TCI was taking advantage of the layoffs as a way to try to fool people into thinking they have sway with Google leadership.
They don't.
They own 0.5% which is nothing compared to other investors. The lion share are still owned by Brin and Page. I'm sure Google leadership humored their call with TCI but it means nothing to them. He didn't even meet with Sundar as far as I heard, but he makes it seems like he did.
Corporate activism isn’t about having the biggest stake, its about rallying other shareholders around your cause.
All else equal a bigger stake gives you more leverage, but its still possible to influence company decision making with a smaller stake by getting other shareholders on your side
I think a big component of this sort of activism (where the ability for actual shareholder control is minimal) is driven by the desire for visibility of the Fund itself as well as for personal visibility of the fund manager.
Here we are discussing TCI and last week we were discussing Ross Gerber calling for board seats on Tesla - who was trolling to get free advertising for the Gerber-Kawaski fund.
It is basically brand hacking/building 101 - Social Media/Legacy Media Engine Optimization. Pick a Goliath and start attacking and assume that Goliath's brand name will drive tweets and news articles and increase engagement for your David brand.
The "any press is good press" approach has been used to win political elections. Rinse repeat enough times and maybe it could be a way to win the presidential election.
> They own 0.5% which is nothing compared to other investors
But it is still a signal to manipulate the job market. If many tech companies agree openly to fire employees that will have consequences, if many tech companies just happen to get the same signals from some investors about firing people then is not that just a happy coincidence that may depress the market and lower salary without any manipulation to be blamed for?
When I read your comment, I assumed he actually had a 365 million salary, which would be amazing. He'd be paying 50% tax on the majority of that. I'd actually give him some respect for that, actually paying tax "fairly" and not optimizing.
At least he said directly what everyone knew and what every CEO hid behind "I take the full responsibility": the current layoffs are a maneuvre to lower the compensation of the employees. These companies know they can rehire these people at any point in the future, so they are doing this to keep the wages in check.
I find it funny that there are economists who still use the argument of class warfare for wealth taxation, indeed we're living a class warfare, but now we know that it's the working class that's being assaulted.
Keep an eye on the smaller tech companies that are snapping up all the laid off talent right now. They will be the next Google/Facebook/Microsoft/Amazon, while all of those will eventually shift to the IBM/Cisco/Oracle tier over the next decade. That's exactly what happens when the company is taken over by MBAs and activist investors while engineering is just a replaceable resource.
"And another thing, employees keep using up a full allotment of oxygen every day. Consider half portions or cutting breathing gasses out of the budget entirely."
"Due to supply chain issues, oxygen prices are at a decades-long peak. Consider mixing up to 30% CO2; also tout your commitment to combating climate change."
Reducing headcount growth to a level 2 years ago, doesn't really sound that crazy in a recession. Also, headcount in tech, grew at a ridiculous fast pace over the past 3-4 years only. All these lay-offs aren't really surprising to me. What is surprising is the amount of people actually being surprised.
Why though? It’s not like they need the money in the short term. They have almost $200 billion in cash. For the majority of Google’s departments the need for employees isn’t tied to demand.
Google desperately needs to find another money printer, and ostensibly they staffed up to help them do it. That hasn’t changed, and Google‘s workload won’t drop noticeably in a recession outside of a few departments.
And even in the those departments, they have so much still growing cash on hand, that they’d probably be better off to weather the storm the lay off only to rehire in a year.
While we're not in a recession, I agree with your point. It sucks for the people it happened to, but the big tech layoffs so far have been minor compared the headcount growth the last couple of years. Economy wide, unemployment is at record lows. Step outside big tech and companies are still struggling to find talent.
There's also an argument that big tech keeping a bunch of people on payroll when they don't need to slows down overall growth in the industry as it makes it harder for startups to find talent.
> The median salary at Alphabet in 2021 amounted to nearly $300000
Let's say the average salary of the 12k people they just fired was $300000. That's 3.6bn a year. Last time I checked Alphabet were burning ~180bn a year. I'm not saying 3.6bn is pocket change, but how is such a small % supposed to make a difference? For comparison, they were fined ~4bn in Europe recently.
Would you give me 2% of your salary if I asked you to? This isn’t intended to fix every problem, right away. This is a single measure. By the way, the fine you referenced is also calculated using a percentage of revenue: https://competition-policy.ec.europa.eu/antitrust_en
Times are good now. $3.6 billion is $36 billion in a decade. One day, Google may need that money to survive. Also, Google’s 2022 profit was $67 billion (down significantly from 2021) so they just increased profits by more than 5%.
The median is probably much much lower than average, but perhaps not by enough to change your point, and odds are those fired are around the median not in the stratosphere.
My salary is 100, I have to spend 99 on food monthly, leaving me with 1 money as profit. If I can eat only 98 money, I double my profit.
I am not saying that is the case here, but reducing a small percentage of cost could matter if your margin is small. And in the case of those big corps, you can think of them as multiple companies internally, it’s likely they are doing layoff on departments/ divisions that have thin margin or unprofitable (ie. if you are in ads, very few were probably laid off)
Google achieved market dominance in large part due to its decision to hire and compensate very talented people very well. I'm not sure how a salary contraction would even work, but that would risk Google losing its lustre for talented programmers.
Perhaps, but I haven't seen any real evidence of a causal relationship between high compensation and market dominance. An alternative hypothesis is that their market dominance is due to the founders' initial disruptive innovation of the Pagerank algorithm plus the later acquisition of the DoubleClick advertising network, and employee compensation was largely irrelevant. Prove me wrong.
From what I've heard talking to people who work at Google, most employees generate zero business value. The same as any other large enterprise.
> that would risk Google losing its lustre for talented programmers.
I suspect that ship has already sailed, any of the postdocs or senior software engineers I know wouldn't touch Google with a 10-foot pole these days. There's a feeling I suspect that they've become too corporate, and that they could fire you pretty much anytime and the first thing you'd know about it would be your access card suddendly not working.
Google achieved market dominance in large part due to its decision to hire very talented people in coordination with the other members of their wage-suppression cartel. How do you reconcile that with "compensate very well"?
Google achieved market dominance for its excellent search product that was superior to competitors well before it grew huge and started hiring in large numbers.
wow. the hubris and inhumanity. How can someone who isn't running the company day-to-day purport to know exactly what staffing levels ought to be. Also why is a billionaire begrudging people for making 300k/ year. wow
Is this guy serious? Imagine having so much money and then being mad for other people trying to earn more money so that they don't have to work for 40 years.
There is absolutely no accountability today. Is it not the CEO at fault if the company made a wrong decision? If he gets to reap the benefits his employees make which results in him getting obscene compensation, is it then not logical to also get a pay reduction if employees get fired.
I have a feeling these CEOs would be a lot less willing to do firings on a whim, if by firing 20k people they lost 30% of their compensation.
The older I get, the more I realize how much Nassim Taleb is right. All of the points made in his book are valid and are still standing the test of time.
There is no Skin in The Game today, hedgies and C-execs just jump ship when it is time to face your consequences. There is a big difference between being a Founder and being a CEO. The former actually deserves some respect.
Let me take a stab at this with a viewpoint that's not "stingy rich f$*k wants to take away worker's money".
The letter is macro level, doesn't really bring up the reasoning, but the data points tell a story.
> Over the last 5 years the headcount has doubled
That's coincidentally been as long as I have used their business and cloud services. I can hardly tell a difference between Google's offering of 2018 versus today. At least not as much as it would explain 2x the employees. Same for their search and other services.
And their customer service still sucks.
> Median salary is $300,000. Average is higher.
This is truly a win for tech workers. But an investor might see this and feel people come to Google for money, not passion.
I think from an investor perspective, these data points are interesting, in context. This person is recommending what they understand; that the headcount and salaries must go down. Is that a solution to the dysfunctionality implied here? What do you folks think?
On one hand, and I know that this is an unpopular opinion here:
Google is a for-profit company. Its goal is to maximize profit. Not to maximize employment. Or employee happiness. Google is not daycare for adults. It’s not about “making the world a better place”, it never was, it’s all about making money, from day 1. Enough with all the corp-speak bullshit, we need to be honest about this.
And making money is a wonderful thing. There’s a reason why people choose to work at Google and not, say, at non-profit orgs or for government. At Google you get to work on cool shit, be compensated very well, be surrounded by super talented and smart people, have great work-life balance, etc., and this only exists because Google is super profitable. So I, for one, welcome this.
And let’s not kid ourselves, there’s plenty of fat at Google, more than 10% even. So if you understand the reality of Google only caring about the bottom line (which is great, in my opinion) and if you recognize that there’s some fat to trim, then you accept that layoffs are perfectly rational and even welcomed.
Finally, to the people worried about losing their job (or having lost their job), this truly sucks, and I sincerely am sorry, but let me be blunt: Google doesn’t owe you shit. Google is not your friend or family, it’s your employer. You have a contract, and Google is allowed to terminate that contract if they see fit (and guess what, so can you!).
/unpopular opinion
Having said that...
Do investors like this at all consider the impact of firing 12K humans (abruptly, and apparently at random) has on things like morale? This has actual, real world, financial consequences that hurt Google's bottom line:
* Damage to productivity
* Damage to employee retention
* Damage to ability to hire new talent
* Damage to PR
* Damage to long term planning
Google had a reputation of being super stable (no layoffs ever, not even during dotcom), which means the best and the brightest were much more inclined to work (and stay) at Google. This reputation is now gone. And what is Google, if not the talented people working there? How much is this damage to Google's best asset worth? Does it really justify saving a marginal cost? Maybe there are better ways to trim fat? Or maybe some fat is worth having in the grand scheme of things?
I understand that an outside investor may not think this way, but from Google execs I would have expected more.
I mean, IMO he’s right for the wrong reasons. The head count of Big Tech companies is - to me - absurd. I…imagine that there are some negative societal precipitations of orgs being that big, of all of that human effort pouring into some shit Google is going to - at best - launch and axe a moment later, instead of something with more use and longevity, all subsidised by squeezing more and more from their ad business.
I don’t give a rats about Google’s profitability though. Even if Google’s engineering ranks are filled with incredibly privileged highly paid people, I’m all for them sucking the company dry if it perturbs people like this investor.
I’ve also got the privilege of nobody caring what I think. If there were an iota of a chance that me writing this comment changed the head count at Google, I’d keep my mouth shut.
Is that median salary actually the salary, or the total comp?
If it is total comp, is it adjusted for the fact that googlers are provided with RSUs and not dollars?(ie, a googler given "$70k" worth of stock in 2019 for 2 years out would receive $150k in stock in 2021.
[+] [-] blindriver|3 years ago|reply
They don't.
They own 0.5% which is nothing compared to other investors. The lion share are still owned by Brin and Page. I'm sure Google leadership humored their call with TCI but it means nothing to them. He didn't even meet with Sundar as far as I heard, but he makes it seems like he did.
[+] [-] adam_arthur|3 years ago|reply
All else equal a bigger stake gives you more leverage, but its still possible to influence company decision making with a smaller stake by getting other shareholders on your side
[+] [-] somethoughts|3 years ago|reply
Here we are discussing TCI and last week we were discussing Ross Gerber calling for board seats on Tesla - who was trolling to get free advertising for the Gerber-Kawaski fund.
It is basically brand hacking/building 101 - Social Media/Legacy Media Engine Optimization. Pick a Goliath and start attacking and assume that Goliath's brand name will drive tweets and news articles and increase engagement for your David brand.
The "any press is good press" approach has been used to win political elections. Rinse repeat enough times and maybe it could be a way to win the presidential election.
[+] [-] hourago|3 years ago|reply
But it is still a signal to manipulate the job market. If many tech companies agree openly to fire employees that will have consequences, if many tech companies just happen to get the same signals from some investors about firing people then is not that just a happy coincidence that may depress the market and lower salary without any manipulation to be blamed for?
[+] [-] seanhunter|3 years ago|reply
This man had the highest salary of anyone in the UK.
https://www.theguardian.com/business/2021/mar/05/the-very-pr...
[+] [-] doix|3 years ago|reply
But no, it's not his salary, it's dividends.
[+] [-] lp4vn|3 years ago|reply
I find it funny that there are economists who still use the argument of class warfare for wealth taxation, indeed we're living a class warfare, but now we know that it's the working class that's being assaulted.
[+] [-] paxys|3 years ago|reply
[+] [-] Werewolf255|3 years ago|reply
[+] [-] manuelabeledo|3 years ago|reply
[+] [-] camgunz|3 years ago|reply
[+] [-] jacquesm|3 years ago|reply
[+] [-] gus_massa|3 years ago|reply
[+] [-] fbrncci|3 years ago|reply
[+] [-] sarchertech|3 years ago|reply
Google desperately needs to find another money printer, and ostensibly they staffed up to help them do it. That hasn’t changed, and Google‘s workload won’t drop noticeably in a recession outside of a few departments.
And even in the those departments, they have so much still growing cash on hand, that they’d probably be better off to weather the storm the lay off only to rehire in a year.
[+] [-] matwood|3 years ago|reply
There's also an argument that big tech keeping a bunch of people on payroll when they don't need to slows down overall growth in the industry as it makes it harder for startups to find talent.
[+] [-] ClumsyPilot|3 years ago|reply
Is the management of google so incompetent they cannot find a profitable application to a large part of their workforce?
[+] [-] efficax|3 years ago|reply
[+] [-] gumby|3 years ago|reply
[+] [-] mkl95|3 years ago|reply
Let's say the average salary of the 12k people they just fired was $300000. That's 3.6bn a year. Last time I checked Alphabet were burning ~180bn a year. I'm not saying 3.6bn is pocket change, but how is such a small % supposed to make a difference? For comparison, they were fined ~4bn in Europe recently.
[+] [-] rubidium|3 years ago|reply
[+] [-] matt123456789|3 years ago|reply
[+] [-] b-team|3 years ago|reply
[+] [-] Terretta|3 years ago|reply
[+] [-] devnull3|3 years ago|reply
[+] [-] NhanH|3 years ago|reply
I am not saying that is the case here, but reducing a small percentage of cost could matter if your margin is small. And in the case of those big corps, you can think of them as multiple companies internally, it’s likely they are doing layoff on departments/ divisions that have thin margin or unprofitable (ie. if you are in ads, very few were probably laid off)
[+] [-] rendall|3 years ago|reply
[+] [-] silisili|3 years ago|reply
Today that seems to have been highly neutered. It's a giant corp with an old money printing machine and not a lot of future direction, IMO.
I'm not sure it's fair to blame them, I think it's just the nature of companies growing too large.
[+] [-] nradov|3 years ago|reply
From what I've heard talking to people who work at Google, most employees generate zero business value. The same as any other large enterprise.
[+] [-] lph|3 years ago|reply
So, cut back on RSU grants.
[+] [-] Simon_O_Rourke|3 years ago|reply
I suspect that ship has already sailed, any of the postdocs or senior software engineers I know wouldn't touch Google with a 10-foot pole these days. There's a feeling I suspect that they've become too corporate, and that they could fire you pretty much anytime and the first thing you'd know about it would be your access card suddendly not working.
[+] [-] philliphaydon|3 years ago|reply
[+] [-] stonogo|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] logicchains|3 years ago|reply
[+] [-] ZephyrBlu|3 years ago|reply
> but that would risk Google losing its lustre for talented programmers
Already has. Google is not "hot" anymore. Probably hasn't been for a while now.
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] naijaboiler|3 years ago|reply
hopefully this letter is fake
[+] [-] newbie578|3 years ago|reply
There is absolutely no accountability today. Is it not the CEO at fault if the company made a wrong decision? If he gets to reap the benefits his employees make which results in him getting obscene compensation, is it then not logical to also get a pay reduction if employees get fired.
I have a feeling these CEOs would be a lot less willing to do firings on a whim, if by firing 20k people they lost 30% of their compensation.
The older I get, the more I realize how much Nassim Taleb is right. All of the points made in his book are valid and are still standing the test of time. There is no Skin in The Game today, hedgies and C-execs just jump ship when it is time to face your consequences. There is a big difference between being a Founder and being a CEO. The former actually deserves some respect.
[+] [-] jmathai|3 years ago|reply
[+] [-] a1371|3 years ago|reply
The letter is macro level, doesn't really bring up the reasoning, but the data points tell a story.
> Over the last 5 years the headcount has doubled
That's coincidentally been as long as I have used their business and cloud services. I can hardly tell a difference between Google's offering of 2018 versus today. At least not as much as it would explain 2x the employees. Same for their search and other services.
And their customer service still sucks.
> Median salary is $300,000. Average is higher.
This is truly a win for tech workers. But an investor might see this and feel people come to Google for money, not passion.
I think from an investor perspective, these data points are interesting, in context. This person is recommending what they understand; that the headcount and salaries must go down. Is that a solution to the dysfunctionality implied here? What do you folks think?
[+] [-] bcd3169|3 years ago|reply
The funny thing is his whole investment in google is just a tiny tiny fraction
[+] [-] brap|3 years ago|reply
Google is a for-profit company. Its goal is to maximize profit. Not to maximize employment. Or employee happiness. Google is not daycare for adults. It’s not about “making the world a better place”, it never was, it’s all about making money, from day 1. Enough with all the corp-speak bullshit, we need to be honest about this.
And making money is a wonderful thing. There’s a reason why people choose to work at Google and not, say, at non-profit orgs or for government. At Google you get to work on cool shit, be compensated very well, be surrounded by super talented and smart people, have great work-life balance, etc., and this only exists because Google is super profitable. So I, for one, welcome this.
And let’s not kid ourselves, there’s plenty of fat at Google, more than 10% even. So if you understand the reality of Google only caring about the bottom line (which is great, in my opinion) and if you recognize that there’s some fat to trim, then you accept that layoffs are perfectly rational and even welcomed.
Finally, to the people worried about losing their job (or having lost their job), this truly sucks, and I sincerely am sorry, but let me be blunt: Google doesn’t owe you shit. Google is not your friend or family, it’s your employer. You have a contract, and Google is allowed to terminate that contract if they see fit (and guess what, so can you!).
/unpopular opinion
Having said that...
Do investors like this at all consider the impact of firing 12K humans (abruptly, and apparently at random) has on things like morale? This has actual, real world, financial consequences that hurt Google's bottom line:
* Damage to productivity
* Damage to employee retention
* Damage to ability to hire new talent
* Damage to PR
* Damage to long term planning
Google had a reputation of being super stable (no layoffs ever, not even during dotcom), which means the best and the brightest were much more inclined to work (and stay) at Google. This reputation is now gone. And what is Google, if not the talented people working there? How much is this damage to Google's best asset worth? Does it really justify saving a marginal cost? Maybe there are better ways to trim fat? Or maybe some fat is worth having in the grand scheme of things?
I understand that an outside investor may not think this way, but from Google execs I would have expected more.
[+] [-] auctoritas|3 years ago|reply
[+] [-] unyttigfjelltol|3 years ago|reply
Interesting argument for a purported long-term investor.
[+] [-] KyeRussell|3 years ago|reply
I don’t give a rats about Google’s profitability though. Even if Google’s engineering ranks are filled with incredibly privileged highly paid people, I’m all for them sucking the company dry if it perturbs people like this investor.
I’ve also got the privilege of nobody caring what I think. If there were an iota of a chance that me writing this comment changed the head count at Google, I’d keep my mouth shut.
This guy can suck a lemon.
[+] [-] Scubabear68|3 years ago|reply
https://www.tcifund.com/files/corporateengageement/alphabet/...
[+] [-] rel2thr|3 years ago|reply
The middle ground that sundar took is weird
I really don’t get the purpose of such a small layoff. Kills employee morale and doesn’t move the needle on costs
[+] [-] oh_sigh|3 years ago|reply
If it is total comp, is it adjusted for the fact that googlers are provided with RSUs and not dollars?(ie, a googler given "$70k" worth of stock in 2019 for 2 years out would receive $150k in stock in 2021.
[+] [-] Scubabear68|3 years ago|reply
https://en.m.wikipedia.org/wiki/The_Children%27s_Investment_...