower than revenue increases, not digging into money raised. This kind of approach was not what investors expected from fast-growth startups, yet it’s the approach Linear is taking. Will we see more companies follow? Exclusive details.