Ben Scharfstein
@scharf
I don't think big tech layoffs are because the companies got bloated, it's because rates went up. If the ROI (including opportunity cost of capital) on a marginal hire is positive they should be hired. As rates increase the opportunity cost of capital increases so this calculation changes.
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Sam Jain
@sambhavjaineth
What do you think @scharf about cutting down salaries by x% instead of laying off x% workforce which will achieve the same economic savings but arguably higher net productivity?
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Ben Scharfstein
@scharf
If you can retain top talent on lower salaries go ahead but I think it’s probably healthy to do a RIF and just focus in on the most profitable aspects of the business. Morale, retention, and future ability to hire will also probably be better if you bite the bullet on layoffs. But idk really, no personal experience
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