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What does it mean? Why do we care?
We care because it provides a glimpse into the management decisions of these corporate giants. We, as an industry, can learn from the mistakes and successes of these decisions.
It has come to light that among those affected by Google’s layoff announcement last week was the entire Python Foundations team. (Sources: Reuters, Hacker News, Reddit.)
Employees at Google who have been laid off are openly expressing their feelings on social media, sharing the distressing news. (Source: Social Coop.)
McKinsey’s Rule Book: Layoffs and Buybacks are Gold for the Stock Price
First of all, no one knows what happened exactly. Everyone is speculating.
What we do know is that Sundar Pichai, CEO of Google, has been hiring outside consultants to “shape up” the company’s strategy.
With large outside consulting firms, it’s always about “maximizing shareholder value” - translation: jacking up the stock price.
Here are, for example, three key pieces of advice that McKinsey & Co., the largest consulting firm in the world, has given its clients since the 1950s:
1️⃣ To maximize shareholder value, cut costs, preferably by eliminating the most “inefficient” part of the workforce.
2️⃣ To maximize shareholder value, buy what’s most valuable for your company - company shares - i.e., implement share buybacks.
3️⃣ The more equity-linked compensation you pay to your company executives, the more they’re aligned with its shareholders.
I have to admit - sometimes this advice works, sometimes it doesn’t. It definitely works in the short term - the stock price almost always reacts very positively at the announcement of layoffs or share buybacks.
First, do you really need to pay tens of millions of dollars to someone to give you these kinds of advice? You don’t trust your CFO who graduated from the exact same Wharton School of Business as these consultants?
Second, the prior mistakes and outright criminal advice given by consultancy firms were nicely summarized by John Oliver on “Last Week Tonight”, which aired on October 22, 2023:
🚫 McKinsey claims to create positive and enduring change in the world. However, Oliver exposed how McKinsey has given flawed, obvious, or harmful advice to various clients, such as AT&T, Purdue Pharma, Rikers Island, and the FDA.
🚫 McKinsey has worked for some of the world’s biggest polluters, the tobacco industry, and authoritarian regimes, while cultivating a culture of smugness and secrecy.
🚫 Oliver criticized McKinsey for its high prices and often unremarkable product. He likened the firm to the “Salt Bae of companies”, projecting a huge amount of confidence to sell a frequently unremarkable product at sky-high prices.
🚫 McKinsey’s advice is often associated with mass layoffs, disguised with euphemisms such as “finding efficiencies” or “organizational streamlining”, and with the expansion of executive pay.
🚫 McKinsey also advised New York City, which paid the company $27.5 million to help reduce violence at Rikers Island. The advice provided by the consultants included the expanded use of Tasers, shotguns, and aggressive dogs.
🚫 McKinsey advised Purdue Pharma, the makers of OxyContin, on how to “turbocharge” sales of opioids.
Turns out, the last “advice” was a criminal offense, and McKinsey is now under criminal investigation by the Department of Justice (DOJ). (Sources: Financial Times, The New York Times.)
So, there is a good chance that whoever consulted Google has been looking at some of the numerical “performance metrics” of each team and offered to lay off a particular team, without actually getting into what exactly they do, how the work of other departments depends on that team, and what the team’s role in the long-term growth of the company is.
As one of the just laid off members of the Google Python team shared, the team wasn’t just Python coders, they were much more than that. (Source: Hacker News.)
What is the Future of Python? Will AI Replace Python Coders?
I have a feeling we should read very little into this news. I don’t think that AI is going to replace Python coders anytime soon.
AI has gotten really good at coding. However, human coders usually do more than just write code. They know how to make their code work with other systems, how to compile, implement, and deploy the code, how to work efficiently with teams, and they may understand the inner workings of the company they work for and how to optimize their work to benefit the company.
Let’s say you’re a doctor who has a new AI that helps you access your patients’ data on Epic’s EHR system. If the AI has a bug or needs an upgrade, who are you going to ask for help: Epic’s IT department 😊? Google? Chances are, you need someone who knows Python, Node.js, C++, Java, or machine learning models.
If you’re a skilled coder, you will be in demand for years and decades to come.
What Will Happen to Google’s Python Team?
Mark my words: Google’s Python team will be quickly snatched up by one of their competitors: Meta, Apple, or Microsoft. Thank God, no more noncompetes! 😉
Conclusion
1️⃣ Google’s decision to lay off its talented workers may backfire, as their competitors will be happy to hire them.
2️⃣ Google may have just been “McKinseyed” - that is, handed off the most important decisions about the company’s future to those who may not care at all about the company’s future.
3️⃣ AI will not replace human coders. Not yet.
👉👉👉👉👉 Hi! My name is Sergei Polevikov. In my newsletter ‘AI Health Uncut’, I combine my knowledge of AI models with my unique skills in analyzing the financial health of digital health companies. Why “Uncut”? Because I never sugarcoat or filter the hard truth. I don’t play games, I don’t work for anyone, and therefore, with your support, I produce the most original, the most unbiased, the most unapologetic research in AI, innovation, and healthcare. Thank you for your support of my work. You’re part of a vibrant community of healthcare AI enthusiasts! Your engagement matters. 🙏🙏🙏🙏🙏