We all know that those corporate statements that announce mass tech layoffs and claim that the job cuts are actually a plan to fuel growth — we all know that’s bullshit.
Right?
I mean, let’s get this out of the way. The gall on that reasoning actually offends me. Like, on a deep spiritual level. Because if there’s a tenet of business that I truly believe is unflinching, it’s that you can’t cut your way to growth. Ever.
So why are all these nerds being shown the door?
Well, there are a few reasons. Most of them unavoidable, but none of them… that.
Be forewarned, I’m going to do a little speculation and opinion here, connecting dots I believe need to be connected. I don’t think I’m wrong though. Disagree with me if you feel like it.
No One Understands AI But Everyone Thinks They Do
I swear, if I see one more article from some “expert” with a headline that screams about AI taking everyone’s job except those of us who are wise enough to learn how to use AI, I will… write a strongly worded letter to the publisher, because it’s the publisher’s fault for letting that garbage through for the clicks.
I can explain why the AI dystopia isn’t true in three words. Movies. Aren’t. Real.
AI is not Skynet. We’re not living in The Matrix. We’re not obligated to welcome our new OpenAI overlords.
The current evolution of GenAI is not going to be the AI that universally replaces knowledge-based labor. What they’re selling as the “AI” function of today’s GenAI can be more closely described as “powerful computers doing if/then statements really fast” than “sentient.”
However, GenAI is indeed a threat to SaaS, especially the business intelligence systems that create and aggregate the data that power an awful lot of other B2B SaaS. These people are freaking out. And they envision a panacea in AI — this technical marvel that can do any tech task at any tech time for less tech money.
Why pay all these high-priced software engineers to develop elegant solutions to specific business problems when we can just ask ChatGPT to solve those problems for us?
Good luck with that.
Investors and Boards Flew Too Close To The Sun
This reason is related to AI but not solely rooted in AI. When the economy is frothy, and there is a technology evolution underway that looks like it’s game-changing, i.e. AI, investors and boards forget how to balance their checkbooks.
The three years before 2024 were, to use an economist term, batshit insane.
Free cash flow dominated those years, as well as the years leading up to the pandemic, meaning there was a ton of cash reserves to spend and spend fast. And while the pandemic looked like it was a paper tiger, in terms of Wall Street economic impact — like maybe a sneeze instead of the flu — the AI race started to heat up.
So with time of the essence and fear and opportunity on either shoulder of investors and board members everywhere, money got spent in weird ways. A lot of it fell into two categories, either on the race to adopt AI or on measures to counter AI.
I generally believe this happened because too many companies missed the boat on some of the major game-changing tech in the 20 years previous — the rise of the internet, then mobile, then cloud, then eCommerce. Everyone watched Google, then Apple, then Amazon, and then… Amazon, eat their lunch.
Oddly, the same tech cycle was playing out pre-pandemic with blockchain and NFTs — but the warning signs were overshadowed by said pandemic, and no one realized that the 800-pound gorillas in the room, Amazon and such, weren’t going after the NFT banana.
I’m so proud of that last sentence, by the way.
This time around, OpenAI and Google are indeed eating all the AI bananas, because real AI is really expensive. So investors and boards that aren’t with OpenAI or Google are mass quitting on the idea that this evolution of GenAI will be lifting all boats any time soon. Certainly not before their now-super-tight cash reserves run out.
So the tech layoffs might be for “growth,” just not the growth they had been hiring for the last three years.
Techies Got Entitled
Yeah, let’s blame the victim a little.
Come on, folks. Did we really think this gravy train was going to last forever?
With all the demands being made by both new and veteran tech talent alike — from where we work, to how much we get paid, to a belief that maybe the business side will finally understand that triangle with time, cost, and quality on each side — at some point the squeaky wheel gets replaced, right?
I’m kidding. A bit.
But much like how too many people think they know AI, too many people on the business side now think they know tech. And when they see all these kids coming out of code schools and universities with syntax drilled into their heads and GitHub project portfolios and all the Agile/Jira terminology nailed, they think, well, that’s what coding is.
And so they hired a ton of them.
And our decades of earned resentment turned into their unearned entitlement.
They learned it from us, friends.
Now everyone is getting the ax.
The Wrong People Are In Charge
That’s what it all boils down to.
The people in charge of telling the story of tech are selling the most dystopian story imaginable.
The people in charge of cutting the checks are chasing a swinging pendulum and scared of getting burned again.
The people in charge of building the tech are understaffed, underskilled, and overconfident.
Yeah. If you dropped this quagmire into my hands, I’d start erasing the board too. It’s unavoidable.
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