alt Hacker NewsI'm going to start calling these "Canary" moments.
Assuming we take everything at face value for these sorts of cuts, it creates the following scenario:
A company finds itself with surplus labor capacity due to the efficiencies in AI while also posting substantial profit or revenue growth. The company could downsize the workforce to capitalize on short-term efficiencies and increase margins, though this will come at the cost of long-term reputational harm due to posted profits/health as well as burning out staff who must do the same (or increasingly, more) work with less headcount, leading to attrition when the market shifts in their favor. Alternatively, it could leverage this surplus labor for a period of moonshot R&D or paying down technical/process debts while they have the capacity and the profit to pay for it, which harms short-term share price relative to their competitors slashing jobs, while improving the company's capabilities in the marketplace in the long-run, potentially through mastery of these AI tools or the creation of new product lines.
The fact so many orgs opt for immediate greed over long-term growth really is its own canary that leadership and governance both has failed the marshmallow test.
Replies
> A company finds itself with surplus labor capacity due to the efficiencies in AI
It's likely more:
A company finds itself with surplus labor capacity due to the over hiring during Covid, cutting down on risky ventures, protecting margins, and narrowing scope.
But I think there's also:
A company wants to see if AI is making them more efficient, decides to cut people as if it was and see what happens.
I also am not sure about the short term stock price, many recent mass layoffs the stock often moved down. The CloudFlare stock is tanking in after market for example.
I think as someone pointed out earlier, this is more likely about margin preservation as their gross margins are deteriorating really quickly.
Excess labor would only translate to increased revenue and new products if these companies had a product vision to begin with. But they don't, so people get sacked.
If using AI had a "substantial profit or revenue growth" wouldn't it make more sense to hire more people so they can use more AI and increase revenue?
This is simply a symptom that the company doesn't have good Quality Control processes in place.
AI-produced code is good but it's not so good that it can replace hand-crafted (or heavily supervised) code written by the type of engineer who works at Cloudflare.
What's really happening is that a few employees realized they can game the system by turning on a firehose of AI slop and pushing 10x the LOC than any other engineer (with or without AI), because there's no one to tell them to stop, and in fact with a management that actively encourages this.
> The fact so many orgs opt for immediate greed over long-term growth really is its own canary that leadership and governance both has failed the marshmallow test.
Why do you think it's greed? The company's stock is down and they just missed expectations on their last earnings report (unheard of in big tech in the last 2 years).
It seems more like a traditional layoff scenario
That's the thing. There is no surplus labour capacity, neither they have any ideas for moonshot projects that could pay off left
cloudflare vibecoded a wordpress clone (emdash), they have no idea where to allocate engineers to make new products.
"A company finds itself with surplus labor capacity due to the efficiencies in AI"
That is one possible interpretation, though I don't think it's supported by any facts.
A competing explanation: companies are spending a ton of money on AI in search of efficiency, and then laying people off in order to offset these investments. That's certainly what's been happening at Microsoft, Oracle, Meta, etc.