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Comment by jt2190 | Hacker News Reader

From the article:

> [Melissa de Witt] Do you think layoffs in tech are some indication of a tech bubble bursting or the company preparing for a recession?

> [Professor Jeffrey Pfeffer] Could there be a tech recession? Yes. Was there a bubble in valuations? Absolutely. Did Meta overhire? Probably. But is that why they are laying people off? Of course not. Meta has plenty of money. These companies are all making money. They are doing it because other companies are doing it.

This may be true, but I’m not sure how we escape this: The market has different expectations now, leadership has to be sensitive to the expectations of the market, etc.

“Making money” has a direct correlation with “risk taking”: When you have money pouring in it’s easy to allocate some to “moon shot” projects. Less money coming in and you can still make “improvements”. When money starts drying up you can only do “maintenance”.

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Not completely relevant to your comment, but I personally I think the word "bubble" is a really bad label for what happened during 2020-2021 and redirects blame away from those responsible.

It assumes there was some irresponsible multi-asset speculative boom in various markets including, government bonds, housing (gloally), crypto and stock valuations all conveniently around the same time in late 2020/ early 2021 when central bankers were doing trillions of QE and governments were injecting similar amounts of fiscal stimulus into the economy, fuelling a general demand boom and pushing the risk-free rate to near-zero. And top on of this central bankers were completely wrong / lying about the path of inflation and rate hikes in the coming years miss leading investors and businesses about the environment they would be operating in going forward.

I guess my point is that if tech companies "over hired" they only did so because the risk-free rate being near-zero devalues profits and incentivise growth. And meanwhile they had a massive demand boom to service caused by the insane fiscal stimulus. They were arguably just doing what they had to given the macro environment governments and central bankers created.

The "bubble" might as well have been government policy. Investors / businesses were just responding as you would expect given the economic conditions.

Were we to drop the risk-free rate to zero and pump $2T in the economy again this year exactly the same thing would happen again.

I just don’t buy the argument of companies are doing it because other companies are doing it.

Overhiring issues + popped bubble valuations + tech recession = you’re doing layoffs because you’re greedy? Really? It doesn’t add up.

To my mind its the only thing that adds up.

It definitely makes them seem hiring and short-sighted in retrospect for overhiring during the bubble. Shouldn’t corporate leadership be as aware that the Fed injected an insane amount of money as the layman, that it was unsustainable? What happened to following Buffet’s dictum about being fearful when others are greedy?

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