In a modern variation of the old pirate ship saying, “the beatings will continue until morale improves,” big tech companies let go of thousands of employees last week in search of missing profits. Twitter laid off a shocking 50 percent of its workforce or 3,000 people while Facebook parent Meta fired 13 percent of theirs or 11,000 people.
The wave goes beyond social media: a new report says Amazon is preparing to lay off up to 10,000 people and many other tech companies of varying sizes have recently announced layoffs or hiring freezes. It’s a sobering reminder that the tech industry is also subject to the ebbs and flows of the business cycle.
The Wall Street Journal makes the case that the absolute number of tech layoffs is still not much compared to the 153 million jobs in the U.S. market, which added 261,000 workers in October. Rather, their analysis is that investors expect too much from the tech industry. Taking a quote from Mark Zuckerberg’s layoffs announcement on Wednesday, the WSJ says this week blasted a hole in tech’s “permanent acceleration” boat.
Here at Verb, we would add that tech leaders also expect too much of themselves. Zuckerberg still believes his metaverse bet will pay off once new products are ready. He is going after a different tech myth: “Build it and they will come.” But that’s not the reason why Meta’s stock went up after the layoffs. Rather, investors celebrated that Zuckerberg was finally cutting costs.
We still need to see if Meta did a careful job of cutting costs while preserving the delicate mesh that keeps customers aboard. For sure, Zuckerberg seems more careful than Musk, though both are still on a different planet than the rest of us. Patrick Campbell, the founder of subscription software company Profitwell, posted a to-do list for mortal CEOs caught in the storm. His second item after cutting costs? Shore up customers, going after anyone near the point of cancellation.
It’s sensible advice for any company with a focus on profits. But as the WSJ analysis put it, not every company can pull off the kind of big transformation that Meta, Twitter, and other tech companies are embarked on. Sales will tell.
Transformation is Hard
In a refreshing contrast to the gloom of tech news last week, Verb customer Compass UOL acquired Avenue Code, a software consultancy with over 1,000 employees in the U.S., Canada, Europe, and Brazil. It’s their sixth and largest acquisition in a strategy to help global customers with their digital transformation projects.
Digital transformation is a growing business: Compass UOL has customers in retail, automotive, insurance, agricultural, petrochemical, and big tech markets. CEO Alexis Rockenbach said that Compass UOL is making an investment in Avenue Code’s “digital talent and leadership, which are the most relevant assets in this deal.”
It’s the Cycle of Life (Sciences)
While some companies transform others grow. “We believe that our technology platform is poised to transform operational environments by connecting nearly any physical asset to the cloud,” said Sridhar Iyengar, CEO of Elemental Machines, a technology platform for optimizing laboratory operations and another Verb customer, when announcing a $41-million Series B funding round.
After helping over 500 life sciences labs use artificial intelligence to automate and extract meaning from operational data, Elemental Machines will use the new investment to grow in related fields such as manufacturing, materials science, food tech, ag tech, and other data-focused industries. Which is to say, all industries.