M&Ms: Fortune
The 77th Edition on how fortunes can change overnight.
Hey Team,
Early in my tech career, I worked for a company that made software for big banks.
Back then, our office was on 43rd street and Madison Ave, in the heart of NYC. That office was on the 8th floor, and the 8th floor was shared with Twitter's NYC office; we had half the floor they had the other half.
Many of us on that office floor made software, but the Twitter people seemed to have more fun than us.
Twitter's office had these big glass walls, so we could see them eat their free lunches when we passed by to go and buy ours. They had nice MacBooks; we had these crappy Hewlett-Packards. We had to pay for drinks from a vending machine in our office; they had a bar full of all sorts of drinks, including alcoholic beverages. Food was catered daily for them, and many massage chairs were regularly being used in their offices.
We make software too, we thought, why can't we have all that nice stuff?
The company I worked for at the time, SunGard, was an enterprise software company that was much bigger than Twitter. SunGard had 13k employees. But none in SunGard got the perks the Twitter folks got daily.
And although I left that job at SunGard after a few years to build software at one of the Big Banks, where they paid much more, I never forgot how good the Twitter people had it back then.
And yet Twitter's fortunes have now changed.
Elon Musk, who seems to be finalizing his Twitter acquisition, said he would let go of 75% of Twitter's workforce. That is 5500 employees out of 7500 that might be let go. And I feel for those people. That is a lot of people whose lives will be disrupted. And as someone who has recently become prolific on the Twitter platform, I worry about the outcome. As an engineer, I know keeping the wheels on with that much change will be hard. Never mind, try and add more to it to make it a bigger success.
But Twitter isn't the only place in tech that is laying people off.
As Dare Obasanjo pointed out in this tweet, Robinhood let go of 1 in 3 employees. Netflix laid off 450 people. Shopify cut its workforce by ten percent. And Microsoft quietly let go of a thousand people. Along with many at Oracle, Intel, and so many other places.
And historically, tech is not the only industry that's ever had its fortunes flip seemingly overnight. History is littered with examples.
In Michael Lewi's book Liars Poker, we find out what happened to the most profitable business on Wall Street in the late 1970s.
"The equity department was an object lesson in life's reversals. The stock market had once been Wall Street's greatest source of revenue. Commissions were fat, fixed, and non-negotiable. Each time a share changed hands, some broker somewhere took out a handsome fee for himself without necessarily doing much work. A broker was paid twice as much for executing a two-hundred-share order as for a one-hundred-share order, even though the amount of work, in either case, was the same. The end of fixed stock brokerage commissions had come on May 1, 1975—called Mayday by stockbrokers—after which, predictably, commissions collapsed. Investors switched to whichever stockbroker charged them the least. As a result, in 1976, revenues across Wall Street fell by some six hundred million dollars. The dependable money machine broke down.
Then, to add insult to penury, the bond market exploded. With the rise of the bond markets, the equity salesmen and traders had been reduced by comparison to small-time toll takers. They made a bit of money and had a few laughs, but not nearly so many as the bondmen. No equity trader, for example, would dream of playing Liar's Poker for a million bucks."
And to be clear, I don't think tech is done by any means, but it won't hurt to start thinking about diversifying out of a single point of failure.
Trust me when I say this, the free lunches can't last forever; I know because we had pantries full of snacks at the successful startup I was a part of, Jet. That all disappeared after Walmart acquired us, along with the bar full of alcohol.
Many people complained when the free stuff was taken away from us, but I said good riddance.
After all, who wants to be the turkey fattened up by free lunches only to get its neck chopped off and potentially become Elon's Thanksgiving dinner?
Nicholas Taleb warns against ever becoming the Turkey in his book The Black Swan:
“Consider a turkey that is fed every day. Every single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race “looking out for its best interests,” as a politician would say. On the afternoon of the Wednesday before Thanksgiving, something unexpected will happen to the turkey. It will incur a revision of belief…
The turkey problem can be generalized to any situation where the same hand that feeds you can be the one that wrings your neck.“
It's much better to be hungry.
It's better to see clearly and to see the world for what it is. That fortunes could change overnight. And the best thing anyone can do is prepare themselves.
Three Tweets from this Week:
Talk about fortunes being reversed overnight. The office and commercial realestate market will probably never come back in our lifetimes.
And, of course, all of these abrupt changes in fortunes with some downsides.
Many people are feeling incredibly lonely in this new world. And intellectual loneliness is a huge problem too.
Besides living close to family, the one thing that has helped me immensely over the last two years has been taking these live cohort-based courses like Write of Passage and Small Bets. Their extremely engaged communities have made me feel like I can meet many people on the same intellectual wavelength outside of a work environment.
I love this quote that Garry Tan shared on Twitter. Because it highlights that no matter how high you climb in any field, you always feel a little bit like an imposter.
Andy Warhol was at the top of his field. And I have gotten to know Garry a little bit from his tweets, and he, too, came from poverty and had a rough upbringing. He founded a company, and he is now YC president.
His YouTube channel is full of good advice and inspiring for startup founders.
One Article from this week:
There are many positive things that remote work has brought in too.
Besides more family time, it has brought in a mini baby boom at a time when populations are collapsing globally.
Two Memes from this Week:
Engineering management is tough.
Thank you for reading the 77th edition of this newsletter.
-Louie
P.S. you can reply directly to this email it will get to me and I will read it.
P.P.S I recently found out that Substack was sending many of the replies to my junk folder. Not all but many. I am very sorry, I am going through all of those emails now and reading them.
I’ve been the turkey.
Never again.
I had no idea about the remote work leading to babyboom. Obvious on hindsight but really cool :)