Thursday, November 17, 2022

Too Big To Innovate

Too Big To Innovate

With tens of thousands of layoffs pending, Silicon Valley has proven it is "Too Big To Innovate." The bloated employment roles of many major tech companies for years have been a symptom of a dearth of innovation; many hires were made simply to prevent those people from actually creating competition. The "C-Word" is the worst word in the lexicon of Silicon Valley amongst the "Big Five."

Google owns search. Apple owns iPhone. Facebook owns social. Amazon owns e-commerce. Microsoft owns PCs. Sprinkled in those distinct monopolies are a mix of other "bets" which help assuage regulators. But make no mistake dear readers, when times get tough (and your stock is down say 50%+ year-to-date), it is time to cull those losing hands and focus on what works: monopolistic control of niche segments.

Sadly the new aphorism for non-founder CEOs seems to be the same: "When in doubt, Grinch it out."

The net beneficiaries? Oddly enough, culling large numbers of superfluous employees to ramp up production of digital nicotine should have wondrous effects on the bottom lines of these companies. After the one-time costs associated with severing excess employees with a couple months salary and limited healthcare, those employees now largely become subsidized by taxpayers for healthcare. And the companies? Oh baby, get out the napkins because it is gravy train time!

Each percentage of layoffs translates to an exponential increase in bottom line profitability for these tech companies. Obviously the damage is most acute in regards to future products development, but when you own a tech monopoly R&D becomes an increasingly negligible cost. The only real danger to the "Big Five" is that maybe some of these employees become founders.