In the past 5 days:
- Google laid off 12,000
- Microsoft laid off 10,000
- Amazon laid off 18,000
When I joined Meta back in 2017, I never expected to see large-scale layoffs at the biggest, most profitable tech companies in the world (Meta laid off 11,000 employees in November.)
Layoffs.fyi shows that more than 200,000 tech workers have been laid off across 2022 and 2023. All signs point to the poor job market continuing for the rest of the year, as tech enters into a pull-back period. For the vast majority of tech employees who started working after the 2008-09 GFC, this will be the first time they encounter industry-wide downturn.
In this article, I wanted to share some context and advice about dealing with layoffs, whether you’ve been laid off or your company may be headed in that direction.
How we got here
The COVID pandemic was, generally speaking, one of the best things that happened for the tech industry. Since all of us were at home, and the government literally handed out money, more time and more money was being spent online than ever before. Almost every tech company, public or private, ascended to an all-time high. Zoom and Snapchat crossed a $100B market cap, and Meta touched $1T.
As a result, between April 2020 and January 2022, these companies grew at a historic clip: Meta, Snap, and Google hired aggressively, in some cases almost doubling headcount within a year. That's astonishingly hard to do when you already have 10s of thousands of employees.
As with most rapid ascents, there was also an element of ego and perception involved. If you’re the CEO of the company, you’re now flush with cash and the cost of borrowing is near zero. It’s incredibly hard to turn down the allure of building more stuff, hiring more people, and spending more on marketing.
But it turns out these companies were riding artificially high, and that growth was unsustainable. With COVID restrictions easing, government spending drying up, and interest rates going up, money now became much more important than money later. All the speculative projects, the stuff which would take 3-4 years to pan out with low margins is now under intense scrutiny.
The fact of the matter is that many tech companies hired too many people, too quickly, and now tech is being hit especially hard in the market. This is the perfect storm for hundreds of thousands of layoffs.
The first thing to remember with a layoff (or, more accurately, a “Reduction in Force”) is don't panic. Mass layoffs are generally more a reflection of company performance and not your performance, so don’t take it personally.
There is also a silver lining here: usually it’s not fun to work at a company which had layoffs. If the cuts weren’t deep enough initially, it’s not uncommon for companies to do 2 or 3 rounds of layoffs, with progressively worse and worse severance packages (Coinbase did an 18% layoff followed by a 20% layoff 6 months later).
I just got laid off...
Here's what you should do if you just got the news of your role being terminated:
Understand your financial situation
You'll be handed a bunch of documents to sign when you're part of a layoff. Understand the terms of your severance pay as you leave the company, and do a deep dive into your savings.
In the US, companies laying off a certain number of staff are required to meet minimum thresholds in terms of pay or disclosure (the WARN Act). Generally, top companies will provide even more severance, something like 14 weeks and benefits.
The important thing to keep in mind here is you should actually do the math of your personal burn rate.
Gainfully employed, many engineers got paid more money than they knew what to do with. A lot of financial gurus will tell you to save at least 20% of your income, but most people just ignored that advice since they were saving way more than that by default, or they expected their compensation to go up dramatically in the next year due to a promotion.
Now that things are not up and to the right, you should spend the time figuring out your savings and expenses each month. When you’ve done the math that you have at least 8-9 months of personal runway, so much of the stress is reduced.
Leverage your network
The most important tool at your disposal after a layoff is your network: your former colleagues at the company who can advocate for you.
Make sure you leverage the brand of your company. After a mass layoff many companies will setup a list for all impacted employees interested in the next opportunity. Opt-in to the list and embrace the fact that you got let go. If you’re coming from a name-brand company, like Stripe, Meta, Airbnb, you get an inherent advantage since lots of startups will want to hire you based simply on pedigree.
The other way to benefit from your network is to tap into referrals from ex-colleagues. There’s a good chance your old manager or teammate would love to work with you again – reach out.
The idea is that you want to use whatever unfair advantages you have. Your network, your pedigree, your passion in an area – these are all great jumping off points.
[Optional] Pivot your career into a new area
Let's be honest: the majority of engineers are on auto-pilot at their level or company, doing a mediocre job since it'good enough.
Use the layoff as the jumping off point to learn the skills and technologies you’ve wanted to for a long time. Maybe this is your opportunity to dive into climate tech or plant-based meats, or to finally build that Android app or learn Haskell.
Many engineers have been wantreprenuers for years, itching to start a company, but always finding some excuse as to why they can't right now. If you've been laid off, one of your biggest excuses just disappeared. Why not turn lemons into lemonade?
If you are able to take a break, take advantage of that. Take time to do nothing, and enjoy being bored. Creativity is bred in boredom, and the world of technology is large.
I might get laid off...
If Google laid people off after making a profit of $50B in 2022, no company is safe. Here's how to best protect yourself:
Build a network of amazing people within the company
If you get laid off, your current coworkers will the most valuable asset for landing your next role. Even if you don’t get laid off, networking with people is how you keep learning skills and discovering trends that can change your career.
Don’t make the mistake that software engineering is about working with computers. Our profession is a human endeavor, and you should spend your days accordingly – talking with people within and outside your company.
Evaluate your role in the company
How critical is your team to the central function of the company? Evaluate this at the present moment, and 5 years from now.
- In an economic contraction, there’s an urgency to cut longer-term bets and centralize focus on a few key areas. What are those key areas? Can you move into that part of the company?
- Some companies, especially pre-PMF, are making one major bet on a new product or service which will be the primary revenue generator in 3-5 years. (See Meta with the Reality Labs division.) Tying your work to this major initiative also gives you a higher chance of surviving layoffs.
In the long term, I’m confident that the innovation and growth in tech will continue. 2023 will be a difficult year, but stay focused on what you can control. Build your network, build your transferable skills, and think about how to grow your career.
We’ve made all the discussion + resources about layoffs free in Taro: https://www.jointaro.com/tag/w7kqFY2Fe8BVTts5uqEt