Mark Zuckerberg explains why so many tech companies are doing layoffs right now

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FEBRUARY 16, 2024

Meta’s CEO says that companies overhired and realized they worked better with fewer employees. JOSH EDELSON/Getty

  • Mark Zuckerberg said that tech layoffs since the pandemic are due to multiple factors.
  • The first wave was due to a course correction from pandemic-era growth and overhiring.
  • Meta’s CEO said more recent layoffs are because companies realized being leaner can make you “more efficient.”

Mark Zuckerberg has a theory for why tech layoffs aren’t slowing down: Companies are realizing that, while painful, there are benefits to being “leaner.”

In an interview with Morning Brew Daily’s podcast published Friday, the Meta CEO said companies are still adjusting to the post-pandemic era.

During the pandemic, e-commerce sales went through the roof. But as people returned to stores and the economy adjusted, companies like Meta realized they had overhired and had to make major cuts.

That was the first wave of layoffs.

“In terms of the layoffs and stuff like that, I actually think that was more due to companies trying to navigate Covid,” Zuckerberg said in the interview when asked if tech layoffs had to do with the AI boom.

Zuckerberg said that companies are no longer shrinking their employee size simply because of overhiring — they’re now realizing there can be benefits to being leaner.

While a lot of tech companies were reluctant to make cuts at first, they realized it didn’t spell the end, Zuckerberg said.

“It was obviously really tough, we parted with a lot of talented people we cared about,” Zuckerberg said in the interview, speaking specifically about Meta’s past layoffs. “But in some ways actually becoming leaner kind of makes the company more effective.”

Since Meta cut tens of thousands of its staff starting with Zuckerberg’s “year of efficiency,” the company has been making a comeback, with its stock at an all-time high.

Meta didn’t immediately respond to Business Insider’s request for comment ahead of publication.

Today, companies are still in the mode of thinking about efficiency, Zuckerberg said. Many are considering restructuring the company, flattening out management levels, and transitioning to a leaner model.

Companies like Microsoft and Google have continued to downsize despite solid earnings. A number of CEOs at companies like Amazon have mentioned plans to restructure the company and invest in areas with AI.

But Zuckerberg said that he didn’t think AI was a big part of the equation.

“At least for us, the AI stuff was not a major driver for that,” the CEO said. “It was like first this overbuilding and then this sense of like let’s do the best work we can by making a lean company.”


Courtesy: Business Insider