DevShop Stories #14 - The Story of Layoffs

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[00:00:00] Josh: Welcome to another episode of Dev Shop Stories. My name is Josh, and I have Kai here with me and Ryan as well for the first time. And today we're gonna share a story about layoffs. So, layoffs right now are in the news, and unfortunately, they do happen to large companies, medium-sized companies, and small companies, and it's something that.

Really stinks. You know, it's just, it, it's terrible to deal with both usually on the employer side and I say usually because we're gonna talk about some of this stuff. And on the employee side, so Red Sky Engineering has honestly never been able to escape layoffs, unfortunately. And so we've had to do, you know, kind of our share.

So Alex and Spencer, if you're listening. Probably should have stayed working late the other day. But no, I jest, but yeah, we've had to kind of do our share sometimes too. And, you know, when those times did, we just kind of looked at our cash and whether we're gonna be able to keep maintaining payroll at the rate based on how much work we had.

And we individually called in each employee, including those who were not even let go. And we just kind of explained, " Hey, things are tight and we're gonna have to make cuts and, you know, you're, you're safe. And, but some people we had to say, you know, we just gonna have to let you go. And unfortunately, it really sucks.

I believe though that we did it in the right way. We kind of addressed the entire staff. We addressed the individuals. We tried everything we could to help them. Place in a new position. We wrote LinkedIn recommendations from, you know, their employer and say, this person's great. We've tried to reach out to other, people that we knew, and it's just, unfortunately, it's something that happens.

And so, the rest of this podcast, we're gonna kind of talk about what's going on in the world, and we've kind of been scraping the internet and kind of pulling up statistics and kind of looking at different things. And, Kai, kind of, what are your thoughts on, what's going on? 

[00:01:51] Kai: I mean, the big thing here we're gonna talk a lot about is big tech and some of the layoffs that you see in the headlines, but I mean, small businesses, I wanna say it almost hurts more because these are people that you work with every day that you see.

And when you have to talk about layoffs, you know these are actual names and people that you know rather than. Just another number or gear in the, in the cog per se, you know? 

[00:02:14] Josh: Right. Yeah. Let's talk about kind of the wrong way to do it, which is unfortunately kind of what's happening with some of these companies.

Right. did you guys hear about the story of the guy that laid off 900 people over Skype? 

[00:02:26] Kai: I've seen stories, but I haven't heard that specific one. 

[00:02:29] Josh: Yeah, I think it was better.com. nobody knew what was coming. It was, I think right before Christmas Day, and, and he had on, 900 people onto a Skype and basically said, Hey, if you're on this Skype call now, unfortunately, you're laid off

And so, gosh, that was, that was it. You know, that was the cut. And right before, a major holiday, which is obviously one of the worst times. I know another example of a friend of mine that actually worked at this company and they did the same thing when it was Christmas Eve. They basically called several people in and just told 'em like, Hey, you're not, you're not making the cut here.

And it wasn't necessarily because of financial reasons. What they had done before is they actually had a, an expert in the field come out and re-interview people for their jobs and basically say like, are you good enough? You know, quiz them on their programming and all that stuff. And so he gave, basically gave his recommendations of like who to keep and who did that.

And so they decided to do those cuts. On Christmas Eve, which is terrible. 

[00:03:30] Ryan: The, sad thing about that too is to think of the morale of that company. Something that's important and something we're addressing right now is culture right, at Red Sky. And so you think of the culture of those companies and, and kind of the hit that they take cuz that's huge.

Punched to the gut, not just for the people that lost their jobs, but the people that had to sit by and watch their friends get fired on Christmas Eve. You know, that can't be good for long-term morale. 

[00:03:54] Josh: Right. And, it makes people question where, where am I. Am I next? You know, am I right? Do you know?

When's the next one coming for me?

[00:04:01] Kai: I was just gonna say the suddenness, you know. One week they're there, the next week they're gone. It really does put everyone on the edge and it's, and it's hard to get rid of that. 

[00:04:09] Ryan: It comes back to the, you feel like a number, you know, not, you're not even part of the layoff, and yet you feel like a number.

It's like, okay, you know, are they gonna, are they gonna wait for, you know, my kids' first birthday to let me go? Or are they gonna wait for Any other holidays to let us go, it kind of taints it 

[00:04:26] Josh: and it's becoming so commonplace right now over the last few months with big tech, you know, big tech layoffs and the economy's bad and, and all that kind of stuff.

And so, so much so that there's been a website that has popped up just recently and it is layoffs. FYI is a really interesting site that just kind of keeps track of, of these, these numbers that are coming out. So we're gonna kind of read some of these big ones. So obviously just recently on, on January 20th, 2023, Google announced.

12,000 people, so 6% of their entire workforce is being laid off. a few months before that was meta or Facebook with 11,000 people, basically 13% of their workforce. we have other examples of Amazon with 10,000. 

[00:05:14] Ryan: Just, just a quick note on that too, is I didn't realize how large Amazon is compared to these other companies.

Oh yeah. It's the same number of people essentially, but 3%. 3% of their workforce. 

[00:05:24] Josh: I think they're over a million employees right now. Amazon, if you think of all their distribution centers and, and everything like that. Yeah. So yeah, Amazon, 10,000 people, Microsoft, 10,000 people. Salesforce, big software SaaS service that does, you know, sales is at 8,000 people just announced on January 4th, so 10% of their workforce.

and the list just kind of goes on and on, you know, and it's, 

[00:05:49] Ryan: what's great about this website too, is they've got the source on it so you can go and, and read a little bit more about it instead of taking it face value. 

[00:05:56] Josh: Right. And, so the other numbers that are on this website are the laid off, the date, the percentages, what industry they're in.

but they also have the stage of the company. So whether they're a public company or a private company, kind of a medium or large 

[00:06:11] Ryan: now. Now, this is interesting. Google Docs. Mm-hmm. a list of employees. Oh, check that out. Oh wow. 

[00:06:18] Josh: So, I mean, it actually has the employees that were laid off or they're, 

[00:06:22] Ryan: they're LinkedIn profiles, Uhhuh, their target roll.

Where they're at, like junior, mid-senior, 

[00:06:28] Josh: which I think's awesome. I mean, if you're looking for, you know, new talent to hire or something, you could basically reach out to them. 

[00:06:33] Ryan: LinkedIn, they've got resumes in here. 

[00:06:35] Josh: Yeah. So that's fascinating. So it seems like the site is kind of really set up to obviously inform, but also to help those who, who unfortunately got laid off into other positions.

[00:06:44] Kai: that's an awesome resource for any business trying to hire, look for talent. 

[00:06:48] Josh: Mm-hmm. . Now, Kai, you found an article that was kind of interesting that had a couple of different points in there. Do you want to kind of go through that? 

[00:06:54] Kai: Yeah. It was an article put out by NPR. they were just talking about the tech layoffs.

You know, this isn't the first time that tech has had, a slump, but it's definitely one of the biggest I, I think they mentioned as far as for a number of people being laid off. This is probably one of the biggest since the 2000.com crash. And so they kind of list out a couple of points that I think we should go through.

I think it is good info. but ultimately, right now, I guess the big thing was big tech is not in trouble per se. Like right now, I think there are a lot of fears about high inflation and what could come next. And so companies are more defensive than others. Then just going bankrupt, to kind of prove some of these points.

They pointed out that, all these big tech companies are having record profit years or Microsoft trying to acquire Blizzard for 69 billion, in cash. I, I think the model's proven that there are still lots of cash reserves for these companies. in good spots. It's just that these are more defensive plays right now than anything.

[00:07:53] Josh: Right. And there are a couple more points, but one thing I wanted to point out was this other graph that we actually have an unfortunate podcast that can't really share with you, but we'll put it up in an article. And what it shows is it shows the actual employee counts of Facebook, Google, Microsoft, and Apple from 2018 to 2023.

And what you see in this graph is that each one of those companies is growing, but some are growing significantly faster than others. For example, Facebook is just massively taken off on like a, they call it like a hockey stick. You know, an exponential growth. Microsoft and Google are still growing extremely fast.

Apples. Growing, but it's not, you know, the actual slope of the line is, is quite a bit lower. And what you see here is that on the layoffs that have happened in 2023, the number of employees dropped. And it sounds like huge numbers. It sounds like, you know, 10,000 people or whatever. But if you actually look at the graph.

All it really sets them back to is about the size that they were right around Covid 2021 when they really started going on some massive hiring sprees. Apple, on the other hand, that has kind of taken the slow and steady approach to hiring, hasn't announced any layoffs yet, and maybe they are coming and whatnot, but they, they haven't grown, just gone, you know, gangbusters with employee growth and so kind of interesting.

[00:09:14] Kai: that is it. I think it just speaks to the industry. There's a lot of opportunity still. You know, we are still super excited to be here in this industry as a development shop, and we do feel like it's gonna grow in the next couple of years. I think right now what we're seeing is just a correction and, and over hiring and maybe some of the aggressive growth that 

[00:09:34] Ryan: we're, we're still feeling some of the uncertainty, right?

But there's still, as far as pipeline growth, we still, there's a feel there's a lot of opportunity right? 

[00:09:41] Josh: And historically, I know McKay, who's been on these podcasts before, he's actually done some research into what has happened during recessions, what kind of industries really, boom, which ones really falter.

Um you know, the funniest ones that, that really go well through a recession are like, Discount stores. So like Dollar Tree and all those other ones, they actually excel quite a bit cuz other people are looking for it. The other thing that happens too is when people get laid off, they start thinking, okay, what else can I do to make some money?

Maybe on the side, maybe I should just start an Etsy shop or I should do, you know, a Shopify website and start selling little things I can create or, or whatever. 

[00:10:18] Ryan: So you're saying our little niche of e-com. It's gonna do all right here. Yeah. Yeah. Absolutely. We need, need to create one for Dollar Tree or Yeah.

Exactly. The next Amazon. 

[00:10:26] Josh: Mm-hmm. Yeah. People look for that and, and the other thing that he has studied is that large companies will obviously have layoffs, but they still have work they have to get done. And so they sometimes turn to kind of outsourcing or outsourcing their software needs. And so that's kind of where Red Sky Engineering could fit in.

[00:10:43] Ryan: Sure. It is, it is shocking to me. I mean, you lose 16% of your, or was it 13 that Amazon lost, and yet I'm still getting my packages on day two, you know, through my primes. It's, it's amazing how they can drop that many employees and still keep moving. 

[00:10:56] Josh: Well, it's the Twitter effect, right? With you know, Elon Musk, 50% Thanos Snap, and 50% of the people that are just gone the next day.

[00:11:05] Ryan: 3,700 still according to this website. 

[00:11:07] Josh: Yeah. And I mean, it just goes to show that there is definitely bloat at these companies, cuz Twitter still works as far as I know. I mean, I, I'm not, an avid Twitter user, but 

[00:11:16] Ryan: I wonder, you know, a lot of these places they have just killer perks. Right. What were you looking at the other day?

Were Yeah, it was just, 

[00:11:22] Josh: it was Google. Yeah, it was Google, yeah. And she was in the hiring department. And so actually a lot of these layoffs are kind of in, in those industries. Recruiters. Recruiters and that kind of stuff. The tech ones. Yes, there has been some downsize in there, but not nearly as much as kind of some of the staff that they don't need if they're kind of putting a pause on hiring.

[00:11:40] Ryan: Kai, you, you had said something about the statistics of who, who's getting jobs and who isn't and how quickly. 

[00:11:47] Kai: there was a study done in an article that, that same NPR article by ZipRecruiter, they were showing that 8 out of 10 techies that were laid off were able to find a new job in three months.

four out of 10 of. We're actually to be able to find a job that next month. So there are still jobs going up and, and opportunities. albeit it's a lot more competitive cuz the market's a lot more full. 

[00:12:10] Josh: Right. And going back to that kind of the right way, wrong way of layoffs and stuff, I mean, don't know, like, talk, talk to me about how should Google have handled it.

Obviously a number of people. where just let go either by text or email or they got to the door and they just couldn't open it and stuff. I mean, what are your thoughts, on that? I mean, that, that challenge you have is you're gonna lay off people. Some people are gonna become disgruntled and they might want to take down the whole system with them when they go.

You know, we talked about dev shop horror stories where, you know, somebody was basically leaving and he wrote code that obfuscated all of the software and made bugs everywhere and stuff. Right? So, what are your guys' thought? 

[00:12:48] Kai: I think the thing that people hate the most is the surprise. you know, I've seen plenty of videos of employees or former employees talking about their experience when they saw the news article that morning.

They asked their boss and their boss told them, no, you're fine. And then later on the boss reaches out and says, Hey, I actually was let go. You're let go too. we're all out of jobs and so, I think communication is a key point. With, with tech it's a little hard because you can't, sometimes it's hard to keep people on because Yeah, they could sabotage the code.

They could do a lot of things, which is why you see a lot of these companies give actually pretty decent severance packages to find places. Mm-hmm. , they just don't have access to anything because they don't wanna run the risk. 

[00:13:29] Ryan: So I, I think that's a big part of it, Kai, is that people f want to feel like they're treated like humans.

You know, even if it is, I mean, layoffs come at all times of the year, right? Like, you can't really decide that. and so even if it's near Christmas, you know, you want to feel like you know the person that you just spent the last year or two or five with, you know that they care about you. But, at the end of the day, these big companies, you gotta remember that.

What, what's their number one goal? bring profit, bring, bring, taking care of the shareholder, right? And so at the end of the day, I mean, most companies, they can, they can have their, you know, a mission statement that they're there to change the world, right? At the end of the day, you gotta make that, that share shareholder happy.

And when you're seeing inflation go up, when there are these fears of a, of a crashing economy, and they're making these defensive, they're just, they just gotta make these defensive moves. 

[00:14:17] Josh: What do you think about it? how would it have been received if these Google employees, instead of doing all the massive cuts, just said, Hey, we're gonna cut out all these perks, you know, anything that's gonna cost us money?

Like, we're gonna no more free lunches, no more massages, no more whatever. You know, 

[00:14:30] Ryan: 100%. So I think of like, I, so. You know, I've been a red sky for two weeks. Before this, I was at another small company. It was still about 10 times the size of what we're at, but still a small business. And every time we, and we had a, a great profit sharing program.

Loved it. You know, the owner was, very generous, and gave 25% of profits back to the employees. Okay? Anytime we had a party or we had a raffle, all I could think about was, would I rather have like a 10th or a hundredth of that, you know, just, mm. Just keep those profits even, I think would think that you know, so these people are.

Wow. We, you know, these other people kept their jobs, right? But they also kept their perks. They still got a full-time gym. They still got free food. They still got, you know, going to Disney. You know, I had a buddy that they sent, you know, the entire family to Disneyland for five days and they paid for the babysitter to go with.

Like, wow, these things are still happening. Yeah. 

[00:15:21] Josh: Right. Yep. But it makes you wonder if the pitchforks would've come out, if, if they said, well, we're not doing layoffs, but we're cutting back on all these little perks that you get and stuff. You know, I, I don't, I don't know. 

[00:15:31] Ryan: I would, that's a good question. I would like to think that people.

Get it, you know, I would appreciate it. Cuz no one knows where, what side of the, you know, the road they're on, on that one is, am I part of it? 

[00:15:42] Kai: I know we've talked plenty of times here. Red Sky, where we know. Lots of people here would be willing to take a pay cut to help prevent layoffs or help prevent someone from losing their job if they had to.

Not to say we want to, or don't worry if anyone's listening to this, that's not the plan. How about, it's Alex, right? I'm just saying the quality of people. You know, it, it kind of does vary and 

[00:16:06] Ryan: there's a lot more flexibility in a small business, that's for sure. Like before we came over here, you know, I talked to my wife and I said, it's time for us to start saving up little nest egg just, just in case.

Cuz in the early days of this last small business, when things got tight, the first thing that people thought about was layoffs. But really that was the last thing we were looking for. Cuz you go lay off a developer here and, and what happens in three months when you get a new project now, now you've got. Put that overhead that, you know, 120 hours or however many hours it is that we put into a developer to get them brought up to speed, that's the last thing we wanna do.

So layoffs are like a last resort. Right. 

[00:16:40] Kai: You know, another thought I was thinking about was this is a. While it's not fun for anyone, especially for the person getting laid off, it is an opportunity, for those people who do get laid off. I mean, now is the time to improve your skills. Now is the time to get to that next level.

You have, a pretty decent reason for why you left your last job. Now you can go full force into your next career choice or whatever you do, and. Maybe get an even better pay raise or a better job that fits your schedule. So 

[00:17:13] Ryan: yeah, I was, so going back to that humanity thing, I was thinking about, my mom.

So you gotta think of the other side of the layoff too. My mom was, over the western division of a very large, home mortgage company in 2008. We had. Horrible crashes all surrounded mortgages. So I believe this mortgage company narrowed down from 13 offices on the western side of the United States.

They narrowed it down to one. So my mom was hired, or she was, she had been at, so she was at a small, small mortgage company that was acquired by this larger one. Anyway, she was the one that was, in charge of laying everyone off. She laid off over 3000 people and it actually destroyed her. So you gotta think of the people, the people that are laying you off don't want to do it either.

Right. I, I hate to bring that up and, you know, the pitchforks are probably gonna come out for that one, but tho, tho they're just as human as you are. And I mean, it, it put, it left a toll on her for, gosh, 6, 7, 8 years. 

[00:18:10] Josh: So I remember the same story when I was talking to another previous company. He was another per coworker with me, and he was in charge of, a small tech group.

And what they did, I mean, large company, it was like HP Adant kind of company. And they had just a, a policy that says every year we're gonna cut 10% of the staff, you know, just the bottom of the rung we're just gonna cut, you know, and, and say that. Performing, you know, that way they, they thought, you know, we can keep it fresh, we can keep, make sure everybody's on their toes and working hard and everything.

And in his division, he had, let's say, 10 people. And they were all amazing performers, but he was mandated to still have to get rid of one of those people. And it was just like it. Tore 'em apart and then he said when he, you know, pulled the person in and told them, he just, you know, after that he ran out too, cuz they had big courtyard, but usually, usually start crying.

[00:19:00] Ryan: Yeah. I mean, when you let someone go, usually the best thing is to have an objective approach to it. right? Like, I mean, you guys have done a pretty good job at that through the gamification. And you guys talked about that in the episode previously, I think. But how, how do you let him go? Yeah. What, what do you say?

What do you say? 

[00:19:17] Josh: Say, I'm, I'm forced to do this and this is not my choice, you know, kinda thing. Gosh, that's miserable. Mm-hmm. , 

[00:19:23] Kai: it's a lot easier if it's a performance issue or, you know, 

[00:19:26] Ryan: yeah, you were supposed to do, you were supposed to do 10 things. You did, you know, six and you did six things when you're supposed to be doing 10 things for eight weeks.

Right. Boom. You're gone. 

[00:19:35] Kai: It's a lot harder though when you look 'em in the eye and say, Hey, you've done everything we've asked.

[00:19:39] Ryan: I legitimately don't want to do this. You're doing a great job. I'll give you a recommendation like you were saying earlier. Mm-hmm. , like, we'll put something on LinkedIn, we'll put feelers out.

But yeah, it's miserable. 

[00:19:49] Josh: I, I might have some friends, I'm gonna call 'em right after this. That kind of thing. You know, that's, that's the way you'd hope you'd want to go. 

[00:19:55] Ryan: I could probably make it through one of those layoffs before I myself just said. It's time for me to go to, yeah. 

I was just gonna say, it makes me think of a story of one of my buddies who worked at a company and, they were going through, it was a, an oil business, an oil business, kind of ebbs and flows with the cost of a, a barrel of oil. And they were going through a pretty deep, Trench, I guess.

and so they decided that they were gonna lay off like 25% of the workforce and they selected 25% of the workforce based on. How many GIT pushes they were doing a day or it was like, or how many lines of code were changed? Mm-hmm. a day. Wow. And he was the chief engineer on the project, so he wasn't, he wasn't committing as many lines of code cuz he is out, you know, coaching people and Right.

You know, setting the vision for the product. And so he, he happened to be one of the people that was let go. 

[00:20:45] Josh: Wow. 

[00:20:46] Kai: Wow. I, I think the takeaway, I, I just want to throw out there to anyone that's building tech, I mean it. A great time, to look for people to hire, but also if you're looking to avoid layoffs, say if you just have like an MVP product you're trying to build or a new feature you're trying to implement.

I mean, the reason why we dev shops are doing really well right now is because people don't want to take the risk. They don't wanna hire someone only to let them go a few months down the road. I, I think from what we found, It is so much cheaper and it's gonna be a lot less taxing on the individuals to hire an outside firm if you're just looking to get started or if you're just looking to add a small thing to it where you don't need a full-time staff.

and I, I think the industry, it's, it's pretty traditional or pretty common to just, we're gonna do everything in-house. We're gonna hire, and then we're just gonna fire. And maybe this is a new approach and a new wave that we can start to implement as we go forward. 

[00:21:44] Ryan: Yeah. It's, it's a whole lot cheaper.

You're not worrying about the benefits, the hiring process, the bring up the training, you know, the training, the tools. you're not worrying about any of that. You, you are, you're getting what you want at a lower price point. Right. You're getting that temporary, temporary resource 

[00:21:59] Kai: and no, so that's a good point. The emotional cost of having to hire just to fire. 

[00:22:04] Ryan: Mm-hmm. . No, that's a good point. 

[00:22:06] Josh: Well, thanks for coming on, Ryan and Kai, and thank you for listening to our story. We'll be back next week with more stories, personal experiences, and advice on running a dev shop. Thanks. 

[00:22:15] Ryan: Thanks, Josh. 

[00:22:16] Kai: Thanks.

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