Big Tech Layoffs

Watch the episode here

• Are tech companies laying off all for the same reasons?
• The real reasons behind layoffs in 2022 
• The recession’s current state
• Billionaires and their business choices
• The Holiday season didn’t save their jobs.. But it did save theirs.
• The facts of this year’s massive layoffs.

What shakin’, hey, we’re back and today we’re going all in. Today we’re talking about big tech layoffs, and I’m excited because this is very relevant to what’s going on right now. I’ve done a lot of news appearances around, uh, meta meaning Facebook and Amazon and Twitter, of course, with all their massive layoffs as you hear. And then I also heard about Redfin the other day. You know, it’s just, we’re starting to, of course here talks about recessions and how the US is entering, and there’s all this woe is me and doom and gloom. You know, the economy is obviously down. These big tech stocks, of course, have freaking tanked. And, today I wanna explain how these layoffs work because I mean, we’ll touch on, this is gonna be very business related today. So you, you can kind of peel back behind the curtain because even though these are all big tech companies, the reasons for these layoffs from company to company are actually very, very, very different for multiple different reasons. 

And I wanna explain to you those reasons why, because it matters if you’re building a business or if you’re working for a business, you can grasp onto this knowledge and really understand some of the inner workings as to why these things take place. So let’s break this down today. That’s what we’re gonna do. Alright? Let’s talk about meta first with Facebook, right? Because that was one of the, the, that really is the biggest one so far from a percentage wise, because they’re laying off or did lay off 13% of their entire workforce. I mean, that, that’s significant, right? When you look at a percentage that’s 13% or around 11,000 employees, that’s a significant cut. And Redfin was actually doing the same around 13% of its employees. I’m not really sure what that equates to the number wise with them, but from a percentage wise, 13% of meta is 11,000 ish employees. 

Now, let’s look at why this happened. Verse Zuckerberg comes out because this is a very similar or a very different reason, I’m sorry, to some of the others. Meta’s reason is from overspending, pure and simple. And I’ll, I’ll go into the details of that. Twitter’s reason is because of an acquisition and because they’re trying to turn the company profitable again. And then Amazon is actually just looking like pure business at this point as far as restructuring. Redfin is economic changes, okay? All four of these have different reasons, but of course, the media likes to lump these things together and say big tech suffering. Look at all the stocks tanking. We’re gonna, we’re gonna explain each of these now meta if you’re running a business, okay? There’s times where you can get things wrong. I’ve done this to where I’ve invested in something and I’ve talked about this in a previous episode into a new idea, something that I’m going after and it flopped big time, right? 

2019 was the biggest financial loss I’ve ever had, a, as an entrepreneur, right? It was around 500,000 now, close to 600 K that year. So a little over a half a million dollars I just lost, gone, okay? On a venture that never panned out, meta started investing. Now that they have been a trillion dollar company, right? Valued at a trillion dollars. Meta started investing money into the metaverse years ago. That’s why they changed their name too, which is stupid in my opinion, right? Because everybody just knows Facebook and Instagram. But now it’s called Meta, right? I don’t know what Zucks was thinking on that one. I, I can kind of see the correlation because they’re investing heavily into the metaverse, but they have spent you ready for this since 2015 on CapEx capital expenditures, meaning money you were putting into something that you hope will have a return at some point. 

Capital expenditures are made to increase capacity, typically at a business. So if you look at Verizon or at and t or T-Mobile, right? Their capital expenditures can mean that they are installing new radios on their towers to give you faster 5g. They’ve actually done a lot of that over the last couple of years. They’re installing equipment, erecting new towers to expand into a new market. That’s what Meta was starting in 2015 when they started spending billions and billions of dollars. They have spent $85 billion in capital expenditures since 2015. Now, you wanna hear a comparison on that. Tesla was actually doing pretty well as a big tech company. Let’s be real. They’re not really an auto manufacturer. They’re actually a tech company. They freaking make computers on wheels. That’s really what it is. Tesla at its core is a tech company. Let’s make that clear. 

So comparing the 85 billion in CapEx capital expenditures that Facebook has made since 2015 to Teslas, are you ready for this? Just 10 billion. And then just this year alone in 2022, Facebook has spent 9.4 billion in CapEx on just this metaverse garbage that looks like Zuck, looks like it’s something out of my 1985 Nintendo, right? That would’ve been right alongside Zelda and Mario Brothers. It looks horrible, right? And he even said, I’m sorry I got this wrong. He even said that to his employees. And these are hard decisions that he has to make, but it has to be done for the better of the company, right? And that’s true, that’s true. They messed up, they missed it. Now they have to make a course correction, which means laying people off in order to save those expenses. They overspent on an area that didn’t pan out that happens, right? 

So it’s not even necessarily something to be mad at him for. It can be just the course of business. And sometimes there’s actually no better way of finding out that something’s not gonna work than actually trying it. So I’m not here to judge whether they should have spent the 85 billion or not since 2015. I can tell you that I don’t like the metaverse stuff that they’re doing because it just looks ugly, which is the general opinion of a lot. But 13% of its staff now is without a job. 11,000 people are without a job because of these poor choices of Facebook or Meta or whatever the hell you wanna call ’em. You decide, all right, Amazon, let’s look at Amazon for a second here. We’re coming into the holiday season, right? And typically Amazon hires more people for the, for the holiday season, uh, like delivery drivers, contract delivery drivers. 

I dunno if you’ve seen this, but you usually have the Amazon trucks pulling up to your house, right? Dropping off the packages when it comes to the holidays. You got like a four door sedan, you got like a minivan, you got like some dude’s car that he also Uber drives in that he’s an Uber driver that’s pulling up in his spare time and dropping off Amazon packages for you. They hire these contractors and Amazon’s still doing the same thing this year. They’re actually ramping up their delivery staff because of the increased seasonal shopping that exists. It won’t be as much as previous years because inflationary statistics are showing that people are going to spend the same amount of money. But since stuff costs more, that means less quantity of stuff, which means less packages overall. But Amazon is still ramping up its delivery staff. 

These, uh, I think it was 10,000 employees is what they’re looking at right now. Amazon is laying off 10,000 employees, ams, blah, blah. Amazon is laying off 10,000 employees. Remember how I said that meta laid off 13% of its workforce and that was about 11,000 employees. So we’re talking roughly the same amount of people, but 10,000 employees is less than 1% of Amazon’s global workforce. And it’s about 3% of their corporate employees. So percentage wise, because Amazon has so many people worldwide, they have 798,000 right? Employees at the end of 2019 is what they reported. You know, it had 1.6 million full and part-time employees as of the end of 2021. So they doubled their staff over, doubled their staff from 2019 to the end of 2021. And now they’re laying off less than 1% of that staff or about 3% of its corporate employees. 

And they’ve also said, this is like in devices. So like the Kindle or the Fire Stick, those are the areas that are getting hit hard right now because they need their staff to deliver these packages over the holidays. So this is like a minor, minor correction. They could be just not putting in as much effort. It could be just a strategic business decision to not produce as many fire sticks or, or Kindles. You know, I, I don’t know, I’m speculating, but those are the divisions that they decided to lay off and not the core of their business, not the absolute core of their business. Whereas Facebook meta, I mean they’re just, they were just suffering because they just spent too much on the wrong stuff over the last couple years. So Amazon, even though, yes, it’s another 10,000 people, it’s not that much of the company. 

You know, it’d be like a 100 person company literally laying off one person for real. That’s what this is. You know, or if it’s a 1000 person company, you’re laying off 10 people because it’s 1%. That’s the comparison here, right? It’s, it’s like a strategic thing saying we don’t need this role anymore because it can be consumed. We might be increasing efficiency in this area, but it’s just because they have so many 1.6 million <laugh> employees. That 10,000 sounds like a lot. Okay? So that they’re just making a minor adjustment. Extremely minor though. It’s not something that is necessarily even worth reporting in the media as far as my opinion goes because this is really just standard business. Again, if you have a hundred people in your company, you can imagine you’re a business owner. If you have a hundred people in your company, you’re laid off 1%. 

That’s literally one person. Literally one person. If you’re saying, you know what their job is, it’s kind of superfluous, redundant, I can, I can have those duties absorbed into the remaining 99% that’s possible. Okay, now let’s talk about Twitter cuz this is the big one. Elon’s always in the news lately with 3,700 people, which is about 50% half of Twitter’s workforce. That’s significant. That is significant chunks of people of resource assets within a company. Let’s dive into why he’s doing this. Okay? He bought the company for 44 billion, which actually ended up being a fair price, right? He thinks he’s overpaid, he’s putting that out there, whatever. He’s trying to figure out ways, and this is why he is creating so much controversy right now, so many ways to create revenue at the moment. Because when he acquired Twitter, Twitter was already losing 4 million a day, 4 million a day, it was burning through cash one easy way because the most expensive item typically on your p and l is people, it’s wages. 

So when it comes to an acquisition like this, and I’m speaking from experience because when it comes to acquisitions, one of the easiest and fastest ways to cut expenses is to look for inefficiencies and redundancies in people. Because a lot of times organizations will overhire because they’re not looking at the right KPIs, not the right metrics, which means they’re not as efficient as they should be. Meaning they can do more with the same people that they have, meaning more revenue, more profits with the same people that they have, or they can do the same with less people and be more profitable, right? There’s only two ways to go with this. You can either increase revenue and keep your people, but that’s harder to do, increasing it that quickly. What’s faster to do when you’re trying to do a major course correction like this when you’re losing 4 million a day at Twitter is to say, you know what, we can do the same with less people and be more efficient. 

So he decided that that number was somewhere around 50% or around 3,700 ish employees. Totally different reason than Facebook overspending. Totally different reason than Amazon just taking less than 1% of their workforce to maybe eliminate redundant people or you know, eliminate a product because it was mostly their devices division that was hit by this, or completely different from Redfin than I’m gonna tell you about right now. Cuz Redfin just eliminated over 10,000 people also, right? Or around 13%. I’m sorry, 13% of their workforce. Another magic nu, this 13% number seems to be consistent across the board. Somehow they eliminated 13% of their workforce because they shut down their house flipping business. They would buy your house, right? Redfin, you can list your house, you know, for sale by owner. And Redfin also started a business a couple years ago where they would purchase your house for you and then flip it for a profit. 

Like if you needed to get out quick or something like that. Or if they saw some equity in it because they were buying it while houses were increasing, okay, while they were increasing in value over these last couple years, and then they would flip it and make a profit. But now what they’re seeing is that because of the economy, the real estate market is cooling down tremendously. The real estate market is cooling down tremendously. People are staying put. Now that the housing crisis where inventory was low, people were moving out of the cities into the suburbs because of all the new remote work, because of the pandemic. That’s done, that’s over. People are not moving into suburban homes and droves anymore. So Redfin is like, we gotta stop this. Otherwise, in the future, in the next year or two, we will lose a ton of money. 

So they have shut down that portion of their business because of where the real estate market is going. It’s a division and a portion of the economy that just doesn’t exist anymore and they’re making a correction for it. Now you see all of these companies are big tech. So when the media gets a hold of this stuff, they’re like, oh my god, big techs suffering all across the board. Take a look at these layoffs and those layoffs and these layoffs and those layoffs. Elon, shame on him for 50%, right? You know, Zuckerberg, I can’t believe he’s laying off so many people. These people’s lives are being upended. Yeah, it sucks to get laid off. I’ve been there. That’s when I started this business. When I started to reach out, which I just took public, was when I was laid off because a division was eliminated at best by where I was at a whole division. 

I was one of those just like Redfin shutting down their house, flipping business just like Amazon making a correction on their device’s business. I was one of those casualties when I was laid off too. But you know what? What did I do when that happened? And this is what separates this, and I talked about this on the news too because I’m encouraged when things like this happen. Because at these times when all the big corporations like to pull back on things, when there’s a turn in the economy, as the economy’s drifting downward, this is the greatest time to make money as an entrepreneur. So as the same I did back then when I was laid off, I doubled down and started this company, which now I just took public. Same in the pandemic two years ago when everybody was pulling back on expenses. I’m like, you know what? I’m freaking hiring. I go out and I hire people, and that’s when I decided to take the company public. I am doubling down and looking at this now. I just completed the first acquisition two months ago in a nationwide roll up, creating this IT and cybersecurity brand for 6.6 million because I doubled down when everybody else was pulling back. 

Let this be encouraging to you: don’t believe all the crap in the media, how they’re lumping all these things into one, because there’s very different reasons across the board, but the similarity that there is, that there exists across all of this is for these people that are being laid off. If you’re one of ’em, I’m sorry, this could be the kick in the pants and you needed just like me, where I said, all right, I’m starting my own gig right now. And then just like the pandemic with me and Roman, all right, I’m taking the company public now while everybody else is powering in a corner. I’m pushing forward, I’m doubling down because that’s what entrepreneurs do is we go ALL IN.