💻 How can cities attract remote workers? Next week, I'm hosting a live chat with Lauren Razavi, author of Global Natives, about digital nomads, urban policy, taxes, productivity, and more. Learn more about Lauren and sign up here.
📚 Premium subscribers will receive the next batch of After Office pages later this week.
In June 2020, I noticed something was changing in the corporate world. Tech firms were hiring like crazy and even signing some office leases. And yet, it was clear that the Covid lockdowns exposed something important: Not just that many jobs can be performed remotely, but also that many jobs were not necessary.
Mark Zuckerberg was the first large-company CEO to truly grasp the first point. In May 2020, he wrote that 50% of Facebook could work remotely within 5-10 years. I took his opinion seriously, but most employers and landlords underestimated the magnitude of the change or its implications. As I wrote back then:
Many companies will continue to rely on "office work" in "office spaces" for many more years. But that's not going to be enough to prevent a total revolution in the office market. Earlier today, an analyst shared a report that many landlords thought was optimistic. The report found that 49% of the people currently working from home want to work at the office "as much as they did pre Covid".
A glass can be half full and remain valuable. An office building can't.
Now, Zuck is leading the way on the second point. Yesterday, the (still) young CEO published an open letter with updates on "Meta's Year of Efficiency." The letter includes Meta's plans and lessons from its experiments with restructuring and remote work. Below are some highlights.
Meta is going all in on "efficiency." It aims to "improve organizational efficiency, dramatically increase developer productivity and tooling, optimize distributed work, garbage collect unnecessary processes, and more."
This spring, the company will announce restructuring plans focused on "flattening" the organization, lowering low-priority projects, and reducing hiring rates. The company plans to lay off around 10,000 people and close about 5,000 open roles. This follows the layoff of 11,000 employees a few months ago. In total, the company is shedding about 25% of its workforce within a few months.
Twitter, a much smaller, financially-distressed company, cut around 75% of its headcount over the past few months. But I don't think any tech companies of Facebook's size and profitability have gone as far.
Meta will become flatter. Zuck believes each management layer adds latency and risk aversion in information flow and decision-making. To make the organization more efficient, he proposes removing multiple layers of management and having individual contributors report to almost every level. However, management is still valued and necessary. So, managers should not have more than ten direct reports. This way, the company will fully utilize each manager's capacity and streamline the organization.
Meta will become leaner. Zuck shares some insights following the previous wave of layoffs. "one surprising result is that many things have gone faster." he says. In retrospect, he "underestimated the indirect costs of lower priority projects." His previous assumption was that "a project is net positive as long as it generates more value than its direct costs." But in reality, every new team takes direct resources that might be better used elsewhere and cause indirect bloat elsewhere in the organization:
"That project team needs laptops and HR benefits and may want to recruit more engineers, so that leads us to hire even more IT, HR and recruiting people, and now those orgs grow and become less efficient and responsive to higher priority teams as well. Maybe the project has overlap with work on another team or maybe it built a bespoke technical system when it should have used general infrastructure we’d already built, so now it will take leadership focus to deduplicate that effort. Indirect costs compound and it’s easy to underestimate them."
He expects a leaner organization will make all employees more productive and increase the likelihood of matching people into fun and fulfilling roles.
Meta will increase the ratio of engineers. The company still values product managers, designers, lawyers, and other contributors. But it wants to "keep technology the main thing" and return to a "more optimal ratio of engineers to other roles."
A related push will emphasize the development of internal (AI) tools that will enable engineers to write code faster, automate workloads, and identify obsolete processes.
Finally, Meta remains committed to distributed work and sees great value in some in-person interactions. So far, the company found that fully remote work was more suitable for experienced employees or those who were onboarded in person before going fully remote:
Our early analysis of performance data suggests that engineers who either joined Meta in-person and then transferred to remote or remained in-person performed better on average than people who joined remotely. This analysis also shows that engineers earlier in their careers perform better on average when they work in-person with teammates at least three days a week. This requires further study, but our hypothesis is that it is still easier to build trust in person and that those relationships help us work more effectively.
As part of the "Year of Efficiency," the plan is to understand these dynamics better and find ways to"make sure people build the necessary connections to work effectively." Zuck encouraged all employees to find more opportunities to work with colleagues in person.
It looks like Meta is still figuring out what works best for it. And its leader is not afraid to share his plans and rationale publicly. It'll be interesting to see where things stand in a year.
In the meantime, layoffs are never pleasant, but Meta's increased efficiency should be good for the tech industry and the economy. Over the past decade, tech giants have been trying to innovate by hiring tens of thousands of people in the hope that one of them would come up with a good idea:
These companies are not recycling ideas, but they are recycling capital. They are using billions made from past successes to bet on employees who will maybe develop a future success that will help finance even more bets. This dynamic is painfully visible in companies like Google, Facebook, and Apple, who are hoarding a huge chunk of the world's talent — throwing people and ideas at the wall to see what sticks.
Assuming the economy doesn't tank, many talented people would now be free to work on things that matter.