[bambataa]

Is this the same CEO who decided to double the engineering team in a single year?

https://techcouver.com/2021/01/06/shopify-to-double-engineer...

Aren’t CEOs paid ludicrously well to make long term decisions, rather than just flail around?

[VoodooJuJu]

>Aren’t CEOs paid ludicrously well to make long term decisions, rather than just flail around?

CEO's are neither prophets nor oracles. They are effectively dice-rolls with a face. Not rollers, but rolls. No matter what, sometimes you get bad numbers.

Founder CEO's like Lutke are heroes. They have skin in the game. This forces them to calculate their risks. Their actions and decisions have greater weight because of this - their payday is not guaranteed, especially early on in the game.

Non-founder CEO's are rent-collectors. They have no skin in the game. Unlimited upside and no downside. They get a handsome payday no matter what.

Non-founder CEO's and the absence of skin in the game is what yields the bastardy that is modern corporatism: highly-paid people who can flail around all they want and still land on their feet.

In this case, Lutke made a bad bet, but with Shopify's success, he's at the point where the result of his bets have no impact on him. He already got his payday.

[ink_13]

Lutke's not a hero, he's a mini-Zuckerberg: he still runs the company he founded as CEO, but he has already made more than enough money to comfortably retire. Also like Zuckerberg, his company might be better off without him at this point, since being practically unaffected by success or failure makes continuing as CEO something of a vanity project.

[jacques_chester]

Tobi took a shitton of skin out of the game when the price was high. And he has a golden share, he can't be replaced, so there's no way for a board to discipline him or fire him. I wouldn't call that skin in the game. He owns the game.

[lazyasciiart]

So he is actually in the same position as a non-founder CEO at this point.

[jonny_eh]

> CEO's are neither prophets nor oracles

Then why are they compensated like they're gods?

[HDThoreaun]

Over hiring in the face of uncertain macro conditions and consumption changes is probably the right choice. If your market expands as you believe it might you're ready to step in and grow. If it doesn't grow you can just lay people off and you're back where you started. The important thing here though is that it's hard to catch up to competitors that have lapped you but it's easy to slow down when you're ahead. If you think there's just a 10% chance that covid causes e-commerce to 10x in size it makes sense to prepare as though it will and then shrink the workforce if things go back to normal.

[ryukafalz]

> If it doesn't grow you can just lay people off and you're back where you started.

"Back where you started" with a now highly demotivated team isn't quite back where you started.

[rcme]

From a business perspective, this is great for Shopify. The labor market for software engineers has seriously softened as a result of all the layoffs. Go look at job openings and their posted salaries.

When Shopify beings hiring again, they are going to be able to hire talent at a fraction of the price.

Also, this is largely a coordinated effort from activist investors specifically targeting large tech salaries. E.g. https://www.businessinsider.com/google-layoffs-cut-jobs-exce...

There is essentially a vicious cycle targeting tech compensation. Activist investors are convincing boards that they're overpaying their tech talent. Then those boards approve layoffs. Then those layoffs further lower salaries. Rinse and repeat.

[mattgreenrocks]

It's not just tech compensation.

The zeitgeist right now is that employee comp is/was simply too high. There have lots of murmurings lately that amount to that at many different levels of the capital chain. Perhaps what's interesting about now is that people are quite okay with saying it openly. Tech is an easy target since it is well-known, and the pandemic inflated the importance of tech artificially to some degree.

Fully grokking the idea that employee comp could be "too high" for the overall health of the economy really did a number on my economic worldview. Gone is the naive belief that rare/valuable skills secure higher salaries over a long period of time. I no longer trust employers to take care of me, and that getting better at building assets (in the form of products, mostly) is something to grow into to supplant and eventually buy out time spent working for someone else.

[pcthrowaway]

Shopify was never paying top of market in the first place. They might be able to get better talent for the same price, but "a fraction of the price" to me has a connotation of "1 over (an integer bigger than 1)", meaning 1/2 or less what they were paying previously... and this is certainly not the case for them.

If you're going to suggest 9/10 is also a fraction or something I'll counter that 4/3 is also a fraction, and no one uses "a fraction of the price" to refer to an increase in price

[jonny_eh]

> When Shopify beings hiring again, they are going to be able to hire talent at a fraction of the price.

Wouldn't it be the opposite? When the market recovers, they'll competing with everyone else for talent, when instead if they held onto their talent, they could be paying less.

[908B64B197]

> When Shopify beings hiring again, they are going to be able to hire talent at a fraction of the price.

What I've been told about Shopify is that they were seen as a good place to get "western" experience before jumping ship (often for folks who couldn't pass the higher bar for US immigration) because they were already not very competitive with companies in the valley.

[raydev]

> Then those layoffs further lower salaries

Is there evidence of this now?

What I see is a small fraction of the open roles I'm used to seeing.

Compensation, on the other hand, is the same at these big companies. If not even higher than it was a couple years ago.

[pastor_bob]

Shopify already pays at the low end. I mean, not even relative to FAANG; you can make a similar salary at a government job as an engineer.

[ngcazz]

It's basically class warfare

[wesapien]

Capitalism is untenable and I say that with frustration as someone who was able to do better after growing up lower-middle class (kinda poor).

AI is already displacing some people from their work. I hate both absolute capitalism and socialism/communism. How can AI help us find a sweet spot?

[moneywoes]

Can anything be done?

[kypro]

To be fair it's extremely hard to make long-term decisions when you have politicians deciding to arbitrarily lock down the economy forcing all small businesses to engage in e-commerce, and when you have a Federal Reverse which alternates between creating financial bubbles and financial crises every couple of years.

Shopify being a beneficiary of both the government mandated lockdowns and the Fed backed investment bubble really had no option but to dramatically increase headcount. Their business literally doubled from 2020-2021 due these actions.

To believe in 2021 that in 2022 the Fed would undergo the most aggressive tightening cycle in history triggering significant headwinds for both startups like Shopify and their small business customers was absurd. At the time the Fed was saying that they weren't "even thinking about thinking about raising rates" so you basically had to assume that Fed lacked all credibility.

I guess what I'm saying here is that there is a reason why so many companies got this wrong beyond incompetence. So if you don't like it you should consider redirecting your outrage.

[jimmytucson]

The notion that this CEO and hundreds of others made bad decisions by over-hiring is sensible, but the fact that so many made the same mistake at the same time makes me second-order think this. As cruel as it sounds, what if over-hiring was a good long term decision? What would that imply?

It would mean that _not_ hiring aggressively in a high-inflation period is harmful to business. To me, that is far more interesting to think about than CEOs making dumb mistakes and not getting punished for it because life isn't fair...

[nahname]

What if their decision making is just doing what everyone else is doing?

[sokoloff]

I feel like not hiring aggressively in a _low-interest-rate environment_ is harmful to your business.

Assuming you have some productive use for the incremental employees, the discounted returns from those employees' contributions are decreased by an uncertainty factor and by the risk-free interest rate. When that latter term is near zero, hiring is restricted by the uncertainty of their performance and projects assigned to, meaning you get a lot of hiring by sensible, data-driven management teams.

[Cthulhu_]

It just reiterates that on a high enough level, employees are just numbers, resources and sliders to fiddle with, often having a direct correlation with share price.

[pdntspa]

This is exactly what is taught in business school. It's why you are a human resource, a thing to be used, rather than a human being with skills and a story and a life and needs

[andsoitis]

He is also a co-founder and owns 7% of the company.

[sharkweek]

A favorite quote of mine about the role of a CEO from the movie Margin Call. Tuld, the CEO of a major bank the night before the housing crisis in 08 starts to fly out of control, after one of the bank's risk analysts discovers they're holding toxic assets:

John Tuld : So, what you're telling me, is that the music is about to stop, and we're going to be left holding the biggest bag of odorous excrement ever assembled in the history of capitalism.

Peter Sullivan : Sir, I not sure that I would put it that way, but let me clarify using your analogy. What this model shows is the music, so to speak, just slowing. If the music were to stop, as you put it, then this model wouldn't even be close to that scenario. It would be considerably worse.

John Tuld : Let me tell you something, Mr. Sullivan. Do you care to know why I'm in this chair with you all? I mean, why I earn the big bucks.

Peter Sullivan : Yes.

John Tuld : I'm here for one reason and one reason alone. I'm here to guess what the music might do a week, a month, a year from now. That's it. Nothing more. And standing here tonight, I'm afraid that I don't hear - a - thing. Just... silence.

[clpm4j]

Also the same CEO who joined Coinbase's board last year, and has seemingly fallen down the crypto rabbit hole. Maybe he's lost a bit of focus on Shopify.

[pbreit]

Also the same CEO who has built a $75b company.

[908B64B197]

According to the man himself

>>Our numbers were unhealthy, just like it is in much of the tech industry.

But that didn't prevent him from profiting from it nor from the layoffs.

To be completely honest, I've never been bullish on Shopify. To me it looked like a "mee too" play for investors that missed the boat on Amazon, Square and Stripe.

[tootie]

CEOs are tasked with maximizing shareholder value and he seems to have succeeded.