Yahoo, Twilio Lay Off Thousands As Bay Area Tech Cutbacks Continue

Cloud Communications software maker Twilio announced on Monday that 17% of their workforce, or roughly 1,500 workers, will be laid off. The layoff, along with the 20% job cut, or almost 1,700 workers, at Yahoo announced during the weekend, became the latest wave of Bay Area tech cuts stretching back to over four months ago.

Beginning in October of last year, the tech sector across the Bay Area announced mass layoffs in the tens of thousands. Among others, these have included Twitter, Peloton, Facebook parent company Meta, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and numerous others. In January, Salesforce cut 10% of it’s staff, or around 7,000 jobs, in only their latest round after several other cuts last year. Seattle-based Amazon slashed 18,000 jobs, with many coming in Silicon Valley cities such as Sunnyvale. Google cut 12,000 employees. And so far in February, thousands more had lost their jobs due to layoffs at former Silicon Valley stars like PayPal and NetApp.

While reasons for the layoffs have varied, they have generally come down to the Bay Area and Silicon Valley being more expensive with higher employee costs for things such as housing; the end of COVID-19; tech companies expanding too quickly during the pandemic when work-from-home jobs brought a greater demand for services; and a rise in AI and automation replacing many tech-based jobs.

However, while some of those reasons were attributed to Yahoo’s layoffs, the largest reason stated in the announcement was how their ad tech team failed to live up to expectations. The ad tech team, which was designed to compete against similar programs run by Google and Meta, was subsequently cut by 50%. 1,000 workers are set to be released this week alone, with the rest being phased out throughout the year.

“The moves are meant to simplify and strengthen the good parts of the business, while sunsetting the rest,” Yahoo CEO Jim Lanzone said over the weekend. “A lot of resources were going into that unified stack without a return. This was a longstanding issue with every variation of this company that needed to be solved eventually. It was too resource intensive to do everything at once.”

The layoffs at Twilio on Monday fell more in line with most of the reasons for job cuts. According to executives, Twilio had grown too large during the COVID-19 pandemic, particularly in communications, with restructuring being necessary to focus more on the data and applications side of the business.

“As we’ve refined our strategy over the past several months, it’s become apparent we need significant structural changes to better execute our strategy,” noted Twilio CEO Jeff Lawson in a statement on Monday. “This is because the two parts of our business – communications and software – are at different lifecycle stages and have different operating needs. In Communications, we have to get more efficient. For Segment, Flex, and Engage, we must accelerate growth.”

“As a result, we’re forming two business units: Twilio Data & Applications and Twilio Communications. When we look at these two business units on their own, it’s clear that we’ve gotten too big, especially in Communications. And that’s why we’re also letting go of some colleagues today.”

Twilio’s layoffs are only the latest for the company, as they had previously let go 11% of employees in September 2022 over similar “grew too large” reasons.

Tech and employment experts noted on Monday that the layoffs are having a huge effect on the Bay Area and are likely to effect 2023 and 2024 elections in the area.

“The layoffs have been demoralizing Silicon Valley,” Julie Ochs, a San Jose-based headhunter and hiring specialist, told the Globe Monday. “These latest firing have shown restructurings following restructurings and tech companies dropping half of their divisions. They aren’t saying it, but they’re panicking.”

“I’m getting some of these workers here, and right now they’re looking for any job, even if they have to take a pay cut. Five, six years ago I had these same workers coming in getting so many offers that they got to negotiate where they parked or if the company could pay for a better chair for their desk. One of my clients made the decision by choosing the company not by the best pay or stock options, but by who had the better snacks in the break rooms. I’m serious – that’s what it was like for most of the past decade.”

“But now, they’re grabbing what they can get. There are still some of those unusual perks like gamerooms and mid-day yoga, but a lot of that is falling by the wayside as workers are more focused on keeping their jobs. These layoffs have been scaring them.”

“Politically, yeah, this will have an effect too. A lot of people running for office here in the next few years will have to answer questions on why they didn’t do more to prevent this. These cities will also see cut tax bases due to these companies shrinking or pulling out. And, I know I keep saying this, but it just isn’t over yet sadly. More layoffs, or new rounds of layoffs, will be coming as companies see more of their new financial situations.”

More tech industry layoffs are expected soon in the Bay Area.