Restructuring Announcement
automattic.com245 points by markx2 a day ago
245 points by markx2 a day ago
From an alternate universe:
I apologize for my erratic behavior which has tarnished our brand and created unnecessary turmoil within our organization. Regrettably, we will need to implement a 16% reduction in headcount to address the financial challenges we now face. I have decided to step aside and hand over control to my deputy, who I believe will provide the steady leadership needed to rebuild trust and restore our company's vision.
He'll never admit he was wrong or step down. He'll drive Automattic into the ground and Wordpress along with it (until someone forks it, like say...WP Engine, heh. Or Redhat, or IBM, or some huge web design firm, etc.)
He considers Wordpress "his" even though...he took it over from the original author who was abandoning the project.
It reminds me of the rage-bender Jamie and Jim Thompson went on, attacking OPNsense for "stealing" their work and doing a lot of immature things taking over opnsense's domain, their subreddit, etc. via legal actions. And at least one lawsuit. They lost on every front - reddit gave the subreddit back to the opnsense developers, ICANN gave them back their domain name, etc.
Attacking OPNsense for "stealing" pfSense was pretty rich given pfSense's origin; netgate slapped their logo on m0n0wall and started working on their fork. Which is exactly what opnsense did that enraged them...
Especially as pfsense software started getting more user-hostile and shifting functionality into the paid versions, pfsense has rapidly become less and less popular. I almost never see anyone recommend it anymore.
> He considers Wordpress "his" even though...he took it over from the original author who was abandoning the project.
Non Wordpress user here, not a blogger, don’t use CMSs. Curious about this line. Reading the history on Wikipedia, the original b2 was the precursor. It was pretty small and being abandoned. Matt proposed forking it in January 2003, and worked with Mike to bring the first version to fruition a few months later. 22 years later it’s a goliath.
Given that history it seems totally fair for Matt to consider WP his thing. You don’t seem to think so, can you explain?
If only we had real leaders...
You can trust me, facile3232, instead. I will improve upon all things the leader of automattic.com failed to improve upon.
This messaging is compelling. Are you also perchance against all bad things, and in favor of all good things?
Huh.
>> There are no layoffs plans at Automattic, in fact we're hiring fairly aggressively and have done a number of acquisitions since this whole thing started, and have several more in the pipeline.
https://old.reddit.com/r/Wordpress/comments/1hxnh73/automatt...
That was important posturing to make sure that everyone knew that his nuclear war on WP Engine was absolutely not going to impact his ability to run the business and the WordPress project. Whether it was true or not it didn't matter at the time, the important thing was to keep up appearances and not let anyone on Reddit think they knew better than Matt.
It's not uncommon for companies to be in a hiring mode until they're very much not in a hiring mode any more.
Yeah. I was made a manager in Feb 2022 with 5 directs and 9 headcount to fill. Hired 5, and then by June 2022 all remaining headcount was cut. In January 2023 we had our first-ever layoffs in the company's 25-year history.
It is so hard to fathom that a leader trusted with millions of dollars of other people's money can be so disengaged from recruiting as to not see a hard wall of cash crunch, months if not years ahead.
You can't assume fundraising will always go swimmingly. You have to always be in survival mode, and if that means not hiring aggressively, then you put on the breaks until the money comes in .
Either as a leader you are clueless about your business cash needs, you are clueless about risk management, or you are clueless about the market, all of which make you not a suitable leader for a long-term company.
The issue was interest rates. Money was free in Feb 2022; the interest rate was literally 0%, and so any cash-generating investment at all is profitable. Fed started raising rates in Apr 2022, at which point leaders started freaking out because they know what higher rates mean, and by Jun 2022 the Fed was raising them in 0.75% increments, which was unheard of in modern economics. By Jan 2023 the rate was 4.5%, which meant that every investment that generates an internal rate of return between 0% and 4.5% is unprofitable. That is the vast majority of investment in today's economy. (We also haven't yet seen this hit fully - a large number of stocks have earnings yields that are lower than what you can get on a savings account, which implies that holding these stocks over cash is unprofitable unless you expect their earnings to grow faster than the interest rate drops, which doesn't seem all that likely in today's environment.)
https://fred.stlouisfed.org/series/FEDFUNDS
Now, you'd have a point if you complained about how centralization of government and economic power with the President and Fed chair, respectively, is a problem. That is the root cause that allows the economy to change faster than any leader can adapt. There used to be a time when people would complain about centralization of executive power on HN, but for some reason that moment seems to have passed.
> The issue was interest rates. Money was free in Feb 2022; the interest rate was literally 0%, and so any cash-generating investment at all is profitable. Fed started raising rates in Apr 2022, at which point leaders started freaking out because they know what higher rates mean, and by Jun 2022 the Fed was raising them in 0.75% increments, which was unheard of in modern economics. By Jan 2023 the rate was 4.5%, which meant that every investment that generates an internal rate of return between 0% and 4.5% is unprofitable.
"Unheard of in modern economics" is carrying quite a lot of weight there. The last time the rates were increased by 0.75% was 1994, and while that's not recent, it's pretty silly to imply that CEOs should be making long-term investments assuming that it would be literally unprecedented for that to happen. Interest rates have changed only a few dozen times _at all_ since then, so yes, they haven't been increased by that much recently, but there's never going to be enough of a sample size over a period of a couple decades that it would be reasonable to assume a precedent that will never be broken.
The crux of your argument seems to be that because the interest rates happen to be set a certain way at a certain time, it would be irrational not to make decisions based on how profitable they'd be at that exact moment in time. The problem with this line of thinking is that plenty of investments are only realized over long enough period of time that by your own admission, people can't possibly react fast enough to avoid those turning into a loss. My question is, why put yourself in a position where you can't adapt fast enough in the first place? The way interest rates are set should not be news to the people making these decisions in companies, so it's not crazy to expect that maybe the people who are betting their company's success on something from less than three decades before being "unprecedented in modern economics" could think at least _a little_ longer term than "literally anything is profitable in this exact moment, so there's no need to think about what might come next".
Because they are publicly traded and subject to lots and lots of checks on corporate governance. The CEO actually didn't want to lay people off (and did a shit-poor job of it when he did). He was getting pressure from the board, who in turn was getting pressure from a lot of activist hedge funds.
Small-fry who operate secretly are able to take the long view and enrich themselves off the masses' stupidity. CEOs of a multi-trillion-$ company that is ~10% of the retirement portfolio of every American are not. At that level you have to go with the market consensus, because you will be ousted and deemed not a fit steward of the enterprise that you are entrusted with otherwise.
> Small-fry who operate secretly are able to take the long view and enrich themselves off the masses' stupidity. CEOs of a multi-trillion-$ company that is ~10% of the retirement portfolio of every American are not.
From my math, you're off by several orders of magnitude, unless somehow we're not talking about Automattic anymore.
> Fed started raising rates in Apr 2022, at which point leaders started freaking out because they know what higher rates mean, and by Jun 2022 the Fed was raising them in 0.75% increments, which was unheard of in modern economics.
You're basically making the case that it happened fast, and went up high, but everyone who paid attention to interest rates understood it was only a matter of time till it had to at least revert back to pre-covid rates (whether you think that's 1.5 or 2.3 or something, depending on how you measure), and that obviously there would need to be real layoffs after.
The excuse is really saying "it turned out more extreme than we thought", but was the behavior take responsible assuming non-extreme rate changes?
Why does the interest rate matter? Unless you have no cash on hand and are operating soley off debt??
If you're venture based and were expecting another round sometime soon. With higher interest rates there were more compelling alternatives for LPs than to invest in Venture, causing a trickle down chilling of the fund raising environment for venture backed companies and requiring them to come up with accelerated plans to reach profitability - including cutting staff and optimizing for survival over growth.
> Unless you have no cash on hand and are operating soley off debt??
Bingo
My employer actually has roughly $100B of cash on hand.
The issue is that they're a publicly-traded company, with a fiduciary responsibility to shareholders. If they're investing in an internal product that will make back 1% of the money invested in it over the next couple years, but they could have been investing in Treasury Bills that make back 4.5%, they are committing financial malpractice and will be sued accordingly.
I’ve seen many companies have this problem. They base hiring against planned revenue instead of current revenue. In a sense you have to - if you’re planning on growing 100% for several years on the back of new products and a big sales team you must hire in advance. It’s what the VC model is founded on. The downside is when you miss the revenue, you have to cut deep. And it’s usually worse because your hiring standards dropped in hyper growth.
“It is difficult to get a man to understand something when his salary depends upon his not understanding it.”
If you are the CEO saying 'we are planning for bad things in the future' while every other CEO is saying 'the arrow only goes up' guess which company the stock market punishes and who gets removed by the board versus who's options become worth more?
How infuriating for anyone recently hired caught in this trap.
It seems to me the obvious, from both a business & human perspective, is to stop hiring at first signs of trouble, before layoffs. To do so otherwise is cruel.
I doubt Matt had zero idea about this possibility two months ago.
This will continue until there are actual consequences for those responsible.
I'm of the mindset that any time a company does layoffs, they should start from the top And work down.
>I'm of the mindset that any time a company does layoffs, they should start from the top And work down.
Oh, to be young and idealistic again! So in your world, the people running the business should fire themselves first?
It's been done.
Bob Mercer and Peter Brown laid themselves off from IBM when they were told to execute 10% across the board layoffs. They had argued their team was one of the highest performing teams in the company but were told that they had their quota. 10% of their team was 2 so they took the hit.
From there, they went on to run Renaissance.
IBM should have kept them.
> So in your world, the people running the business should fire themselves first?
If they are needed to continue leading, they should consider cutting their own salary until the problems are fixed. Let them take their entire compensation in just their equity for a time.
However we all know this won’t be the norm, and that’s OK. Not great, just OK.
Been there and done that. One startup I was at instituted a 50% pay cut for senior execs, 25% for the level below that and no cut below that. The CEO took a 100% pay cut.
This let us get through a short rough patch without layoffs.
I worked at middle-sized company that instituted a pay cuts, cutting all bonuses and stopping raises. After year, company lost almost every person in tech managenent and most of team leaders, their clients actively executing forking rights and no one believes in company future now.
I once heard wise words from some CEO. In harsh times, clients do not want cheaper and worse services from us. They want less services. So we are moving out headcount down, while keeping pay and even execute raises for those who stay.
Can you explain why this is wise? I'd say most execs leaving is usually a net positive. You are framing it as a tragedy and I am just not seeing it.
From where I am standing, leeches that are only there for fat bonuses left. Where's the loss?
And the measure you described also doesn't follow. Bad times always end and then you have a worse product. Will the execs pick up the new tech work?
I do know of one guy who took a pay cut because unless he hamstrung his own team badly he was looking at needing to lay off about 2.3 people and so he cut his own salary to make it 2 instead of 3.
That's one story surrounded by a hell of a lot of shitheel stories.
If they're running the business, and it's at a point where it needs layoffs; sounds like they're not doing their job properly, and should be replaced with people who can-- like every other position in the business.
Not that they will-- too much self-interest.
not the parent, but accountability is supposed to be assumed up the org chart while responsibility is delegated down.
so, yeah. the people ultimately accountable for fucking shit up should probably be held accountable first and foremost.
(this is why CEOs often resign in the wake of a scandal)
Imagine the organization you are imagining in your head.
Now imagine there is a Super-boss, who is exactly like the "people running the business" (attribution needed), but one level above them.
If the Super Boss were to look at the situation, I think it'd be pretty obvious that the issue would be "The people organizing the company at the highest level" who are responsible for the failures of the company. That may involve over-hiring, which is itself a bad practice that causes unnecessary pain and (personal, financial) suffering, and would be a good cause to fire them for almost crashing my beautiful super-company that I, the Super-boss, super-founded.
You're saying that if we return the Super-boss to the realm of the fictional, then suddenly it isn't the C-suite's fault anymore?
If we're discussing should, then yeah, their heads should be the first to roll. I agree its idealistic to imagine them having the sort of decency this requires, but I agree it should be the case!
If they have to fire people, they're running it poorly, so yes?
If you've spent any time in business at all, you know it's always the tea lady who gets fired first and the managers last. Many commenters here seem to live in some kind of fantasy world.
>the people running the business should fire themselves first?
You were questioning whether they should, not whether they will. That's what people are responding to. They understand perfectly well who will get fired first.
I was questioning the idealism actually. There’s not much to be achieved by wishing the world was a certain way, it’s generally more useful to deal with the world as it is.
What idealism? The person you responded to said they didn't expect things to change unless there were real consequences. Not expecting things to change is the opposite of idealism.
But even if they were idealistic, arguing with people for wishing the world was better is a genuinely odd thing. If you followed your beliefs, wouldn't you understand that telling people not to wish for things is pointless? If you actually dealt with the world as it is, you would not argue with people on the Internet because changing somebody's mind, particularly in the way you are attempting to do it, is just as much wishful thinking as hoping that CEOs will fire themselves.
If we don't talk about what we feel is ideal, we can never strive to achieve it.
Its really important to discuss idealism for that reason alone