Shulou(Shulou.com)11/24 Report--

January 30, Google has been a bit "different" in Silicon Valley since its inception. The company does not focus on profitability, adheres to its pledge never to bow to Wall Street, and offers enviable benefits to its employees. However, the latest massive layoffs suggest that Google has changed, and now the company seems to be more focused on specific business, and the era of unlimited employee benefits is gone.

In the year of Pexels2004, Google co-founders Larry Page and Sergey Brin gave a somewhat different IPO roadshow. Instead of suits, they wore casual clothes, refused to answer many questions from financial tycoons and warned investors that the newly listed company might use its resources to "improve many of the world's problems" rather than focus on profitability.

Both founders worried that the company would be subject to more restrictions when it went public and vowed never to bow to Wall Street. To ensure that they can deliver on their promises, Page and Brin carefully organized the company so that they controlled most of the voting shares. Instead of returning the money to shareholders in the first place, Google uses it to attract and retain innovative talent, providing them with benefits such as in-house massages, free food and generous pay.

At the end of 2010, for example, Page and Brin announced a 10% pay rise, doubling their already lucrative annual bonuses and giving employees $1000 Christmas gifts. Google employees not only received the highest salaries in the technology sector, but also received lucrative stock awards. The generosity of the two founders shows that they really regard employees as the core of the company's development.

However, Google's parent company, Alphabet, recently announced that it would cut 12000 jobs, or about 6% of its workforce, including many executives and some veterans who have worked there since the company's inception. For a company known for doting its employees, layoffs are a spiritual shock. Especially given that some employees have been coldly laid off and their email access has been cut off even before saying goodbye to their long-time colleagues.

Alphabet is not the only company to lay off staff on a large scale. Executives at Meta, Microsoft, Salesforce, Amazon and others are doing the same thing, hoping to reduce the number of employees they suddenly feel redundant through layoffs. Sandal Sundar Pichai, chief executive of Alphabet, made a statement that was very similar to the wording in other company briefs, as if by ChatGPT, the AI chatbot: "I'm sorry, we were too optimistic about hiring during the epidemic, so some of you will have to leave. But this is just a turning point in our trajectory, and I'm still excited about the future!"

However, Alphabet's layoffs are a little different from those of other tech giants. Apart from laying off hundreds of salespeople in 2009, the company has never made such large-scale layoffs. At the same time, there are signs that the era of unlimited benefits for employees is gone forever. For example, 27 of the people affected by the layoffs are Google's internal massage therapists.

Moreover, Google is not in a financial crisis. Although, like most technology companies recently, Google's growth has slowed and its share price is falling, the company is still making a lot of cash. In the most recent quarter, the company barely managed to maintain a profit of $14 billion and its cash reserves reached $116 billion. In the past few years, Google has spent more than $100 billion to buy back its own shares, which is something Wall Street likes, but it doesn't help the company's business.

Mr Pichai does have a case for layoffs and cuts in benefits. Google has 187000 employees, but there is no denying that thousands of them have jobs that are not essential to the company, not only massage therapists but also hundreds of middle managers working on non-essential projects. Brin and Page always feel that middle managers are delaying innovation. As can be expected, those working in the highly competitive AI field, including Google Brain, the Google AI research team, have not been affected by the layoffs. In fact, Pichai argues that the spending cuts are meant to enable Google to devote more resources to AI.

But in some ways, layoffs seem to represent a changing concept. For years, Alphabet has funded projects dedicated to the development of new technologies and created a dedicated independent department, such as an internal incubator called Area 120, which has been largely closed due to layoffs this month. The X department of Alphabet, which is in charge of the moon landing program, has also been streamlined. Wall Street has complained for years that its ambitious "other bets" are not profitable, and now the company seems to be more focused on more specific business.

There is no doubt that Alphabet has invested billions in pursuit of the "next big thing" (Next Big Thing). These projects are called "moon landings" because one success can offset the cost of 100 failures. It can be said that Google's bet has been partially successful. Google Brain, which started with X, is now integrated not only into Google, but also a key component of almost all the company's software, and will have a key advantage in the upcoming generative artificial intelligence (AIGC) wars.

In addition, at a time when the US government and the EU do not approve of monopolistic acquisitions by large technology companies, it becomes more important to invest in new internal businesses. Google's most successful move since the launch of the search feature was the $1.6 billion acquisition of video sharing platform YouTube in 2006. If the acquisition had taken place today, FTC chairwoman Lina Khan might have strongly opposed it.

Similarly, Alphabet seems more inclined to offer enviable benefits to its employees. In fact, not many companies can generate enough profits to cover all these expenses. But the core idea of Mr Brin and Mr Page is that treating employees like royalty will pay off handsomely. This in itself is a subversive innovation that has become a role model for almost all Silicon Valley competitors, not only tech giants, but also well-funded startups, who compete as fiercely for top chefs as machine learning experts. It was a grand experiment that ran counter to Wall Street's beliefs. Wall Street believes that the best workers are those who have been brutally exploited and ruthlessly eliminated.

Coincidentally, Alphabet's move coincided with a communication between hedge fund tycoon Christopher Horn and Pichai, one of the company's largest shareholders. Mr Horne has repeatedly complained publicly that Alphabet should make significant layoffs, writing that the current 6 per cent layoffs are "a small step in the right direction", advocating 20 per cent layoffs. Horne also complained that the salary was too high and spent too much money on "other bets". Of course, the whole point of Brin and Page maintaining a majority of voting shares is that they don't have to argue with shareholders about layoffs or pay cuts.

While the remaining Google employees are still well-paid and enjoy many benefits, the changes are likely to prompt some to explore other options. While Pichai and his team tried to defend who should be fired at a full meeting this week, many employees still don't know why Division X is laying off staff, while Division Y is hiring more. But to be sure, Department Y and others in the company (except perhaps AI experts) are less sure about the safety of their jobs. "it feels like the company has changed and I don't understand why I was fired," said one engineer who has long been engaged in software engineering. I do have a feeling that even those employees who have performed well for a long time are left behind, they have to be careful now. "

In the memo, Pichai promised that Google would continue to "treat the impossible healthily, which has been at the core of our culture from the beginning". Unfortunately, this has proved almost impossible without layoffs, which could scare those who stay and call into question the company's unique values.

In In the Plex, published in 2011, Brin and Page are said to be reluctant to let Google go public. Although Google eventually did IPO, Page and Brin chose to do it their own way. The battle of values between Google and Wall Street reflects the resistance of its founders to the traditional shackles and irrational American corporate culture.

Page and Brin drafted an open letter to potential investors explaining in concise terms why Google is special, so its relationship with shareholders will be different from other companies. "Google is not a traditional company, nor are we going to be a traditional company," Page wrote in a letter released on April 29, 2004. " This is a clear warning to potential shareholders: please fasten your seat belt!

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