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COVID hangover

With a lot of tech companies laying people off in the last month I got to see how insane the firing practices in the US are and how greed rules supreme in the tech industry. But this is only a harbinger of what’s to come.

Through friends and from what I’ve seen first hand, the standard procedure to fire someone in the US is to invite them to a meeting, tell them that they have been let go, and immediately suspend all their company accounts. Or email them to tell them they have been let go (effective immediately), or worse yet tell them they have been let go via a tweet.

There is zero humanity in laying people off this way. These people dedicated months or years of their lives building these companies and then one morning they get kicked out the door with a 60 day severance package - which is the legal minimum - and aren’t even given the decency to say good bye to their former coworkers.

These layoffs weren’t triggered by financial losses but by speculations of a looming recession. Companies are afraid that money won’t be cheap and profits will be low in the coming years and they are cutting their losses while they still can in an effort to keep investors and shareholders happy. In other words, they are cutting headcount to cut expenses in an effort to prop up profits. Which is extremely greedy after a year of record profits and shows no regard for the humans that made this growth possible in the first place.

I believe that these layoffs are not an indication of the tech bubble bursting, but are just the hangover after the COVID lock-downs when tech seemed like the only unaffected industry. This caused every company in the industry to over-hire and expand in the pursue of even higher profits. But expecting 20-30% returns year-after-year and infinite growth is unrealistic - that can only be a bubble. After a couple of good years a bad one is bound to happen. And if there is going to be a recession then profits should be low - don’t turn a bad day for you into a tragedy for others. Sit it out and don’t be greedy.

If the industry weathers this recession relatively unscathed people will see tech as an even better investment vehicle which will in turn lead to more investment, more hype, and the bubble will inflate even more. This seems to be the outcome that most big companies are banking on since even after the layoffs most of them still have more employees than they had two years ago, indicating that they want to use the extra manpower to expand.

I don’t know when or how this bubble will burst, but it will be one hell of a pop when it does.

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