With profound sorrow, I read the news of all layoffs across the tech industry. Thousands are losing their job in what seems to be a very long and grim period where tech companies are on a streak to cut costs and make themselves “leaner.”
Speculation is an integral part of the tech world. Venture Capital companies are always looking for the next unicorn (companies that would provide 10 - 100x returns). Startups are a risky asset class; three out of four startups backed by venture capital fail, and less than 1% reach unicorn status. Therefore, the VC game is a pure statistical bet. The reality is that tech companies, especially VC backed startups, have long been overblown-hiring, following risky growth strategies that try leveraging headcount to accelerate output. There’s a build of pressure to show good enough results to indicate a successful exit. The long term is a risky game, although being contradictory that one company can build innovative and sustainable products quickly. And this is the reason for hiring a lot.
There’s this saying that “9 women can’t give birth to a baby in a month”, which plays around the fact that increasing headcount is not the solution to a better outcome, but instead to more output (sometimes not even the case). Headcount and meaningful outcomes are not directly correlated. Unfortunately, that’s the mindset we found ourselves working in tech. But that changed.
Due to an adverse economic situation, among other factors such as conflicts, energy crisis, etc., what we’re seeing now is companies trying their limits and questioning the ideal (minimal sometimes) team sizes for keeping business afloat. This mindset, in and of itself, is not wrong. What is bad, from my perspective, is that VCs turned from valuing companies that pump up headcount to valuing the ones which can get rid of the “extra weight” fast. What a messed up game to be played.
In the long run, I believe that what is happening now will naturally balance the workforce and distribute talents from big tech FAANG behemoths to smaller companies, hopefully, more purposeful companies that act more responsibly.
Questioning our ways of working Building digital products is a very uncertain process. Delivering good products in a reasonable time and building enough audience and engagement to make a business profitable (therefore not relying on fundraising to survive) is an arduous process. It takes team cohesion, vision, purpose-driven people taking on complex challenges, and techniques that enable the uncertainty to be embraced and overcome.
The tides of change we’re going through will necessarily make tech companies rethink their ways of working. We successfully moved from a corporate waterfall software development approach to a more streamlined one with Agile. But it’s time for something else. Writing code deployable faster is no longer a problem. So it’s time to focus on how we’re solving problems and delivering value to customers. That’s why a renovated interest in the Design process (or “Design Thinking,” if you will) has emerged. Design facilitates the understanding of real-world issues and how to identify opportunities in people’s day-to-day activities.
A recent example I’ve recently stumbled upon is the concept of Shaping from the creators of Basecamp. That’s a refreshing new approach to product development cycles. I expect more to come.
As an optimistic person, I positively see the future we’re heading towards. Along the way, many will still lose their jobs and need to repurpose their lives and question why they do what they do and how they approach their work. I hope we’re moving to a place where we can innovate and improve the world more sustainably; it’s no longer acceptable to “move fast and break things.”