When the company stops growing, when the founder moves on, when HR is calling the shots, when the executives care more about real estate than products…
It’s time to leave, and find a new company to work for.
I joined AWS about seven years ago, when it was growing fast, there was headcount and flexibility in hiring, and Amazon was famously cheap about the office space it occupied. I retired a year and a half ago, and many of the people I worked with have also left. [Update] Justin Garrison just quit, but before he left he just wrote a critical blog post “Amazon’s Silent Sacking” about the way they are pushing people out. What changed?
Growth slowed. When companies transition from high growth to slow growth or begin shrinking it isn’t just a small change, it needs a fundamentally different approach to management and the culture of the company. I saw this play out while I was at Sun Microsystems as the dot com bubble burst in 2001–2004. Adding headcount and budget every year covers up all kind of problems, it brings a flexibility to operations that becomes part of the culture. When growth is flat to shrinking companies freeze like deer in the headlights, and to make it worse managers start to hoard headcount and play politics to preserve their products. Innovation goes away, micromanagement appears and everyone gets less useful work done. I haven’t seen a good way to gradually manage this situation. The most successful approaches I’ve seen (which Sun didn’t do) are to cut deeply and early by shutting down entire product lines and removing layers of management, so that the company can grow back by opening headcount again. It’s like pruning a sickly tree. If you cut off the dead leaves one by one, you end up with too many branches and shriveled fruit. If you cut back hard, and remove whole branches, the roots provide enough energy for the tree to grow back. This does mean that you have to shut down or sell off entire product lines, and shrink the business. It’s very hard to contemplate and navigate this, which is why most companies don’t do it agressively enough. As an employee, it’s usually best to leave in the first wave of cuts.
[Update] The other approach that seems to work is to keep people but cut pay, and provide new stock options to compensate. I think this is a good approach for several reasons. If the main problem is a lack of revenue growth, due to a general market slowdown, then everyone is trying to cut at once. The effective market value of employees has dropped, you can hire people for less, so reducing cash flow by cutting salaries makes more sense than layoffs. Using the savings to grow by hiring lower cost remote employees reduces demand on office space, which should be the first thing you cut back on anyway. If the stock price has already dropped then issuing new options at the lower price is helpful, it defers the cost and ties it to future success. Keeping most of the people you have in place maintains product investment levels, which maximizes the chance of keeping revenue and out executing competition. In a fediverse discussion about this topic one comment was that to get through COVID individual contributors took a 10% pay cut, and the CEO took a 50% pay cut, with a sliding scale on the way up the org chart.
In the unlikely event that a deep pruning and grow back strategy is happening at your company, and you are still there, the product teams that are left after pruning should try to keep the most experienced employees, lay off the junior ones, and return managers to individual contributor positions where possible. Experienced employees have been through this before, make better judgement calls under stress, and communicate better. There is a tendency to micromanage and add process overhead that needs to be resisted. Simplify processes to reduce bureaucracy and management overhead, speed up time-to-value, and take advantage of the gaps in the market that appear as competitors fail.
Founder led companies often have problems maintaining their innovation culture when the founder moves on. I think this is part of the problem at Amazon, and I was happy to be leaving as Andy Jassy took over from Jeff Bezos and Adam Selipsky took over AWS. Jeff Bezos was always focused on keeping the “Day 1” culture at Amazon, and everyone I talk to there is clear that it’s now “Day 2”. Politics and micromanagement have taken over, and HR processes take up far too much of everyone’s time.
There’s another red flag for me when large real estate construction projects take up too much management attention. The plans for Amazon HQ2, and the building of ever larger and fancier office tower blocks in Seattle by Amazon collided with Covid, lockdown and an accelerated work from home movement. The right thing to do coming out of lockdown would have been to write down the real estate investment in one go, re-negotiate the tax incentives that cities provide, embrace remote working, and continue the policy Amazon had at the time, where each director level leader could decide what was best for their teams. Instead, we now have the situation that Amazon management care more about real estate than product. Where is the customer obsession in that? Customers don’t care what the companies buildings are like. As Justin says, they are using Return To Office (RTO) to drive people out of the company without needing to fire them. By analogy, pruning by cutting off the best remaining leaves and fruit buds one at a time, leaving the dead wood behind.
[Update] HR teams tend to copy policies across companies, and we are seeing more places bring in clearly obnoxious RTO policies designed to save money by avoiding redundancy payouts. WebMD is one, and Broadcom has told the newly aquired VMware employees to RTO as well.
[Update] There are a few studies that seem to indicate that while there are some high profile companies driving RTO, the actual majority trend is to accept the change and make hybrid work, and employees prefer it. Work from home was 3% before lockdown, went to almost 50% during lockdown, and is now stable at 22% or so.
[Update] Since posting this I’ve had private messages from people at Amazon thanking me for saying what they aren’t allowed to say internally. “Disagree and commit” has been weaponized to force the RTO policy on everyone. In a group making a decision, it’s usually a majority that agree with the decision, and the people that don’t agree see that they are outnumbered and commit to it. However with RTO I think it is a minority imposing an unpopular policy on everyone else, without supporting data or discussion. Disagreeing is career-limiting, so what we are seeing is “Disagree and quit”. People are interviewing while waiting for their next RSU grant. Someone also said that it’s not “Day 2” it’s “Day 3”, and did I know anywhere that is hiring?.
In summary, I don’t think the situation for Amazon is as bad as it was for Sun in 2002, and in the short term they are going to continue to grow the business slowly. However I do think there’s lessons to be learned, and that the delusion that they can roll back work from home and enforce RTO without killing off innovation is a big problem that will increasingly hurt them over time. I personally hired a bunch of people into AWS, in my own team and by encouraging people to join elsewhere. Nowadays I’d say a hard no to anyone thinking of working there, they have shown that you can’t trust whatever they say during the interview process. Local management gets overruled to relocate people hired to be remote, and to move to locations that they can change arbitrarily. Try and get a job at somewhere growing rapidly with a sensible work location policy like NVIDIA instead.