[colinmorelli]

…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.

[kevviiinn]

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

[colinmorelli]

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.

[kevviiinn]

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

[colinmorelli]

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.

[kevviiinn]

I didn't realize EA was getting VC funding. Which round are they in?

You say all of this about economics like the field isn't one of the worst verified "scientific" fields out there

[colinmorelli]

“Depressed investor sentiment” applies to publicly traded companies as well. Profitability is now the focus. Speculative bets are not.

Public markets operate on opinions and feelings more than science. That sentiment of the markets is not high right now is clear. Look at every publicly traded tech company’s performance in the last 12 months.