What do you think about bloat at big tech and software?
The main points? They think Alphabet has hired too quickly, overpays employees vs. peers, and is spending too much money at Other Bets. The data presented in the short letter is pretty convincing, I’d give it a read if you’re more interested in this topic.
Now, a lot of people think it is disingenuous for an outside investor to believe they know better than the people actually running a business. But sometimes, an outside perspective and a fresh set of eyes can be extremely helpful, and I think this is one of those situations.
Some big tech companies (Alphabet, Meta, Amazon) got caught up in the e-commerce/digital advertising bullwhip in 2021 and hired too many people. Now, in 2022, minority investors are helping them realize these mistakes. This should be a symbiotic relationship, not a combative one.
Unless the global economy goes through a major downturn, there’s no reason that Google Services (a monopoly on digital advertising) should not see increasing operating leverage over multi-year periods.
They don’t need to pull an Elon Musk and fire half the team (that would be idiotic), but slowing hiring and paying a bit less will make everyone — including employees who get paid lots of stock comp — happier in the long run."