Discord is laying off 17 percent of employees

https://www.theverge.com/2024/1/11/24034705/discord-layoffs-17-percent-employees

by minimaxir • 3 years ago

457 366 3 years ago

theverge.com

paxys9• 3 years ago

Layoff season is becoming an annual thing in tech, isn't it?

saos2• 3 years ago

There’s always an annual layoff. Media just perpetuating it…

dragontamer• 3 years ago

30%+ at Twitch, 17% at Discord, huge numbers at Google (anyone have a % from Google yet?)

There's definitely more layoffs this year than usual. There's always layoffs, but the size / scope of them are not traditionally this big.

aaomidi5• 3 years ago

Google did not do layoffs like the one last year really ever before last year.

paxys9• 3 years ago

How many people did Google lay off annually in January before 2023?

swingingFlyFish2• 3 years ago

No these sets off layoffs are way different than before.

jimbob45• 3 years ago

Really need the government to start heavily penalizing companies who lay people off. Layoffs can't be a tool for a company to get ahead financially. We're ruining lives and triggering suicides with these layoffs.

symlinkk• 3 years ago

That would slow down hiring.

r053bud• 3 years ago

The government is totally disinterested in penalizing companies for this. How else will it keep a healthy well-supplied reserve army of labour?

peter_l_downs• 3 years ago

How would this work? Would companies be unable to fire people except for rule violations?

kbd• 3 years ago

More government is not the solution to all problems.

davidw2• 3 years ago

Or, instead of the government dictating those kinds of company decisions, put in place a system so that you're ok if you do get laid off, like a real health care system that is not linked to your place of employment.

HammadB2• 3 years ago

I don't think its the role of the government to penalize layoffs. If a company needs to do a layoff to remain viable it must be allowed to - the downside (everyone loses their job) is worse. And trying to apply some mechanism where the government decides if its ok or not seems too intractable.

I think the approach of things like the WARN (https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...) act are more plausible. Use legislation to make the workforce more informed, resilient and ahead-of layoffs. You don't want mass layoffs crippling your economy because people are unable to plan.

It's a direct consequence of the WARN act that most tech layoffs have extremely generous severance.

EA-3167• 3 years ago

There's already a known way to combat these sorts of things... they're called unions. Tech jobs will be a lot more stable and bearable when more people understand that, and that we aren't all embarrassed millionaires.

paxys9• 3 years ago

The question we really need to ask is – why are people driven to bankruptcy and suicide because of their employment situation? Why can't everyone have a cushion so they aren't reliant on their next paycheck to have food and shelter? Why can't everyone have healthcare? Why can't we have reasonable vacations, sabbaticals, maternity/paternity leaves? These are the issues government should be solving. And when they do, companies should happily lay off as many people as they want as frequently as they want.

rqtwteye3• 3 years ago

I don't think penalizing will work. I think government shouldn't constantly inflate bubbles where companies have way too much investment money so they constantly overhire until the shit hits the fan. It would have been better to slowly more away from the low interest rates over the last decade.

rchaud4• 3 years ago

It's shareholder capitalism. On one hand, you get stock options in your comp that might be worth a lot. On the other, you could get booted if it means that the company's earnings per share beats Wall St estimates.

29athrowaway3• 3 years ago

Rank and yank

https://en.m.wikipedia.org/wiki/Vitality_curve

1. Rank everyone

2. Layoff bottom 10% or so

3. Reward the top

4. Keep it secret or the workforce will adapt by hiring bad people and sabotaging good people

Used at most companies with performance evaluations. Taught at MBA schools.

Trivia: MBAs have accomplished nothing throughout human history. Only creating overpaid executives that avoid taxes, corrupt the government, ruin the environment, make people poor, sick and make other countries richer. If all MBAs retired tomorrow 90% of obesity, pollution and corruption would stop.

eli3• 3 years ago

Just about all companies have performance evaluations. This is not an explicit tactic in most companies.

ska• 3 years ago

Used at most companies with performance evaluations.

I suspect this is not true. Evals are far more common that stacking.

Btw when you do do this, 4 pretty much never works, and generate a political layer around it.

Perversely, at the group level it raises the value of lower performers, mostly as "chips".

dv_dt• 3 years ago

The company that first applied that strategy, GE, ran themselves into all sorts of problems with that approach. Microsoft’s era of doing fairly poorly was also at a timeframe when they were doing rank and cut strongly.

candiddevmike2• 3 years ago

Stack ranking people has got to be one of the most soul crushing tasks imaginable. You don't know what if any of the bottom will be cut.

paxys9• 3 years ago

You are talking about stack ranking. While yes, it does happen, the outcome of it isn't dictated in a single "x% people are now fired" event. There are multiple rounds of performance reviews, employees at the bottom are identified, they go through PIPs or some other similar process, and it may eventually lead to their firing or resignation. What we are seeing right now isn't that.

compiler-guy• 3 years ago

Neither this round of layoffs at Google nor the last had any association with performance as far as anyone can tell.

Strong performers from the teams around have been laid off, and people who really need to be gone have not.

PartiallyTyped• 3 years ago

4. Keep it secret or the workforce will adapt by hiring bad people and sabotaging good people

AWS isn't even hiding it anymore ...

ProllyInfamous3• 3 years ago

Many sub-contractors right now are "naming their own prices" — but from my POV (as a construction consultant, retired electrician) being a residential GC right now would have been "a tough christmas bonus."

Hoping things swing better, but everything is in cycles. I definitely do NOT believe that AI has NOTHING to do with this (double-negative)...

ttymck2• 3 years ago

What?

ProllyInfamous3• 3 years ago

I'm providing perspective from non-IT/CS career (residential construction), which is booming for smaller trades (but not as a whole).

Being a homebuilder right now would not be enviable (because it is too expensive to build/buy right now).

rvz• 3 years ago

Like I said before and as predicted [0], its not over yet for the layoffs.

More layoffs to come as the tech industry begins to correct further. Especially VC funded startups.

[0] https://news.ycombinator.com/item?id=37924095

ren_engineer• 3 years ago

the Silicon valley of the last 15 years was a 0% interest rate phenomenon, going to take a long time for normalcy to return after a decade of distortion to organic market forces

sf_rob• 3 years ago

Also these companies are reaching financial maturity. It's going to be the next generation of companies to be trendy/fun/excessive IMO.

groceryheist2• 3 years ago

Yes. It is time for laid off seniors to take these exit packages and incubate the next generation. Be ready to draw financing when rates fall in Q3 of 2024.

tuckerconnelly• 3 years ago

How does 0% interest rate actually affect this though? Are that many companies actually funded on debt now? Or are are sales down because their customers were purchasing with debt?

zooq_ai2• 3 years ago

It's a knock on effect. Most software companies sell to other software companies and VC funded startups

ketzo5• 3 years ago

Fair question, but there's a pretty direct line.

ZIRP means that huge capital managers (sovereign wealth funds, pension funds, 401k managers, etc.) get very, very little money on the super-safe stuff they like to buy.

They need to make returns somehow, so if a VC is promising them 15% returns, that sounds quite promising compared to T-Bonds that return 1.5%!

But over the last two years, the yield on super-safe investments now looks more like 6, 7, 8, 9%. That makes a high-risk investment like VC much less attractive, by comparison.

If VC is less attractive, less capital flows to their funds; smaller VC funds means much more discerning, stingy startup investment.

Ekaros2• 3 years ago

You can get debt cheap to fund investment. Other side is that lot of money is always searching for some kind of return. With rates going up that money can go back to boring bonds, either from governments or even big reliable companies that are unlikely going anywhere.

No need to gamble it anymore on tech companies.

ojbyrne4• 3 years ago

Companies evaluate ROI for projects against the "risk-free" interest rate. When that interest rate rises, fewer projects are viable.

mempko2• 3 years ago

What do you mean by 'organic market forces'? All interest rates are decided on, from what we have now to 0%. All markets are designed, with rules, regulations, and tax laws.

Markets are a technology, they don't come from nature. Markets are an intentional product of governments. Anthropologists haven't found a single stateless society that voluntarily chose markets.

IggleSniggle• 3 years ago

Have anthropologists found any stateless society? Whether it's mother, father, grandma, brother, there's always an older person that sets the rules and expectations (and enforcement, the key quality of a state) for youngsters, even if indirectly.

In order for what you say to have meaning, "stateless" would almost tautologically require "no market." But clearly states are themselves a natural aspect of aggregate human behavior in resource limited environments.

rchaud4• 3 years ago

0% financing and you're making losses year after year after year? Maybe it's time to return the money to the shareholders instead of playing musical chairs as the S.S. ZIRP sinks.

neom• 3 years ago

For any HR folks kicking around HN: When thinking about lay-off at this scale of business, how do y'all go about navigating the WARN act? Do you just mitigate it with longer than 60-day layoff compensation?

bluetidepro• 3 years ago

Have been wondering this, too.

grumple• 3 years ago

Not an HR folk, but from what I've seen they often just offer at least 60 days of severance and benefits.

codingdave• 3 years ago

There are quite a few exceptions that can be used. They are listed on Wikipedia: https://en.wikipedia.org/wiki/Worker_Adjustment_and_Retraini...

IANAL, nor am I HR, but I have to imagine that if a company wanted to avoid the WARN act, those exceptions would give them creative ways to structure the layoffs to avoid it.

mikeryan• 3 years ago

Unless you legitimately fall under those exceptions it’s generally viewed as best not try to skirt the WARN act you’ll end up with a bunch of lawsuits to defend and pretty harsh penalties if you lose (back pay up to the time of the award plus the severance and legal fees)

hn_throwaway_994• 3 years ago

If necessary, nearly all companies will give at least 60 days severance in lieu of notice.

More to the point, though, in this particular example I'm not even sure federal WARN notice requirements apply here - there are lots of loopholes people don't often understand. See https://www.schneiderwallace.com/practice-areas/employment/w... - looking at those bullets:

* "Layoffs of 500 or more workers at a single site or location." - doesn't apply, was only 170 employees

* "Layoffs of 50 or more workers when those layoffs comprise 33% of the total full-time workers at the location" - my guess is that doesn't apply either, as the 170 workers were spread throughout the company

* "Layoffs of 50 or more workers when closing a building or facility, or the layoffs include the discontinuation of an entire operating unit" - Again, I believe these discord layoffs were broad-based and not the result of entirely closing a single business unit.

eli3• 3 years ago

California has its own WARN Act with less lenient rules

UncleOxidant5• 3 years ago

If necessary, nearly all companies will give at least 60 days severance in lieu of notice.

They don't call it severance - it's just regular pay for 60 days. Technically they're still employed by the company. At the end of that 60 day period when the employment is terminated, that's when severance (if there is any) is paid.

UncleOxidant5• 3 years ago

My wife was working for a bank until August of last year. One day in late August they called a meeting and told the whole department that while they were still employees for the next 60 days they could no longer come into the office and actually work. That's how they got around the WARN act - they didn't have to file the WARN report until that 60 days was up. I guess that kind of makes sense for a bank: if you give people a 60 days heads up that layoffs are coming that could result in potential mayhem.

rqtwteye3• 3 years ago

"if you give people a 60 days heads up that layoffs are coming that could result in potential mayhem."

Does this mayhem actually ever happen or is it paranoia? I have seen several layoffs where people got advance warning of a few weeks up to almost a year. I have never seen people do anything bad once they got told they would be laid off.

fragmede2• 3 years ago

in this case, Facebook is navigating this by giving 5 months of severance, in excess of what the WARN act requires.

newobj• 3 years ago

I absolutely picked the right year to become a solo indie game dev

(after I was laid off :P)

extrabladeworks• 3 years ago

Can't get laid off if you're the only employee

paxys9• 3 years ago

Try having an unhappy spouse..

par• 3 years ago

how's that going? Not being sarcastic... i'm envious :)

lightbendover2• 3 years ago

I am teetering on the decision myself. Have you enjoyed it?

cableshaft• 3 years ago

Doing that a bit in my spare time (hoping to get a game into Steam early access later this year, and I should be able to get a small mobile game released, it's already about 2/3rds of the way done).

I'd consider going full-time indie, but then there'd be zero incomes in the family, instead of just one (partner is quitting her job and taking a break soon).

Best of luck to you!

gaws2• 3 years ago

How are you supporting yourself?

aaomidi5• 3 years ago

Canceling my nitro

Scoundreller3• 3 years ago

Heh, I cancelled my newspaper sub once they went hard-paywall. I was happy to support the freeloaders but not once they axed them.

Made for a confusing desub call.

I’m sure they’ll come out ahead but at least I know I hurt their user-hostile project’s ROI a bit.

aaomidi5• 3 years ago

I basically don't think Discord is ever going to be able to support my platform of choice properly at this point (Linux).

I hope this company crashes and burns, especially for what they've done to documentation availability across projects.

ok1234562• 3 years ago

Thank you for your service.

kevincox• 3 years ago

Reminds me of YouTube Red (as it was called at the time) where they were really pushing these original premium films. But my favourite part about YouTube is that I can share the videos I watch. As a subscriber it was actually doing me a disservice to lock them up because I wanted my friends to watch them and discuss.

bovermyer• 3 years ago

OK, the layoffs suck, and the whole "failed to realize the pandemic growth wasn't permanent" thing is getting way overplayed.

However, these are some crazy exit packages. Five months of salary? Health insurance through the end of 2024? That's a heck of a buffer.

para_parolu• 3 years ago

With such package I would voluntarily quit.

theonething• 3 years ago

In this (tech) job market, I would not.

scrapcode2• 3 years ago

I think it seems fair. Maybe forums are biased toward the negative, but it seems like the market is tough and it is taking even highly qualified individuals at least that amount of time to find something new.

cagenut• 3 years ago

what does 'fair' have to do with anything

spacemadness• 3 years ago

This forum seems swarming with people with an axe to grind against SV employees of late. As far as I can tell some people think they are well informed on the matter purely from following people on TikTok. Such as the “they only work 6 hours a week” crowd.

paxys9• 3 years ago

While the severance definitely makes things easier, layoff season is also a terrible time to look for jobs because there are like 300,000 other qualified candidates with big company credentials in the same situation as you. The cushion isn't a luxury but a necessity. In some jurisdictions it is legally required.

pcthrowaway• 3 years ago

I'm wondering if by "layoff season" you mean the first quarter, or the entire last 2 years?

January of last year had more than twice as many layoffs as any other month of the year, and the first quarter of '23 had nearly twice as many layoffs as the rest of the year combined. Not sure if we'll see the same trend this year, but it does seem like there have been an uncharacteristic number of layoffs this month already.

YetAnotherNick• 3 years ago

In some jurisdictions it is legally required.

Which jurisdiction requires 5 months of salary?

xienze• 3 years ago

because there are like 300,000 other qualified candidates with big company credentials in the same situation as you

And to add insult to injury, there will inevitably be lots of sound bites from CEOs whining about a lack of engineering talent, so can we please raise H1B limits???

Amezarak• 3 years ago

Yeah. I got laid off a few months ago and I can’t even get an interview. Never had that problem before.

ricardobeat• 3 years ago

Nothing crazy about it if you compare to whats _required by law_ elsewhere. In the Netherlands you’ll get at least 3 months salary, possibly more if the layoffs were negotiated with a works council, an additional N months depending on your years of employment, and healthcare, well, is not tied to your job at all. Nothing extraordinary about it.

xnx2• 3 years ago

Netherlands seems to do a lot of things right, and I know the US isn't making all the right tradeoffs, but lack of safety net is one of the reasons US pay is higher.

huytersd• 3 years ago

It’s not that crazy considering all the layoffs are happening at the same time and new openings are slim. I wouldn’t be surprised if almost everyone laid off have to use all the buffer provided before they can find another job.

rqtwteye3• 3 years ago

This buffer evaporates very quickly in a bad job market as I learned in 2002 and 2003. I think the only "crazy" exit packages are when they throw dozens of millions after failed executives.

renewiltord• 3 years ago

A friend worked at Google. Pretty lazy guy. A few months salary to quit, but 8 months to wind down what he worked on. In truth, one year's pay to do nothing. He, predictably, did nothing.

bityard2• 3 years ago

This reminds me of the show Silicon Valley, there is a subplot where one of the main characters is unassigned from his own project but not given a new team or project. Just, unassigned. He wanders around the building and eventually makes his way to the roof where he runs into a small crowd of other "unassigned" employees. They mostly badge into the office, head to the roof and sit up there all day doing nothing of importance.

mensetmanusman2• 3 years ago

it takes six months to get hired for many.

maxioatic• 3 years ago

I believe it's only five months of health insurance since it says "Five months of benefit continuation". It does also say "Continued access to Modern Health through the end of 2024", but Modern Health is a mental health platform.

_justinfunk• 3 years ago

I wonder if the new IRS section 174 rules are intensifying these tech lay offs. As far as I understand it, software engineering salaries are no longer fully tax deductible in the year they are paid, instead they can only be depreciated at 20%.

wutangisforever• 3 years ago

i don't really get why this law was invented, what was it supposed to prevent?

badpun• 3 years ago

I'm not an accountant, but to me it looks like the IRS was operating at an assumption that the software engineers write is not immediately consumed, but rather has on average 5 years amortization period (meaning, it's producing value for 5 years, on average).

blihp• 3 years ago

Anything that pulls in income and/or pushes out expenses results in a higher tax liability to the IRS. It makes a lot of sense in the world of real estate and equipment expenses (i.e. items which have very long useful lives to a business), less so for labor and other short term expenses.

bobthepanda3• 3 years ago

The deficit hawks have routinely included legislation that included automatic ways to reduce the US deficit to be implemented at a future point in time, when hopefully Congress has sorted out whether or not such a thing is actually desirable. It's essentially a budget Sword of Damocles.

Of course, Congressional budget negotiations have been an unproductive circus show for a while, so this never actually happened and the thing that was never actually intended to go in place went in effect. With the current razor-thin majority in the House constantly getting derailed over budget negotiations, this is unlikely to resolve any time soon.

UncleMeat3• 3 years ago

The change was part of the trump tax bill, which at least needed to be able to claim that it was revenue-neutral after 10 years to be able to be passed through the budget reconciliation process.

btown• 3 years ago

https://blog.pragmaticengineer.com/section-174/ is a good overview and describes some of the history:

In 2017, then-President, Donald Trump, signed the 2017 Tax Cuts & Jobs act, which overhauled tax codes and reduced tax – for example, it reduced the top tax bracket from 39.6% to 37%. To make the bill pass strict budgetary rules, the Senate used a process called reconciliation: adding in tax code changes that delayed tax increases. These delayed increases “balanced out” the tax reduction.
One of these changes was Section 174, set to come into effect 5 years later, in 2022. These parts deliver the blow by making it clear that software development costs need to be amortized over 5-15 years. Most experts expected Congress to push back the Section 174 amendment to a later date, or simply remove it. But Congressional negotiations to repeal the changes fell apart at the last minute in December 2022, meaning it became law.
Amazon, Microsoft, Intel, Ford, Lockheed Martin, and other US companies created the US R&D Coalition in 2018 to advocate in reversing this change. This group concludes... "By diminishing the near-term value of R&D expenditures, the Tax Cuts and Jobs Act will reduce incentives for companies to invest in the development of new products, ultimately hurting consumers and businesses alike.”
What about VC-funded companies? For loss-making companies this change doesn’t make much of a difference. But the change does impact VC-funded companies near to break even. Most VC-funded companies close to breakeven have big-enough cash buffers with which to pay unexpected tax bills. However, these companies might reduce hiring – or even consider letting go staff.

My 2c are that big tech companies with large amounts of cash on hand wanted to be seen optically as fighting against this change... but those with cash on hand would also benefit from being the only ones able to weather the storm relative to their would-be competitors. It's unclear that incentives were aligned here among those companies with lobbying budgets.

hibikir2• 3 years ago

You have chunks of the explanation in other responses, let's try to put them together:

Since Obama became president, all legislation basically needs 2/3rds of the senate to pass if it's remotely controversial and every tax change is controversial. There is one exception though: if the bill is of a budgetary nature, and is revenue neutral over 10 years.

Trump really wanted to pass some tax cuts in 2017. But as you'd expect, claiming that a big tax cut is revenue neutral is far more than the senate parlamentarian would believe. So instead, some tax cuts are made temporary, and some tax changes are made that would gain revenue. Then the whole thing appears to be revenue neutral over a decade, because nobody expects that the poison pills at the end will actually be allowed to happen. They tend to come in 6+ years later, as to make sure that all senators and the president might also claim said increases are not their problem.

So the expectation is that a future congress will just undo those tax changes, and push them further into the future, by again making another bill that looks revenue neutral in the long run, but is just kicking the ball down the road.

The congress since the midterms, however, is even less functional than in the Obama or Trump years: So the poison pills that are not supposed to happen are starting to happen. Other cuts that occurred, like the increase of the standard deduction, were also marked as temporary, and could come back if congress doesn't do anything.

So ultimately it's all side-effects of people trying to bypass congressional rules, because otherwise we'd not see anything other than emergency spending bills passing in congress. Changes to legislation that would make this kind of dysfunction stop happening are even harder to pass. Every incentive pushes politicians of all parties to play with fire. This time we got burned.

laidoffamazon• 3 years ago

Same reason why the Trump Tax cuts almost made PhD tuition waivers taxable.

1) Tech workers are liberals

2) Liberals being owned is good if you're an administration consumed with punishing your enemies and enriching your allies

#2 is also why SALT deduction was curtailed, to punish blue states. While I think that's accidentally good policy, it made people mad enough to flip the House in 2018.

cjbgkagh3• 3 years ago

Wow - that is absolutely insane. I had no idea that existed. Looked it up, section 174 amendment added in Tax Cut and Jobs Act 2017 coming into effect 2022.

Workaccount2• 3 years ago

Worse is that it was fully expected to be repealed before becoming law, but then got stuck in political quagmire. So here we are...

wait_a_minute3• 3 years ago

I think if you survive(d) layoffs, then that means the company employing you now has a more long-term view of their investment into your onboarding and continued growth. So while the pain at first may be jarring, in the long run it is worth it if the move causes companies to view their developers as long-term team members rather than assets which can be depreciated right away.

Especially in vesting environments, where devs need to wait for the vesting to have made their R&D-heavy roles worth it from a monetary point of view. Well, large firms will need to give their devs enough runway now so that they can depreciate the costs over a longer period of time instead of only thinking in the short term. They can still fully deduct the salaries, just over a longer period of time. It is 5 years for domestic R&D / development and 15 years for foreign. I think that is good and will cause better treatment of developers in the long run.

boringuser22• 3 years ago

The problem is that we now have a massive surplus of skilled engineers so good luck getting hired when you're inevitably arbitrarily let go.

Your mindset is only valid in the explicit context of a company

A) not having cut you

B) having cut others prior to you

As soon as that context is lost in the next two years when you get fired or find a new job, you're back to square one, except you're also competing against Joe Google Engineer.

datadrivenangel• 3 years ago

Until they do 5 more rounds of layoffs over the next year.

Last startup I worked for is on round 7 of layoffs / restructuring right now.

alok99• 3 years ago

I'm having a hard time understanding how this leads to lay offs. Software engineering salaries being amortized over 5 years leads to an increase in yearly taxable income for the company. So what makes this a bad thing for the company? Are they doing the layoffs just to reduce total income to bring taxable income back down to (or closer to) 0? I.e. is this all just to avoid paying more taxes?

supportengineer3• 3 years ago

Small startups who were not anticipating this change may not have the cash available to pay the tax bill due on that taxable income.

opt1c2• 3 years ago

Imagine you're a small business that makes $1m ARR and you employ 5 software engineers at $200k per year. Your net income is 0.

Prior to this change in the tax code, your software labor costs for that year would all count against your income so you'd be taxed on $0 in profit.

With this tax code, you can only amortize 10% of software labor in the first year so now your business just had $900k in profit as far as the IRS is concerned. You now have to pay ~200k in taxes. You have to come up with that money somehow, and for most businesses the only short-term option is a combo of reducing costs (layoffs) and loans.

shmatt3• 3 years ago

Discord isn't profitable

UncleOxidant5• 3 years ago

In addition to more layoffs/less hiring it looks like there are a lot of undesirable side effects of this change, especially for small to medium sized companies. Including moving IP out of the US. What were they thinking?

https://newsletter.pragmaticengineer.com/p/the-pulse-75

redcobra762• 3 years ago

The context of the 2017 tax cuts is important; it was/is a major feather in the administration’s cap.

cscharenberg• 3 years ago

It definitely affected hiring. I work at a startup that is self-funded, profitable, and at about 24 people. The tax change increased our tax bill by around $125k, so that's an engineer we couldn't hire.

Made me glad our founders are so fiscally conservative, as other startups around had to lay off some people to have cash on hand to pay the increased taxes.

nocoiner• 3 years ago

If I’m reading that right, that seems to be referring to foreign-originated IP, that’s been contributed to a Delaware corp, but is now being repatriated elsewhere to avoid Section 174. I assume the reason the associated software development activities are no longer subject to 174 is because there’s no longer a US taxpayer involved. Is this really applicable for US-originated IP? To the extent that there’s still US tax jurisdiction involved, doesn’t that just put you into the world of transfer pricing, GILTI and such?

I’m also fairly skeptical that this is all that much of a deterrent to doing business in the United States. The US had uncommonly high corporate tax rates until recently, and that didn’t seem to adversely affect economic dynamism. I mean, sure, one can avoid this particular taxation regime by (checks notes) moving the entire operation to another country, but that obviously sacrifices the advantages of doing business in the US (deep and liquid capital markets, well-known legal regime associated with investing in a Delaware corp, network and agglomeration effects, etc.) and the replacement jurisdiction is certainly going to have its own set of downsides.

adrianmonk• 3 years ago

What were they thinking?

"Tech companies, specifically, have lots of money. How can we get some of it?"

dustingetz• 3 years ago

Venture capital investment dollars are not revenue and not taxed as revenue – so not sure if discord is profitable or what (edit: article says it's not) but the rule doesn't impact growth stage cos iiuc. Really it just impacts bootstrappers who are royally fucked, good job USA

SirensOfTitan• 3 years ago

The fact that, as far as I understand, section 174 rules are disliked across the aisle, yet Congress cannot get its act together enough to fix what will wreak the pipeline for arguably the most valuable and dynamic part of the US's economy speaks volumes. The legislative branch of the US federal government is in such dire need of reform.

pc86• 3 years ago

What reforms exactly would fix that?

mensetmanusman2• 3 years ago

Is this just a Biden admin thing? Or were finance people gunning for tech layoffs for a while?

jacobyoder3• 3 years ago

This was legislation passed under Trump, but didn't take effect until 2022.

Take credit for "lowering taxes"... push the effects of the time bomb on to a future administration. Definition of stable genius... ;)

lalaland1125• 3 years ago

This is a Trump admin thing, with a delayed fuse so his successor gets blamed

pkilgore• 3 years ago

Passed by the Trump administration to help make the long term CBO math work on cutting taxes for the wealthy.

chuckadams2• 3 years ago

I don't get it: a salary is a depreciable asset? I thought that only applied to actual tangible things that needed replacement on a schedule. I'll never understand accounting... and I'm increasingly thinking that's the point.

gen220• 3 years ago

The idea is that you're converting some % of developers' salaries into intellectual property (i.e. code), and that intellectual property is a capital asset that depreciates over time in the same way that a tractor or a widget-making machine would.

The salary is not the asset, it's an expense that produces an asset.

mdavidn• 3 years ago

The reason amortization exists is to reduce taxes in later years:

If a company invests $1 million into an asset that earns $250k each year over 5 years, the company would otherwise see a $750k loss the first year followed by $250k profit for 4 years. By following an amortization schedule, they are taxed on a steady $50k profit each year. In other words, the taxable effect of the expense is "spread" through the years in which that asset is expected to earn income.

whalesalad• 3 years ago

gotta cover the midjourney cdn bill somehow

HumblyTossed• 3 years ago

Going to be a lot of lay-offs this year as employers reset employee expectations.

dotnet002• 3 years ago

Hopefully those were the guys that have been mostly ruining the mobile app UI over the past couple of years. Discord is the only app I've felt the need to turn off updates for.

cobalt60• 3 years ago

discord was done for me when it became whatever it is now than it was envisioned earlier.

lulznews• 3 years ago

Hmm. Coordinated effort to depress salaries? How did that work for Steve?

seydor3• 3 years ago

how does discord survive? they also seem to have a large spam issue and they are stubborn on not implementing obvious features

busymom02• 3 years ago

What features? Asking as someone who doesn't use discord much.

seydor3• 3 years ago

bulk removing spam posts

internet101010• 3 years ago

Only being able to receive a DM from someone after approving a friend request. Last I checked you have to enable this after installing.

It should be the default setting.

didntcheck• 3 years ago

I'd also love to see their storage and bandwidth bill. They allow users to upload unlimited files with no retention limit, and have now upped the single file limit for Nitro users to 500mb. As a user I'm certainly not complaining, but surely it can't be sustainable

FireBeyond3• 3 years ago

I suspect there's a huge benefit to deduplication for things like gifs and memes and emoji for them. But yes, still.

hn_throwaway_994• 3 years ago

Frustrating, layoffs seem to be back in full swing. I posted this comment just yesterday, https://news.ycombinator.com/item?id=38945990, and since then HN had articles about Google layoffs, now Discord, and I also saw that FullStory had a pretty big layoff.

It really had felt like things had stabilized a bit (at least for software engineers) in the fall. Was that just the lull before the storm?

beretguy• 3 years ago

I started to bookmark all the layoff stories to see how many of them.

pb72• 3 years ago

No need.

https://layoffs.fyi

mrnaught• 3 years ago

https://layoffs.fyi/

pb72• 3 years ago

Cruise, Spotify, VMWare, and Unity were among the companies that had sizable (15%+ of a large group) layoffs before the end of last year. I don’t think it ever really stabilized.

alephnerd• 3 years ago

VMWare's is because of M&A. I wouldn't classify it's layoffs for the same reason as Cruise, Spotify, and Unity.

hn_throwaway_994• 3 years ago

But Cruise, VMWare and Unity's layoffs were all very much company-specific execution issues - I'd expect to see some layoffs like that even during boom times. Of that list only Spotify is really in the "we hired too much and now we're downsizing due to economic conditions" boat. In fact, I remember thinking "That sucks, this is the first one of those I've heard in a while" when the Spotify layoff was announced.

ironlake• 3 years ago

I think many companies are anticipating a significant downturn in the economy and are trying to get ahead of it. Layoffs help stock prices almost immediately and management get bonuses for increasing the bottom line.

Workers are defenseless. Save your money in case you're laid off. Work less if they keep you on.

Let management be rewarded by nothing more than short term monetary gain. Don't give them extra productivity.

shmatt3• 3 years ago

We grew quickly and expanded our workforce even faster, increasing by 5x since 2020

Am i reading this right? Once the pandemic hit headcount went 200 -> 1000 -> 830

What is different in the user experience since 2020? I can understand needing an army of SRE's but this feels extremely bloated for a company who was able to run their product on a 200 person crew

dotnet002• 3 years ago

Since 2020 they've screwed around with the UI several times and have added stuff like forums and threads.

wrenky• 3 years ago

I think the growth of Discord partially explains it- They needed a _lot_ more SRE/Scale engineers, which causes growth in HR/Management layers.

They also added a bunch of monetization stuff (discord nitro) and attempted to get more "community" based features like custom emotes/badges/profiles per server/watch party stuff.

The core experience is the same, I think they've done a great job ensuring that doesnt change! They have also done the usual software stuff, improving core outskirts like stability/performance/login methods/slash options. Its the same core product but better.

ketzo5• 3 years ago

I'm sure their userbase grew in a big big way during the pandemic, but honestly, by the beginning of 2020 Discord was already a massive operation. How much more headcount could pure scaling explain?

I think you're more on the money with the miscellaneous other projects. They were even trying to sell games through Discord at one point.

whatyesaid• 3 years ago

I guess they are building other products and trying to diversify, like a game store that flopped within Discord. To make the progress/maintain what they currently have, yeah, you wouldn't even need 200 people if they were halfway decent.

Unlike Twitter or Twitch, they have to diversify, as I believe they are burning money on their core product. The benefits of Nitro is not much. But they aren't going to become profitable by paying engineers $400K on bad ideas and keeping the engineers on reserve duty, which they have probably been doing.

okdood642• 3 years ago

I can understand needing an army of SRE

As an SRE I can assure you, you don't need an army of SREs for a singular product.

__turbobrew__• 3 years ago

They hired 800 engineers to create the soundboard. That is basically the only notable feature in the last 4 years.

reportgunner2• 3 years ago

They also completely ran the android app into the ground.

seoulmetro6• 3 years ago

User experience? Lots of spam about new features.

Senior Executives experience? They look bigger as a company.

ok1234562• 3 years ago

Back to IRC

subpixel• 3 years ago

I was unaware they turned down a $12 billion acquisition. I think that is pretty insane even in the 0% interest era.

ketzo5• 3 years ago

Eyeball test with zero context, but honestly? I doubt a 17% layoff will cut deep enough.

That still leaves them with more than 4x the employees they had in 2020 (when the product had already reached massive scale and, IMO, very high quality):

“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,” Citron wrote. “As a result, we took on more projects and became less efficient in how we operated.”

I know someone always makes a comment about "wow, X company had Y000 employees? what do they even do all day?", and I don't wanna be glib, but it really does seem like they expanded beyond any kind of reasonable measure.

If I were at Discord, and I wasn't part of an extremely core team with a direct line to revenue generation, I would be sharpening up my resume.

---

Edit: Okay, I missed this:

Discord has raised a total of about $1 billion in funding. It has more than $700 million in cash on its balance sheet and the goal to become profitable this year

That's actually a lot better than I expected. Clearly they are making non-trivial revenue, and still have quite a bit of cash; maybe keeping a still-pretty-high headcount to pursue new monetization projects is the right call.

shmatt3• 3 years ago

Knowing the average SV interview loop too well, I can't imagine how many bad (for corporate type work) hires growing that fast brings in. A bunch of leetcode-hard optimized engineers being thrown into an organization that just grew from 200 to 1000 people.

If you are part of that 200 original group, you probably have a paycheck for another 5 years just answering tech debt questions

autoexecbat• 3 years ago

When hiring fast, there's also an element of "we'll find something for you to do", meaning that you're expected to find something yourself. This can lead to people becoming very narrow on something that the business doesn't really value

bluetomcat• 3 years ago

It sounds like a recipe for ruining a product and turning a company into a dysfunctional organisation. Onboarding 800 idle people prepared to reverse linked-lists :-)

TylerE• 3 years ago

Now imagine if they opened those jobs to all of us in low cost of living areas instead of demanding in person presence. They'd get better people, and people like me would be getting a decent bump even if we were only getting 50 or 60% of SF salary.

excord2• 3 years ago

Discord interview questions are not your typical leetcode problems. Your premise is wrong.

lispisok• 3 years ago

Off the top of my head I cannot recall any big features added to discord over the last few years. I'd like to know what those 4x more employees were working on.

skrebbel• 3 years ago

Maybe not engineers? Discord quickly morphed from a place where gamers yell at each other into a place where lots of communities and movements exist. Maybe that skyrocketed the need for moderation, lawsuits of people demanding that their former block party co-organizer gets un-admin'ed, abuse reports, etc?

ketzo5• 3 years ago

They have been trying a lot of different routes for monetization, and over a pretty short time period. Adding lots of little things to Nitro, more community server monetization features; at one point, Discord was even trying to sell games a la Steam.

I'm sure that last one in particular had quite a lot of headcount associated, and it seems obvious that after they totally shuttered the project, they just reallocated the employees to new stuff.

Xeamek2• 3 years ago

They changed the icons for mute mic, and mute sound buttons. So that probably took at least a dedicated team and few months of work...

strbean• 3 years ago

Activities and soundboards are the ones that come to mind. Activities are a pretty heavy feature.

spiderice• 3 years ago

what do they even do all day?

Discord has added a bunch of new features over the past couple years. Unfortunately, they don't seem to be very useful features (at least not to me). I still just use it for voice chat during video games.

hamandcheese• 3 years ago

Their eng team wasn't particularly large. ~300 was what I last heard.

I don't know how eng grew over that time, but it doesn't strike me as bloated given their scale and user base.

brokencode• 3 years ago

One of the most surprising things to me during the pandemic was the dramatic hiring spree that almost every major tech company engaged in at the same time. I was getting pings from different recruiters multiple times a month during this time, and I’m sure others were getting many more.

Today’s layoffs are a direct result of the irrational exuberance of that era.

Solvency2• 3 years ago

Can someone explain this systemic hiring phenomena? A pandemic hits and every corporation thinks that's the time to hire and scale by gross multipliers? Why? Whose idea was this? How did it catch on everywhere?

mvdtnz2• 3 years ago

Clearly they are making non-trivial revenue

"Non-trivial" is a very low bar to clear. It's obvious that Discord simply does not need to be the scale it is. It doesn't need a billion dollars and it doesn't need a thousand employees. It's very clear that they only have the employees because the investors were stupid enough to give them that much money, and they need to find something to do with it.

Some products just do not need to be that big.

valval• 3 years ago

What on earth is your reasoning for saying this? I really dislike the habit of stating something absolutely ludicrous and running away with it.

loceng• 3 years ago

It seems most, if not all, big-successful companies use the formula to over higher and then you prune off the lowest-poorest performers - however that metric is determined.

mikepavone• 3 years ago

As someone who joined pre-pandemic, my opinion is that we were unsustainably lean at the time. I was shocked at how small the infrastructure team was when I joined the company and things were honestly a bit rickety at the user scale we were at then. While engineering was probably the single biggest department, a large chunk of that 200 were in departments like Trust & Safety and Customer Experience (support).

We saw a huge amount of user growth during the pandemic, we massively increased the number of users that could be in a single guild (server), we launched features that asked a lot more from our AV backend (stage channels, camera video in guild voice), had to deal with a massive increase in spam during the crypto boom, expanded voice calls to Xbox and PS5 and had to deal with an increasingly fraught regulatory environment.

We also shipped a lot of user-facing features during that timeframe. Some of those ultimately got removed because of poor results and depending on your use of the platform I imagine some of those that stayed may not be particularly visible, but we really did ship a lot of stuff and I'm not going to attempt to list it all here.

Obviously, in hindsight we should have had a tighter focus and probably hired a bit less, but this sentiment that we are/were hugely bloated feels pretty wild to me from where I'm sitting.

ketzo5• 3 years ago

This is great context and I really appreciate it. I honestly thought of Discord as being super stable even in 2020; interesting to hear things felt rickety, internally.

My sense is that Discord was exploring a lot of different ideas for monetization all at once, and that maybe the sprawl of new projects got unwieldy, esp. in 2022-23; how accurate would you say that is?

x0x0• 3 years ago

Still -- my quick google came up with 750 employees mid 2023. So this is 125-ish employees. Particularly with 5 months severance, that seems too small to save much money (assuming $300k fully loaded, that's $40m pa) and also too small to materially impact velocity by reducing headcount and being more careful about commits.

I'd expect more like a 50% cut to really speed up the significantly fewer projects by eliminating coordination overhead and giving PMs the ability to really slash projects.

ps -- I'm not claiming it was bloated, that's (implicitly, and I believe fairly?) the ceo's claim.

sosodev• 3 years ago

It’s the way HN continues to rationalize the hundreds of thousands of layoffs. Every company is bloated and few software engineers are worth keeping it seems.

Gintasui• 3 years ago

Discord is like nuclear fusion - always one year from being profitable.

letwhile2• 3 years ago

Good management. But you can buy stickers and stuff

gumballindie• 3 years ago

“We grew quickly and expanded our workforce even faster, increasing by 5x since 2020,”

Turns out ordering people back to offices is bad for the economy. Less disposable income and free time means people spending less sharing anime pictures on discord.

hellotomyrars• 3 years ago

700 million in cash is a massive warchest to be sitting on. I’m still doubtful on their path to profitability but having looked at their financials that are readily available, I’m actually more optimistic about their long term prospects. Absolutely sucks for anyone losing their job but assuming they actually deliver on the claims made here, it is an entirely reasonable severance package to me.

sumtechguy• 3 years ago

Park it in 5% bonds. Can the employees beat that for making rev for the company?

majani• 3 years ago

Maybe you're joking but if you're not, investors could sue you for lack of fiduciary duty

xnx2• 3 years ago

I have to imagine some of these single product companies (Zoom, Dropbox, Discourse) will eventually get rolled up to make some office suite alternative to Mircrosoft Office and Google Workspace.

nickstinemates6• 3 years ago

I basically live on Discord these days. Love it. It's one of the best pieces of technology I have ever used. I hope they figure it out.

bowsamic3• 3 years ago

I just deleted my discord account after realising I live on it way too much. I will miss the people I met there, but it was consuming my life

nickstinemates6• 3 years ago

It's definitely the people that keep me on it and engaged, and how easily the software makes it happen. I've made a lot of friends, and it is nice to spend time with them there.

seoulmetro6• 3 years ago

It's just a chatroom. People have been doing that for ages. A (poorly navigable, well made) chatroom is the best piece of tech you've ever used?

nickstinemates6• 3 years ago

It is not just a chatroom when done correctly.

And yes, I've been in chatrooms for literally ages (since the early 90s,) and Discord is amazing technology. As an example, the ability for multiple people to share video at the same time seamlessly is unmatched.

From my POV - the joint experience, with friends, is the best combination of party line / group text / watch party / joint experience available on the planet.

Solvency2• 3 years ago

So this is just a new annual tech industry thing yeah? Because every year it happens, and always the same excuses. This screams of a boiling the frog strategy.

dancemethis• 3 years ago

Time for them to cash in some more on the user data and metadata they are selling, I guess.

Why these folks don't blow the whistle is beyond me.

honkycat• 3 years ago

I wonder if this yet another layoff as a result of the R&D tax change for SWEs

ptek• 3 years ago

170 employees at average IT salary of $100,000 = $17,000,000.00USD.

Saving 17 million a year is a lot. I feel sorry for the workers.

Kye• 3 years ago

Do you think all the institutional knowledge that 17% took with them was documented somewhere in an internal Discord server?

seoulmetro6• 3 years ago

Considering all the useless crap Discord is bundling into the app. They definitely had too many hands on deck. So much spam whenever you open the app.

sagarkamat• 3 years ago

Can someone answer this question for me? By now, a ton of companies have done layoffs explaining that they overhired during COVID. These hires had to have come from somewhere, presumably other industries. What happened to those industries? Do they not want workers back? Did those jobs go away? Or do people just not want to go back to them?

reportgunner2• 3 years ago

Hopefully it's the people who designed the new mobile app.

wseqyrku• 3 years ago

If MS could acquire Discord back in 2021 people would assert that this is the direct result of the acquisition.

Discord is laying off 17 percent of employees

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