Top Reads, Listens, Follows & Takeaways of the week
Bloat & the 80-20 principle
Takeaways:
Since Elon took over Twitter, 80% of the companies’ employees have been fired. As a big fan and user of Twitter, I’ve noticed ~no difference in my user experience. In fact, there have been some marginally positive new features launched. Whether or not the 80% cut has led to the optimal manpower structure for Twitter isn’t the point - it’s that an S&P 500 company valued at $44B got to be so grossly bloated and unproductive. This can’t be an isolated case.
Cue the scene from Office Space, “What would ya say…you do here?”
The whole situation makes me question hiring, leadership, productivity, and company structure. The headlines of layoffs at tech firms are starting to roll in, but how much of the downsize is just the top layer of gluttonous corporate bloat? What would it take to reach an optimal manpower level? A lean level? Google doubled in size over the past 2-3 years and still boasts a median employee salary of $300k. It’s both a testament to how incredibly profitable these tech businesses are and how the good times always come to an end. The Twitter downsize and the others to come may be the ultimate reminder of the 80-20 principle.
Tech is ~25% of the S&P 500. If tech got lean in manpower, where do S&P 500 margins end up? How do leaders of large organizations assess the point at which they NEED vs. want a new employee?
The incredible chart below may have even more room to trend lower.
Reads:
Sam Hinkie’s resignation letter to the Philadelphia 76ers (here)
Hiring: Why more is often less by Ravi Gupta (here)
Transitory Goldilocks (here)
Letter From Riga: Perspective on Russia from a Man Who Fled (here)
Cognitive dissonance in active management (here)
New China Rule Threatens to Disrupt U.S. Solar Ambitions (here)
Investor’s 5-Year, $100 Million Buying Spree on Nantucket & Martha’s Vineyard (here)
Listens:
Carl Kawaja on regime change, the Amazon rainforest, baseball, and oil & gas (here)
Michael Cembalest on Capital Allocators (here)
Rob Citrone – Emerging Markets, Hedge Funds, and Staying in the Game (here)
Follow, Watch & Other great content:
Training with Roger Federer (here)
How the Civil War ended - Historian Jeremi Suri explains (here)