Yahoo and Twilio lay off thousands of employees due to ongoing tech cutbacks in the Bay Area

Cloud communications software maker Twilio announced on Monday that 17% of its employees, or roughly 1,500 people, will be laid off. The layoffs, along with a 20% job cut, or nearly 1,700 employees, that Yahoo announced over the weekend, was the latest wave of Bay Area tech cuts that began more than four months ago.

Since last October, the Bay Area tech sector has announced massive layoffs, numbering in the tens of thousands. Among others, they include Twitter, Peloton, Facebook’s parent company Meta, Lyft, Opendoor, Chime, Stripe, Intel, Microsoft, and many more. In January, Salesforce cut 10% of its workforce, or about 7,000 jobs, in just the latest round after several other cuts last year. Seattle-based Amazon has cut 18,000 jobs, many of which have moved to Silicon Valley cities like Sunnyvale. Google cut 12,000 employees. And by February, thousands more had lost their jobs due to layoffs at former Silicon Valley stars like PayPal and NetApp.

While the reasons for layoffs varied, they tended to be that the San Francisco Bay Area and Silicon Valley were more expensive with higher employee costs for things like housing; end of COVID-19; technology companies expanded too quickly during the pandemic, when working from home created an increased demand for services; and the rise of AI and automation replacing many technology-based jobs.

However, while some of these reasons were attributed to Yahoo’s layoffs, the biggest reason given in the announcement was that their ad tech team fell short of expectations. The advertising team, which was supposed to compete with those of Google and Meta, was subsequently cut by 50%. It is planned to lay off 1,000 workers this week alone, and the rest within a year.

“These moves are designed to simplify and strengthen the good parts of the business while shutting down the rest,” Yahoo CEO Jim Lanzone said over the weekend. “A lot of resources went into this single stack with no return. This was a longstanding issue with every variation of this company that eventually needed to be addressed. It was too resource intensive to do everything at once.”

The layoffs at Twilio on Monday were more in line with most of the reasons for the job cuts. Twilio has grown too large during the COVID-19 pandemic, especially in communications, and needs to be restructured to focus more on data and business applications, executives say.

“As we have refined our strategy over the past few months, it has become clear that we need significant structural changes to better execute our strategy,” Twilio CEO Jeff Lawson said Monday. “This is because the two parts of our business — communications and software — are at different stages of the life cycle and have different operational needs. In communications, we must become more effective. For Segment, Flex and Engage, we need to accelerate growth.”

“As a result, we are forming two business units: Twilio Data & Applications and Twilio Communications. When we look at these two business units separately, it’s clear that we’ve grown too big, especially in communications. And that is why we are releasing some of our colleagues today.”

Twilio’s layoffs are just the latest for the company, having previously laid off 11% of employees in September 2022 for similar “too much growth” reasons.

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

“The layoffs have demoralized Silicon Valley,” Julie Ochs, a San Jose headhunter and hiring specialist, told the Globe on Monday. “These latest layoffs have shown restructuring following restructuring and tech companies abolishing half of their divisions. They don’t say it, but they panic.”

“I bring some of these workers here and right now they are looking for any job, even if they have to take a pay cut. Five or six years ago, those same workers would come to me with so many offers that they had to negotiate where they would park or if the company could pay for the best chair for their desk. One of my clients made the decision to choose a company not for the best pay or stock options, but for who had the best break room snacks. I’m serious – it’s been that way for most of the last decade.”

“But now they grab what they can get. There are still some of these unusual perks, like game rooms and mid-day yoga, but many of them are fading into the background as workers focus more on keeping their jobs. These layoffs scared them.”

“Politically, yes, it will also affect. Many people running for office here in the next few years will have to answer questions about why they didn’t do more to prevent this. These cities will also have a reduced tax base due to the downsizing or exit of these companies. And I know I keep repeating this, but unfortunately this is not the end. There will be new layoffs or new rounds of layoffs as companies see more of their new financial situations.”

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

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