The Hard Numbers Around Layoffs Today

0:00I want to talk about some of the hard numbers around layoffs today. So I don't know if you've seen this, but, you know, earlier this week, right, we saw UPS, I think, 48 ,000 employees layoffs. Amazon up to 30 ,000 employees. No, Amazon was, was it 13 or 17 ,000? That was this week, but there's, we're talking about more recently, not even just this week. So you're right. It's a small number this week. The 30 ,000 comes from, the market was estimating Amazon's about to lay off 30 ,000 people, and they came out with a real number, and it was low. I saw the real number. You're talking about the Wall Street Journal number, right?

0:34It was like 14 ,000. It was something like that. Yeah, yeah. Okay. So you got recent layoff announcement, UPS 48 ,000. Amazon up to 30 ,000, so it could be 17 ,000, right? Intel 24 ,000. Nestle 16 ,000. Accenture we've talked about already 11 ,000. Ford 11 ,000. Novo Nordisk 9 ,000. Microsoft 7 ,000. PwC 5 ,600, right? So the labor market, it says the labor market is clearly weakening. And look, we don't have hard numbers from the Fed right now, so who knows what's happening. ADP release numbers. What did it say? They're saying they're adding jobs in the last four weeks. That's good. So what is happening here?

1:09They now do weekly job reports. ADP job report adding jobs. I think it was like 30 ,000 or something like that or 10 ,000. Four-week data. They added 14 ,250 jobs per week for the four weeks ending October 11th. Have you seen the graph where it shows that since ChatGPG 3.5 came out that junior job hiring is going trending downwards, whereas senior job hiring is continuing to go up. I haven't seen that data, but here's what's interesting. I was watching CNBC yesterday. Your favorite channel. Mm-hmm. And it was either yesterday or the day before. And the Propexity, they had an interview with, I believe, Propexity founder and a few others.

1:54You should know his name, Aravind. Something like that. But right now, all these companies, when they're doing layoffs, One of the biggest things that they're citing is they're laying off because of AI efficiencies, right? You've seen that? And CNBC is like, is it really AI efficiencies? So they're at this event. Or is it just cutting the bottom? They're at this event with a lot of AI people, like founders of these companies like ProPlex. They're like, we don't see AI impacting a lot of these jobs. We believe they overhired during COVID and they're just using AI as a scapegoat. You see the Chamath tweet yesterday?

2:28No. Okay, I'm not going to say, guys, it's not me saying this. I don't want to get in trouble. So Chamath tweeted this yesterday. He said, what is AI efficiency? Something around this. He's like, no, it's more so the people are cutting because of the 2021, like overhiring, but all the DEI initiatives too. He's like, that's the reality of what's happening. They're cutting these people right now. Under the guise of kind of what you're saying, AI efficiency, because it's easy to say that. Yes. And also - And remote work too. And if you say AI efficiencies, like, oh, this company is becoming more efficient.

2:56They're AI forward. Maybe their stock price should go up. But if they just say, hey, we overhired and we're cutting and we've had record profits, you look really bad. It's a bad story to tell. Yeah, but quite a few of the AI people on CNBC, because they were switching to different people, they're like, most of them were saying, this isn't AI efficiencies. They're like, these are just companies cutting because they overhired. They're like, we're seeing people hire more because of AI and it's just making people more efficient. but they're still hiring and they're not cutting because we haven't seen it replace tons of stuff i mean we talked about this last week i i think don't don't get me wrong i think we both think the ai efficiencies are coming they're not quite no where we need it to be right but we do we do said this last week we need more we're gonna we're hiring more engineers we're looking for more engineers right we haven't cut a ton because of ai have you no yeah i'm like i haven't seen one thing where it's just like but we can do this now we don't need tons of people what we have done from ai is oh it's made our people more efficient so we have greater output cool push that forward to the customer i would say we're um tougher now about the people on the team and so what i mean by that is we don't want a group of has and has has not have halves and have nots right so if you're really good at ai but i suck at ai then you and i are going to be at odds right in the next couple years or so so we don't want that to happen so we're trying to lift everyone along with us but You can take a horse to water, but you can't make him drink, right?

4:21And that's something that we want to make sure that we upscale everyone at the same time. And so all that to say is, I'll give you one more thing. With these conversations you and I are having with our friends behind the scenes, other founders, right? What's happening right now? They're, what are they saying? Oh, we're way more profitable than we've ever been. And they are strictly saying that they are cutting for these same reasons, right? They're able to confidently cut people that they weren't able to cut before. So maybe there is a little AI efficiencies there. Because behind the scenes, it's not like they take pride in cutting people.

4:58They give them severance and all that type of stuff. But they're a lot more aggressive with cutting. Yeah. Check out this quote. This is on NBC News. This is from David Atour, a professor of economics at Massachusetts Institute of Technology. So they're talking about the recent layoffs. and people saying it's AI. And straight up, it's much easier for companies to say, we are laying off because we're realizing AI-related efficiencies, than to say, we're laying off because we're not that profitable or bloated or facing a slowing economic environment. And that's the reality. You and I work with so many large companies, and we're not seeing, when we work with these companies in different departments, we're not seeing AI make everything so efficient where they can just lay off 10 ,000 plus people.

5:49Not yet. But for sure it's coming, but not yet. Definitely not yet. But I would say that the story works out well now because the efficiencies are coming and it is a weakening labor market, or it's a weakening labor market, right? The economy is bad, right? So I don't know. You saw the rate cuts yesterday, right? They did 0.25%. He's going to cut anyway. He's always going to cut. That was already priced in. Yeah, but it changed from we're cutting three times this year to... We might not cut in December. We may not cut in December. Yeah, which you saw things tank after. And the 10-year went up because everyone was forecasting three cuts this year, and now they're saying they're undecided for December.

6:28Yeah, it was supposed to be a great week for the markets and crypto and all that, but at least it looks like Xi Jinping and Trump got a deal done. Okay, one more thing on the efficiency thing and then you can pick the next topic. So Ethan Mull excited this. So this is a study from Wharton, UPenn. So this Wharton study found that corporate ROI from generative AI from large scale tracking, they found that 75 % already have a positive return on investment from AI, less than a 5 % negative return. Also, 40 % of business leaders now use AI daily themselves. Right. So basically, you can see this chart over here.

7:04Well, those of you that are watching YouTube might be able to see it. But basically, tier one enterprise, 12 billion plus annual revenue, significantly positive ROI. Right. So that is 26 percent. And then moderately positive ROI. But what's the ROI coming from when you say AI? Like what are they specifically using it? So it says, for example, clear financial returns or major operational improvements. right um and then moderate positive is measurable benefits but limited or in early stages so that's 31 on moderately positive and then neutral roi is nine percent which is cost and benefits roughly balanced so far i know you and i are on the same page we think the technology is great it's going to get much better over time it's here to stay it's going to have an impact on corporations i just don't think most companies are really generating at least enterprise companies are generating that much of a ROI from a lot of this AI stuff.

7:55Right now. Right now. And I'll give you a great example of this. Yesterday when I was meeting up with a buddy, I don't think I mentioned the company name, right? Okay, great. So I was meeting up with a buddy and they work at a Fortune 100 company. And this Fortune 100 company has a lot of employees. And we were having a serious conversation about everyone they have in marketing, everyone product, everyone engineering. and what they actually get done and all the inefficiencies because global teams do everything their own way i was like and we're we both were like you know if the company cut half their staff probably nothing would happen differently from a revenue aspect and then we're talking about all the engineers just working on things like seo and helping with data and analytics and then we're talking about how much they actually ship out or changes and I was like for them to really do this much work it's like the average person must be only working like an hour or two a day even even with like a lot of old archaic code that could slow things down I'm like there's no way someone's working more than an hour or two a day yeah like exactly they're like a lot of these people just need to be laid off and I'm like I wonder how much bloat there is in the global organization.

9:14Dude, okay, check this out. You like this. You like graphs. Okay, I think this is a Wall Street Journal graph. So this graph over here, I'm showing Neil right now. So back in the 1900s, people were working an average of 58.5 hours per week, and the yearly earnings were 15 ,000. Now, keep in mind inflation, right? But you go all the way to like 2000 or so or 2020, the hours work per week has gone down like 58.5 per week to 34.2. And I think it's going to continue to decrease, right? Yearly earnings have gone up to 63 ,000. Services industry workers per 100 total workers is 50 total workers. So bloat, okay?

9:46Bloat, right? Whereas before, when you had service industry workers - Wait, service industry workers per 100 total workers? Yeah. So like 16 services, for the services industry, you had 16 workers per total 100 workers, right? Now you have 49, right? What this means here, I should pull up this graph over here. So this graph over here shows the number of people in different employment sectors, right? So back in the day, remember in 1825, farming was huge. Everyone was in farming, right? And then And then it got cut down. And then you had manufacturing to come up, right? 1825, manufacturing started to go up, but now it's gone down.

10:18So like farming has gone all the way down. Okay. Manufacturing has gone all the way down. So like services have gone all the way up. What's going to happen now? This is going to go down. In theory, time will tell, but in theory. I'll bet you. You want to bet? I think it depends what industry. Yeah. Because like if you want to talk about services for cutting, you know, lawns, yes, I think it's going to go down. Yeah. If you want to talk about services for, let's say, artwork, management consulting, like for executives, I don't think it's going to really go down. No, but I think the numbers, I think we're going to - Total numbers?

10:52Yeah, total numbers are going to go down a lot. Yeah. So I think certain roles, like very strategic leadership type roles - Even our role, I think there's going to be an impact, but I don't think our teams are going to be cut in half. No, but I think Brian Halligan's point, so Brian actually tweeted this. I think we're going to look back at this disruption, AI, and observe that we handle this well. So humans always adapt. This is the point, right? So people are like, oh, you know, job loss. Sure. But I will guarantee you people are working on things that they are happy working on today. But it's going to be even better in the coming years.

11:23Yes. I think the big problem that you see in the corporate world is there's a lot of people getting paid. And they're not doing much. And they could just be getting fired. and that'll create the downward jobs. I just think companies right now are really bloated. I think COVID really made a lot of companies bloated and most of them have not resized from it. Speaking of which, you just mentioned we talked about consultancy, right? So look, so the big consultancy, so we're talking McKinsey, Bain and BCG will probably be fine because they are CYA insurance. CYA means cover your ass, right? So to explain here, big companies typically that will hire these big firms.

12:01So CYA means if I hire you, as an executive, I can just blame McKinsey or Bain, right? Or a different example is if you're working at a company and you hire someone from McKinsey and they do a terrible job, you won't look bad to your boss if McKinsey messed up because if you pick a no-name brand and they do bad, your boss will be like, why'd you hire this company that has no reputations, not well-known? If you hire McKinsey, they're going to be like, well, they got a great reputation. They need to preserve more. Yes. They're protecting their job. That's what the CYA means. Cover your ass. Okay.

12:38So it says over here, McKinsey, Bain, BCG, because they're the brand names are probably going to be fine as consultancies, right? But the rest of the consultancy industry could be in trouble and stock price is already showing that, right? So you look at Accenture here, down 30%. Booze, I never even heard of booze, down 52%. Capgemini down 26%. FDI Consulting, Gartner's down 50%, right? So you can see the graphs here. They're going straight down. Now, it's never that simple. You can't just say it's like AI or whatever, but maybe you can. But look at Accenture's revenue is still going up. Valuations are down.

13:10Revenue is not going down for all of them. Give me another one. Capgemini? Capgemini. Gemini stock. The Black Friday Cyber Monday weekend is where systems get stress tested. Traffic surges, inventory moves fast, and every second counts. You need a platform built for the moment. That's Shopify, the commerce platform behind millions of businesses and 10 % of all U.S. e-commerce. With Shopify, you can launch fast with thousands of templates and tools that make your site not just beautiful, but conversion ready. Shopify is packed with helpful tools that write product descriptions, page headlines, and even enhance your product photography to increase your reach during the busiest time of the year.

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14:21Let's see. Quarterly, they're down 0.28%. So I would not say, how much is Capgemini's stock tanked in a year? they're down 15 % from what I saw on the thing oh year to date 7 % one year is 15 % what's another one Globin is Globin in there no Gardner do Gardner is Gardner public I don't think Gardner's public but I mean it shows it kind of looks like a stock price here yeah Gardner year to date they're down 48.32 % wow okay try one more one more booze okay but let's look at the revenue Gardner's revenue up June 2025, year over year is 5.73. Yeah. So these are, we're looking at valuations here. I need you to look at revenue.

15:06Yeah. Yeah. And we just want to clarify this because just because the stock goes up or down, it doesn't mean the company's growing as fast. So for example, if I look at Walmart over a year period, their stock is up 26.35%. Okay. 26%. Their revenue is up 4.76 % quarter over quarter. The previous quarter was 2.54%. So they're growing, call it roughly 5 % a year. I'm just giving a higher number. When you look at their annual and look at 2025, it's 5%. But yet the stock is up 23%. So this is interesting. So Reuters was the one that came up with this first. And the quote is, I mean, you hear this quite a bit.

15:51It's a bit exaggerated. Now, AI is killing consulting, right? So for example, if a company performs a project in-house, that costs around$1 million, but consulting firms like Accenture have been offering the same service for$200 ,000. Now with machine learning, companies can do the same job themselves for just$10 ,000. Will consulting become a forgotten profession in the AI era like the coachman in the past? I don't think that's going to be the case. I think they're still going to be consulting. And I think they're still going to be able to charge a premium, but probably less because if you're a CEO, you would be foolish not to say, hey, with AI, we want to get some of those efficiencies.

16:19Maybe they can price pressure them down a little bit, but I think these companies will be okay. I would actually look at it from a different perspective. Accenture, if I look at the one-year graph as of today, is down October 30th, 27.84%. Okay? Accenture is growing in revenue. The real issue is Accenture used to be worth roughly 30 times profit. Is a company like that supposed to be worth 30 times profit? Probably not. If you look at it now, they're worth around 20 times profit. And the reality is, is a lot of these companies were just overvalued. Yep. By the way, do you want to know a sneaky way to decrease your cost per clicks on your Google ads?

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