Hi Reader,
Somebody at Meta has been asleep for the last three years. The bill came due on Thursday.
Eight thousand jobs are being cut. Effective May 20. Every news outlet covered the same angle. The cuts pay for the AI bet. The market priced in the savings. Analysts used the word “efficiency”.
Now turn the story around.
In its 2023 SEC filing, Meta disclosed a median total compensation per employee of $379,000. Multiply by 8,000.
That is just over 3 billion dollars in annual compensation, leaving the cost line in one memo.
The question is not how Meta is going to save 3 billion dollars next year.
The question is how Meta has been spending 3 billion dollars on this every year for who knows how long.
Either the work these 8,000 were doing was disappearing month by month and nobody adjusted, or the work was already gone and the payroll continued. In either case, somebody at Meta was not watching. For years.
If a company can remove 8,000 people in one memo without breaking the business, the company was already broken. It was just broken in a way that did not show up on the revenue line. The numbers were great. Quarterly profit was a record. The cost was invisible.
This is the part of the story nobody wants to discuss. The market is not punishing Meta for letting this happen.
The market is rewarding Meta for finally noticing. That is the wrong incentive. It tells every other CEO that the smart move is to let the bill grow until the bet changes, then clear it in one announcement and call it discipline.
The honest version is simpler. A profitable company should not be in a position to make a 10 percent cut on a Thursday memo. If the work was changing, the company should have been adjusting all along. Roles redeployed.
Hiring slowed. Functions consolidated. Quietly, continuously, while the people involved still had a runway.
Mass cuts are not a sign of a sharp company. They are a sign of a company that finally looked.
If you run a business, the lesson is not in Meta’s discipline. It is in the years before the discipline. Look at your own business this week. Quietly. Are there roles you would not refill if they left tomorrow? Are there projects nobody would notice if they stopped?
If the answer is yes, the question is not when to cut.
The question is who in your company was supposed to be watching, and what else are they missing.
Don’t set goals. TAME the effort.
See you next week!
