Brace yourself. The layoffs winter is here – The Nutgraf by The Ken – The Ken

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The Nutgraf is a 10-min newsletter sent at 10 AM IST every Saturday. It connects the dots and synthesizes one big event in business, technology and finance that happened over the week in India. In a way you’ll never forget.
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But maybe there’s something you can do about it
So it feels like I came back from Thailand to a different world altogether, especially the world of tech. Layoffs are happening all over. Hiring freezes are being announced (some prefer to keep it unannounced). Earnings and stock prices seem to be largely muted. Elon Musk is finding out that it’s easier to get rockets back to earth than to manage Twitter. And Mark Zuckerberg is literally living in a different reality. 
Whew. 
From a career standpoint, I’ve lived through a recession and a funding crunch, so I want to say that all this is transient and that things have a way of changing very quickly—which is more or less what happened during Covid. 
However, there are some signals that the winter is going to get a lot worse, and that it will last longer than anytime in our recent history. 
And that’s a bit worrying. 
So in today’s edition, I’m not just writing about the layoffs, I’m also asking for your help. 
Let’s dive in.
Look, like I said, I’ve lived through a recession, a (relatively minor) slowdown, and a complete lockdown. They were all bad, but the worst-case scenarios didn’t exactly pan out. It’s easy to forget this, but in all three scenarios, experts underestimated how resilient the global economy was, and things got back to normal far more quickly than expected. 
I’m not so sure this time around. 
First, the companies that are buckling their belts are not the ones you expected to
Last week, the payments giant Stripe announced that it would layoff 14% of its employees. Then Amazon, of all companies—Amazon, officially declared that it would freeze hiring across most of its corporate roles, including for Amazon Web Services (AWS). There are reports that Apple is doing the same. Of course, many other companies are doing this too, but the fact that these three companies are in this list is especially concerning. 
That’s because what’s common to Stripe, Amazon AWS, and Apple is that they are the primary providers of the infrastructure of the internet. 
These are the three legs that the global internet economy rests on. 
And the world’s leading providers of all three of these services are scaling down. 
This is unprecedented. 
Second, the Federal Reserve is still being super cautious
I don’t want to get too deep into macroeconomics, but the short, grossly simplified thesis is that the Federal Reserve of the United States is the most important organisation that controls the supply of capital globally. The Fed controls printing of dollars and interest rates for borrowing. And after kickstarting a liquidity party back in early 2020 after the pandemic struck, the Fed is now essentially running around switching on the lights and telling people to call their Ubers and go home. 
Very simply, the Fed cares about inflation. And to cut down inflation, it’s raising interest rates. In fact, it has implemented “the swiftest tightening of U.S. monetary policy in 40 years”.
And the big worry is that there’s some way to go. 
How does the Fed know this? 
Paradoxically, it’s because jobs are still being created. 
The labour market is a strange beast. We are living in a time where bad news is actually good news. The Federal Reserve has been taking a set of actions to curb inflation, and one outcome of those actions should have been a decline in new jobs and higher unemployment across the board. And right now, it’s a bit mixed. So the Fed expects to stay the course, likely for the next several months. 
This was probably one of the triggers that precipitated the layoffs across tech companies last week. 
And the Fed is not done yet. 
When Stripe laid off a big chunk of its staff last week, the company published a fairly transparent blog post detailing the severance packages (which are as generous as one can expect), and also had a section where founders John and Patrick Collison took ownership and wrote about the mistakes they made. 
Here’s that relevant section.
Here’s my quick take. 
Special projects teams at consumer tech companies are at high-risk
Typically, the way it works at tech companies is that once they establish themselves, they form teams to embark on more risky adventures. In general, these teams may try to go for international expansion, or to build a completely new business that’s unrelated to the core. All of this is fun and amazing in good times. 
But when things turn, these teams are usually the first to go. 
There are many examples of this. Last year, just after Zomato went public and started facing a lot of scrutiny (and pressure) to fix its business, it killed its entire international business. OYO did something similar when the pandemic hit. 
Essentially if you are working on a ‘moonshot’ project, well, it may be time to come back to earth. Preferably in one of Musk’s rockets. 
Executives with ridiculous salaries are going to have to find other jobs 
Back in 2020, Coinbase, the crypto company hired an executive named Surojit Chatterjee as their Chief Product Officer. Chatterjee previously worked at Google and even had a brief stint at Flipkart. 
And the headlines claimed that Coinbase had offered him a US$643 million compensation package. Now the truth is that that number is technically correct, but has several nuances, like a stock payout that extends over five years, or that a large part of his salary was in Dogecoin. 
Okay, that last part wasn’t true, but you know what I mean. 
Anyway it didn’t stop the chatter and the attention.
If you know someone like Surojit Chatterjee, or if you received absurd salary increments last year, well, the next few months may be a bit rough for you. 
Working at crypto, ed-tech, or e-commerce is not going to be fun
Crypto, we know. Edtech, well, we know that it’s always been a bit cold and heartless, but is now touching new depths—like signing up global football stars as their brand ambassadors while simultaneously laying-off staff. 
I think e-commerce isn’t in a good place either. By this, I don’t mean companies like Amazon and Flipkart, but smaller firms. In fact, the publication Inc42 maintains an Indian startup layoff tracker, and from a sectoral standpoint, e-commerce has contributed to nearly 15% of layoffs in the past few months. 
Anyway, all of this is my take. 
But what do you think? 
Perhaps you are an executive, or a manager, or someone involved in hiring. I’m sure you are seeing the signals. You are probably attending meetings where layoffs are being discussed. According to you, what kind of roles are at risk? What are companies thinking? How do they decide how to make a decision on whom to keep and whom to let go? 

Write to me at [email protected]. I’ll share some of the best stuff I hear with the rest of you. Don’t worry, I’ll get in touch with you and take your permission before I publish anything you share with me.
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