> if Shopify can deliver its software with less people, then with the same number of people they could deliver more

That is assuming everyone contributes in a meaningful way. That might not be the case for various reasons: - Incompetence / lazyness - You feel productive, but you impact is actually really low ("I am preparing an alignment meeting") - You are working on a product / component that generates little to no revenue/interest (Hello "metaverse" team from Facebook) - Your skill are not highly required at the moment and don't seem to be required in a short/mid term; someone else surely needs you more.

Sometimes, doing more is not necessarily the right thing. 37 signals is famously known to have far enough revenues to hire a ton of guys and probably launch many new products. Yet, they choose to remain at a fixed headcount for now and return the profits to their shareholders. They do not hesitate to let people / fire them if they feel the need to despite their profits. Why can't Shopify follow the same strategy; albeit at a different headcount ?

I thought 37signals is privately owned. How do you know how much revenue they have?

I have no idea of their exact numbers. But The CEO publicly said they generate tens of millions of profits every year [1]. This is for a company of around 30 to 40 employees.

https://twitter.com/jasonfried/status/1212837791031279616?la...

You are assuming that there is an infinite number of people that can be added to Shopify’s payroll that will increase the product’s usefulness and increase revenue enough to justify their hiring.

The company leadership doesn’t believe that. There is a line where adding more people will not justify enough revenue increase, and that’s up to the company leaders to decide.

It’s worse for the people laid off, but ultimately wouldn’t they want to do something useful? In a new job they will be wanted. At Shopify they are not wanted.

To put it another way, you believe that a welfare maximizing equilibrium can not only be achieved in principle, but is routinely achieved in practice with minimal friction?

This is difficult to believe. I think everyone sees signs all around them of foolish decisions by firm principals that hamper consumer and worker welfare even in the short term, to say nothing of the effect of various kinds of hysteresis on the long term development path of economies (e.g. detaching people from the labor market in a manner that undermines their health, currency of their skills, etc.)

We're not talking about hiring more people, let alone an infinite number. Simply I am pointing out the downsides of laying off people.

You're not taking into account that "deliver more" isn't an infinite type of thing that can happen. There is a threshold with market/product fit where "more" doesn't mean more revenue and benefit to shareholders.

I think this is something all companies struggle with: at some point you may achieve product/market maturity but the people that could determine this are fundamentally in conflict with ever communicating this because they or their peers would be out of work at that employer. In my opinion, this is when internal politics start to become more prevalent because its human nature to protect your well being/source of money.

Companies aren't limited to one software product. They often are, but they don't have to be.

How many software products has Google released over the years, which they're able to do so because they have a massive number of employees? More employees will allow for more products.

Whether it would be prudent or profitable to tackle more products is another story, but we're already talking about hypotheticals with 'infinite employees' here.

I do think there is room for 20% of its employees to work on other products that could integrate well with their vision and still be within the ecommerce realm. But that doesn't juice up their stock price right away.

> The company leadership doesn’t believe that.

Starting rather recently and suddenly, don’t you think? The company leadership did apparently believe that each and every time they made a hire. And I bet a lot of the people laid off today were hired fairly recently.

the unemployment rate is 3.5%

> then with the same number of people they could deliver more.

this is not true to begin with. classic engineering fallacy

> this is not true to begin with. classic engineering fallacy

Are you assuming they'd be put onto the existing projects (which may slow down delivery, yes) rather than doing new projects in parallel (which will not and will in fact let them deliver more because there are more projects)?

you're simply doubling down on the fallacy. doing more projects does not mean you're delivering more. code is not value. there needs to be clear demand for what is being produced and management needs to have effective leadership to make sure the right people are doing the right things. all of which require effort. in lieu of that, it's better to lay people off from the company's perspective. if and when they understand the scope of the problem and the demand is there they will hire more people. that's more or less how to economy works.

The fallacy is that organizations as a whole can only do so many different things efficiently. Capital allocation becomes less efficient if a single hierarchically structured entity has to decide on how and where to invest its capital, compared to the alternative of free market competition for capital (as usual ceteris paribus).