In 2004 Google co-founders Larry Page and Sergey Brin were involved in a comically passive-aggressive IPO road show. They ditched business suits in favor of casual wear, refused to answer many of the questions of financial tycoons, and warned investors that instead of focusing on profits, the new public company could use its resources “to solve some of the world’s problems.” Both founders feared the limitations of a public company and vowed that Google would never sing along to Wall Street’s tune. To ensure they can do this, the founders structured the company in such a way that they controlled the majority of voting shares. Instead of giving money back to shareholders, Google will pamper the talent that fueled its innovations with perks like in-home massages, free meals and generous compensation. For example, in late 2010, Page and Brin blow the brains out of their workers announcing an overall 10 percent raise, doubling a generous annual bonus, and a $1,000 Christmas gift, just like that. The beneficiaries already had top market wages, complemented by lucrative stocks. But the generosity of the founders made it clear that this is what they meant when they said that employees are the heart of the company.
Brin and Page have not been seriously involved for many years, but the company’s 25-year history has left a legacy that defies convention. At least until this month, when Google’s parent company Alphabet laid off 12,000 employees, about 6% of its workforce, including many senior executives and some people who have worked there since its early days. For a company known to care about its employees, the layoffs were a psychological shock. Especially since some of the victims were fired coldly, having their email access cut off even before they had a chance to say goodbye to longtime colleagues.
Alphabet is not the only company laying off employees. The top executives of Meta, Microsoft, Salesforce, Amazon, and other companies are doing the same thing – fighting what they suddenly perceive as excessive headcount by chopping off heads. Current CEO Sundar Pichai’s note was so similar to other corporate mailing lists that it seems they were all feeding ChatGPT the same clues: Hey, sorry, I was overly optimistic in hiring when we were raking in cash during the pandemic, so some of you will have to leave. But this is just a spike in our trajectory. I’m very excited about a future that not all of you will be a part of!
However, bloodletting at Alphabet is different. Apart from laying off several hundred sales staff in 2009, the company has never experienced a mass layoff. And with it, signals that the era of unlimited privileges has passed. (Among the victims of the cuts were 27 employees of the company. massage therapists at home.) And it’s not that the company is in financial danger. While growth has slowed and stocks have tumbled – just like every other tech company of late – Alphabet is still making a lot of money. in last quarter the company reportedly managed to make a profit of $14 billion. He also has $116 billion sitting in their vaults. And over the past few years he’s spent over 100 billion dollars buy back their own shares, which Wall Street loves, but does nothing for the business itself.
Pichai has reasons for layoffs and benefits cuts. Among the 187,000 employees, there were undoubtedly thousands whose work was not an integral part of the company – probably not only massage therapists, but also hundreds of middle managers doing secondary projects. (Brin and Page have always believed that middle managers are a brake on innovation.) As you might expect, those who worked in the highly competitive field of artificial intelligence, including the Google Brain research group, were not affected by layoffs. In fact, Pichai claimed that the cuts were made so that Google could spend more AI resources.
But in a sense, the layoffs represent a gradual shift in philosophy. For many years, Alphabet has funded projects and created entire departments dedicated to the creation of new technologies. One was an in-house incubator called Area 120, which was all but closed due to cutbacks this month. There have also been some cuts to Alphabet’s X division, which is working on “shots to the moon.” Wall Street has been complaining about the loss-making nature of the company’s ambitious “other bets” for years, and now the company appears to be more focused on its more concrete business.