Tech leaders shed staff to boost inventory | by Todd Moses | January 2024

After destroying more than 12,000 jobs last year, Google and others are planning more layoffs for 2024. While many say it’s because of AI, the money tells a different story.

Why it matters: The saying “MBA equals BMW” is no longer viable. It takes more than an advanced degree to stay out of financial trouble today. Former CEOs with impressive exits, graduates of top programs, and long-term tech workers face changes in their life plans. However, investors will reap the benefits.

CEOs have a legal duty to shareholders, not employees. Once the tech giants start laying off, investors will be rewarded. Including:

  • Job cuts suggest that society has become more efficient (Ashworth 2024)
  • After layoffs in 2023, the S&P 500 rose 24% and the Nasdaq Composite rose 43% (Bowman 2024)
  • Amazon ( AMZN ), Alphabet ( GOOGL ), The Meta Platforms ( META ), BlackRock ( BLK ), Citigroup © and Unity Software ( U ) all announced job cuts for 2024 (Heath 2024)

Despite the hype, OpenAI and other AI leaders cannot replace highly skilled employees. As of today, these technologies can help with writing, creating non-trivial code, composing images, and answering customer questions. This technology is not comparable to an average computer scientist, a decent businessman or an average salesperson.

These tech leaders are not replacing humans with the current state of AI. Instead, they maximize their efficiency by cutting redundant people out of the operation. For years, companies have hired more employees to scale faster. Venture capital-backed firms are under pressure to proliferate, and that pressure only increases when they go public. Downsizing means the company has reached its growth limit.

The growth limit does not mean that the company cannot make more progress. It means that the company has discovered the maximum capacity of the workforce to maintain operations. Downsizing should reduce costs without reducing revenue (Ashworth 2024).

Leave a Comment