Just like you're blindly copying what you read others say about "cheap money", EA is just blindly copying what others are doing and laying off employees
My dude, if you wanna pretend like the greater macro trends have no effects on large swaths of business then be my guest but businesses in may different verticals are prepping for less sales. It's whats happening. You can la la la "businesses are dumb and no one is a free thinker" all you want but that only hurts you.
No business is an island.
I'm not parroting what I've read others say. I'm sharing my LIVED EXPERIENCE from a company that is like EA. Go look at my profile and look at the news.
This place used to feel like we had some nerds that really wanted to understand business. I'm sad that acknowledging simple macro trends is not considered table stakes anymore.
I'm not at liberty to share those discussions with you, but I respect you for asking. I can point you to what was shared with the public:
"The current macroeconomic environment is tough, and as a result, companies are still spending but they are taking a more conservative approach to software investments and are taking more time to make purchasing decisions."
Do you think that's a lie? Some businesses have stacks of dollars, but how fast will that value be inflated away? Some businesses don't and rely on credit to cover payroll. That just got more expensive due to interest rates. Our CEO said "Businesses are making decisions differently". Or said another way:
The Macro environment has effects to all businesses.
Your original dunk attempt was "everybody, myself included is just parrotting and blindly following" and I attempted to explain to you that everyone is in this new macro environment (driven by the changes to cost of money, as well as increased money supply) together and is adjusting business expectations accordingly.
Do you think interest rates and the influences to macro env are not the driving factor impacting business decisions right now? Would love to hear what your contrary thoughts are beyond "business leaders are all sheep, myself included".
Macroeconomic environment can also be equated to rising cost of salaries in general, salaries can be reduced by increasing competition in the workforce through large layoffs. If a company can't afford to continue paying large salaries they can easily reduce that cost through laying people off at the same time as other companies
I'll ask you one rhetorical question and then I'm going to stop arguing with you because you refuse to connect the dots for some fantastic hoop-jumping:
- What is driving the cost of salaries raising?
In "normal times" you might say competition and cost of living. Cost of living is... inflation.
Right now, with our increased money supply, inflation is much higher than it's been for a while, and that is a large driving factor for people demanding more salary. This is where interest rates play in to layoffs. This concurs with your points that laying off people could create more competition in the market which means some folks may consider a job for slightly less pay vs. no job at all.
But you've run circles trying to pretend like interest rates are not a factor in this, and I'm not gonna waste any more of my time explaining that to you. There is enough commentary from others here and everywhere else, you are just refusing to believe it.
Of course I refuse to believe it, just because a bunch of people are parroting the same line doesn't make it correct.
Inflation is being driven by corporations who have been increasing prices since the pandemic, they've had record profits at the expense of everyone's cost of living [0,1] and even landlords have been colluding [4] to raise rents on people even though they can't afford it, I mean where will they go as one property management company asked in a business call [3]. Even Forbes doesn't take the opportunity to blame the fed in this instance, which is kinda funny to me, but being a mouthpiece for capital they of course point the finger at supply constraints with some fancy graphs [2].
…there are pretty limited options here. Nobody is blindly copying what others are doing.
For most technology companies, salaries and compensation are one of if not the top line item in the budget. And during a time of cheap money (which is objectively true - this is not someone regurgitating other comments), companies invest in new initiatives.
So when headcount is the top line item, and new initiatives are less desirable as capital becomes more expensive…it’s pretty clear that there’s a small set of viable options to make the math work again.
It could still be related to rising salaries but not interest rates. Mass layoffs increases competition and lowers salaries overall irrespective of interest rates, having a lot of layoffs from multiple companies at the same time is a way for the company to save money. I don't know why people think companies that generally have millions or billions in the bank need to borrow money to pay salaries, I've never seen anyone provide evidence that these huge companies are doing that. I only see people parroting the interest rate line and blaming the Fed
Because you are fundamentally misunderstanding how interest rates impact companies. No, these companies are not borrowing money to fund salaries.
When interest rates drop, safe investments (such as bonds), become less attractive. The yield on those investments is not high. This means that excess capital gets reallocated towards riskier bets (such as stocks, or venture investing) to try to yield a return that way. More speculative bets happen as a result of free flowing cash to high growth organizations. Companies are willing to lose money in exchange for market share because investors are willing to bet on companies that are losing money on the off-chance that one of them yields a 100x return. This game becomes more attractive when other means of growing investments are harder to come by.
Now, interest rates are higher. I can throw money into a savings account at 4.5% APY. A potential 7% return by throwing it all into high growth stocks (which also carry significant downside risk) is comparatively less attractive. I'm now much more incentivized to invest in companies that are stable and carry less downside risk. Those companies are the ones that are spending more responsibly and generating positive cash flow.
I'm still waiting for some sort of reference about interest rates directly impacting layoff decisions. You can make claims as much as you want but that isn't evidence that you're correct about interest rates being the cause of layoffs
Because, as I just indicated, it's not the interest rates directly. It's indirect. If you don't believe that high interest rates can have a suppressive effect on higher risk investments, then you're just arguing with clear verifiable macroeconomic fact.
If you do understand that higher interest rates suppress higher risk investments, then there's a direct line between that and slowing VC funding and depressed investor sentiment, which is ultimately what's feeding these layoffs.
The indirect link is not always true. Interest rates can be risen in a bull market. When done slowly, this effect is less pronounced. In this case, we massively shifted rates in a short amount of time during a period of high inflation.
No business is an island.
I'm not parroting what I've read others say. I'm sharing my LIVED EXPERIENCE from a company that is like EA. Go look at my profile and look at the news.
This place used to feel like we had some nerds that really wanted to understand business. I'm sad that acknowledging simple macro trends is not considered table stakes anymore.