Om Malik

The era of endless prosperity in tech is over

Jeff Bezos (Credit: Getty images)

‘I don’t think you want a management structure that’s just managers managing managers, managing managers, managing managers, managing the people who are doing the work,’ Meta CEO Mark Zuckerberg recently said at a company all-hands.

He might not have been talking about his company, but you could apply his words to the entire technology ecosystem, which after nearly a decade of unprecedented boom is afflicted by the disease of wealth. It’s grown fat, rich and bloated.

During the pandemic, the total headcount for Silicon Valley was on the way up. Yet the economic downturn, slowing growth, the end of cheap money and an increasingly bellicose investment community are making Silicon Valley now pause and undertake layoffs – a word we have not heard in these parts since the 2008 financial crisis.

An economic downturn is an excellent opportunity for tech companies to clean house and trim the fat

Some estimate that technology companies have cut over 225,000 jobs since the start of 2022. Meta, Amazon, Microsoft, and Google have cut 51,000 positions. In a larger scheme of things, 225,000 cuts aren’t much. The tech industry still employs about nine million people in the US alone.

But sometimes layoffs aren’t just layoffs. They’re a rude reminder of tough times ahead for a sector that is (quickly) coming down from historic and unprecedented highs.

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Microsoft CEO Satya Nadella put it best in April 2020 when he proclaimed: ‘We’ve seen two years’ worth of digital transformation in two months.’ He was talking about the wholesale and almost overnight dependence and dominance of all-sort technologies in our daily lives. Whether it was working remotely, buying online, delivery services, telehealth or living our lives entirely through screens, the future arrived in a hurry. The result was unprecedented growth – in size and scope.

Microsoft’s chief was merely articulating what every single technology CEO was experiencing.

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