➡ Meta and Microsoft are both reducing their workforce, but in different ways. Meta is laying off about 8% of its employees, while Microsoft is offering buyouts to about 7% of its staff. These actions are not due to economic issues, but rather a strategy to invest in future technologies like AI while maintaining profits for shareholders. Despite these layoffs, these companies are still hiring for specific roles that align with their future plans.
➡ Companies are cutting jobs to save money and invest in their future, which is cheered on by investors. Facebook, now Meta, is a global platform used by many, not just in your local area, and they’re adding new features like AI to their products. Despite layoffs, this could lead to new companies being founded by those let go. Meta is planning to lay off about 8,000 people to invest in building new platforms.

What does this mean for Meta? Do you remember the political story here is Mark Zuckerberg sitting alongside the President of the United States saying, Oh, I shall spend $600 billion in the United States of America to re-industrialize AI infrastructure in this country over a three year period. And so that’s the sort of political side of the story. But their capital expenditure commitment for the year is size large. Well, and of course, and Joe alluded to this with the other hyperscalers, it’s not only Meta we’re getting news in this regard today, as we know, was reported earlier that Microsoft is offering buyouts to about 7% of its workers.

Is that the exact same story here, Ed, or are there some idiosyncrasies to consider with Meta in particular? Well, idiosyncrasies in the sense that the way that Microsoft is going about this is offering buyouts to 7% of the workforce. So a different number, but also a different mechanism trying to make voluntary retirement, the modus operandi by which they reduce that headcount longer term. But you’re still talking about thousands of employees in the United States and that reporting, according to a Bloomberg source, Microsoft has 125,000 people. So again, similar level, you know, 8,000 to 9,000 employees.

You know, the capital expenditure commitment from Microsoft is also great. And when we talk about that, when we say capital expenditure, it’s a financial term, you’re talking about an upfront cost commitment to buy the latest generations of chips and build out data center infrastructure to develop or run AI. It basically comes down to being as simple as that. So Meta is laying off 8% of its workforce. Microsoft is offering buyouts. Alright, let’s mine this out. It’s two different ways that you can look at this, right? So let’s first attach ourselves to Microsoft, right? Buyouts are much different than layoffs because they’re looking for a certain amount of people to take the deal, roughly around the same from both companies, 7,000 to 8,000 workers.

When you work for Microsoft, they’re looking for people to basically retire, walk away or go and get another position. And so you’re in a much stronger space if you’re getting a buyout because you’re more likely to be able to keep your job if you are a worker from Microsoft than you are, obviously, over at Meta. Meta is really like, okay, I’m waiting to find out if I’m one of the people to get laid off. At Microsoft, it’s like, hold on, it’s a lot of people that’s taking buyouts and they’re going to work at other companies. And so it’s two different things.

Now, let’s go over to Meta, right? Meta is laying off around, I think, around 8,000 workers. That’s what the pitch is, is that it’s going to be around 8,000 workers starting later next month. A lot of them will get about 16 weeks of severance. And they should have already been looking in the first place if they wasn’t in a specific field. Where’s the caveat for this? Because I did a video inside of the Patreon that I dropped for y’all in Manchester, where I broke down to y’all how y’all can get a job or get a position or get to a dream job, despite the fact that it’s layoffs, despite the fact that, you know, a lot of these companies are downsizing.

I’ve already explained this thing to y’all inside of the Patreon. So if you’re a bag chaser and you watch that video, this doesn’t apply to you. But let’s just talk about this on a surface level and give you some insight. All right, here’s the caveat. When you go on these social media platforms and you see people talking about layoffs and the state of the economy and everything like that, they don’t understand money. They don’t understand corporate America. They don’t understand Silicon Valley tech companies and what’s really happening. When all of the tech firms were at the White House, right, when Trump first got in the office and they were groveling at his feet and it was making financial commitments to spend trillions of dollars collectively on technology to basically realign what we think technology is supposed to be and prepare themselves for the future and invest in America.

They made these financial commitments. But what did these commitments look like? Because if you go to any of these job boards, job sites, there’s not going to be a shortage of positions for Meta, Microsoft and any other company, including Oracle, for the jobs that they want. What does this mean? When you make this capital commitment, because we’re in an arms race, it really is only with technology. When we talk about chips, we talk about AI, when we talk about exactly what the purpose of that AI is going to be used for. I got these Meta glasses that I’m going to probably use to get a first person perspective and take you all through this Lamborghini when I go through and I’m going to drop it on the Patreon for you guys, along with the regular vlog.

When you’re using Meta AI, it’s different than when you’re using Amazon’s AI, when they’re trying to implement physical AI, when you’re using Grok that’s going to be integrated in the vehicles, when you’re using chat GBT or Gemini or Claw that is now overtaken OpenAI when it comes to regular everyday use cases. When you think about how AI is going to be used, think about it in the same lens of how we’re using the cloud. The way that Apple uses its cloud is much different than the way that Azure, which is a Microsoft product, is leveraging its cloud, especially when it comes to technology, video games, deployment, AI, all of this stuff, right? AI infrastructure, when you talk about the way that Oracle is leveraging its cloud, it’s all different, but it’s still an arms race because it’s an uncharted territory and we’re trying to get as many users as possible.

But in order for them to get there, right, because I’m going to bring it back to the layoffs, in order for them to get there, they have to make a capital spin. The caveat to that is, I want to spend this amount of money. Let’s say I want to spend $500 billion over the next seven years, but the problem is that you’re not a privately owned company, you’re a publicly traded company, which means that you have to be accountable to shareholders, you have to be accountable to the board. So how can we make this capital commitment and we prepare for the future, while at the same time we still have to be available to shareholders? Well, then that means that you got to start running a little bit more lean, right? What does running lean mean? That mean that we got to reduce headcount so we can justify spending money and we don’t mess up your profits as far as being a shareholder.

Nothing is more important as an investor than being a shareholder. Being a shareholder means that the CEO has to be, has to be accountable to you for ensuring that your profits is in short for now and it’s in short for the future. They’re not interested in you being a growth stock because you’re an already established company. Am I, am I talking too far? Y’all need to get in stock club. Number one, you need to get into the Patreon and you need to start learning these terms so that you’re not feeling behind when we talk about this on the regular streams.

From a C student’s perspective, I want you to invest in a future as a company, meta, Microsoft, Oracle, Google, whatever. I want you to be competing in the future, but I don’t want to take a haircut while you’re doing it. I don’t want my profits and the share price of the company going down while you’re making this capital spin, but I want you to make this capital spin because in order for you to compete for the future, you have to make an investment. So where does that leave us? That means that you need to reduce 10% of your workforce, 8% of your workforce, 7% of your workforce, 12% of your workforce.

For people that are just sitting around middle managers, people that are on projects that’s no longer in flight, you can’t just be employing people for the sake of employing people. You have to employ the right people. That is why you’re going to see jobs on the job board still and them still hiring for the positions that they need while at the same time making capital, reducing jobs in the areas that don’t matter. They want to make sure that we’re ensuring profits and we’re investing in the future and so you got to go. The reason for the layoffs is not because these companies are not incredibly profitable.

The biggest misconception from these people on the internet is they’re telling you that the economy is in a dump. It’s not. They’re booming. They’re booming. Facebook and Facebook meta is having one of the best years ever. These technology companies are getting to the bag. So it’s not an economic problem. Money is flowing everywhere. But as they make these capital investments, they don’t want to take a haircut and so they got to make sure that they operate more lean and so you don’t want to pay for it. You understand what I’m saying? The companies are not suffering, but they still have to be accountable to shareholders.

They still got to make investments and so they have to reduce headcount to to justify in their budget that they’re actually going to be able to afford the investments that they committed to. And what has been the story of a longer period of time is investors really cheering that commitment. But as you guys know, Wall Street also likes to have it both ways and they want to see something give it. Somebody said, I don’t know who uses Facebook except for boomers. Well, then that means that you actually need to get on these conference calls because Facebook is literally a worldwide.

Platform. People are using it all over the world. Just not people in your neighborhood. Y’all think that y’all culture is the only thing that matters. No, it’s a worldwide thing. And plus people use Instagram. People use WhatsApp. They buy these glasses, these Ray-Ban metal glasses that at a historic clip that peeped out. Now they’re integrating AI, meta AI into these glasses. People use these platforms all the time. People use Facebook marketplace. They use Facebook dating. Man, people are using these products like crazy. You may not know anybody that use it, but it don’t mean it. It ain’t booming.

I don’t know what y’all talking about in the opposite direction, some financial discipline. And usually headcount is where you find that what we call it compromise. What’s this mean for morale at a company that’s involved in building out the next industrial revolution? Oh, goodness. You know, since the meta story broke, I haven’t had a chance to talk to anyone within the company. I would know that I think Reuters reported the meta cuts were coming and based on what’s now confirmed pretty accurately. The other way of looking at it is that this is the story of Silicon Valley.

When you have a big round of layoffs or voluntary redundancies, retirements, you create a generation of people who… What is it? Voluntary redundancies. I mean that more than one person is doing the same job that we don’t need. And so we go ahead and eliminate one of them and keep the other one. Time on their hands and experience. And those people tend to found companies or they invest in other companies. And so that’s how I would tend to look at that story. But morale can also be difficult. And in meta’s memo, which came from the chief people officer, obviously it’s acknowledged that this is not what people want to be hearing.

But yeah, I look at the bright side. Many people often do. So, yeah, meta is going to be laying off about 8,000 people they estimate. I had already kind of talked to you all about this a long time ago. And I told you all that this was coming in now, just officially announced it over to the workforce. Microsoft is looking for buyouts, but that’s because they basically spending hundreds of billions of dollars to build out these platforms and to invest in the future. [tr:trw].

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