Over the past week, Silicon Valley companies have laid off 20,000 employees, a swift ramp-up of the job cuts and hiring freezes that have been ricocheting through the tech industry for months.

Twitter, Facebook parent Meta, payment platform Stripe, software service firm Salesforce, ride-hailing company Lyft and a growing list of smaller companies all laid off double-digit percentages of their workers. That means tens of thousands of engineers, salespeople and support staff in one of the country’s most important and highest-paying industries are out of a job. Meanwhile, other companies including Google and Amazon have recently instated hiring slowdowns and freezes. A New York Times report Monday said Amazon is planning to lay off about 10,000 employees.

The departures are solidifying a feeling in Silicon Valley that the bull market of the past decade — which created massive amounts of wealth for tech investors, workers and the broader economy — is decidedly over, conjuring an image of what the rest of the economy could experience if a predicted recession materializes.

“It does feel a little like 2000,” said Lise Buyer, a longtime tech analyst, executive and investor, referring to the turn-of-the-century dot-com crash. “Hire engineers, hire engineers, hire engineers, and then suddenly companies get a cold bucket of water in their face.”

Executives at the companies making the cuts blamed a variety of interconnected factors — overzealous hiring during the pandemic, a slowdown in e-commerce activity and people spending less time online as in-person events return. Tech CEOs have been warning about a looming recession for months, telling their employees to expect tougher working conditions and drastically slowing down the rapid growth they had preached for years.

When it comes to newer tech companies, low interest rates over the past decade have allowed venture capitalists to easily raise money and pour it into new start-ups — even if their founders didn’t have solid plans for actually making money.

During the pandemic, that dynamic went into overdrive. At the same time, bigger tech companies expanded rapidly to take advantage of people spending more time online. Tech share prices soared, boosting confidence and stock-based payouts for workers.

But now that the Federal Reserve is aggressively raising interest rates to fight inflation, venture capitalists are being stingier with their investments, forcing companies to focus more on profitability than growth. Tech giants are doing the same, as higher prices cut into their revenue, forcing them to cut costs.

The layoffs come just a year after Silicon Valley was at its peak, with valuations of Big Tech companies spilling into the trillions, salaries at all-time highs and cryptocurrencies pouring new wealth into the pockets of investors and workers alike. Now, tens of thousands of workers are looking for work.

Marc Weil taught himself how to code when he was 9 years old, and has worked in tech since 2010 at various companies, even founding his own start-up at one point. This week, the 35-year-old engineering manager at Stripe was one of thousands who lost their jobs.

“Year after year goes by and the tech economy keeps getting bigger and bigger with no end in sight,” Weil said. “Everyone in tech has been warned by people who lived through the last few decades that this will end. And so it ended.”

Weil bought a house just three weeks before the layoffs. But he’s not too worried about finding a new job, thanks to the network he’s built up over 10 years in the Valley. He’s more concerned about his younger colleagues.

Spokespeople for Lyft, Twitter, Facebook, Amazon and Google did not return requests for comment. A spokesperson for Stripe referred to a blog post the company’s CEO had made about the layoffs.

“We are facing stubborn inflation, energy shocks, higher interest rates, reduced investment budgets, and sparser start-up funding,” CEO Patrick Collison said in the post. Salesforce spokeswoman Annie Vincent said the company is supporting its workers who were laid off.

For the past 10 years, Big Tech companies have ruled the U.S. economy. Apple, Amazon, Google and Microsoft all broke the trillion-dollar valuation mark, becoming by far the most valuable organizations in modern history. They competed with venture-funded start-ups such as Uber, WeWork, Airbnb and Stripe for tech and business talent, driving up salaries and the cost of living in the Bay Area and other tech hubs like Seattle.

Source: Washington Post

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