[jppope]

I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI and more to do with the revenue outlook or the growth outlook. Basically, they are "narrative shopping" to save face with the stock market... and IMO it might work.

Just a basic sniff test though - If AI enables developer productivity that would translate to more revenue, reduced costs, reduced risk, etc. The bottom line numbers would get better. With more resources available your next move is to decrease spending on more productivity enhancements or revenue opportunities? They don't want more revenue? Doesn't add up.

The better headline would be: "Amazon CEO Andy Jazzy faced with poor financial outlook tries to convince the public that downsizing is due to improvements in AI"

[sahaj]

It has more to do with the workforce wage demands and their output. Imagine if we all think that AI will get rid of our job at some point. We will work harder and demand less money do that work. All large corps did huge coordinated cuts in workforce in 2022-2023, and now there's this narrative. They are simply trying to get us to do more work for less money.

[jppope]

Even hiring people at minimum wage costs a lot of money... Maybe they are firing people so they can rehire at a lower cost, but thats a really expensive way to get people to work for less.

[fsndz]

Klarna tried this narrative shopping strategy first and it backfired: https://fsndzomga.medium.com/i-have-no-confidence-in-klarna-...

[burnte]

True, however the pitch itself is telling. They're not saying "we're expecting AI to boost the productivity of our employees by 20% with no increase in labor costs." They're saying "we're going to spend less on humans" because investors are more ok with spending money on machines than people. That's the problem, they're not looking at how AI enhances people, they're looking at how it can eliminate people.

[thunky]

Why would you expect different?

Companies don't exist to benefit their employees (or their customers).

[bredren]

Boosting second sentence here, because I think it is a foundational problem for a company trying to behave like Apple.

If the company was owned primarily by employees and customers I think it would be more likely to carry out its mission.

[burnte]

I would expect different because there are two major philosophies in business, and they indicate the direction a business will go. There is the philosophy of focus on profit/growth, or focus on costs/value-extraction.

Before anyone straw mans "but you can do both", yes, you can, but only one can be the MAIN way you run a business.

A focus on profit and growth will lead to seeing employees as strategic resources ready to be deployed to serve the business and generate revenue. One wants to enable those employees with the best matching tools that enable the employee to do more. In this case, a growth leader would say "AI can make our people 20% more productive without adding headcount, and lets us refocus another 10% of employees to more productive/profitable tasks, better utilizing the internal knowledge those employees have. These are the companies that tend to become more profitable and successful because leaders understand that good employees are an asset, not a liability.

The other focus, on costs and value extraction, see the business as a zero sum game; in order to increase profits, we must decrease costs or find a way to extract more value from customers. These are the companies that will reduce service levels with no change in pricing to improve profits. They'll understaff a facility to see the "true minimum number of employees" (the bare minimum), depending on some employees to go "above and beyond" to get things done for no additional compensation. They'll get rid of expensive employees, settle for replacements employees who are 75% as good but will work for 65% of the money, and keep headcount the same; worse service, but proportionally lower costs. These are the companies that maybe be huge, but they're not market leaders, they're reactive and basically rent takers.

When a leader begins to resent employees being paid to do their work, it's time for that leader to go, because they'll simply start that company on a decline.

Basically, there are those who understand the difference between cost and value, and those who are too focused on cost to even understand value. If your first response to AI is "we can cut people" you're in the latter camp. Your first reaction is to cut costs, rather than to exploit the new tech for even higher profits.

Eyes on the future instead of the past is how you grow and succeed. Employee success leads to company success. Employees are not a cost center.

[thunky]

Respecfully disagree...

We all know the story of WhatsApp having a billion users with 50 employees. While Slack had significantly more employees and not necessarily a better product/business.

If Slack were to cut their staff down to 50, that would mean they are the ruthless type that only care about value extraction and doesn't value their employees, right? But if they started with 50 and kept it there, they'd be celebrated for efficiency like WhatsApp?

Point is, there is no way to know how efficient a company is, or what their philosophy is, just by looking at their financials and their headcount. Even if the headcount moves.

[burnte]

All generalizations are false, and I wasn't trying to say that's a hard and fast rule for every single company.

[crop_rotation]

> Just a basic sniff test though - If AI enables developer productivity that would translate to more revenue, reduced costs, reduced risk, etc. The bottom line numbers would get better. With more resources available your next move is to decrease spending on more productivity enhancements or revenue opportunities? They don't want more revenue? Doesn't add up.

If that was true then the companies should never have been doing layoffs, as all these companies are generating tens of billions of dollars in revenue.

> The better headline would be: "Amazon CEO Andy Jazzy faced with poor financial outlook tries to convince the public that downsizing is due to improvements in AI"

This is assuming that companies have the capacity to keep increasing revenue by adding more workforce, which is just not true. At some point you hit diminishing returns with more workers. The same goes for Agent workers. To chase more revenue you need a lot more than just more SWEs and a lot of that is not currently similarly scalable.

[jchw]

Even though I can fathom a world where AI tools could somehow lead to reduced head count, I think this is the only reasonable interpretation right now. After all, tech companies have been beating the "downsizing due to AI" drum for a really long time now, and for almost the entire time it has been very blatantly obvious bullshit.

[another_twist]

What amazes me is the vile shit directed towards software engineers. Remember that letter from the dickhead investor to Google demanding to know why engineers were paid 450k. Or just PMs beating the drum about how you don't need engineers ? My reaction to that was hey all the tools you love to throw into engineers faces were devtools. You know the dev part is important. Remember Bubble, their whole schtick was you dont need a technical cofounder and I have yet to see a unicorn Bubble app. Instead of talking about how we all can collaborate, people really are hating on engineers for nothing.

[CharlesW]

> I think the fair way to read any CEO's comments about AI reducing their workforce at this point has nothing to do with the capabilities of AI…

You can legitimately argue "far less to do with", but it's definitely not nothing. There are countless projects underway where AI will allow for 10% reductions with zero business impact in the short term, and 25-40% reductions (sometimes more) by 2030.

[jppope]

ok. so you can reduce your head count without impact great! Why would you get rid of people? Why would you not reassign those people into other productive or revenue generating activities?

The only logical explanation is that they don't have enough opportunities to utilize those people OR as I previously mentioned... their financials might look bad, and they are trying to make them look better so they don't take a hit in the markets.

[TheOtherHobbes]

Fire people. Stonks go up. Bonus!

Stonks go down - fast - when all those fired people stop buying, but that's a problem for the next CEO.

As you say, they could also expand. Or just fix the problems with the site.

But they don't have the imagination to do that.

[diamond559]

Countless projects huh, CMU found the best of them has only a 30%ish success rate on basic business tasks. Many are below 90% still, but yeah let's just pull magic numbers out of thin air. How much Nvda you own bud?

[CharlesW]

Zero Nvidia. The CMU benchmark is fun, but tasks <> jobs. They found that agents can autonomously finish about a third of their simulated office tasks, but that can't be mapped to a labor-market forecast.

[rsynnott]

> There are countless projects underway where AI will allow for 10% reductions with zero business impact in the short term, and 25-40% reductions (sometimes more) by 2030.

Are there any where it empirically _has_ done, or are we still in jam tomorrow mode? Like, there is a very big industry devoted to selling this stuff; I'd be _extremely_ cautious about promises and projections.

[another_twist]

I am curious, where are these numbers from ?

[CharlesW]

These are realistic (IMHO, of course) projections based on studies I've helped with and conversations I've had with my network. Naturally, the impact will vary enormously based on roles, and the timelines won't be evenly distributed.

But these kinds of projections aren't unusual at all — if you use the Deep Research capabilities of modern models to build a list of public projections for your own research, you'll see similar estimates. These reports will generally use the framing of "efficiency gains", where AI will "free-up employees from drudgery to focus on higher-value work", but my intuition is that a future where all individual contributors are elevated to Director of Agentic Workflows is probably not the most likely outcome.

[diamond559]

What studies? MIT estimates only 5% of the workforce can be replaced long term. What tasks are you employees using AI on, CMU shows the best llm only has a ~30% success rate for basic business tasks. Are you a vibe coding start up or something?

[CharlesW]

> MIT estimates only 5% of the workforce can be replaced long term.

The model by MIT's Daron Acemoglu estimates that ~5% of U.S. tasks can be completely and profitably automated by AI within ten years.

It was expressly not a head-count forecast, and didn't attempt to quantify the headcount reduction that AI augmentation could enable.

[another_twist]

https://economics.mit.edu/sites/default/files/2024-04/The%20...

Is this the MIT paper ? In this one the TFP is 0.55%

[red-iron-pine]

i think profitably is the key word here, since AI orgs are burning ungodly amounts of money and electricity and will expect to recoup that money.

[another_twist]

I see and are these studies public ? Could we see the data and the methodology here ? Thing is there are benchmarks to judge software engineering capability of AI. I am more interested in how the jobless predictions made ?

I understand all the theory but it can largely be condensed into - AI makes workforce more efficient so you need less people. But there are no good studies afaik that measure AI powered efficiency and surely nothing about how to model workforce reduction due to AI. I am curious what the science is behind these opinions.

[rsynnott]

> These reports will generally use the framing of "efficiency gains", where AI will "free-up employees from drudgery to focus on higher-value work"

Okay, but what are these reports _based_ on? Everything I've seen along these lines has been, essentially, marketing material; there seems to be very little hard data suggesting this kind of outcome.

[whatever1]

In my case AI has boosted my productivity towards directions that are not on the critical path for a project, but nevertheless very nice to have.

For example now I have a ton of graphs and interactive UI pages that interact with my code. Made everyone’s lives easier, but at least in my case it was not a dealbreaker not having these, and frankly nobody was willing to pay for them.

[cyanydeez]

Reduce it further: they have a cudgel to manipulate lower salaries with.

So it really doesnt matter whats realistic. They want cheaper workers to live in fear.

[conartist6]

Yes, your point about revenue is very astute