Making sense of the layoff wave

Read it is lovely to be back here. For anyone who hasn't listened to Parth on Read Rifts for the past three weeks, please go back and listen because they were so fantastic and unfortunately we're going to start with a not positive topic. So last month was the worst January for job cut announcements since the Great Recession. U.S. companies announced 108,000 cuts. It was 120% increase year over year and and hiring intentions also fell 13% from last year, hitting their lowest level since 2009. So there are some not great things happening in the workforce. And almost half of the January reductions were linked to just three companies, Amazon, UPS and Dow. Some people are saying that AI is to blame. They've been talking about white collar job cuts for a long time. They're saying that this is the fruits of that labor. Some economists say this isn't so clear. Many of the people who are laid off were saying, no, I was using AI, I was on the front lines and I still got laid off. My question for you is what should we make of this continued layoff news? Do we think that I was behind it or are they just being branded that way?

0:00

I've asked a lot of different people who have a call it industry wide views is if they're actually seeing any data yet as to layoffs or job replacement from AI. It isn't to say can't happen and will happen in fact and in which ways and so forth. But literally everyone I've talked to who isn't just kind of, kind of trying to spot a line in order to get a lot of media attention has said no evidence as yet. And you say, well but why are there layoffs and why are there challenges? Well, there's, there's a lot of things. There is the kind of a whole bunch of weird hiring and organizational things from COVID that are getting refactored and when those are getting refactored, you a refactor in layoffs, you also have less, you know, kind of entry job level, you know, hiring others are. We're living in an extremely turbulent time for businesses. For businesses to invest, they need to have predictability, you know, kind of the tariff roller coaster of what tariffs will be when and so forth. You know, I literally know of, of, of of CEOs who have said if I could sell my US business unit, I will because I can't deal with this roller coaster anymore. And so, you know, there's all of that factoring in as well. Now like I said, this isn't saying that there couldn't be, you know, here in 2026, some things that actually really start on that, you know, in, you know, white collar things, customer service would tend to be the one that I think you would really see first and be one of the most likely places of data. I've done enough work that I actually have seen of kind of startups and small businesses that they're like, well, we used to have three people doing this, now we have one. But not every case that I've talked to them and it's been more agnolica. It isn't that they fired the other two. It's like, well, now these other two can do all this other work that we need to have happen. So one of the things that usually happens in a small business is, well, shit, we've got all kinds of ways that we can grow the business. We actually want these people doing this stuff now. And you know, most notably actually, by the way, entertainingly, where I've had the deepest conversations of those are in the podcasting business where, you know, kind of what are we doing for audio managing and all the rest? And like, you know, the kinds of things that you and I are doing with these read riffs of putting them out in all these different languages, that's actually, in fact something that we, we wouldn't have done if we didn't have it. We could do now. You'd say, well, if you were gonna, if you didn't have AI and you wanted to do it, you would have had to hire a whole bunch of people. It's like, yes, then it would not have been economically feasible and management feasible and we wouldn't have done it. So it's again, it's not a job loss for something that otherwise would have been hired, you know, kind of point of view. Now what I do think is that we will continue to see from lots of different reasons, the top thing is that people are pointing to AI for anything that happens. I think it's because, you know, hey, it's like, like here's a parallel. Usually what happens is you get a market correction and then, you know, it's very rare that one company is doing layoffs. If one company is doing layoffs, then that means that company really got out over its keys and having problems. One of the odd things you can notice is that you go, oh, we have a layoff season. And then all of a sudden a bunch of companies that don't economically like, aren't economically compelled to do a layoff, eg, you know, we're, we're going into the red. We can chart when we're going out of business, revenue is collapsing or something else. But they do a layoff then is because they can then do a layoff where they don't look weak, because most times a layoff signals my business is in trouble. You as an investor, might want to run for the hills. It's a challenging time. So companies only want to do layoffs when they're away from the pack, when they absolutely have to.

1:09

Right.

5:26

They will do them. And it may be a very good thing for them to do. This is not saying it's cruel or in house, but it's like, well, action fact. This whole division that we've been investing in, Action Vector, is not going to work. And we should really like Refactor. It's part of what makes business efficient. Then you have a layoff season. Now, of course, we have a new layoff demon. It's an AI layoff demon, right? And that AI layoff demon is like, oh, it's because my business is strong. It's because I'm adopting the new technologies and so forth. So I'm doing layoffs. So you have this new kind of bugbear. And I think that's one of the reasons why, you see already last year, a bunch of different CEOs saying, yes, yes, I'm fully adopting any I. And I anticipate layoffs because of this. Because it's. I'm strong, and if I need to change this, this is scapegoat. I'm a company you should. Well, I'm a company you should be investing in because it's a signal of strength, not weakness. And then you got, of course, the drama. The, the. It's dramatic for the press. It's like, you know, as opposed to, well, it's layoffs. You know, look, Company X is not doing so well, which, you know, they'll do. But it's like, okay, once you do that, sorry. But it's like, oh, it's part of the, you know, the hero versus villain story of the human laborer versus the AI replacement. You know, the dog fight is at noon, cameras will be rolling, you know, et cetera, et cetera. And it's like, you know, so the press wants that. The, the. By the way, so would the government obviously want this because it's not like, oh, because we have these totally terrible business management tariff.

5:27

Right?

7:01

You know, let's try to make the rest of the world buy Chinese, not American by what we're doing, you know, kind of policies. It's not that it's AI right? So, so there's going to be all of that. And by the way, none of this is saying that there won't be this year even some substantive job transitions that come about for it. And it's an important big thing to try to navigate and we should be trying to figure out how to navigate it for individuals, for companies, for industries, for countries. Everyone should be working on kind of some of the transition. Even though I think almost none of the numbers have anything to do with AI yet.

7:01

Right. Thus far they really haven't been been attributed to AI or they shouldn't have been attributed to AI but we might see it in 26 and 27. And I know you don't want to and can't predict the future, but if you were to guess where we were going to see sort of the first AI job loss, you said customer service, but do you expect that to be more in the tech sector or more in the non tech sector? Is this going to be in, you know, durable goods? Is this going to be in retail? Is this going to be in sort of more tradition tech?

7:45

I think it'll be in the largest sectors that hire the most customer service people.

8:15

Gotcha.

8:26

And by the way, we may not even see it in U. S numbers in 26 because a lot of those people are already driving Philippine shops and India shops and everything else. And it may help, it may hit there first. And I haven't actually done that study, maybe that's even started in 25, you know, with companies like Sierra and Parlo and other other folks. Because the natural dynamic is to say, well, can we replace 70% of our current customer service cost, get much higher outcomes by doing this, and just retain the absolute best CS stuff for the things that the AI can't, can't, can't directly handle. And it's a natural thing to do. But of course, if you have a tiny customer service department, because it's very rare, it's like, well, why go through all that energy and hassle to do that? Whereas if you have a big expense, then it's like that's a very natural thing to go. And I, you know, I, I know of dozens of companies that have already piloted it, you know, through, you know, talking to some of these AI customer service companies. And so that's part of the reason why that. Now that being said, you know, as you know, my advice to everyone is start using AI. And my advice to college graduates who are saying, hey, this is a sucky time for entry level jobs which Again, I don't actually think is because of AI yet from anything I can tell, and I have a lot of different cross industry views, but it is because of, hey, we got business turbulence. We're not hiring, we're refactoring. You know, it's the. It's tariffs, it's Covid, et cetera. Well, but all the businesses know that they need AI and so, you know, my kind of categorical advice is, you know, basically use AI, Right, Absolutely.

8:27

We know one thing for certain, that AI is coming, and so we better be using it.

10:24

Yeah. Well, also, as a graduate, you can be saying, I'm AI native.

10:28

Right. Hire me because I know what's up.

10:33

And I can help you as an organization with this.

10:35

Right. Make that transition.

10:38

Old people adopt much more slowly. Totally. We can help. Right. And I think that's the thing that we want to, you know, be driving for those. For those people and for those folks.

10:40

Absolutely. So, Reid, moving away from sort of the economic side of AI to the technical side, I think most of our listeners probably heard about cloudbot, which was renamed and then renamed again to Maltbot and then became Open Claw and it went massively viral as the past few weeks for agentic tools that can actually do work. This is not just, you know, a chatbot that you're asking back and forth. It is doing things for you across your inbox, your calendar, your files, your browser. Like, it's, it's. This is the dream for AI to be actually doing work for people. And so the hype here is that this is the beginning of the AI employees that people are talking about. And so immediately there was backlash with, is this safe? Are we giving people permissions to our credit cards, to our email inboxes? Is this an attack surface for all sorts of malicious attacks? Because none of this is safe. But I think actually the most sort of interesting and hilarious weird thing that happened was the explosion of autonomous agents, and it spilled into places like Mult Book. So this is like a Facebook. It's a bot for social network. And agents were talking to each other. Some of the things they were saying were debunked, like the fact that they had to do 10,000 captchas to just get into the. The multiple social network. But others were real with agents talking to each other about their human overlords. So how should we interpret this Claude bot moment? Both from a. Whoa. This is one of the first times that agents are doing real work to. Also. This is really weird.

10:50

Look, this is a very significant moment and part of the significant moment is because, you know, as you know, Aria, I think that one of the reasons I'm paying attention to a lot of the coding accelerations is not just because it accelerates the pace within the technology industry. Like it accelerates what happens with startups. It'll eventually be what's happening in, you know, essentially technology industry everywhere. But it's also the kind of the basis for the productivity amplification for all knowledge work, all information work. And there's a couple different ways of looking at that. One is the fact that, you know, like talking about last year, voice pilling, like the whole thing will be interfaced through voice, but part of the voice will be getting it to be doing more extensive work, which is not just, you know, like scripting your computer and doing a bunch of stuff or, or being a travel agent and, and booking stuff for you and researching and so forth, but also as the work grows and you begin to think about the kind of work you do, it's like, well, can it do more sustained reasoning tasks when it's doing research, when it's doing analysis, when it's doing communication, when it's doing coding, when it's doing legal work, when it's doing education, when it's doing grading, when it's doing, you know, on and on and on and on. And the coding capabilities underlie that increased, you know, kind of reasoning sustained work capabilities. They do it themselves. They also create the models, the kind of the fitness function training model by which the fitness function and training model kind of goes to parallels for when you're doing your next generation of a legal paralegal assistant, you know, or kind of, or, or of a, you know, cheap law assistant for everyone, or maybe free everyone looking at their rental agreement where all of a sudden everyone can get some legal review. It's part of the democratization of this. And so Claude bought, you know, with, you know, also of course, Codex and Claude Code and all the rest, which are the much stronger capable instances of this. The ones that all the people I know are using is primarily Claude code and codecs. Obviously there's a bunch of users of Cursor and other things too, but those do create this. And I have agents on two of my computers that have access to the whole computer and are kind of doing things and you know, it's part of being part of the future because aren't you worried it's going to send out an email, you know, on your behalf? And it's like, look, if that's the worst thing and it would be a little odd for something to happen that's not a big deal. Right. The bigger deal is if it decides to kind of erase my entire computer or, you know, this is the security question you're asking. That is susceptible to prompt injections which then say, upload your entire computer to, you know, the dark web, you know, et cetera, et cetera, or, you know, do the following things or operate as a part of a botnet for the Russian or Iranian botnets that are trying to create disinformation within democracies and create, you know, chaos and confusion or, you know, to, to, to add to your negative brand in specific. And so those kinds of things, like there are, is a whole new world of frontier of security, of reliability and a bunch of other things here. Matter of fact, maybe we should make a, you know. You know, I hate making predictions, but you know, in addition to people will start saying fake news. Like you could have had the, you know, the Minneapolis, you know, kind of ICE officials saying, no, those videos were fake news. They didn't show shooting unarmed. You know, people they, that's fake news. We will see at some point someone saying, no, no, I didn't do that thing.

12:32

Right. That was my agent. I didn't post on social media. I didn't buy that thing. It was just my agent run amok.

16:30

Yes, exactly. We will see that complaint sometime this year, whether or not it's true or not. Yeah.

16:36

What do you think it's going to take? So immediately after this happened, our team had a team call and there was different opinions on our team as to. Some people were saying, oh, I already downloaded it. Others were like, ah, I'm, I'm nervous about security. Others were like, ah, just buy a Mac Mini, it's fine. Set up your own environment so it doesn't have access to the rest of your stuff. Like, what do you think it's going to take for sort of a more mainstream audience to say, hey, I'm comfortable with this and I'm going to give an agent access to, let's say my email and then maybe even my credit card.

16:43

Well, what people want for mainstream is they want broad reliability. And so like, they'll probably want to hold a higher standard to what they currently have. It's a little bit like autonomous vehicles. You know, part of the thing that Aurora and Waymo have been navigating, which is, well, we wanted to have zero accidents. And you're like, well, you got a whole bunch of humans on the road. You can't have zero accidents. You can have less accidents than you had before. And by the way, delaying to getting less accidents, you're costing in, you know, hundreds and thousands of lives. Yep. So you shouldn't delay for that, which is the natural, you know, for whatever reasons. Like no, no, we should wait until it's no accidents. Like okay, your, your actual thing is costing thousands of lives. Well, similarly today a lot of people get cyber scammed. They get cyber scammed through, you know, emails. It could cyberspam through hacks and so forth. So, but, but the, the, the probable mass consumer demand will be it's got to be safer than that. Where the real answer or completely safe. And it's actually the real answer, should just be safer than that. Now part of the thing is it'll be so valuable so quickly that I think people will just like the use of computers and the fact that, and taking like people aren't saying I'm not using email until there's no phishing attacks. It's like, I'm going to use email and some people are going to be vulnerable to phishing attacks and we're going to try to prevent it as much as we can. By the way. I think AI is going to help with that. Like, I think that's where it's going to play out. But I think it'll probably be driven. People will initially go slow than fast because it'll just be like, oh my God, until it's safe. Oh shit. You, you're doing all those cool things and really helping your work and your life with it. I'm going to do it too. Right. And then, you know, we as technologists, as, as, as industrialists, et cetera, need to be trying to do our best to make sure that the, the accident rate, you know, because a lot of criminals try to take advantage of this, you know, a lot of rogue state nations try to take advantage of this will actually in fact be, you know, low. I don't think we can make it zero, but just try to make it as low as possible.

17:15

Yep. No, absolutely. And I think that sort of relatedly a lot of people are saying let's keep tech over here and then let's keep politics over there. And as we've been talking about like they are so intertwined, we talked about the layoffs. Are they due to AI or are they due to disastrous tariff policies? Which is very much, you know, a live political question. And so you recently published an op ed in the San Francisco Standard and you argued that Silicon Valley can't be neutral anymore. Too many tech Leaders have sort of tried to stay above politics and said, no, I'm about business, I'm not about politics. Or perhaps gone even further and sort of placated the administration. And, you know, I understand when you are, you know, leading a top company in the United States, you want to have a good relationship with the administration. But you have said that sort of our institutions are under enough stress that it is. It is time to speak out. We must speak our values, and we must sort of stick up for the future of America. So why did you write this piece? Like, what do you want people to take away from it?

19:25

Look, the short answer is we're living with an administration that is claiming that there's a ton of domestic terrorism. And, you know, my fear is that the reason why they're doing this is to try to justify a bunch of essentially fascist, autocratic action against their enemies and opponents, which is, you know, anybody that they care to think is their enemies and opponents, let alone people who actually think that they're trying to hold them accountable, the rule of law. And so, you know, last year I was. Because I do want, you know, any elected president, any elected administration to be as successful as possible for the American people very, very badly. I was basically pretty quiet. It was a little bit of, hey, I wish they would begin, you know, follow the law better. I wish they'd be less cruel. I wish they would show more competence, you know, rather than just, you know, like, say, look, we're doing all these layoffs in the federal government. You're like, yeah, you're killing lots of kids, you know, and, you know, to be better at all of that, but muted and softly, because it's like, look, of course, what we want is, is not person one was right or person two was right about the political outcomes, or this is the way you should have voted, or this is the way you should vote. It's. We want the best possible thing for, you know, as Americans, for Americans. And then, you know, I tend to think we as Americans also are a little bit like, we also care about the world, too, and we want the good things for the rest of the world as well. But let's just focus on Americans. So here you have two points. Not just one, but two points of people being shot when they posed no violence risk to the ICE officers. And you can tell it from the video cameras. And so they were shot basically murdered because of that. From the video cameras, you can tell various forms of malfeasance, like, including in the. Renee Goode is like, you know, officer you know, using an epithet, you know, so it's like, oh, this is not a God. I felt so I thought they were gonna run over me. It's like, no, no, I'm. I'm delivering retribution. Which is what trained, like many, many great police officers, great FBI agents across the nation have been trained not to do this. It's putting shame on them and all their training to have these, you know, poorly trained, you know, not in control of themselves, people doing murders. And you kind of go, okay, look, enough's enough. I mean, yes, you can see the thousands of assaults that are happening, the terror that's happening, the kind of invasion of blue, blue state cities because, oh, it's an, it's a sanctuary city, etc. But to do that, that is like, I think, fundamentally un American. And the thing for business leaders is to say it's fine to. When it's just kind of red versus blue. And this person thinks higher tax rate, and that person thinks lower tax rate, or this person thinks regulation for X, or this person thinks that, you know, we should be doing teaching X in schools or not. Which I do think is generally, should be separation and truth and say, but, you know, Constitution, right? But it's like, look, this is. The domestic terrorism is ice. The domestic terrorism is them shooting Americans and assaulting Americans. You know, people who have, who are born in this country, who have passports, etc. That's an American issue. And I think as business leaders, you should go, no, no, actually, in fact, I'm going to speak out on it to show that I actually have courage, that I care about it. And obviously I was talking mostly within Silicon Valley, but it's like, if you're silent, you're complicit, and you could say, well, but it's not my place. And it's like, well, it's not your place to speak out about, like, not having murders in your country perpetuated. What do you think is your place, you think is your place when people are being shipped off to camps because, you know, making the Nazi thing, it's like, well, okay, yeah, then. And you're like, well, there's this thing with these attention centers you got to pay attention to. Like, it's like, look, you know, there's a reason why we have law and due process and that kind of thing as part of the reason why we say that's what it is to be American. And even if you said what I support, all these other good things that the administration's doing is like, right, but you're Going to be silent about the same things that, in parallel, the Germans were silent about prior to World War II. You're going to be silent about those. And you don't wait until there's gas chambers. Right. I mean, that was a relatively late addition in the, you know, kind of Nazi regime. You speak up early to say, no, we correct before we are on the trains in that direction. I was like, okay, like, what if it was just one. You got to look, one bad officer caught on video camera handled badly. Because it should be, yes, we're going to investigate. We're going to make sure this doesn't happen. Then a second followed up by, nope. Public statements that are denying the truth. You can see in the videos.

20:25

Exactly. I mean, I think it'd be one thing if, to your point, it's a bad apple and the administration said, let's investigate immediately. Instead, they said, let's investigate the victims and the families of the victims instead of investigating what happened. And, you know, to your point about people not standing up, a lot of people say, you know, Trump is someone who is vindictive or does retribution. And so it'll. It's bad for my business. But I think one of the things that I'm hopeful about with you speaking up is there is safety in numbers. If everyone speaks up, there can't be revenge against everyone. And so if you're speaking up, then the next person can. It gives more cover to the next person and to the next person. Because to your point, we can't just sit back. We have to stand up, even if you're not standing up for humanity. Listen, business and commerce is suffering incredibly in Minneapolis because people aren't leaving their homes, they can't go to work, they can't take their kids to school. So this is certainly a moral and a Constitution issue, but it also will affect the future of America and the.

25:58

Future of business and let me add, just kind of take a slight tune up. So for people who are thinking about themselves and doing stuff, it's obviously much easier to do once half the people have spoken up.

27:03

Right, right.

27:18

That doesn't require courage. If you say, okay, I'm, no, I don't have any courage. I'm going to wait for that. Fine. But self identify.

27:20

Right.

27:28

Understand that that's what you're doing. Courage is when you speak up, when you're like, I wonder if the other people are going to come speak up with me. Yep, that's what courage is. And so that was part of the reason why to write the SF standard, you know, to. To. To be out there. And, you know, I. I anticipate a ton of political attacks because of it.

27:29

Absolutely. Well, amen. Proud to work with you on this one, Reed. Thank you so much.

27:54

Possible is produced by Palette Media. It's hosted by Ari Finger and me, Reid Hoffman. Our showrunner is Sean Young. Possible is produced by Tanasi Delos, Katie Sanders, Spencer Strasmore, Emo Zhu, Trent Barboza, and Tafadzwa Nimarundwe.

27:59

Special thanks to Surya Yalamanchili, Sayida Sepieva, Ian Alice, Greg Biato, Parth Patil, and Ben Rellis.

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