February 2023 Archives

Working for face-eating leopards

There is a meme that started somewhere during the post-Brexit period when the reality of what the United Kingdom's departure from the European Union really meant started hitting home. It got picked up by people in the US to talk about voter regret for electing Trump. It goes like this:

"I didn't think the leopard would eat my face," said the woman who voted for the Let Leopards Eat Faces party.


I'm thinking about this right now with regards to the reductions in force (RIFs) happening in US-based big tech. We don't know for sure why this is happening, but there are several competing (and probably overlapping) theories:

  • A major hedge fund is pushing the majors to cut staffing in a cynical bid to reduce salary inflation in the industry, and make their job of investing in growth companies easier by reducing their payroll expenses.
  • Inflation-related softening in consumer and business consumption hitting the growth percentages of these companies hard enough they have to make up the gap in profitability, which means cuts.
  • Seeing the majors cut staffing means you can avoid a public relations hit by me too-ing your own reduction in force in a cynical bid to reduce salary inflation and make hiring less expensive over the next year or so.
  • Seeing several members of the peer companies you picked in your Radford salary survey do RIFs, so you cut some high cost staff to further reduce salary inflation and make hiring less expensive over the next year or so.

You might notice a theme here, which is what reminded me of the face eating leopard parable. There is a piece of advice I tell people at work that relates to this:

(DayJob) is a publicly traded SaaS company in the United States, forget this at your peril.

This is a nonspecific warning, but I mean it in the sense that we all are still working for a face-eating leopard; just one that's more domesticated than many of the others. When push comes to shove, it'll still eat faces. Yes, the benefits are pretty good and they haven't done a RIF yet; but do not mistake this for a sign that they will not ever perform a RIF. In case you need it specified, the theme in the above list is "reduce the pace of salary inflation and make hiring less expensive over the next year or so," which can be accomplished several ways, one of which is a RIF.

There are other ways to reduce the pace of salary inflation and make hiring cheaper:

  • Stop focus-hiring in "high cost metros" like San Francisco, New York, and London and instead focus hiring in cheaper metros like Atlanta and Dublin. This is great for two reasons. First, it makes the base-salary of most of your new talent rather lower than the base salary of the high cost metro talent; second, salary inflation is compressed in these lesser metros so your talent stays cheaper. The pandemic made this option more palatable due to the move to remote working styles.
  • Start hiring in friendly foreign markets that are cheaper than US markets. This takes significant investment, but is a move well known to the tech industry: off-shoring. Eastern Europe is +8 hours from San Francisco much of the year, which makes it a great place to start adding talent to work towards "follow the sun" support of your systems. Eastern Europe's cost of living is relatively low, which means the talent comes cheaper. -8 hours from SF is the middle of the Pacific, it's a big ocean, but is part of why you see Australian and Chinese centers. Some opt to go the India route and deal with a 10 or 14 hour time difference instead.
  • Close foreign development centers to bring more of the workforce into the friendlier US labor relations regime. Lots of European companies have mandatory notice periods for layoffs and RIFs, which really slows down how fast you can cut costs when you need to. "At-will" employment laws in the US means you can almost always do a same-day termination. This option is best for companies who did the previous point during past contractions.
  • Move more work to contractors. This moves the benefits problem to another company, and if you need to cut contractors that's rather cheaper. Microsoft famously got in trouble for this one and ended up under a court judgement to offer full time benefits for contractors serving longer than 18 months. Which meant contractors never served more than 18 months, ever.

All four of these moves are things you do when you have some warning that winds are shifting, or you already know you need to add percentages to your profitability line-items in your quarterly/annual reports. A domesticated leopard will do more of the above slow-shifting before biting faces off through a RIF. That leopard will still bite faces off if the above doesn't move the profitability needle fast enough.

What does this mean for those of us working for face-eating leopards?

First and foremost, it means being defensive with your finances. If you are working for this particular variety of face-eating leopard (publicly traded US tech company compensating in part through stocks) then you are probably in the top 5% of US income. Before I got a job with one of these leopards I didn't understand how friends in the industry could say things like:

I left Company X today. I plan to take a few months off before seriously looking for my next thing.

Who has that kind of money laying around? I sure didn't. Then I started working for one of them and got stock-compensation, then I understood. Those Restricted Stock Units meant quarterly infusions of cash-equivalents I had to do something with, so I saved them. It turns out a lot of us do that too, since the savings-rate of the top 1% of the US income list is over 30%. That gives us a lot of leeway to build up an emergency fund, which we all still need to do. If you're living hand to mouth, which is actually easy when your rent is $4000/mo, then you're at risk of having a really bad time if its your turn to have your face eaten.

Second, if you're living in a high cost metro and are working for a company with a sizable remote workforce, you are at elevated risk of getting your face eaten and having them repost your job somewhere like New Orleans. Being more at risk means you need to be more diligent about making sure your finances can survive 5 months of unemployment. The US technical job market is getting realigned now that the money has figured out you can have a successful business by hiring outside the major metros. More and more, when companies are facing equally qualified candidates in New York City and Cincinnati, they pick the Cinci candidate because they're cheaper.

Third, and much less helpful, work towards changing the US labor market (or relocating to a labor market where employees are treated better by policy) to make face-eating harder to do. A majority of the European Union has laws on the books requiring a notice period for reductions of any kind, same day terminations are rare and shocking. By proxy, a lot of the places colonized by EU members have similar protections. Getting three weeks warning that you will be out of a job means you can say goodbye, work on a transition plan, and otherwise have time to mourn. It still sucks to lose your job, but it'll hurt less.