What the Meta, Stripe, and Lyft layoffs tell us (+ a framework for navigating recession)
With all the recent layoffs, I wanted to talk about something that is top of mind for all of us: how to navigate turbulent times.
Today I want to share a framework that has helped me maneuver through market uncertainty, going back to my time as a software engineer during the 2008 financial crisis. I’ll also share tips for weathering new challenges to come in 2023.
I also want to remind you that Educative is here to help. Finding your next career opportunity, whether by choice or due to layoffs, is never easy. We want to help you stay as competitive as possible in a challenging market.
Educative Premium subscribers can take advantage of our best-selling interview prep resources, which have helped hundreds of thousands of engineers prepare strategically for interviews.
So without further ado, let’s break down what steps developers can take to weather uncertainty and navigate a recession:
How to assess job stability
How to evaluate opportunity cost in your job hunt
How to put your best foot forward in 2023
Note: I adapted this issue of Grokking the Tech Career from my
newsletter. Over there I share tips, tools, and best practices on engineering leadership.Are we in a recession?
On January 22, 2009, a colleague and I tried to enter a Microsoft building and noticed his badge didn’t work. This wasn’t unusual; badges stopped working now and again, and we would just go and grab a temporary one. But on this day, the circumstances were different.
A few hours earlier, Microsoft had announced its first-ever layoffs, and managers were planning to communicate with employees impacted by the layoff. Even though Microsoft wouldn’t have revoked employee access so quickly, the experience was highly unnerving for my colleague. He rushed to reception, anxiously told them his badge wasn’t working, and only calmed down once a temporary badge was issued.
I know that many engineers are experiencing a similar form of anxiety right now — even if it’s the feeling of getting suddenly logged out by a Google work account, or Slack taking too long to load.
I also know that many have already experienced a layoff. If that is true for you, I am very sorry to hear it. It’s not an easy situation to be in, and I hope that we can help you in your job hunt.
Having lived through the 2008-2009 recession as a developer, I can empathize with engineers navigating an uncertain market. And unfortunately, we’re seeing a lot of the same warning signs today as we did back then.
Recent layoffs at major players like Stripe, Lyft, and Meta, don’t bode well for the state of the market. Even more troubling is that a recent survey on Blind showed that 53% of laid-off engineers hadn’t found a new job in 6 months. For many engineers living in the US with a working visa (like I was in 2009), the stakes are even higher.
In moments like these, it’s a good time to consider the following questions:
How do I know if I’m at risk?
Should I switch jobs?
How can I mitigate the impact if I am laid off?
I want to share a useful framework that has helped me answer these questions and navigate times of market uncertainty. I hope you find it useful, as well.
How to assess the security of my job
In order to know where you stand, it’s important to take a moment to assess your job security. Start by answering three important questions:
What is my company’s financial standing?
Am I working on a critical project?
How good or bad was my last performance review?
1) What is my company’s financial standing?
This question is typically easier to answer if you work at a public company (e.g. via stock prices, earnings reports, and SEC filings).
It’s a bit more complicated at private companies, but there are still a few signs to watch out for. These include hiring freezes and significant decline in users or revenue.
I will also add that even as a senior engineer, it’s difficult to predict what will happen. Often managers are not aware until a few hours before layoffs are announced. That’s why it’s important for developers to assess their own standing at the company by asking the next two questions:
2) Am I working on a critical project?
When laying off people or teams, the first projects that are cut are the ones that are not important or critical for the growth of the core business. For example, Google Keep is less vital than Google Cloud. The more critical a project you’re working on at the company, the more secure your position is.
3) How good or bad was my last performance review?
Some companies start aggressive performance management programs to lead into layoffs. Meta and Amazon have been placing the lower 10% (based on performance) on PIP based on managerial nominations. Then there’s a 50% chance that you’ll be let go.
If you’re not working on a critical project, and your manager wasn’t happy with your last review cycle, then you should probably start looking for a new job right away. It’s better to interview while you are employed than try to convince the hiring manager that your performance wasn’t the reason you got laid off.
Should I stay or should I go?
If you decide to stay, work towards increasing the visibility of your contributions, or speak with a hiring manager that’s backfilling for a critical role.
If you have to jump ship (or are laid off and looking for new work), the best option is to find a company with broad hiring freezes, but that is still backfilling for critical roles. If you can land one of these positions, you should consider yourself relatively safe.
That said, there is a significant risk in entering a new job in today’s climate. In your new role, you would be at a disadvantage with a lack of tribal knowledge and lack of time to prove your worth. Unless you’re moving from an unstable position to a more stable position, I recommend staying in a stable position for the next 6-9 months.
A quick way to determine whether your situation is stable (in addition to asking yourself the three questions in the previous section) is to ask yourself whether you are currently learning and/or earning.
Garry Tan, President of YCombinator, puts it best:
At every job you should either learn or earn. Obviously, there are inherent risks in leaving a job where you’re well-established, but there is an opportunity cost if you’re not learning and can earn more elsewhere. That said, if you’re not learning but still earning, then the opportunity cost can be weighted differently.
Here’s a decision tree to help get you started:
Weathering The Storm
Regardless of your job security, I strongly advise you to take matters into your own hands to make yourself more desirable to current and future employers.
Here are a few ways to increase your value and hireability:
Keep your skills sharp
Learn new technologies and languages
Update your resume
Brush up on your Coding Interview and System Design Interview skills
I want to finish by saying it’s not all doom and gloom. The total number of engineers worldwide is still much less than the demand. Even if you do experience a layoff, you will have an easier time finding a job during a recession than in other roles. And having navigated a recession before as an engineer, I can attest that it will get better eventually.
Ultimately, I encourage you to prepare for all possible outcomes. That way you will put yourself in the best position to land on your feet — no matter which way the wind blows.