Mark Zuckerberg explains why so many tech companies are doing layoffs right now

February 19, 2024

Mark Zuckerberg has a theory for why tech layoffs aren’t slowing down: Companies are realizing that, while painful, there are benefits to being “leaner.”

In an interview with Morning Brew Daily’s podcast published Friday, the Meta CEO said companies are still adjusting to the post-pandemic era. He also discussed competition with Apple, among other topics in a wide-ranging interview.

The first wave

During the pandemic, e-commerce sales went through the roof, which drove big gains in online advertising. But as people returned to stores and the economy adjusted, sales growth ebbed and ad rates came back to earth. Many companies, including Meta, realized they had overhired and had to make major cuts.

That was the first wave of layoffs.

“In terms of the layoffs and stuff like that, I actually think that was more due to companies trying to navigate Covid,” Zuckerberg said in the interview when asked if tech layoffs had to do with the AI boom.

What comes next

Zuckerberg said that companies are no longer shrinking their employee size simply because of overhiring — they’re now realizing there can be benefits to being leaner.

While a lot of tech companies were reluctant to make cuts at first, they realized it didn’t spell the end, Zuckerberg said.

“It was obviously really tough, we parted with a lot of talented people we cared about,” Zuckerberg said in the interview, speaking specifically about Meta’s past layoffs. “But in some ways actually becoming leaner kind of makes the company more effective.”

Since Meta cut tens of thousands of its staff starting with Zuckerberg’s “year of efficiency,” the company has been making a comeback, with its stock at an all-time high.

Fewer management layers

Zuckerberg has been chopping management layers as part of this efficiency drive. Instagram is eliminating technical program managers and that role is also being cut back across other parts of Meta.

Meta didn’t respond to Business Insider’s request for comment.

Today, companies are still in the mode of thinking about efficiency, Zuckerberg said during the Morning Brew podcast. Many are considering restructuring the company, flattening out management levels, and transitioning to a leaner model.

Companies like Microsoft and Google have continued to downsize despite solid earnings. A number of CEOs at companies like Amazon have mentioned plans to restructure the company and invest in areas with AI.

But Zuckerberg said that he didn’t think AI was a big part of the equation.

“At least for us, the AI stuff was not a major driver for that,” the CEO said. “It was like first this overbuilding and then this sense of like let’s do the best work we can by making a lean company.”

Apple competition

Zuck also spoke about Meta’s intense rivalry with Apple. Zuckerberg and Apple CEO Tim Cook have something of a feud going back several years now. And the companies are racing to become the dominant platform for virtual reality, augmented reality, and what Apple calls spatial computing.

Earlier this week, Zuck panned Apple’s Vision Pro goggles in a review posted online.

“I take Apple seriously,” he said during the Morning Brew podcast. “I think it’s like a good company. They do good work.”

Zuck said Apple will likely improve its headset, but Meta will probably move faster.

He also looked back as the history of computing and described how sometimes closed platforms like Apple’s iOS won.

“But that’s not always how it works,” Zuck said, noting that Microsoft’s open approach with personal computers won out in the 1990s.

“I just don’t think that the future is written on this yet,” he said.

Source: GWFM Research & Study

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