from Gergely Orosz | by Gergely Orosz

It's been over a year since Uber laid off about 20% of it's engineering organization. In my observation, the layoffs - and how they were done - were one of the biggest mistake the company did: and something other tech companies should learn from. Thread with my observations.

(Note that most of this thread is my take, but I've talked with several Uber engineering leaders who were there at the layoffs at the time) 1. The plan, as I understand was simple and finance-driven. Cut the cost of engineering by X%. This mandate was passed down to each eng org

2. Alarm bells were rang early at each level on what this would mean. Leaders warned that by cutting 20% (even if it's the "bottom" 20%) this would have terrible consequences: - Top performers would leave - Hiring would become difficult, if not impossible People said their part.

3. One eng org that did not have any cuts was India. It was clear enough to anyone paying attention: much of the US engineering efforts would be moved over, eventually, some starting with the layoffs. Cost was the driver here.

4. The layoffs happened. They were swift and efficient, and over with (except for in Amsterdam, where local regulations dragged this out for 1-2 painful months). And then the exact thing that people warned in #2 started to happen:

5. A few top performers in the US started to quit. This put pressure on hiring more in India, and faster. US teams were asked to help with this effort. If the direction was unclear to anyone, this made it very clear. People in the US started to quit in droves. Surprise?

6. This was the folks in #2 warned about/predicted. Now leadership reacted with retention bonuses, and allocating bonuses early. The damage was done. This was when I also decided to leave: it was clear Amsterdam would get no investment in the near future. Also, my time was up.

7. The eng hiring funnel and branding built up over years suddenly collapsed. Hiring in the US became expensive: and given a choice, would you join a company that laid off 1/5th of engineering? In India, hiring was tough, and (predictably) slower than planned.

8. How did other companies handle layoffs? I rarely use Booking .com as an example, but they are a good one. Their revenue collapsed, similar to Uber. They, however, knew that laying off engineers would be hard to recover from. So they laid off... no one in tech (eng/PM).

9. As it's predictable, Uber is hiring back all the headcount they let go a year ago, and then some more. Decisions will be nuanced at the C-level, but I could not find anyone who agreed within engineering leadership on the layoff strategy: exactly because most predicted this.

10. What's there to learn? If you're a tech company, don't treat engineering as a cost center, including at layoffs. Yes, it's much simpler to do so: but you'll pay a hefty price for it. Just like Uber paid the price by cutting the bottom X% and losing their top X% as a result.

11. One thing that I honestly believe Uber leadership did not expect was the hot job/investor market for engineers. Most tech folks left Uber for a *lot* better opportunities. May got a fat raise. Others started a company with huge (pre-) seed rounds. Layoffs were the trigger.

12. The effect of layoffs did not stop in a few months. Many long-tenured folks eventually came around to leaving: the layoff trauma was usually the trigger. Layoffs made everyone realize the "mission" is great, but profits come ahead of job security. Layoffs shape culture.

13. With every layoff come the "told-you-so" stories. E.g. complete teams were laid off owning key prod services. The next day was a manic scramble to even get credentials to operate them. These just added to the feeling that leadership either doesn't know or doesn't care.

I can only share this since I left Uber: I left Uber with an official HR warning triggered by layoffs. I sought advice from fellow engineering managers on the Rands leadership Slack who went through similar layoffs. Someone at Uber reported me -> HR investigation -> warning.

(I got the warning the day after I handed in my resignation, but it amplified the notion that process was more important than Uber than doing layoffs right. The advice I got in private helped me navigate layoffs - but HR and the anonymous Uber employee reporting me disagreed.)