The Tech layoffs…again

The news these past few weeks have been a bit depressing in Seattle as Amazon annouced it was laying off 18,000 employees and Microsoft followed a couple of weeks later saying it will be laying off 10,000. Google, who has a large presence in Seattle announced they will be laying off 12,000. To be clear not all layoffs are in Seattle, just a little over 3000. It is always hard to take this type of news, especially when people you know are getting let go. The driving force is diving economies, fueled by events beyond any indiviuals control. As humans we are programmed against uncertainty (though I would argue that is when you have great opportunity), it makes people anxious, we do not like that. It takes both a physical toll and mental toll. Lost sleep, stress etc..It is not just Seattle, as the economy dives companies like Goldman Sachs are laying off people. With all the doom and gloom, specifically on tech it is easy to fall prey to dystopian scenarios, but to be clear all is not lost.

It is hard to believe but I have now been over 30yrs in the tech industry and during that time I have now seen several periods of “bust” and econmoic uncertainty. Starting with sitting in a hotel with my wife and 1 yr old child in Sante Fe, New Mexico and watching CNBC as the entire market went bust, including Microsoft stock and my net worth dropping by 50%. The dotcom bubble had burst. The scenario in this one was a overhyped new world order under the guise of the Internet. Honestly the sentiment was not wrong it was just too early for the tech that would eventuallly power the web. The following month would watch many people and companies in a daze as retirenment plans were put on hold, big purchases postponed and too many internet startups went bust. The industry and the time had to do a reset, luckily for many who lost their job in the startup community the big boys were still hiring and many who I had watched leave Microsoft all of a sudden returned.

Looking back on the dotcom “bubble”, there were a number of Wall St gurus hyping stocks that had no real business model (Charles Gasparino’s book “Blood on the Streets” is a excellent source on this topic). Inherently Wall St is a very emotional entity and gets caught up in its own hype quite easily . At that time online trading was fairly new and it brought in a lot of new particpants, who got caught up in the hype. First stop: the tech workforce. It was a crazy time. As a Microsoft employee some of the startups I worked with gave me stock (before Microsoft cut the string on this activity..dang Jeff Raikes). For a brief while I could have sold those stocks at a 150k profit….I learned a lesson as I made less than 20k. But in the end the dotcom bubble would be a minor set back and valuable learning as the future would provide more grim reminders, but in between these “tidal” events the tech industry was doing fantastic.

The next fail was not one of hype but one of false economic expectations. Capatalism is a beautiful thing and in many ways perfect, but that perfection is not just wealth creation but wealth destruction. It is also controlled by humans, who in their greedy lust do very damaging things. In 2008 that came to fruition. The financial institutions in an effort to expand their market created new financial vehicles in an effort to spread risk. Providing loans to people where they could buy a house and not start payments for six months (just one example). All of a sudden you had people buyimg real estate investments, where based on their current level of income realistically they could not afford. Seem obvious that it was a bad business model. But as I said Wall St gets caught up in its own hype. When the bubble finally burst we had a huge issue of capital flow, when a market has no capiltal it ceases to become a market. Fear gripped the United States and quickly went global. That is a vey high level overview and a lot of great books have covered the subject better than I (One of many I recommend is Andrew Ross-Sorkin’s “Too Big to Fail”.). The fear in created was very real.

At Microsoft, as we met with customers time and time again we all heard in the sales force, “I need to do more with less”. All of a sudden the standard Microsoft Enterprise Agreement, instead of having a annual true up where the customer pays for more licenses we were being asked to true down as they wanted to pay for less licenses. Companies did not need more copies of Microsoft Office, they needed less as they no longer had 10,000 employees they had 7,500. At Microsoft annual company meeting Microsoft COO Kevin Turner tried to calm the troops by sharing a favorite Sam Walton Story (Kevin came to Microsoft from WalMart). Sam had said, “In times of econmic uncertainty there are those that participate and those that do not. The latter always gains marketshare”. I thought at the time Microsoft was going to use its large cash reserve to ride the wave, invest in our customers during the downturn and come out stronger on the other end. How wrong I was. The next day travel was cut as budgets were slashed. At Microsoft we had to do more with less. We were participants.

It led to what was a first at Microsoft; layoffs. When it was announced it was hard to believe it was happening. It was something that was unfathomable. In hindsight it probably should have been foreseen, the employee count at Microsoft was well over 100,000 and Microsoft was struggling with its own gitrth. It probably would have had to happen anyway, the financial crisis just accelerated the path to layoffs. I missed the first round of layoffs but was not so lucky in the second. It happened ironically on Nov 4, 2009. I started on Nov 4, 1991. I wil not go into all the details but you can read about that day here . When this happens it is a frightening experience especially when you have three young sons. I would land at another job in 8 months. The thing about econmoies and tech in particular is they always rebound, not to be a financial advisor but I would always have money saved up to survive a year as these cycles repeat themselves.

Every recession has its own motion. The current one for technology folks is interesting in that it comes out of a pandemic. Many companies sufferred during the pandemic (did anyone go to Disneyland?). However for tech it was a boom period as everything was done remotely and online. How many Amazon delivery trucks did you see during the pandemic? Where schools struggled as they had to move classes to remote, in tech it was simply an email “you will not come into the office but work from home”. Where many industries were struggling, tech was accelerating. The cloud was growing, streaming services like Zoom and Microsoft Teams were thriving. It seemed the Googles and Amazons of the world would cruise through the pandemic no problem. One issue: geopolitics.

The dotcom bom/bust and financial crisis were largely Wall St created events. The current crisis of inflation and rising interest rates are more the result of global events. Vladimir Putin has a very Russian sence of history and we all know he lamented the downfall of the Soviet Empire. On February 22, 2022 he set in motion the Russian attack on Ukraine. Russia being a major supplier of oil on the global markets (second only to the United States) sent energy prices sky rocketing. This set in motion a cascade of events as prices began to rise and the Federal Reserve to combat rising inflation increased interest rates. For the first time in a long time a big impact was on food prices. When food and gas prices increase you have to make decisions about purchases and things begin to slow down. When they slow down companies are forced to make decisions: layoffs.

So here we are again. The giants all laying thousands of people off. A lot of uncertainty about the future, which leads to fear. Having now been through 3 cycles (and who knows I could still get laid off during this cycle) I am not as worried as before as every time it has happenned the tech sector has come back stronger. One thing that was ingrained upon me early in my career by Bill Gates was if you are doing 9 things right and one thing wrong, what are you doing wrong? Even though we commanded 90% marketshare we were always fearful of what was around the corner. What big opportunities are we missing? If you look at Microsoft’s big competitors they operate the same way. It just takes a technological breakthruogh to wipe away a business unit or destroy a company. The iPhone destroyed Windows Mobile and crushed Blackberry (does anyone own this device anymore?). Google right now is stressed about OpenAI and Chat GPT. When these moments happen they pull the industry to new heights, which means new jobs and new opportunities.

Right now if you are out of work, enjoy time with family, friends and reflect on your past while you position yourself for your futture. It is ok now and then to have a pause from work and assess life and what are the values that are most important to you. With each passing year I become more bullish on the tech sector as we continue to tackle new problems and new challenges. We create new innovations, most of which will fail. But those that do not will be part of reshaping the industry. With every change comes new opportunities. There will be incremental changes and big changes. Right now AI is rapidly evolving and down the road we will have Quantum computing. These are just a few things to think about during your not self determined time-out. Enjoy it and remember the future is so bright you gotta wear shades.

Good Night and Good Luck

Hans Henrik Hoffmann Jan 25, 2023

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10 Books from 2022 I would recommend

I am part of a book group that set a goal of 22 books read for 2022. I am proud to say I read 29 so I have a fair amount of books to choose from for my top 10 list. What are my criteria? I think the first is do I remember the book and refer back to it in conversation and my thoughts. I appreciate great writing in fiction and non-fiction. It was hard to narrow down the list as a number of books I really liked did not make the list. Enjoy the list and hopefully one or two books catches your interest.

First book I recommend is Craig Whitlock’s book the “Afghanistan Papers: A Secret History of the War”.

An engaging account of the 20 years the US spent in Afghanistan. The book highlights fundamental challenges the Military faced during their time in the country. There was no central city that controlled the economy or was there a historical seat of power. Kanduhar was called the capital, but Afghanistan was a series of regions controlled by varios warlords with different allegences and competing agendas. The poverty of the nation impacted life decisions – do I join the police force or go to the field and harvest poppies? At the end of the day when you have a family to feed you follow the money. Having a population that was largey uneducated created a series of challenges for the United States. The book covers in part 4 administrations, by far the most time is spent with GW Bush and Obama as they covered 15 of those 20 years. It was an engaging account of what went wrong in Afghanistan and why. Worth the read.

Second book I recommend is Mark Twain’s “The Innocents Abroad”

I love Mark Twain, there is a reason he his a gigantic icon in American Literature, and one of its most influential. In “The Innocents Abroad” he takes us on a journey to Europe and the Holy Lands. The book is full of Twain’s famous wit and astute observations. The book starts in the Atlantic in the Azores before moving onto the continent. The book is two parts as Twain travels the southern part of Europe and eventually meets with Czar Alexander II on the coast of the Black Sea, before moving to the second part of the book as Twain visit the Holy Lands. Like many great writers, Twain is well versed in scripture which lends to the observations he makes along the journey. It would be fair to say that all great American writers stem from Twain.

The Third Book is “The Growth Delusion” by David Pilling

It seems we have been conditioned over the last fifty plus years to believe that all a country needs for its wealth and happiness is to grow the GDP, that mystical measure of goods and services. I had read Pilling’s previous book “Bending Adversity” about his time in Japan, where in the book he questioned GDP as a measure of success since Japan has a declining population (a trend not unique to Japan). It is a thought provoking book that provides a history of the term GDP – interestingly coined by a Ukranian economist. In the end the argument is being made, is GDP still the best way to measure the success and happiness of a nation? This book makes that open for debate

The fourth book I chose is Evan Osnos’ “Wildland: the Making if American Fury”.

America has been through a tough journey over the past several years. Evan Osnos attempts to capture what has led to this American disfunction and anger over the past few decades. He does so in three different settings. One in West Virginia where he worked post college for a local paper. The second where he grew up in Greenwich Viilage, CT once a humble community now overwhelmed with massive wealth. The third being a black community in Chicago. As he returns to these locations he finds dessolation in two areas and a loss of hope (a loss of the American Dream) and one representing the mega wealth of the 1% of America. America over the past couple of decades has become an angry nation, focused on perceived ill’s done by its government, while ignoring a larger picture in play. This book did a great job in at least providing some understanding as to what went wrong in America and why we are at a inflection point in our history.

The fifth book on my list is Erik Larson’s fantastic book “Devil in the White CIty

Erik Larson is a favorite author who chooses unique events in history. In this case it is the Worlds Fair of 1893 in Chicago. It is a duel story – one of the challenge of creating a magnificent World Expo and the other of a seriel killer. The driver for the Expo was to make something greater than the Paris Expo of 1889. A key figure was the famed landscape architect, Frederick Law Olmstead as he desired to make the worlds most amazing fair grounds. On the flip side underneath it all was H. H. Holmes believed by many to be the first modern day seriel killer. The book keeps you engaged as the Expo is under a considerable time crunch and the seriel killer gets better with practice. Fun read.

The sixth book is “There is Nothing for You Here” and given my blue collar roots one I related to

Fiona Hill grew up in the Northeastern part of Engalend. A very blue-collar part of the country and one with history in the coal mines (her father was a coal miner). An area that when Margaret Thatcher came to power was decimated by the free market, whcih Thatcher ushered in as a desciple of Milton Friedman. It serves as notice that though there are great benefits to free market economics, there will always be consequences. Fiona Hill was lucky as she was interested in Education and working her way up. She attended University of St Andrews. She eventually came to the US and worked in the Trump adminstration. She would build a career based on her education as a scholar on the Soviet Union, spending several months in Moscow in 1987 (interesting that I would visit Hungary and Czechosslovakia during that same period). She paints a story of a person, like many, who no matter where they end up our bound by their roots

The seventh book “Ghosts of Spain” returns me to Spain, where not a year goes by I do not read a book about Spain

A country that I have visited several times and one that is close to my heart. Giles Tremlett is a British journalist who works for the Guardian and lives in Madrid. If you are interested in Spanish history and culture this is a great overview of Spain and the differnet regions. It starts with the Spanish Civil War but quickly goes to the diffeent regions of Spain – Basque, Catelnia, Andalusia, La Mancha, etc..You learn about the ETA, Flamenco, etc..It was a really interesting and engaging read and one that made me want to go back to Spain. One thing he pointed out is there are not mant great academics focused on the Spanish Civil War, many are from outside (Paul Preston and Hugh Thomas). The War is not that far removed from memory in Spain, Franco died in 1975, so the pain of that era is still remembered

Th eigth book, “Leaving Las Vegas” and one that was inspired by the movie of the same name, which it was based upon

A book I had on my list since the movie came. I had heard it was an exceptionally well written book (it s also a quick read at less than 150 pages). The book is far more brutal than he movie and dives deeper into alcoholism and prostitution. What stands out is O’Briens writing. It is clean and simple and easy to connect and engage with. It is the only book he released (a few were released posthumously). He died at the age of 33 and the book was called his “suicide note”. I doubt he had a good life, it s a shame he did not realize his talent as a writer. We are all less for it

The ninth book, “California Burning” a non-fiction book that tackles “The Grid”.

An area that until recently has been left to decay, is the US infrastructure. This book documents the cost of Pacific Gas and Electruc going public, where shareholder value takes precedence. Early on PG&E brought in Accenutre as a lead consultant who focused on business value (which meand cutting costs). Consequently they reduced budget in areas like safety. In Nothern California they have over 700.000 utiity poles, many very old (between 50yrs and close to 100yrs). Combine this with global warming and a very dry landscape, with high winds and you have the makings of a disaster. This led to the Camp Fire (Paradise, CA) where 85 people died. This is a facinatig book on how when mutilple things come together due to neglegence and greed that disasters occur. We take the electrical grid for granted but with increasing energy demands combined with climate change we as a nation need to rethink our investments in American infrastructure. This was a book I could not put down

The tenth and final for this years list, “The Divider” and a return to politics.

A political junkie I am. Having read Baker before I knew he was a thorough journalist and combined with his wife it made for a powerful and disturbing read, A lot covered territory covered before. Trumps disdain for military leaders who are not loyal to him, this stemming more from his lack of understanding of the basic checks and balances in the US constituion. A general lack of knowledge of why US alliance exist and their value. Trump was often called a transactional President. Coming from a business world he sought instant gratifcation, almost always in the form of dollars. What comes through in the book is his extreme vanity and lack of self confidence. When challenged it usually led to emotional meltdowns, leading to beratings of those who were in his administration. The Trump administration had high turnover and usually could be traced to the man at the top. He glorified himself at every opportunity. This book is well researched and a engaging read.

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