Why Layoffs Happen

We explain why layoffs happen and why they’re a recurring reality in the tech industry.

Here are the core points from the lesson:

• Layoffs occur when companies face bad economics, often triggered by unforeseen macroeconomic shifts like the post-COVID slowdown after years of stimulus-fueled growth.
• Overambitious hiring is a major contributor, especially when overly positive economic conditions lead companies to scale headcount faster than the business can sustainably support.
• Fundamentally unsound business models and poor strategic direction also drive layoffs, and in practice, these factors usually overlap—making layoffs inevitable since executives can’t make perfect decisions all the time.