New Year, New Layoffs
An unexpectedly early edition of the stack for 2023, as Salesforce surprised us all by announcing it was laying off 10% of its workforce. Not a huge surprise in the context of other big tech companies announcing their own layoffs - Meta, Amazon and others - more so as it’s the first time that the inexorable rise of Salesforce looks to be faltering, albeit ever so slightly.
This is likely to be a combination of factors -
Growth slowing to 14%. In many other industries this would be considered stellar performance, but in the big tech world it’s distinctly sub-par and puts them at #10 on Cloud Wars growth leaders.
An activist investor in Starboard now involved - not the best time for growth to slow!
Like many tech companies, Salesforce grew quickly during the pandemic, apparently hiring 30,000 people and taking their headcount to around 80,000, on the assumption that the good times would continue to roll. While it’s taken a little while to happen, face to face is having a comeback of sorts and many tech stocks have taken a major hit.
Other tech companies have cut staff already, which gives the rest a chance to cut headcount if they want to.
While this is distressing for those affected, it’s worth bearing in mind a 10% reduction for a company of 80,000 staff leaves them at around 72,000, which is still over 20,000 up from the start of the pandemic, and over double what they were in 2019. Based on this I don’t think Salesforce are in major trouble, just realising like many others that the non-stop growth was unusual rather than guaranteed through the brilliance of their product and vision.
Layoffs at scale are rarely heralded as sensitively done, and this was no different. While Marc Benioff started well, taking personal responsibility in the email to staff, talk of losing people to layoffs being similar to mourning people who died wasn’t a great stance to take. While it might be tough for him and the other execs, it’s orders of magnitude tougher on the other side where you’ve lost your living and, given how invested many of us are in the Salesforce ecosystem, the job that you defined you. I’ll bet there was way more denial, anger, bargaining, depression and acceptance from the recipients of emails telling them they were out compared to those sending them.
This also rather undermines the message of compassionate capitalism that Benioff and co have been sending. After years of saying it’s not all about shareholder value, it turns out that, when the chips are down, it really is. I’m expecting the Ohana marketing to be dialled back for a few months, otherwise it’s just handing critics a stick to beat them with.
This also isn’t over - in his letter to staff, Marc Benioff mentioned the layoffs would be happening over the coming weeks. If you are making more than 99 people redundant in the UK, collective redundancy rules apply which means a minimum 45 day consultancy period, so unfortunately I’m expecting to see more LinkedIn posts affecting people closer to home.
BrightGen, like the rest of the ecosystem, offer our support to those affected. I’ve not seen too much in the way of consulting fee earners being hit so far, but that my just be reflective of my LinkedIn connection graph - most I have seen look like they need to find another product company like Salesforce rather than a services company.
I don’t think this is any reason to worry about a career in the Salesforce ecosystem though - the trickle down effect from big tech layoffs will increase competition for roles in the tiers below, but it’s still growing, just not as fast as it was. The couple of times I’ve been made redundant were companies failing during significant recessions where everyone was cutting back, and this doesn’t look like that - while big tech is shedding staff, the tech job market still looks to be in pretty good health.