There seems to be significant opportunity to zig as others zag. Imagine the Intel letter saying "we are going to take advantage of the current hiring environment to scoop up talent, and push forward on initiatives."
Just keep smooth talking everyone into cost reductions and make arbitrary decisions to make it feel like you're actually in charge.
The letter seemed contradictory: be a factory, but innovate on AI. Is AI actually smart? Human brains use the power of a dim incandescent light bulb, why does AI require so much power, that the processing chips overheat?
Sure, selected tasks can be done orders of magnitude faster, but do we, for example, really need that kind of output, like pi to a trillion digits? Or AI controlling stock market trading? How much liquidity is necessary for traders other than huge funds?
But speaking of combining forces, Microsoft will be more likely to pick them up in a fire sale now, which I think would be best for all involved. Then you’re a couple of M&As away with first Dell and then Oracle.
Then they will select a champion to fight the Pentavirate at The Meadows!!
Because they all studied the same MBA programs.
I thought about this a lot over the years.
I saw something that piqued my interest last year though, and kind've helped connect the dots. I was on a cruise, and most of the ship was available to guests. One day, one room was cordoned off to an invite-only meeting. The windows weren't blocked, but on the screen was a presentation about AI investments, number of jobs saved (reduced), and etc.
I found one of the attendants later during the voyage and chatted her up. She was head of HR in some big company, and the meeting was supposed to be private. But it contained a lot more than just spreadsheets about AI investments. There was homework and whatnot, but the attendees weren't all from a single company. It was "direction setting". I don't think it was Intel (topic under discussion) but certainly some loosely related tech industry.
I'm convinced that it was nothing less than business collusion.
So, back to your question:
> why do all these business leaders all do the same things at the same time?
Because they're told to.
Wonder if it’s “not illegal” if it’s done in international waters.
I didn't ask. As I understand it, it's less about legality and more about plausible deniability; on a "party boat" with plenty of other public people to make it cheaper than renting a whole boat, plus the week for the cruise and time to relax -- seems plausible that these people "just happened" to book the same boat at the same time at peak tourist season and decide to throw a "private party". I should have asked more questions, but there were plenty of other people to chat up.
That’s not my assessment. Why do you say that?
https://www.amazon.com/Capital-Order-Economists-Invented-Aus...
Most of these businesses are feeling the same pressures and experiencing the same problems... in silence. Eventually one of their competitors breaks (because they are forced to due to economic realities, etc) and starts making necessary moves (layoffs, efficiency improvements, etc). The rest follow-suit, breathing a collective sigh of relief that they weren't the first to make all the headlines.
But there are CEOs who define an industry. Those are not easily swayed by big capital.
Meanwhile, a lot of laborers in our profession have fallen for their propaganda of markets and so-called meritocracy, not realizing they have more in common with the fruit picker than their common exploiter.
Class warfare is real. It's time tech workers wake up to that fact and start fighting back instead of letting oligarchs walk over them.
Nice “So I Married an Axe Murderer” reference!
It appears that Lip-Bu used an LLM to help write this memo. Also: 15% of staff with an arbitrary 50% management? Boy, he must have been up all night working on that one! Maybe everyone can have an ice cream social when they return- bring your own.
Simple. These companies need enough 'fitness' in order to survive and thrive. No one has the power to fight against the Nature’s Wille—survival of the fittest. They have to obey, especially when faced with the ruthless, life-and-death competition of the commercial world.
P.S. Hoping this comment doesn’t get downvoted too much and end up dead, not surviving.
American markets have largely consolidated into oligopolies, where just a handful of very large companies operate. It's extremely easy for them to wink at each other and then raise prices/layoff workers, etc.
This is also being accelerated by the unregulated software market that lets the corporations hide behind algorithms, as we recently saw with realty. https://www.npr.org/2024/08/23/nx-s1-5087586/realpage-rent-l...
The end of ZIRP was the bat signal to corporate America to begin layoffs.
Broadly speaking though, I think you’re experiencing confirmation bias to some degree. If you only look at companies that are on the struggle bus, then you only see a limited number of levers that management has (RIF, delay CapEx, etc). Other struggling companies that don’t take evasive maneuvers go out of business and we don’t hear the story.
I've pitched that a couple times in my career. The difficulty is that, in a lot of cases, your future business prospects are genuinely correlated with the future prospects of other businesses.
Intel is going to sell fewer CPUs in the next 3 years if other businesses aren't hiring and expanding as quickly as they did during COVID. And I think there's a pretty good reason to think that Intel's revenues will actually shrink as a result.
That limits how much zig they can do while others zag.
I think they should do what you say but shareholders are looking for the quickest, best returns now, not in a few years time.
You'll find the same names appearing over and over again.
The reason all companies seem to do the same thing at the same time is that their boards are all the same people giving the same order to all their companies' ceo's at the same time.
A sensible, sober CEO would still need a lot of political capital to push back against a boardroom that's hounding them to jump on the latest hype train. You certainly won't get that from a CEO who just took that position a few months ago.
A sensible, sober boardroom that doesn't push their execs to jump on the hype train would need to answer to angry shareholders. It's almost certain that >50% will support the latest fad and would vote out a board that they perceive as being behind the times.
That's where startups and privately owned companies get their natural advantage of being able to go against the grain.
Prior to this, they could just get low interest loans to do whatever financial engineering they wanted to demonstrate growth and get their bag. That is over, now the only way to get the bag is firing people.
So, it's not just that they're all in a capitalist polycule, but is is that they all just live in the same bubble of irrational short term reasoning.
Are you sure you didn't just see a sales meeting?
If you're a farmer in the market for a $200k combine harvester, sales guys will be happy to put you in a $200-a-night hotel so you can attend their invite-only presentation on how their latest models give you 10% more yield with 30% lower labour cost thanks to the new auto-steer mechanism and six-stage threshing mechanism. And they'll hand-hold you through all the calculations to write a business case.
It's all the more reason why labor needs to start being more aggressive and properly work together.
They all work with restructuring companies!! So, I hope that tells you how smart they are :-)
I think there's a lot of "monkey see, monkey do" going on in the corporate world.
Also, shareholders and all that.
Intel doesn't have a meme-stock/vibe-stock thing going on at the moment (think Elon and getting to Mars by 2030, or robotaxis everywhere by the end of 2025 etc).
So I guess downsizing seems to be the only potential appeal for them right now.
Disclaimer: I know nothing
It is precisely because data comes out murkily, with a lag - and the effects of changes have a lag as well- that managing the Federal Reserve can't by reduced to a simple process. It is an art done by humans- one where 'general trust in the institution' is the single most important variable of the last 40 years.
Eventually some companies will start scooping talent up, and everybody will zig :)
Doing more with less is warning sign like “curve ahead”.
And the agentic focus is not forward-thinking.
Our present is to a small degree agentic, and that will increase, but that won’t sustain because (1) latency and (2) technological evolution.
It’s more likely that everyone will have their own AI on-board which will have all of the data it needs in local storage that gets regular updates. Evolving to current agentic flows won’t help with that type of processing.
That is, it's true that they tried to do it and the software exists. But it doesn't matter, because nobody is actually motivated to join the cartel (defecting is more profitable) and they have no enforcement for it.
all the big tech companies used to have no-poach agreements to not hire from each other, such that they didnt have to compete on price
Historically Apple has done this - Steve Jobs noted at one point that the absolute last thing they were going to do during a recession was to cut R&D, because that was what was going to let them capitalize once the recession was over.
Left as an exercise for the reader is assessing Apple’s financial performance as relates to the rest of the industry, with extra credit for comparing that to the ongoing guidance from the finance industry set.
Labor categorization can be thought of in a more useful framework -- Category 1: Builders who don't know it yet. These people have the cognitive capability, work ethic, and problem-solving skills to create value independently, but they've been socialized to believe employment is the only viable path, or have yet to take the leap of starting "their own thing". They're retained and developed because they're essentially entrepreneurs who haven't discovered their own agency yet. Category 2: Consumers masquerading as producers. They extract more value than they create - through entitlement, minimal effort, or misaligned incentives. They're often the loudest about "worker rights" precisely because they have the most to lose from merit-based evaluation.
The pattern you're seeing (layoffs + micromanagement + cost focus) targets Category 2 while trying to retain Category 1. The economy can no longer subsidize low-value labor.
The interesting dynamic: Category 2 workers are often most vocal about collective action because individual performance evaluation threatens their position. Category 1 workers are more likely to focus on skill development and value creation, and frankly are the most to benefit from the evolution of AI tooling.
"Labor solidarity" messaging often fails to resonate with the most effective and productive workers.
That and if you don't rent out a property for long and leave it unused, it'll literally rot because nobody is there to notice squatters or water leaks or etc.
No conspiracy theories are needed. Boards are incestious, most board members aren’t all that bright or forward looking, they have a lot of imposter syndrome about it, they worry about getting important trends wrong, and so they follow the herd. CEOs follow the board, companies follow the CEO, voila, everybody does the same thing at the same time.
And yes, I think there is an opportunity to zig while everyone else is zagging.
Also: major institutional investors (such as VCs) demand a seat on the board and then send their B team to actually sit through the board meetings of their less key investments. Those board members follow the investor company’s line, spreading it to lots of companies at once.
By the way, standing as workers, I wish they wouldn't resort to layoffs as the usual route when facing challenges, but sadly, excel competence is required to make it happen, and not many have it.
Looking at Andy Grove's wikpedia page it could be that the above reflects his focus on "strategic inflection points"
So Intel used to do it once, but now, not so much
Many other companies “Wall Street” trades shares in did not have a problem with setting long term goals for compensation, why did Intel?
Why would Wall St want Intel’s market cap graph to look like this:
https://companiesmarketcap.com/intel/marketcap/
Rather than this:
https://companiesmarketcap.com/tsmc/marketcap/
https://companiesmarketcap.com/nvidia/marketcap/
https://companiesmarketcap.com/apple/marketcap/
https://companiesmarketcap.com/qualcomm/marketcap/
It makes no sense to scapegoat Wall Street, when the SP500 was a rocketship (does Wall Street not get the blame for that, if they are apparently responsible for Intel’s demise?)
It was do or die a decade or two ago to catch up in that market, but they didn’t bother paying sufficient salaries and focusing on the growing markets, so here they are.
Yes given those are jobs where hallucination is a feature not a bug
Considering how much the sales division of many medium and large companies dictates the direction of the whole company, "sales meeting" and "business collusion" is often the same thing.
I've worked for FAR too many companies that have lost $60million in support and maintenance on a sub-par product that sales managed to sell for $30million gross... and then the sales division (and upper management) leave the company for something better. What a surprise.
The incentives to collude are powerful.
Every year we get wealthier and wealthier as a society, so that means we are capable of less and labor has to take the haircut while capital keeps on as is.
We could subsidize 10s of thousands to hundreds of thousands of people to do literally nothing and not be any worse off than we were 15 years ago
The most important thing a CEO brings is relationships. LLMs can't do that (yet).
Post script: there's still a chance that LLMs replace CEOs due to LLMs being easier for the board to influence/control.
Most hired executives play not to lose rather than playing to win; the nature of their compensation packages incentivizes it, where big wins accrue largely to diffuse shareholders while big losses mean they lose their fat executive pay package. It takes a founder-CEO to play to win, but if the hired CEO had that skillset and that inclination, they'd be a founder rather than a CEO.
Ah, see? Prosperity has not come to your business because you have not made the proper offerings to the new AI gods.
"When McKinsey Comes to Town" is an interesting read that covers a lot of this. It's worse than I thought.
> "Labor solidarity" messaging often fails to resonate with the most effective and productive workers.
That's what the rentier class wants you to think. It's convenient if everyone is a temporarily embarrassed CEO, makes them much happier to act against their own class interests.
The problem is that multiple layoffs are terrible for morale and basically obliterate the motivation and mood of the remaining workers.
Reorgs are another common pattern of incompetent management that introduce chaos without bringing net positive value.
This is similar shit that happened in the '80's, '90's, and '00s and was captured culturally by Dilbert and Office Space.
Those who ignore the lessons of the past will make history rhyme once again.
imagine this approach fails and you have to go to your board? They’re going to flat you alive and call you an idiot who should’ve done what everyone else was doing since it was obvious
but if you do what everyone else is doing? Well the macro changed obviously!
EDIT: I’ve worked at big tech companies where this was a meme, where the execs would do whatever meta/google did but six months later
> Because they're told to.
This is largely it.
Consultants rule the earth!
Now why all the countries start just warring and killing all at the same time... now that is weird. I guess the best bet is same people who own all the business, stop paying all the bribes at once or something and all the power people go nuts
I’ve been involved on layoff planning. It can be very cloak and dagger. But you never involve competitors. Ever.
We then informed corporate of the numbers, and someone would quickly is how to price the gas that day.
I thought it was about keeping the price competitive. No, I was told, it’s the exact opposite.
We would gladly sell the gas at cost, if not less, because the real money came from coffee and other merch.
But the state had a minimum mark up law. We had to charge the customers more.
The idea was to protect small gas stations from corporate chains, but gas is a commodity. Everyone pays about the same.
I later found out that the reason I was reason I was recording the competitors prices was to make sure they were following the minimum markup laws, so we could sue them if they werent.
You can rest assured that bribery in that way is extremely common in the West.
Conspiracy theory: business leaders don't do as much as they should, so they imitate each others moves to justify their existence on the position. With a side effect of cluelessly influencing lives of thousands, but that's a repeated scheme in the overall history of civilization
What would you do when you're bleeding money?
They're just trying to get the job done and copying your partner's homework can save time, even if your partner didn't get the right answer or also just copied their partner.
CEOs, on average, don't know what they're doing any more than anyone in most other professions. They just happen to be born part of the ruling class.
More than half raised their hands immediately. It was a Philosophy 101 class.
> On June 27, 2006, the sale of Intel's XScale PXA mobile processor assets was announced. Intel agreed to sell the XScale PXA business to Marvell Technology Group for an estimated $600 million in cash and the assumption of unspecified liabilities. The move was intended to permit Intel to focus its resources on its core x86 and server businesses.
So they got out of the world’s biggest new market 1 year before iphone came out.
https://www.reuters.com/technology/rise-decline-intel-2024-1...
> 2007 - Apple launches the iPhone, helping kick off a mobile phone boom that Intel mostly missed. Under CEO Paul Otellini, Intel turned down a deal to make iPhone processors because it did not stand to profit enough from the arrangement. Instead, Apple used chips based on designs from Arm Holdings , whose tech now dominates the mobile market.
The leaders from 20 years ago made the bed that Intel now has to sleep in.
Skill issue. I can outpace your LLM if I get the same tolerances.
Best example is the rental market and the landlords all using the same price setting "algorithm"
But yes, together, the Big 3 are the single largest shareholder in 88% of SP500 companies.
https://www.cambridge.org/core/journals/business-and-politic...
Meanwhile most people in "rich" countries will have to reach mid-career status to even reach $100k.
used to be a sales engineer at an ISP. one you've heard of. we had account execs straight up offer "referral agent fees" to the network managers we were selling to.
bandwith is mostly the same -- 10Gbps here is more or less 10Gbps elsewhere -- so you gotta set yourself apart. and it worked. constantly.
chatGPT always sounds confident, and it's not hard for it to calculate the lowest possible option and take it.
They made money by selling coffee, which costs less than a cent, for five bucks.
You must not have been renting apartments in any significant market during the 2010's
AI was a wonderful scapegoat. If it wasn't AI it'd be the economy or some other excuse. No one wants to admit mismanagement and overspending, but of course a business is going to take advantage of a discount. It's just a shame that wasn't a discount on property or hardware, it was on people.
Some other smaller companies are swept up in this because they follow moves from the larger companies. Everyone is trying to copy the leader, right? Everyone is asking "what's that big successful company do? That's what we need to do." So you have this absolutely horrible job hiring process in tech too as a result of that. You have excess and toxicity because people are trying to make something work that doesn't make sense for their business.
What do you think the whole $100 million bonuses for these AI people (which so far have been rumors) is going to do? It'll cause idiots elsewhere to go overpay and over hire because of FOMO...and once again more layoffs in the future.
And on and on we have these cycles.
So the "market" demands sacrifice basically and there is cover when everyone else is doing it. You can be contrarian but your stock may get punished. Intel may not have a good plan anyway. The reason the market demands sacrifice is likely because of predicted unfavorable economic headwinds (etc... so signs of recession or what not). These predictions could be wrong though. Companies do constantly realign though, product initiatives fail etc...
Low-performers extract value from high-performers at every organizational level. A developer carrying three mediocre teammates isn't being manipulated by "the rentier class" when they prefer merit-based evaluation.
Your argument requires believing that productive workers can't accurately assess their own interests.
Particularly in tech and tech adjacent, there's a belief that doing what everyone else is doing is safe. It's the "nobody ever got fired for buying IBM" approach but for corporate decision making.
If other companies return to office, you return to office. They're successful, so they must have good reasons - no need to investigate or come up with your own reasons. If other companies eliminate QA, you eliminate QA.
Most tech companies are just following what the big dogs are doing, but worse and stupider. When it backfires, nobody cares.
Is this truly about macroeconomic forces that every business is responding to? Or is it just following the latest fad?
Just like any bubble bursting, that is the best time for any well-positioned company to invest in that market. The problem with Intel is that they are far from well positioned. AMD and nVidia each have about a quarter of the employees that Intel has and TSMC has about half. Intel over-invested in employment so the over-employment bubble bursting will hit them hard. Their best bet is to refocus their current employees, but they might not be the right mix, so they may need to have even larger layoffs, while simultaneously highering new employees in pertinent fields.
People complain about lack of US manufacturing, and short term thinking and its all heavily tied to a couple fundamental truths about companies in the USA.
Corporate raiding and looting is a core part of the fiance sector. There are a half dozen methods of asset stripping used against literally all successful businesses here. Much of this 'short term thinking' is either the business trying to make itself look less appealing, or the actual act of handing the money over directly via stock buybacks or dividends (which are at least taxed) rather than investing in the company.
'Investors' in the USA have absolutely zero interest in the actual companies they are investing in, because it is to easy to divest of those investments or sell/merge the resulting companies. The goal largely seems to be to create the illusion of success at any cost. If that means destroying the company to get a 10% return next month, then that's fine, because they will then turn around and sell it before it collapses.
At least some of this could be solve via strong incentives against short term investing. Say an actual value tax (rather than a capital gains tax) that penalizes holdings less than a couple years. A 25% value tax applied for holdings less than a year that decreases to 0 over some longer time-frame, say 5 years. Yes this would completely destroy the business model of quite a number of wall street firms, and maybe even make it hard for businesses to raise capital. But, it would put a lot more focus on buying businesses that actually have long term prospects, allow those businesses to invest in capital intensive manufacturing operations and a laundry list of other things most people agree is a good idea. It would also likely return stock prices to realistic future return numbers because investing in companies with obviously inflated market caps would become a lot more risky.
Many economists point out that the Fed's policies serve the 1% above all.
Heck you can get a Nobel Prize based on your Fed chairmanship, then tank the economy.
One pundit observes that the Fed is an example of "burn the village to save the village" as (rarely) an underemployed firefighter-turned-arsonist will do. Extreme perspective for sure.
In the era of Big Data, can't real-time data and policy co-exist?
Yes an AI will come up with more insight than many management people as many people state in this thread that a LLM can do their job. Its a mistake to assume that's what they are paid for however.
It's like fashion, humans follow trends, almost always, and in the case of big companies, the CEOs are quite wealthy and that means the people they hangout with, the parties they attend, and the general circles they are part of, is pretty small (not that many people at that level of wealth), and so they're all mostly part of the same "clicks" that talk about and share the same ideas.
Intel has one trick (x86 and a process lead) and actively sabotages all other endeavors. Oh there other trick, because they streamlined certain aspects of production, is that they have a SKU explosion.
Layoffs and cost focus are two of those. There's also additional pressure from major shareholders (institutional) to reduce opex, even if the better strategy would sometimes be to stretch for some strategic goal when everyone else is contracting. Your stock is going to take a hit in the short term.
Lastly, some is just the "yell harder" mentality kicking in for management that doesn't actually know what to do.
What happens when they get their wish? Do they start getting paid something close to the combined salary of the team they were carrying? Or do they get an attaboy and a pizza, and a precedent for "merit-based" layoffs that will be turned against them soon enough? I know which way I've seen it play out.
> Your argument requires believing that productive workers can't accurately assess their own interests.
Is it so implausible that people skilled in a specific field might be bad at cooperating (perhaps because they're bad at communicating with each other, at least relative to another class) and politically naive? If you think workers have a good understanding of their own interests then why has the labour share of income kept dropping?
When the economy slows down, people and companies spend less. Less spending means fewer sales, which means less work and less money to pay staff. Since salaries are a big cost, companies cut jobs.
Before the downturn, spending was up, sales were up, and companies hired more people. Now they see they hired too many or inefficiently, so they cut headcount not only because demand is down, but also to fix those inefficiencies.
And about the argument of investing now to scoop up talent and push initiatives forward: downturns often come with higher interest rates. That makes it more expensive to raise money to invest. So why would companies do that now?
True. That's no reason to "leave money on the table" as they may have seen it, and being substantially cheaper than the alternative, when they could have been barely cheaper and attracting the same amount of people.