LET THIS SINK IN

I do not have a twitter account and frankly if the company folds tomorrow, I will not miss the service nor shed a tear. But recently the new owner of the company Elon Musk has fired off, laid off 50% of the workforce and still the company is operating, meaning it has not collapsed. The service is still operational across many borders. Maybe the ad dollars are down, but mechanistically the service is functional. For all the time that I was employed or had my own companies, I had experienced nothing like that, meaning if I had fired off, laid off, even 10 percent of my staff, my projects or companies would go belly up. So, I wondered: Who were these people crowding the offices in their high-tech building in downtown San Francisco, how is it possible that regardless of the reasons, how can an organization be so bloated that when you get rid of half of the staff the company still functions.

The recent layoffs in the high-tech companies are not as much as 50% but are a fraction. During the pandemic, a few sectors benefitted immensely from the shutdowns and the high-tech sector was one of them. Because of this expansion, hiring was at a frenetic pace. Now that the pandemic is over, the business is slowing down and the layoffs have started. I can understand that getting rid of the dead wood, as they used to say during the heydays of GE, it makes the organization a bit more efficient and more in line with the demands of the future. Also, aren’t these companies still making a lot of profits? The high-tech companies’ stocks have gained over 10% just in a month this year. I think also companies are laying off because the others are doing it. But it’s incredible that a company like Twitter has laid off half of its staff and reputedly selling the nailed down furniture in its building to make money and pay the rent, and it is still running. How is that possible? All these people actually working at twitter:what exactly were they doing? Were they actually just sitting at their desks on their hands performing some bs jobs as late David Graeber called?

When I worked at Silicon Valley some years ago, the founder was doing all the hiring. We had to jump through hoops trying to justify and open the requisition, not just some petty email to the HR guy asking him to hire as soon as possible. He jokingly called himself the main headhunter, and he was proud of it. He used to utter that fact all the time. Every Friday afternoon when we had the company meetings, “We are going to be a lean and mean organization. You need to show and prove to me we desperately need this guy because you are, all of you on the payroll are burning cash every day.” It was a high-tech company building state of art minimum dimension silicon chips. My group was primarily responsible for the production of 0.8 μm SRAM’s and EPROM s, meeting the ever increasing quarterly targets. The irrefutable law of the Silicon Valley is the fact that you need to come up with new products all the time. You are always behind the eight ball and you need to do research and development which is expensive and innovate at the same time. The way my group was doing it was during the day we handled the production of silicon wafers and we did the experimentation, read research and development in the graveyard shift. The passdown from the day shift not only explained the status of the production that day but also included explicit instructions about the experimentation to be carried out that night. She became so proficient in designing experiments, using multivariate analysis and an appetite to learn not to mention wake me up in the middle of the night if things did not go the way she wanted that a few years later I learned she was doing consulting for an equipment company in the valley. That is how we moved from 16k to 256k and ultimately to 1megabit in record times with only a handful of people. In order to be organizationally efficient, work needs to be compartmentalized so that the focus in each compartment achieves the desired results. Putting a bunch of people behind desks and computers, without clear goals and timelines, will set in complacency about the company and false perception of the manager that things are getting done so he can rest easy.

The other thing which is quite instrumental in the hiring process is especially during the good times when things are going extremely well and the coffers are spilling over with cash optimism sets in within the company. The managers start thinking about the future and they just buy in to the notion that business will always be good, hence i need to be prepared with my staff. Getting more people on board becomes a top priority. Along with that, of course, the more people you have on your staff, the more powerful they will see you across the company and the higher ups will think that the manager is indispensable. Few people view your position as being worthwhile if indeed you as a manager managing only a few people instead of a few hundred or a few thousand. That is just the common perception in the society. So you open the floodgates and adds run all over the place resumes start pouring. As you are eating in the cafeteria, you see all these new people every day and you ask yourself who are these people, where did they come from and who are they working for and what do they do all day?

The day when Elon Musk walked into the twitter office carrying a bathroom sink, I guess he was trying to make the point: let it sink in. I am going to make some drastic changes. That afternoon the entire upper management staff were fired, a few of the corner office occupants, they walked out. Yes, he had to cut down the staff and fast, but what criteria to use to do the ranking and the rating of employees? So, in this chaos, the managers were asking the people on the payroll to print and present to Elon the last 20 or 30 days of the computer code that they had written. There was this thinking that the more lines of code that you had written, the more valuable you are for the company. And that is exactly the fallacy of evaluating an employee’s performance, and the value and worth to the company. All throughout my career in Silicon Valley and elsewhere, I adopted this lean and mean philosophy I learned in my first job of hiring and firing. And of course while I did that I relied not only on my gut feelings but by soliciting different opinions from a team of my colleagues to see if the person not only can do the job but can also fit into the culture. It’s almost impossible to determine beforehand which employees will do a great job for the company regardless of how many times the applicant gets interviewed. But it is easier to determine if the potential employee will fit into the company culture and I think that is the key determinant of a successful organizational efficiency.