Apple avoids job cuts because it didn’t overhire like Google and Amazon

Apple was smart to move slower. They are probably one of the best run companies in the world.

But surely someone must have questioned the industry mass over hiring with the Covid bubble and VC cheap money fuelling it for decades to result in these mass layoffs?

Apparently you can't.

High performing public tech companies went totally insane and doubled their head counts. Everyone else was a cargo cult with an open checkbook so they insanity-squared their head counts. No one could possibly manage such a gigantic influx of knowledge workers so resources were obviously being poorly allocated industry-wide. This first had an impact on low performing public companies, followed by the higher performing public companies, and then the cargo cults.

The places that didn't go insane were not only unaffected but stand to benefit immensely.

Apple's culture is not all that amendable to high growth of headcount[0]. Its not in their DNA. Steve Jobs in his return back to Apple setup a cultural legacy around hiring smart, hiring smart, and being intentional. That its better to invest in hiring the best you can and people who fit. When I was there, it was another huge boom time for most of the industry, and Apple still wasn't hiring fast like Meta (then Facebook) or Google was. Some departments in Apple do scale quickly, but typically there is a targeted plan behind that scaling.

In essence, they don't like to take shots on scaling the people aspect of the business, because they value culture fit extremely high and intentionally put it ahead of many other metrics internally.

That was and I believe still is the case

[0]: one can argue no company can take rapid headcount rises, but setting that aside, clearly a lot of companies thought it could work

Amazon saw a massive spike in their ecommerce business due to lockdowns so they had to hire to ensure they had the labour to deal with all the extra orders and deliveries. And even with this extra hiring I remember my deliveries being delayed often in 2020.

Saleforce is a weird software company because my understanding is a lot of their staff are there to help clients with integrations, manage accounts and to upsell. Again, assuming Salesforce saw a spike in demand during the pandemic they probably needed more employees because of the nature of their business.

My guess is that Apple also had to ramp up manufacturing significantly during the pandemic to meet demand, but obviously they don't employee people directly to do their manufacturing which probably gave them more flexibility when it came to meeting pandemic demand without increasing head count.

For the most part I don't understand why people act like tech companies were hiring recklessly during the pandemic. Are people forgetting how much demand was pulled forward by stimulus and lockdowns? These companies were forced to hire or lose market share. That's really the only two options they had.

Personally I'd be blaming politicians and the Fed for creating an impossible economic environment to operate in. If you were a company in 2020 your demand was either skyrocketing from lockdowns or at zero because you were forced to close your business. There was no in-between. Tech employees as initial beneficiaries of lockdowns are only now seeing the impact of job losses, but these were happening on mass elsewhere in the economy while lockdowns were in place.

Demand looked like it was growing massively with no end in sight, valuations were insane, and money was easy to get.

A lot of companies didn't stop to think that maybe it was all just a bubble. So they hired to avoid missing out.

Basic things like running a sustainable business with a sane balance sheet were not scrutinized by investors. Now they are, and in the layoff emails to employees we see CEOs talking about how that is important, as if they suddenly realized it for the first time.

To be fair, some of those companies probably did make a lot more money than they would have if they hadn't taken advantage of the situation -- and they probably would have been punished by their shareholders if they didn't.

We forget that many of these companies have been doubling every few years already. Google and meta were startups in the 2000s, apple and Microsoft are 20+y older.

Basically, most of these tech companies have been hiring at a constant rate for years, and also experiencing constant attrition. Once the economy soured, and then hiring freezes started, attrition rates had crashed, and the employee count wasn't as affected by freeze as desired. The layoffs have been roughly a reset towards the headcount before the freeze for many companies.

While the whole article is paywalled, I'll quote an excerpt from ben Thompson:

> The popular narrative right now about these layoffs is that tech companies dramatically over-hired during the pandemic, but while that seems to have happened with Amazon — and for arguably very good reasons given the way that e-commerce shot up during lockdowns in particular — the reality is that the rest of the tech companies largely increased at the same rate they always had. Sure, the number of employees they added was large, but that was a function of keeping the same hiring rate off of an ever increasing base.

> In short, no one was giving up a job at one of the big five tech companies this year as fear spread about a broad-based slowdown in hiring... These companies, though, adjusted more slowly to the slower rate of attrition, which means they accidentally increased their headcount... the relatively limited size of the layoffs to date actually reflects that: these companies are not returning to their pre-pandemic levels of employees, but rather to where they would be had they kept up roughly the same rates of hiring this year that they have over the last ten

[0] https://stratechery.com/2023/tech-layoffs-big-techs-hiring-r...

It did later mean the cult-like indoctrination of the leadership principles made sense. When you’re growing at that rate (even not considering the attrition that happens along side it) you can easily end up in a place where _most_ of the employees have been with the company for 12mo or less. If you’ve any hope of maintaining a consistent culture over time you need to get in embedded into people quick. Because the new hires are looking at people who’ve only been there 9 months as though they’re the OGs of the company.

That's the cool part - you can't.

Apple had a big bump in pandemic-related revenue too, inspired by mass WFH hardware purchases. And now Apple revenue has gone down as well: https://sixcolors.com/post/2023/02/apple-results-and-charts-...

Both strategies make sense—make big, risky investments, or grind out more profits in existing, highly lucrative markets.

It was certainly a possibility, but staggers my mind that companies of this size all decided it was a sureity.

If I were to be uncharitable, this is the effect of senior staff at these companies having been completely detached from the pandemic experience of the majority of the population. Lots of people still had to go to work F2F, lots of people spent it cooped up in 30m2 apartments with flatmates they hate.

Was the ROI good though? Did any of these companies seem to deliver new products or features faster? Do their financials suggest that these devs somehow improved operational efficiency (e.g. improved gross margins)?

Or was it just that they hired because they could afford to?

The bloomberg article has a visual showing revenue-per-employee going up from 1.17M/employee (2017-2019) to 2.51M/employee (2020-2022), so ... some of the underlying economics changed somehow?

I don't believe that any CEO/CFO with half a brain actually thought this. Sure, things wouldn't return to pre-pandemic levels necessarily, but the COVID-induced state was not going to permanently change human behavior.

> ROI on devs was good compared to low inflation and low interest rates. Then both of those things changed

this is more the reason; the "mea culpa, how could we have known" excuses is just to cover a regression to the mean they knew was eventually going to happen.

https://www.mckinsey.com/capabilities/strategy-and-corporate...

CEOs that didn't meet those needs would be fired for ceding market share instead. This demand explosion did not manifest in hardware companies such as Apple.

Lots of small to massive very successful companies don't need to use their model of hiring a pool of people and then only later figuring out which role they will fill. If you're only hiring someone when you have identified a specific role and identified the correct person for that role it might take longer to hire someone, but you won't overhire as easily and you're probably more likely to have a higher hit rate in terms of getting the right person.

This seems like the crux of the problem. Of course engineering managers always want more headcount - I am one and I would be very happy to get more headcount. My backlog is ten miles long and keeps growing.

But I also understand that if I head enough engineers to actually take care of all the things I want, I will have likely overhired, and am chasing increasingly marginal returns on investment. Some things should not make it off the backlog, because honestly the ROI likely isn't worth it.

"Optimal" staffing at the team level is almost certainly not optimal for either the company or the product. A team that doesn't have to constantly drop things because of lack of resources is likely building a lot of stuff that is poorly-justified.

In a healthy company the desire to do everything is tempered by financial reality and sound judgment - it sounds like both got tossed out the airlock at many companies.

Assuming there isn't a sharp dropoff of the ROI on the work juuuuust past the point where the current team can tackle it, that means that the work in the backlog is valuable and worth paying for. By chopping people they are saying actually, this work doesn't need to be done. Whether that work needs to be done or is valuable has not magically changed. That means the company was wrong all along about whether the work in the backlog was worth doing, and had all along had too many people on the team -- despite painfully fighting for headcount to get that work done, and despite careful calculus about which teams to spend budget on, all those managers were basically categorically wrong all along. How can we reconcile all that?

I think this is a very muddled analysis. You seem to be saying that the lack of focus is caused by the perception of a permanent easy revenue stream. But I think the causation is actually the reverse of that. The lack of focus is more like a breadth first search for additional sustainable revenue streams undertaken because they know the golden goose can't lay eggs forever.

And similarly backwards: it is Apple who has the luxury of focus because high-end consumer computing hardware is a stable revenue stream with very little risk of drying up over a very long time horizon.

Maybe the investments weren't successful or didn't pan out, but that is not to say they didn't invest.

I was at a series B startup that did 15% layoffs during the first pandemic wave. The result: we moved faster, code quality went up, morale increased over time. Some layoffs are driven by necessity, and some are opportunistic ways for companies to retool and mass-fire low performers.

This applies at higher levels of abstractions too. When google did their layoffs, multiple entire unprofitable teams and business units were eliminated. It doesn't matter if "they could pay for it". They had an opportune excuse to remove some ugly looking lines from the balance sheet all at once and they took it.

It's impractical for them to try to differentiate high and low individual performers at that scale. No matter how talented you are, you were contributing to a loss-making part of the company.

Apple seems to have been better at not having useless teams and divisions. Tim Cook is a disciplined guy, so I'm not surprised.

The problem is the culture. Google is an exceptionally poorly managed company as a rule I claim this is by design from the beginning: as an engineering meritocracy, the technically best ideas won (over time) and employees voted with their feet. That doesn't scale. I'd argue that it began to fail pretty dramatically around the time Diane Greene took over Cloud and Prabhakar moved over (you could probably also argue that those org changes were lagging indicators, and the real start to the "problems" began when Ruth was hired) to run Ads/Search. As the board became increasingly business focused, the lack of solid management or even strategic leadership became more problematic.

What's rule #1 of B2B? Being responsive to your customers' needs and acting predictably. The lack of top-to-bottom management combined with the legacy meritocratic culture have not lent themselves to the same sort of command-and-control hierarchy you see at places like Apple & Microsoft, both of which have been almost entirely market driven for decades.

If you look at this[1] org chart cartoon from about ten years ago, you see what things looked like then. You had the Cult of Jobs at Apple, where a singular leader compartmentalized the entire company. You see the Sales & Marketing driven Microsoft, where Ballmer created stupid internal coopetition, and you see the insane messes at FB & Google. I suggest these are no longer accurate representations. As all of these big tech businesses have matured, everyone is converging on Amazon's & Oracle's command & control model, which is the traditional strategy for managing large organizations. It has been easier for some to get there (MSFT, for example, just had to remove the "guns" from their org chart), but at places like Google & Facebook there are fundamental changes that are required for the corporations to run efficiently that are also orthogonal to the founders' principles of how things should work, and (in my opinion) what you've been seeing in the past few quarters are "light" attempts at dealing with that. For Google it was the "cut off your nose to spite your face" 12k layoff. For FB it was a more existential staff cut but also the more recent notice to middle management that many of them are expected to become ICs again, to remove redundant layers.

I don't think it's in Google's current culture to "turn the ship quickly". Frankly, under the circumstances, I think the only way to legitimately force this would be to divorce Ads from the rest of the business (or even just make it its own Bet). Anything else will likely fail, slowly, and feel like death by a thousand cuts for the rank & file and like pushing a string uphill to the leadership.

[1] https://ritholtz.com/2013/07/organizational-charts-of-amazon...

I think I found the full interview on YouTube [1] Managers: From Italy to Top Global Businesses. Luca Maestri, CFO of Apple

1: https://www.youtube.com/watch?v=rHWwq5--nEw

Apple relies a lot on contractors. Those 2 IR folks likely have 2-3 comms firms on retainer. Those 7 treasury folks likely have an entire team staffed at a major bank.

Some companies decide to source labor in house, others don’t.

distribution/warehouse problem and over hiring problem are two separate problems.

i will explain overhiring problem.

from 2018 to 2021 many amazon executives and director leave company. this continued in 2022.

these “tech” leadership very hands on..strong technical acumen. they have vision..manage people..understand business..understand the tech and how to scale.

these people not perfect. under them it very hard burnout factory of place to work. good chance if you work here you need therapy.

these people all start leaving.

they replace by “professional” managers. professional manager has one goal: grow headcount and build empire so they get promoted.

entire teams exist with no valuable output. team of 8 people supporting a service built 10 years ago maybe doing patching like replace outdated java log4j library and redeploy. no feature work. entire team can be fired and service ownership could be given easily to some team doing feature work in another space.

this problem happening all over amazon. innovation at amazon is on how to increase revenue. what they do is hire mba grad, put pressure on them to deliver. Mba grad does obvious shitty thing… let show more ads. if you see amazon.com and search it is now flea market but before you buy any cheap trash first you see walls and walls of “sponsored” recommendation or what is actually fucking ad.

it a massive grift.

amazon need Bezos to return like bob iger do at Disney. jassy only focus on aws

Highly unlikely: https://9to5mac.com/2023/02/02/apple-layoffs-tim-cook/

It's so exhausting too.

Yes, I consider it good management and judgement. Apple is a company, not some charity. Amazon, etc didn't hire out of the goodness of their hearts they felt they could capitalize on something that didn't materialize.

If we follow one path all the way to the end: If you can bring on a large number of people, then you can potentially evaluate them as "up-and-coming" high-quality talent. Those talents can be soaked in your business and technology stack, and become internal experts. Over that talent's life within the company, you may also underpay them relative to bringing in the same equivalent 10+ year veteran and training them on your internal assets.

On another path: You can also develop a broader population of mid-grade, quality talent which can strength workforce resilience.

During the mass layoff, procedures are different, and you may not have to follow quite the same fire-process as with an individual, and without some of the individual recourse processes regarding discrimination.

FWIW, Microsoft used to (still does?) had a certain percentage of layoffs every year. In a good environment, it's weeding; in a bad environment, it culls good talent.

Well, maybe don't be mad at anyone. Aside from a small number of true a-holes, the vast majority of people are all stumbling along doing the best they can and trying to make the best decisions they can. Yep, sometimes we humans don't make the best decisions. Sometimes we do dumb things. But at the end of the day, I personally believe most of us are trying to do the right thing. If that wasn't true, our society would rapidly descend into chaos.

As for me, I'm trying not to be mad at anyone. You do you I guess.

So as a metric it's very context-dependant.

But I think if you go back and look at who is criticizing Nintendo, they're not the same people criticizing Google and Amazon. They're opposing sides. It's move-fast-and-break-things versus do-it-right-the-first-time. Both have their merits.

But when you move fast and overhire, you upend people's lives when you have to let them go.

When you move slow, you provide fewer opportunities for people, but noone upends their lives over it.

For my comfort, I choose employers who prioritize keeping the team intact, even if that does mean fewer opportunities during boom times.

Have you not read this forum for the past week? It's been riddled with techies ragging on tech CEO's for "blaming the economy" and not blaming themselves for over-hiring.

From what I recall Nintendo’s hiring was never the issue but the pay

You or a friend?

"U.S. reports blowout job growth; unemployment lowest since 1969" https://www.reuters.com/world/us/us-job-growth-accelerates-j...

Although last week the US announced an unexpectedly strong jobs report, roughly 80% higher jobs growth than expected. (180,000 projected, 300,000 actual iirc).

Although the article is paywalled so I don't know, maybe the author has a quote from Apple with some statement minimally confirming this.

Otherwise they are pretty similar sized "Big Tech" companies.

Apple: 164,000 employees

Google: 150,000 employees

Amazon: ~800,000 corporate employees (this one was harder to find but the tech/software team is probably similar to above)

People forget these days but the entire point of the stock market is to give companies a money-printing machine. More accurately, it's an on-demand way of obtaining investment by sucking up value from the people who hold your shares.

https://www.oreilly.com/library/view/leading-apple-with/9781...

But some people still have this belief that 9 women can make a baby in a month.

“Brooks' law is an observation about software project management according to which adding manpower to a software project that is behind schedule delays it even longer.”

I also think they’re doing research, not development most of the time. Such projects can’t be time-estimated, so they can’t be late (managers or outsiders still might call them late, though), and often can’t be parallelized well (“9 women cannot make a baby in one month”), so starting out with a larger team may not have helped, either.

Did they announce an AR headset, not bring it to market and someone else's got wildly popular or...?