Tech lay-offs now, end of Big Tech next
Here is my prediction: the current tech lay-offs will end Big Tech as we know it. Sometime in the upcoming months, laid off Google engineers, will found the company that eventually eats Googles lunch.
Let's take a few steps back to today, though: there is no doubt that tech startups and Big Tech companies have over-hired in the past two years, compared to the manpower they really need to operate at the Status Quo.
But operating and innovating are two separate things. Cuts now are to juice short-term earnings in a soft economy, to boost sagging share prices. But it is as short-sighted as it sounds.
No cohort of people is more uniquely qualified to solve the problems Google solves, than engineers who worked there. This is why I believe it is inevitable that the company that kills Google is likely to be founded by ex-Google employees. Now, recently let go employees are suddenly freed of the bureaucratic constraints they were under at a big company. As clickbait would say: "You won't believe what happens next!".
The supposed average compensation of laid off Googlers is $300K/year. At 12000 laid off, that amounts to a saving of $2.6bn/year. If the thing that kills Google comes from people they just laid off in the next 5-10 years, was it a saving at all?
Maybe the over-hiring of recent years shouldn't really be seen as over-hiring at all. Overpaying excess engineers is actually one of the smartest ways of reducing competition, by keeping people in Golden Hand-cuffs. And now, everyone stopped doing it, all at once. I'm not sure leadership of Big Tech companies realize this. Wall Street certainly doesn't.
In a digital, globalized world, human capital is the only capital. The currency is knowledge. Releasing decades of institutional knowledge, that is now hell-bent on proving Big Tech wrong, will have interesting side-effects.
The next round of market-based creative destruction will be epic, grab on to something! Ex-Googlers are coming for Google, ex-Meta employees are coming for Meta, and they will eat their lunch.
My bet is the next round of tech growth and innovation will dwarf the last 20 years. 2 years from now, the shortage of skilled engineers will be worse than at any point we've seen so far.
What do you think?