Twitch.tv Lays of 400 Employees

https://blog.twitch.tv/en/2023/03/20/an-update-about-our-workforce/

by ccity88 • 3 years ago

214 214 3 years ago

blog.twitch.tv

ccity88• 3 years ago

For context, this is part of a wider layoff at Amazon, with over 9000 job losses:

https://twitter.com/zachbussey/status/1637826120216195075

gtirloni• 3 years ago

Like many companies, our business has been impacted by the current macroeconomic environment

I must be living under a rock because, outside big tech self-inflicted wounds, I don't know what they are talking about. Is it Ukraine? SVB? Chinese housing market?

vkou• 3 years ago

The macroeconomic trend is 'the stock price went down because the fed stopped printing money'.

runnerup2• 3 years ago

I don’t understand how this is affecting AMZN’s cash flow though. Seems like both their costs and revenues would scale similarly with inflationary effects, leaving a similar profit margin %.

mdavidn• 3 years ago

The "macroeconomic environment" is the evaporation of available VC funding because higher interest rates provide more lucrative investments elsewhere.

runnerup2• 3 years ago

Why would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale.

Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.

jacooper2• 3 years ago

But Twitch is owned by Amazon? They don't need VCs?

ryanSrich2• 3 years ago

Huh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?

jacooper2• 3 years ago

Its the investors.

nonethewiser2• 3 years ago

I assumed rising interest rates primarily.

gretch5• 3 years ago

Federal reserve interest rates.

When interest rates are low, money flows more freely. When interests rates are up, it's harder to lend/borrow, money flows less freely, and the economy cinches up as a whole. This is a major simplification to a very complex system, but it happens because e.g. as someone with money, you'd rather just put it into a government bond that will for sure pay you 4%, rather than chasing speculative investments. When that same bond is only paying out 1%, you might be more inclined to put your money in a start up and see what happens.

Aperocky• 3 years ago

Not just your money, renting money is so much cheaper when you only need to pay 0.25% per year against the firehose known as the Fed.

mym19902• 3 years ago

If this is the case, why are layoffs currently mostly in the tech sector and not everywhere? Unemployment budged .2% from Jan - Feb but this is hardly indicative of anything.

pcurve• 3 years ago

How does the fed rates impact game streaming revenue? Were they not profitable?

sanderjd• 3 years ago

I don't know for sure, but it seems to me that advertising spend must be way down, due to interest rates and (related) the expectation that consumer spending will / should be pulling back over the next X months. All the biggest layoffs seem downstream from consumer spending in some way or another.

tinus_hn• 3 years ago

Twitch grew very quickly during lockdown and shrank very quickly when it was over.

ryanSrich2• 3 years ago

SVB as an excuse for any company turmoil is criminal. Literally nothing happened. Everyone got all of their money. If any company uses SVB as an excuse they must be named and ridiculed for lying.

karmasimida• 3 years ago

I guess Twitch still hardly making any money

chii• 3 years ago

despite the huge number of ads being shoved into the user's faces.

andreimackenzie• 3 years ago

Advertisers not spending as much

Rastonbury2• 3 years ago

Advertising, which is how twitch makes money, look at GOOG, FB, Snap revenues, companies are bracing for a recession so have dialed back ad budgets. Enterprise tech spend and consulting/professional services budgets are also being put on hold, it's not the whole economy but the slowdown is clear and obvious in these industries

PurpleRamen4• 3 years ago

In case of twitch it's more simple: pandemia is ending, people move back to their normal life outside of twitch. Revenue in the last months has been shrinking for streamers, and thus also for twitch. Their business was blowing up in the last 2-3 years, when so many viewers were at home. And this also resulted in Twitch hiring many new people, like so many other tech-companies. And like so many others, they are now shrinking again, adapting to the new situation.

saos• 3 years ago

What type of roles are they cutting?

tecc501• 3 years ago

Not Poggers

dathinab3• 3 years ago

best comment on HN today (through due to satire will probably down voted into oblivion).

ubercore• 3 years ago

A bit unfortunate that their blog format has "In other news" in giant letters right under their announcement about laying off 400 people. Maybe a blog isn't the right place to make news like this public.

greenyoda• 3 years ago

Earlier discussion: https://news.ycombinator.com/item?id=35235579

1B05H1N• 3 years ago

"Only 8,600 more to go" - Amazon HR rep probably

moneywoes• 3 years ago

Does twitch follow the same pip policies as Amazon?

ipsum2• 3 years ago

The CEO and founder of Twitch announced a week ago that he was leaving the company. It's admirable to see a captain going down with his ship.

https://news.ycombinator.com/item?id=35184011

gretch5• 3 years ago

There is something romantic about it, but make sure you don't accidentally admire it more than the captain who keeps their ship safe and thus neither of them go down at all. All those captains out there who are faceless/nameless because their ship didn't get blown to pieces.

calderknight2• 3 years ago

That's the opposite of going down with the ship.

varunjain992• 3 years ago

Or more like transferring ships while the ship goes down :)

wahnfrieden• 3 years ago

You meant to write "to see a captain jump ship"

iepathos2• 3 years ago

Is it admirable if that same captain steered the ship into a rock leading it to go down in the first place? I don't think so.

wolfgang000• 3 years ago

What do you mean? he just appointed a new capitan while he deployed his lifeboat

PurpleRamen4• 3 years ago

It was known for a while that he will leave, so it's not like he left because the company has problems. I mean, they are also "only" firing 3-4% of their workforce, which in my understanding is a pretty low number for a mass layoff. And it's mostly a reaction to their massive growth and hirings in the pandemia, which is now over as the company is shrinking back to a normal size.

kup0• 3 years ago

Yes how convenient of him to step down days before having to make a difficult announcement and instead pawning it off on the new interim CEO instead.

So admirable. How this could be characterized as "going down with his ship" is absolutely wild to me

joshe• 3 years ago

Like rain, interest rates raises fall on the just and the unjust alike.

squarefoot• 3 years ago

I'd be curious to see how the sudden surge of available workforce is affecting the average salaries in the IT, compared to other fields that weren't touched so badly by the layoff wave.

dathinab3• 3 years ago

There had been a huge deficit of qualified worker due to SV/FANG/.. sponging them up.

So we likely won't go to a oversupply situation.

But as under-supply decreases and in turn saleries should fall.

But then salaries had been in some contexts so high that most startups couldn't afford paying it, so just by accepting this salaries without them falling the average would fall.

So I don't expect the salaries for mid to high qualified IT workers to fall too much outside of SV, and especially outside of the US. Like it still will be a pretty well paying job, just not necessary through the moon high salaries.

Through it might get a bit harder for low qualified IT workers, much harder if they are unlucky wrt. current AI development.

brwck• 3 years ago

There's a theory in economics called "sticky wages". Salaries don't decline due to layoffs or temporary economic downturns.

maerF0x0• 3 years ago

Twitch is an amazon property. This is likely simply an extension of the amazon layoffs.

dathinab3• 3 years ago

unlikely as AFIK Amazone hasn't fully folded Twitch into it's structures additionally:

Firstly Twitch due to historic reason is less likely to have any personal bloat.

Secondly running a streaming platform isn't cheap (media live cross decoding, high data transfer, more requirements for the data transfer due to less buffering, still moderation and copyright detection, some licenses with big copyright holders etc.) and from why I have heard twitch isn't doing that well (through not terrible).

Thirdly there was a influx of live streaming usage during COVID which now likely is receding.

Fourthly it relies a lot on people not just subscribing but "gifting" money (bits, subs) to streamers for little return besides bragging rights, a thanks maybe some emotes and feeling good because of the gift. In a economy which feels more unstable people are less likely to want to spend money this way, or can't even if they want to.

I would guess Twitch has more reasons for cost cutting then Amazone, but at the same time I would guess in different to Amazone Twitch is more likely to be negatively affected by the layoffs.

odux• 3 years ago

It is part of the larger Amazon layoffs announced today though: https://www.aboutamazon.com/news/company-news/update-from-ce...

amrb• 3 years ago

But how will I get my quote of hot-tub streamers??

ryandrake3• 3 years ago

Like many companies, our business has been impacted by the current macroeconomic environment, and user and revenue growth has not kept pace with our expectations. In order to run our business sustainably, we’ve made the very difficult decision to shrink the size of our workforce.

Let's just take a moment to admire this paragraph.

"our business has been impacted by the current macroeconomic environment"

There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity.

"user and revenue growth has not kept pace with our expectations"

So, they are growing, but not growing faster than some [arbitrary] goal?

"In order to run our business sustainably"

Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line.

"we’ve made the very difficult decision to shrink the size of our workforce"

This is what I don't get about all of these layoff letters. It's always the same thing: We're growing, our revenue is growing, and [usually unsaid] our costs are growing. So why not just arrest the cost growth? Stop the bleeding, don't start amputating limbs. I can understand layoffs when your business is running at a loss, not when it's growing.

calderknight2• 3 years ago

I think the companies have employees to try to make more money. When things are going really well in the economy it's easy for employees to create/capture lots of value, so the companies hire lots of employees to do that. But when the economy slows down a bit, suddenly it's a lot more difficult for employees to create value, so it doesn't make sense not to reduce the number of employees.

onlypositive2• 3 years ago

Yup, this is basically it.

My team at work hasn't created any meaningful value in a year. We've shipped nonstop but the things were tasked to work on just don't work out or even if they are well received simply don't add up to our salaries.

BearOso• 3 years ago

The problem here is increasing growth. That's unsustainable. Having growth is already a linear positive. Companies seek to continuously increase growth to placate shareholders, but that's a magnitude greater, quadratic.

Eventually you simply can't keep increasing. In a panic to keep up the in short term, companies are cutting their lifelines. This is just leading to failure.

klysm• 3 years ago

Because we’ve set up the incentive structures to make growth the most important thing. Shares increase when you grow - the revenue barely matters to the people in control

noduerme• 3 years ago

AMZN is down almost 40% over the past year, so if that's the purpose, I'm not sure the strategy is working.

EricDeb• 3 years ago

This is mostly because capital gains is taxed less than income.

dehrmann3• 3 years ago

At growth companies, share price tends to track future revenue.

varunjain992• 3 years ago

Well, a company doesn't exist to just be profitable. But to maximize profits (mostly).

So it's certainly possible that cutting costs - even when profitable - can increase short-term and long-term profitability.

ryandrake3• 3 years ago

So why didn't they do it a year ago? Or two years ago, or three? It would have increased profitability at that time, too. How did dozens of already-profitable companies all suddenly decide together to cut costs within 6 months of each other? I wish they would be more specific than the "macroeconomic environment" excuse.

I swear these CEOs are like soccer players running around the pitch, just waiting for Mister Macroeconomic Environment to run near them so they can dive, clutching their calves, crying "impacted! impacted!"

TylerE5• 3 years ago

I believe it short term. I’m not sure I’ve seen a large convincing example of it NOT causing a PR/customer/staff retention issue long term.

Madmallard• 3 years ago

They don't exist to maximize profits. Publicly traded companies try to maximize profits in the short term. If it was over long-term they would be doing things people would generally like more.

gotoeleven2• 3 years ago

You would also be angry if they wrote "we fired our 400 worst employees because we decided they're not worth their salaries" which also happens to be exactly true.

Up there with anti-whiteboard-interview screeds, the critique-the-tone-of-a-layoff-post comment is a mainstay of the hacker news comment thread: as tiresome as it is uninteresting.

TylerE5• 3 years ago

So what does that make a meta post twice over?

lanza• 3 years ago

Wait, I thought revenue was growing! How is that not sustainable? If you just leave costs where they are and let revenue grow, you are by definition sustaining/growing the bottom line.

Come on man, if you don't understand how a business can be showing signs of unhealthiness while still increasing revenue then don't post. That's such a trivial superficial analysis of reality.

I'm not going to pretend to know or understand enough about Twitch's business to agree or disagree with whether they need layoffs. But a shallow comment of "revenue go up" is lowbrow nonsense.

ilyt• 3 years ago

Or, the investors want their returns. If you don't understand how perfectly healthy business can be gutted just because investors want better number on next year's sheets and don't care about long term then don't post.

kibwen• 3 years ago

We should be holding the president of a multi-billion dollar corporation to a higher standard than a random HN commenter. If Dan Clancy wants to lie to our faces with this egregiously milquetoast corpo-speak, he does not deserve serious or good faith analysis of his words. He's bullshitting us, plain and simple, and I see no reason to smile, lick my lips, and ask politely for seconds.

dangus2• 3 years ago

The truth of the matter is that companies aren't monetarily incentivized to avoid layoffs.

Layoffs cost almost nothing. Companies aren't required to pay full salaries or provide any healthcare/benefits for any reasonable period of time after a layoff.

I think even the 3 month notice period from the WARN Act is a pretty crap amount of time to provide for employees who have been terminated.

For a software company especially, they can pull a Twitter and leave the business on autopilot with the code that has already been written and axe most employees. It's not really a big deal to get rid of employees then hire them back 6 months later, but it really should be.

Also, companies like Twitter prove that the WARN Act can just be outright violated while employees are left to fight court battles they can't afford nor have time to fight.

Then you look at unemployment benefits where in most states the whole process is overly bureaucratic and wasteful system that doesn't come close to anything resembling a replacement for salary. I think that whole system would work better and be able to send more money to the unemployed if it was just automatic payments without all the overhead of having people on staff processing applications and answering phones to deal with questions, appeals, etc.

Instead, just continue all terminated employees' salary and healthcare benefits for 3-6 months after termination automatically on the employer's dime. Implement something like that and watch as our boom and bust economy gets a lot less mountainous. Companies would actually have to try and make an educated choice about whether or not to hire someone.

Companies should only be able to dispute unemployment in cases of clear and obvious misconduct. I don't even think that low performing employees who showed up and made some level of half-assed effort should have unemployment benefits revoked. Isn't the hiring of a low-performing employee the fault of the employer for not sufficiently vetting the candidate?

Maybe what I'm proposing is too extreme, I don't know, but I think the status quo is way too lenient on businesses.

jszymborski• 3 years ago

Come on man, if you don't understand how a business can be showing signs of unhealthiness while still increasing revenue then don't post.

I wasn't aware of this criteria, is that somewhere in the guidelines? All I'm seeing is stuff about civility and being decent.

yunohn5• 3 years ago

revenue go up faster

CEO takes responsibility by cashing out massive bonuses.

revenue go up slower

CEO “takes responsibility” by firing others.

Are you good-faith questioning why the HN crowd is justifiably upset over the current state of things?

amitrip• 3 years ago

is it though?

misssocrates3• 3 years ago

Why don't they just say what happened?

"We got drunk on cheap money"

sokoloff3• 3 years ago

Or "while the Fed had the punch bowl out, we drank heartily like everyone else; when they took it away, we grabbed out coat and headed home to sleep it off a while..."

listenallyall5• 3 years ago

Leave costs where they are? Inflation likely causing many of their inputs to increase. Employees tend to want raises, bonuses and stock options. Health insurance basically always goes up. Customers demanding more features/quality (i.e. faster streams, 4k) while bandwidth/server costs rising. Marketing visibility often set via competitive bidding or auctions. They already reduced what they pay to their content creators late 2022.

I can understand layoffs when your business is running at a loss

How do you know Twitch isn't?

This is what I don't get

No, there's more.

lakomen• 3 years ago

How do you know Twitch isn't?

They wrote that they're profiting, in the initial post, just not as much as they'd like to. Profit isn't loss.

chatmasta3• 3 years ago

Here's a better version:

Everyone else is firing people. So it seemed like a good time to fire some people.
We found 400 people to fire, which sounded like a good number because it's not as big as 500. None of them seemed to be doing anything useful, so we fired them.
The product will not be affected and as a user you will notice no difference whatsoever.
Signed, some anonymous guy who took over after our CEO stepped down this week so you can't blame him for firing people.

bottlepalm• 3 years ago

there’s a looot of employees here we don’t like. Instead of going through the whole PIP/HR dance we’ve decided to give every manager a blank check to fire a few of you. The whole ‘economy’ situation is a perfect cover to do this now. Adios.

vecter3• 3 years ago

It’s easy to comment like this from afar, but would you actually send this message if you were the CEO?

_alex_• 3 years ago

Zero growth or negative growth (real or nominal) are both cases that not keep pace with expectations.

What about that paragraph makes you think things are gangbusters but they have to lay people off?

throw8383833jj• 3 years ago

Jack welsh school of management: you've got to reward the top 20% and layoff the bottom 10%, about once a year. this is very much possible when there's an oversupply of labor.

arrty88• 3 years ago

They were staffed for 10x and only seeing 2x. Probably shutting down a lot of growth projects that aren’t showing promise.

misssocrates3• 3 years ago

"Those who thought it was free money are now discovering that they have to pay for it retrospectively." -Nassim Taleb

justapassenger2• 3 years ago

I can understand layoffs when your business is running at a loss, not when it's growing.

Do you revisit your personal budget only once you run out of money, or once your income changes?

machinawhite2• 3 years ago

Do you also employ people and managers and use your personal budget solely to make profit instead of buying food? Stop the weird analogies

bart_spoon3• 3 years ago

Mass layoffs aren’t the same as revisiting a personal budget. They are fairly drastic measures.

To use your analogy, a layoff while revenue is growing is like continuing to get raises at work, but when this years raise isn’t as high as you expected, you start pawning off possessions for the cash. If times were dire, perhaps it makes sense. If you are still making money, it seems more prudent to tamp down on new purchases than to try and take back old ones.

TeeMassive• 3 years ago

They're culling the less performant employees and use the current economic crisis as a PR excuse.

dusted• 3 years ago

I'm impressed that they even needed 400 people to run it in the first place ?

jefozabuss• 3 years ago

There is a lot going on the back-end of these big streaming sites and also they have "support over 25 languages, in order to provide 24/7/365" so I'd guess it's in the thousand+ range.

thenerdhead• 3 years ago

Everyone is going through two things. Correcting irresponsible hiring over the last couple years, and a strategic inflection point. While the former has mostly happened, the latter is going to continue to happen until new business models are found.

It is very common to see new CEOs at this time to “make things more contemporary” and with that is the redundancy of roles and even people who may not adapt to the new culture.

Much of the business speak here is trying to say “we’re reducing our workforce to make room for new roles and new people who will match our new strategic direction”. Every company is confused internally and need strong leadership to get through it.

Literally all ordinary rules of business go out the window and people are firing from the hip right now. Pun intended.

PurpleRamen4• 3 years ago

There's that passive, vague non-word again: "impacted". Such a milquetoast way to say "something happened" but without that pesky specificity.

Well, everyone ion the business knows what's going on with twitch and the streaming-market at the moment. So no reason really to explain further I guess?

So, they are growing, but not growing faster than some [arbitrary] goal?

Actually, in the last months they were shrinking. Partly because viewership around this time of the year is always shrinking for reasons, but this time even more, because pandemia inflated the market, and now as it's ending, the inflation also disappears. Overall, there is still growth compared to the time before the pandemia, but nobody really knows how it will hold until the end of the year. Additionally, the gaming-markted is being a wild mix at the moment, and most attempts of twitch to diversify their content have failed. So they are a bit clueless at the moment I guess how the ship will move and grow.

Tsiklon• 3 years ago

> "user and revenue growth has not kept pace with our expectations"
So, they are growing, but not growing faster than some [arbitrary] goal?

Actually the absence of a direction in this sentence is specifically vague language that allows the implication of, but not statement of “negative growth”.

Vaslo2• 3 years ago

Setting targets for your business is not arbitrary. No business with investors just dials in an easy forecast. All investors demand growth with profit, otherwise they would put their money elsewhere. Goals are not set to make employee lives easy.

2-718-281-828• 3 years ago

they streamed 400 of their employees getting laid? o.0 ... that's outrageous!

iepathos2• 3 years ago

For some perspective, twitch generated $2.6 billion in revenue in 2021 and $2.8 billion in 2022. They've seen nothing but increased revenue over time.

throwawayinvi• 3 years ago

Increased revenue tells nothing. What are the profits?

pcthrowaway• 3 years ago

So they took in an extra 200 million $ in revenue in 2022, great. Though that doesn't necessarily mean they'll continue to take in more revenue given that 2022 was the year lockdowns pretty much disappeared everywhere and I'm guessing Twitch's model benefits from people being stuck at home.

But let's ignore that, and say they'll keep making that 2.8 billion. Did they hire 1000 new employees between 2021 and 2022? Because if so, that probably means they're making less profit even with an additional 200 million $ in revenue. Assuming the fully loaded cost per employee is ~200K/year, which according to Levels is on the low end (their L4s make 209K, L5s and up make much more)

Couple that with investors now clamouring for returns, and from the business side you can see why reducing their cash out-flows is at least appealing.

PurpleRamen4• 3 years ago

And 2023, most likely this will go down hard. Revenue for streamers has already been down the last months, more than usually around this time of the year. 2021 and 2022, Twitch had a massive growth because of the pandemia, so many working from home and not being able to spend the money on other things like events or travel. This is now over, and their revenue is shrinking.

pcorsaro2• 3 years ago

Every one of these companies doing layoffs says something like what's in this update: "user and revenue growth has not kept pace with our expectations." I find it really hard to believe that all of these companies assumed that growth during Covid was sustainable and would just continue into eternity. I have a small restaurant supply business. Our revenue was up almost 50% above our best year ever. We knew there was no way it was going to last forever. All of these companies just sound so disingenuous when they say their growth didn't keep up with their expectations. They knew this day would eventually have to come, they just don't want to come out and say that.

Rastonbury2• 3 years ago

I'm curious if you own any stocks, did you own then sell any tech companies or after covid up to mid 2022?

pcorsaro2• 3 years ago

Just index funds for the most part. I don't attempt to time the market really. I assume you're implying that if I had known things were going to slow down I should have made a fortune trading stocks. I'm not saying anyone had a crystal ball for when the market was going to slow down. I think that's kind of a fools errand for most retail investors. All I'm saying is these companies keep making statements saying that growth didn't meet expectations. It just feels really disingenuous to me is all I'm saying.

thret• 3 years ago

'Lays of 400 Employees' has a different meaning to 'Lays off 400 Employees'.

jboydyhacker• 3 years ago

Are they keeping their headquarters in downtown SF? It has not been used for a while and fairly nice

rvz• 3 years ago

"Engineers hopefully not affected" - HN

benjamoon• 3 years ago

If I was more suspicious I’d be wondering if the sudden huge rise in ai was at all linked to the sudden huge waves of layoffs. Maybe all these big tech companies have seen something before the rest of us?

xyst• 3 years ago

Probably getting forced to trim the fat by their parent company, Amazon.

seanhunter• 3 years ago

There's a typo in the headline. Should be "lays off".

steakscience• 3 years ago

I don't see how "macroeconomic conditions" impacts Twitch viewership.

It's not selling anything to any consumer or business. If anything, people are watching more Twitch.

Twitch.tv Lays of 400 Employees

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