Are we about to enter a new era of ultra-profitable tech companies?
While companies like GOOG and MSFT have had ridiculously healthy margins compared to traditional industries for some time now, it's also been clear in recent years that these companies have become very loose with spending. Take GOOG for example, they spend so much unnecessary money on fancy offices, free lunches, diversity programs, highly speculative investments, stock based comp, etc.
But perhaps more importantly what happens when all the unprofitable tech companies with 80% gross margins decide to operate profitably? A lot of companies are so wasteful in tech today that they're actually choosing not to operate profitably so they can grow faster. We've seen Uber basically do a u-turn on this stance, but many other companies are following suite.
The media seems to think these cuts are a sign that tech companies are struggling and other industries like energy will now take the lead, but surely being able to drop 10-50% of your workforce with almost no consequences is a sign of strength not weakness?
I guess this whole time the most profitable companies in the world apparently weren't even trying that hard to be profitable.
While companies like GOOG and MSFT have had ridiculously healthy margins compared to traditional industries for some time now, it's also been clear in recent years that these companies have become very loose with spending. Take GOOG for example, they spend so much unnecessary money on fancy offices, free lunches, diversity programs, highly speculative investments, stock based comp, etc.
But perhaps more importantly what happens when all the unprofitable tech companies with 80% gross margins decide to operate profitably? A lot of companies are so wasteful in tech today that they're actually choosing not to operate profitably so they can grow faster. We've seen Uber basically do a u-turn on this stance, but many other companies are following suite.
The media seems to think these cuts are a sign that tech companies are struggling and other industries like energy will now take the lead, but surely being able to drop 10-50% of your workforce with almost no consequences is a sign of strength not weakness?
I guess this whole time the most profitable companies in the world apparently weren't even trying that hard to be profitable.