The Hard Numbers Around Layoffs Today

I want to talk about some of the hard, the hard numbers around layoffs today. So I don't know if you've seen this, but you know, earlier this week, right, we saw UPS, I think 48,000 employees layoffs, Amazon up to 30,000 employees.

Intel— No, Amazon was, was it 13,000 or 17,000?

That was this week. But there's, there's, we're talking about more recently, not even just this week. So you're right, it's a smaller number this week, but this is—

The 30,000 comes from the market was estimating Amazon's about to lay off 30,000 people and they came out with the real number and I saw the real number.

That's— you're talking about the Wall Street Journal number, right? It was like 14,000.

It was something like that.

Yeah. Okay. So you got recent layoff announcement, UPS 48,000, Amazon up to 30,000. So it could be 17,000, right? Intel 24,000, Nestlé 16,000, Accenture we've talked about already, 11,000, Ford 11,000, Novo Nordisk 9,000, Microsoft 7,000, PwC 5,600. Right. So the labor market, it says the labor market is clearly weakening. And look, we don't have hard numbers from the Fed right now, so who knows what's happening.

ADP released numbers.

What did it say?

They're saying they're adding jobs in the last 4 weeks.

That's good. So what is happening here?

They now do weekly job reports. ADP job report adding jobs. I think it was like 30,000 or something like that, or 10,000. 4-week data. They added 14,250 jobs per week for the 4 weeks ending October 11th.

Have you seen the graph where it shows that since ChatGPT 3.5 came out, that junior job hiring is going trending downwards, whereas senior job hiring has continued to go up?

I haven't seen that data, but here's what's interesting. I was watching CNBC yesterday.

Your favorite channel.

Mm-hmm. And it was either yesterday or day before, and the Perplexity, they had an interview with the, I believe, Perplexity founder and a few others.

You should know his name, Aravind.

Something like that. But right now, all these companies, when they're doing layoffs, one of the biggest things that they're citing is they're laying off because of AI efficiencies, right? You've seen that? And CNBC is like, is it really AI efficiencies? So they're at this event—

Or they're just cutting the bottom.

Yeah, they're at this event with a lot of AI people, like founders of these companies, like Perplexity. They're like, we don't see AI impacting a lot of these jobs. We believe they overhired during COVID and they're just using AI as a scapegoat.

Chamath tweet yesterday?

No.

Okay, I'm not gonna say, guys, it's not me saying this, I don't wanna get in trouble. So Chamath tweeted this yesterday, he said, what is AI efficiency? Something around this. He's like, no, it's more so that people are cutting because of the 2021 like overhiring, but all the DEI initiatives too. He's like, that's the reality of what's happening, they're cutting these people right now under the guise of kind of what you're saying, AI efficiency, 'cause it's easy to say that, right?

Yes, and also—

And remote work too.

And if you say AI efficiencies, you're like, oh, this company's becoming more efficient. They're AI forward, maybe their stock price should go up. But if they just say, hey, we overhired and we're cutting, and we've had record profits, like you look really bad.

It's a bad story to tell.

Yeah, but some of the, quite a few of the AI people on CNBC, 'cause they were switching to different people, they're like, most of them were saying, this isn't AI efficiencies. They're like, these are just companies cutting 'cause they overhired. They're like, we're seeing people hire more because of AI, and it's just making people more efficient, but they're still hiring and they're not cutting because of AI.

We haven't seen it I mean, we talked about this last week. I think, don't get me wrong, I think we both think the AI efficiencies are coming. They're not quite where we need it to be, right? But we did, we just said this last week, we need more, we're gonna, we're hiring more engineers, we're looking for more engineers, right?

We haven't cut a ton 'cause of AI, have you?

No.

Yeah, I'm like, I haven't seen one thing where it's just like, oh, we can do this now, we don't need tons of people. What we have done from AI is, oh, it's made our people more efficient, so we have greater output, cool. Push that forward to the customer.

I would say we're tougher now about the people on the team, and so what I mean by that is we don't want a group of has and has not, haves and have-nots, right? So if you're really good at AI, but I suck at AI, then you and I are going to be at odds, right, in the next couple years or so, so we don't want that to happen, so we're trying to lift everyone along with us, but you can take a horse to water, but you can't make them drink, right? And that's something that we want to make sure that we upskill everyone at the same time, and so All that to say is with these, like, I'll give you one more thing. With these conversations you and I are having with our friends behind the scenes, other founders, right? What's happening right now? They're, what are they saying? Oh, we're way more profitable than we've ever been.

Yeah.

And they are strictly saying that they're cutting for these same reasons, right? They're able to cut the people that, they're able to confidently cut people that they weren't able to cut before. So maybe there is a little AI efficiencies there. Because behind the scenes, like, it's not like they take pride in cutting people. They give them severance and all that type of stuff, but they're a lot more aggressive with cutting.

Yep. Check out this quote from— this is on NBC News. This is from David Autor, a professor of economics at Massachusetts Institute of Technology, right? So they're talking about the recent layoffs and people saying it's AI. And straight up, it's much easier for companies to say, We are laying off because we're realizing AI-related efficiencies, than to say we're laying off because we're not that profitable or bloated or facing a slowing economic environment. And that's the reality. Like you and I work with so many large companies and we're not seeing, when we work with these companies in different departments, we're not seeing AI make everything so efficient where they can just lay off 10,000+ people.

No, not yet. But for sure it's coming, but not yet. Definitely not yet. Yeah. But I would say that the story works out well now because the efficiencies are coming and it is a weakening labor market, or it's a weakening labor market, right? Or the economy is bad, right? So I don't know.

You saw the rate cuts yesterday, right? They did 0.25%.

He was going to cut anyway. He was always going to cut. That was already priced in.

Yeah. But it changed from we're cutting 3 times this year to—

We might not cut in December.

We may not cut in December.

Yeah. Which you saw things tank after.

And the 10-year went up because it was, everyone was forecasting 3 cuts this year and now they're saying they're undecided for December.

Yeah, it was supposed to be a great week for the markets and crypto and all that, but you know, at least it looks like Xi Jinping and Trump got a deal done.

So yeah. Yeah.

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Okay.

One more thing on the efficiency thing, and then you can pick the next topic. So Ethan Mole excited this because this is a study from Wharton, UPenn. Okay. So This Wharton study found that corporate ROI from generative AI from large-scale tracking, they found that 75% already have a positive return on investment from AI, less than a 5% negative return. Also, 40% of business leaders now use AI daily themselves, right? So basically, you can see this chart over here. Well, those of you that are watching YouTube might be able to see it, but basically, tier 1 enterprise, $12 billion plus annual revenue, Significantly positive ROI, right? So that is 26%. And then moderately positive ROI.

But what's the ROI coming from when you say AI? Like, what are they specifically using AI for?

So it says, for example, clear financial returns or major operational improvements, right? And then moderately positive is measurable benefits, but limited or in early stages. So that's 31% on moderately positive. And then neutral ROI is 9%, which is costs and benefits roughly balanced so far.

I know you and I are on the same page. We think the technology's great. It's going to get much better over time. It's here to stay. It's going to have an impact on corporations. I just don't think most companies are really generating, at least enterprise companies are generating that much of an ROI from a lot of this AI stuff. Right now.

Right now.

Right now. And I'll give you a great example of this. Yesterday when I was meeting up with a buddy, I don't think I mentioned the company name, right? Okay, great. So I was meeting up with a buddy, And they work at a Fortune 100 company.

Mm-hmm.

And this Fortune 100 company has a lot of employees. And we were having a serious conversation about everyone they have in marketing, everyone product, everyone engineering, and what they actually get done and all the inefficiencies because global teams do everything their own way. I was like, and we were, we both were like, you know, if the company cut half their staff, probably nothing would happen differently from a revenue aspect. And then we're talking about all the engineers just working on things like SEO and helping with data and analytics. And then we're talking about how much they actually ship out or changes. And I was like, for them to only do this much work, it's like the average person must be only working like an hour or 2 a day. Even with like, a lot of old archaic code that could slow things down. I'm like, there's no way someone's working more than an hour or 2 a day. And they're like, exactly. They're like, a lot of these people just need to be laid off. And I'm like, I wonder how much bloat there is in the global organization.

Dude, okay, check this out. You'll like this. You like graphs. Okay, this, I think this is a Wall Street Journal graph, but so this graph over here, I'm showing Neil right now. So back in the 1900s, people were working an average of 58.5 hours per week and the yearly earnings were $15,000. Now keep in mind inflation, right? But You go all the way to like 2000 or so, or 2020, people are— the hours worked per week has gone down like 58.5 per week to 34.2. And I think it's going to continue to decrease, right? Yearly earnings have gone up to $63,000. Services industry workers per 100 total workers is 50 total workers. So bloat.

Okay.

Bloat. Right. Whereas before when you had service industry workers—

Service industry workers per 100 total workers?

Yeah. So like 16 services for the services industry, you had 16 workers per total 100 workers. Right now you have 49. Right. What this means Here, I should pull up this graph over here. So this graph over here shows the number of people in different employment sectors, right? So back in the day, remember in 1825, farming was huge. Everyone was in farming.

Yeah. Now there's machines.

And then it got cut down. And then you had manufacturing to come up, right? 1825, manufacturing started to go up, but now it's gone down. So like farming has gone all the way down. Okay. Manufacturing has gone all the way down. It's like services have gone all the way up. What's going to happen now? This is going to go down.

In theory, time will tell, but in theory.

I'll bet you, we want to bet?

I think it depends what industry.

Yeah.

Because like, if you want to talk about services for cutting, you know, lawns, yes, I think it's going to go down.

Yeah.

If you want to talk about services for, let's say, artwork, management consulting, like for executives, I don't think it's going to really go down.

No, but I think the numbers, I think we're just—

The total numbers, yes.

Yeah, total numbers are going to go down a lot.

Yeah. So I think certain roles, like very strategic leadership type roles, Even our role, I think there's gonna be an impact, but I don't think our teams are gonna be cut in half.

No, but I think Brian Halligan's point, so Brian actually tweeted this, I think we're gonna look back at this disruption, AI, and observe that we handled this well too. So humans always adapt, this is the point, right? So people are like, oh, you know, job losses, sure, but I will guarantee you people are working on things that they like are happier working on today, but it's gonna be even better in the coming years.

Yes. I think the big problem that you see in the corporate world is there's a lot of people getting paid and they're not doing much and they could just be getting fired and that'll create the downward jobs. I just think companies right now are really bloated. I think COVID really made a lot of companies bloated and most of them have not resized from it. Yeah, dude.

Speaking of which, you just mentioned, we talked about consultancy, right? So Look, so the big consultancies, so this, we're talking McKinsey, Bain, and BCG will probably be fine because they are CYA insurance. CYA means cover your ass, right? So they explain here, big companies typically that will hire these big firms. So CYA means if I hire you as an executive, I can just blame McKinsey or Bain, right?

Or a different example is if you're working at a company and you hire someone from McKinsey and they do a terrible job, You won't look bad to your boss if McKinsey messed up, because if you pick a no-name brand and they do bad, your boss would be like, why'd you hire this company that has no reputation, is not well known? If you hire McKinsey, they're going to be like, well, they got a great reputation. They need to preserve more.

Yes.

So they're protecting their job. That's what the CYA means.

Cover your ass. Okay. So the— so it says over here, McKinsey, Bain, BCG, because they're the brand names, are probably going to be fine as consultancies, right? But the rest of the consulting industry could be in trouble and stock price is already showing that, right? So you look at Accenture here, down 30%. Booz Allen, I never even heard of Booz Allen, down 52%. Capgemini down 26%. FTI Consulting, Gartner's down 50%, right? So you can see the graphs here, they're going straight down. Now we can't, it's never that simple. You can't just say it's like AI or whatever, but maybe you can.

So, but look at McKinsey's, Accenture's revenue is still going up. Valuations are down. Revenue's not going down for all of them. Give me another one, Capgemini? Cap Gemini, Gemini stock. Let's see quarterly they're down 0.28%. So I would not say how much does Cap Gemini tanks stock tanked in the year? They're they're down 30% from what I saw in the year to date 7%. One year is Uh, 15%. What's another one? Uh, Globant. Is Globant in there? No. Uh, Globant's a similar type of company. Gardner.

Do Gardner. Is Gardner public? I don't think Gardner's public, but I mean, it shows if it, it kind of looks like a stock price here.

Yeah. Gardner year to date, they're down 48.32%.

Wow. Okay. Try one more. One more.

Boost. Okay. But let's look at the revenue. Gardner's revenue up June 2025 year over year is 5.73.

Yeah. These, so these are, we're looking at valuations here and then you're looking at revenue. Yeah. Yeah.

And we just wanna clarify this because just because a stock goes up or down, It doesn't mean the company's growing as fast. So for example, if I look at Walmart over a year period, their stock is up 26.35%. Okay, 26%. Their revenue is up 4.76% quarter over quarter. The previous quarter was 2.54%. So they're growing, call it roughly 5% a year. I'm just giving a higher number. When you look at their annual and look at 2025, it's 5%, but yet the stock is up 23%.

So this is interesting. So Reuters was the one that came up with this first. And the quote is, I mean, you hear this quite a bit. It's a bit exaggerated now. AI is killing consulting, right? So for example, if a company performs a project in-house, it costs around $1 million, but consulting firms like Accenture have been offering the same service for $200,000. Now with machine learning, companies can do the same job themselves for just $10,000. Will consulting become a forgotten profession in the AI era like the coachmen in the past? I don't think that's going to be the case. I think there's still going to be consulting and I think they're still going to be able to charge a premium, but probably less because if you're a CEO, it would be— you would be foolish not to say, hey, with AI, we want to get some of those efficiencies. So maybe they can price pressure them down a little bit. But I think these companies will be okay.

I would actually look at it from a different perspective. Accenture, if I look at the 1-year graph as of today, is down October 30th, 27.84%. Okay. Accenture is growing in revenue. The real issue is Accenture used to be worth roughly 30 times profit. Is a company like that supposed to be worth 30 times profit? Probably not. If you look at it now, they're worth around 20 times profit.

Hmm.

And the reality is a lot of these companies were just overvalued.

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You've seen this, right?

Yeah.

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Uh-huh.

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