Discord lays off 170 people, blames growing too quickly | TechCrunch::Discord has become a mainstay for many online communities in recent years, but its relative success hasn’t shielded the platform from the financial woes Discord is laying off 17% of staff, or 170 people.
They didn’t mess up. The government interest rates were 0% when they borrowed money to grow their workforce by about 800 people. The interest rate has risen to 5.5% - an interest rate hike that hasn’t been seen since the “stagflation” crisis fifty years ago and one that couldn’t really be forseen unless you could have predicted the wars in Russia and Israel.
It’s unfortunate for the 170 people being fired, but what’s the alternative? Keep going until they’re bankrupt and then all 1000 people are out of a job?
The government absolutely knew this would happen when they decided to raise interest rates. They are acting on advice that things would be even worse if they didn’t rise interest rates. Other countries around the world are doing the same thing, with the same unfortunate results.
No, they messed up. Regardless of user count, and economic context, there is a limit to how fast you can grow a company. Going beyond that limit means that you’re diluting internal company knowledge so much that everyone just ends up doing their own thing— it’s chaos. Quality control, standards, procedures, etc go out the window. You also loose your ability to create accurate, data-backed plans with a high degree of confidence the farther you get from where you are now. You can predict the impact of a few new hires pretty easily, but hundreds, when your current team is only a couple hundred? You simply can’t forecast what holes you are creating, and challenges you will encounter with that many new people (specifically, that high of a growth percentage) in that short a time period. Growing that fast is incredibly risky, and in almost all cases, a terrible business decision. I’ve worked for SEVERAL companies that have worked this way, and it always destroys the company from the inside out.
If you want confirmation, just look at their product offering. Discord has consistently come out with features that no one has been asking for in a desperate attempt to monetize their platform, while for some reason continuing to hire like crazy (I.E., spending shit tons of money). Instead of working on their core product, and finding a way to monetize that. I can (and do) pay for all the messaging platforms I use out of principle, and I would happily pay more if their platform were more reliable. They could easily gate features in a way that generates them money, but instead of doing that, they let the core platform stagnate and add all this paid crap no one wants, of course they aren’t making money. This is a direct result of their company having a huge percentage of employees that do not fundamentally understand the product, because they hired too fast and diluted their internal knowledge.
Cool blame the government for the decisions of the executive team…
They weren’t FORCED to hire like crazy, they did it because they got greedy, thought the money train would never stop and got caught with their pants down. Many companies stayed within normal growth estimates and many didn’t.
Executive teams should be expected to predict these things accurately or be held accountable. But they won’t. They will cut staff and will happily pretend they did everything they could cash the checks and do the Bronze Medal meme Celebration as they MBA (verb) the fuck out of a company until it is dead and do the same to the next one.