Read Zuckerberg’s letter announcing the layoffs


Meta CEO Mark Zuckerberg said in a letter to employees on Wednesday that he is laying off 13% of his workforce, or more than 11,000 employees.

“Today I’m sharing some of the most challenging changes we’ve made in Meta’s history,” Zuckerberg said in the letter. “I have decided to reduce the size of our team by approximately 13% and let go of more than 11,000 talented employees. We are also taking a number of additional steps to reduce discretionary spending and become a more efficient company. We will have a hiring freeze during Q1.”

Meta shares rose 4% in premarket trading.

The layoffs come at a difficult time for Facebook parent Meta, which in late October gave tepid guidance for its upcoming fourth-quarter earnings, spooking investors and sending its shares down nearly 20%.

Investors are concerned about Meta’s rising costs and expenses, which rose 19% year-over-year to $22.1 billion in the third quarter. The company’s total sales fell 4% to $27.71 billion in the quarter, while operating income was down 46% to $5.66 billion from a year earlier.

“I want to take responsibility for these decisions and how we got here. I know it’s difficult for everyone and I’m especially sorry for those affected.” Zuckerberg said.

He said Meta is making layoffs across every organization, but hiring will be disproportionately affected because the company plans to hire fewer people in 2023. The company extended the hiring freeze through the first quarter, with a few exceptions, Zuckerberg said.

“It’s a sad moment and there’s no escaping it. To those who left, I want to thank you again for everything you put into this place,” he said.

Affected employees will receive 16 weeks of pay and two additional weeks for each year of service, Zuckerberg said. Meta will cover health insurance for six months.

Meta is heavily invested in the metaverse, which refers to the yet-to-be-developed digital world accessible through virtual reality and augmented reality headsets. That big bet has cost Meta $9.4 billion by 2022, and the company expects losses to “increase significantly year over year.”

Meta plans to “focus our investments on a small number of high-priority growth areas” over the next year, Zuckerberg said during a call with analysts as part of its third-quarter earnings call.

“This means that some teams will grow meaningfully, but most other teams will remain flat or shrink over the next year,” Zuckerberg said. “Overall, we expect to end 2023 as either about the same size or a slightly smaller organization than we are today.”

As of the end of September, Meta has more than 87,000 employees.

Here is Mark Zuckerberg’s letter to employees:

“Today I’m sharing some of the most challenging changes we’ve made in Meta history. I’ve decided to reduce our team size by approximately 13% and let go of more than 11,000 talented employees. We’re also adopting a leaner and more a series of additional steps to become an efficient company.

I want to take responsibility for these decisions and how we got here. I know this is difficult for everyone and I am especially sorry to those affected.

How did we get here?

At the onset of Covid, the world quickly went online and the growth of e-commerce led to huge revenue growth. Many predicted that this would be a permanent acceleration that would continue even after the pandemic was over. So I did, so I decided to significantly increase our investments. Unfortunately, it didn’t turn out the way I had hoped. Not only has online trading returned to its previous trends, but the macroeconomic downturn, increased competition and the loss of advertising signals have caused our revenue to be much lower than I expected. I did it wrong and I take responsibility for it.

In this new environment, we need to be more efficient than capital. We’ve shifted more of our resources to a smaller number of high-priority development areas – like our AI discovery engine, our advertising and business platforms, and our long-term vision for the metaverse. We have cut costs across our business, including reducing budgets, reducing concessions and reducing real estate footprint. We are restructuring teams to improve our efficiency. But these measures will not only keep our costs in line with our revenue growth, so I have made the difficult decision to let people go.

How will this work?

There is no good way to get fired, but we hope to get all the relevant information to you as soon as possible and do our best to support you thereafter.

Everyone will soon receive an email telling them what this layoff means for you. Each affected employee will then have an opportunity to speak with someone to get their questions answered and join information sessions.

Some details in the US include:

  • Get fired. We will pay 16 weeks of base pay plus an additional two weeks of service each year.
  • PTO. We will pay for all remaining PTO time.
  • RSU entitlement. Everyone affected will receive their rights on November 15, 2022.
  • Health insurance. We will cover health care costs for people and their families for six months.
  • Career services. We will provide three months of career support with an external vendor, including early access to unpublished job offers.
  • Immigration support. I know it’s especially difficult if you’re here on a visa. There is a notice period before termination and some visa grace periods, which means everyone will have time to make plans and work through their immigration status. We have dedicated immigration experts to guide you based on the needs of you and your family.

Support outside of the US will be similar and we will soon follow separate processes that take local employment laws into account.

Given the amount of access to sensitive data, we have decided to revoke access to most Meta systems for people leaving today. But we keep the email addresses active throughout the day so everyone can say goodbye.

While we are making cuts across each organization across both the Application Family and Reality Labs, some teams will be more impacted than others. Hiring will be disproportionately affected as we plan to hire fewer people next year. We are also restructuring our business teams more fundamentally. This is not a reflection of the great work these groups are doing, but what we need going forward. The leaders of each group will set up a time over the next few days to discuss what this means for your team.

The teammates who will be leaving us are talented and passionate and have made a significant impact on our company and our community. Each and every one of you has helped make Meta a success and for that I am grateful. I am sure you will continue to do great things elsewhere.

What other changes are we making?

I view layoffs as a last resort, so we decided to curb other sources of expense before letting teammates go. Overall, this will lead to a meaningful cultural shift in how we operate. For example, as we reduce our real estate footprint, we’re moving to desk sharing for people who already spend most of their time outside the office. We’ll be rolling out more cost-cutting changes like this in the coming months.

We are also extending the hiring freeze through Q1, with a few exceptions. I will monitor our business performance, operating efficiency and other macroeconomic factors to determine whether and for how long we should continue to hire at that time. This will allow us to control our cost structure during a sustained economic downturn. It will also put us on track to achieve a more efficient cost structure than what we have recently demonstrated to investors.

I am currently in the middle of a comprehensive review of our infrastructure spending. As we build our AI infrastructure, we focus on becoming more efficient with our capabilities. Our infrastructure will continue to be a significant advantage for Meta, and I believe we can achieve this while spending less.

Basically, we’re making all these changes for two reasons: our revenue forecast is lower than we expected earlier this year, and we want to make sure we’re operating efficiently in both the App Family and Reality Labs.

How do we move forward?

This is a sad situation and there is no way out. To those who left, I want to thank you again for everything you put into this place. Without your hard work, we would not be where we are today, and I am grateful for your contributions.

To the rest of you, I know it’s a tough time for you too. Not only are we saying goodbye to people we worked closely with, but many of you feel uncertain about the future. I want you to know that we are making these decisions to make sure our future is strong.

I believe we are very underrated as a company today. Billions of people use our services to connect and our communities continue to grow. Our core business is one of the most profitable ever built and has great potential ahead. We are leading the way in developing technology to define the future of social engagement and the next computing platform. We are doing historically important things. I am confident that if we work effectively, we will come out of this recession stronger and stronger than ever.

In the coming weeks, we will share more about how we will operate as a streamlined organization to achieve our priorities. For now, I will say again how grateful I am to those who have gone for all that you have done to advance our mission.

mark”

Look: Meta should go back to its core advertising business and double down.



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