🤥 Big Tech Is Making It Easy for Startups To Crush Them

Welcome to The Level Ups. Modern business news for the future business leader (in plain-Jane English).

Today:

• Quiet quitting and hiring freezes - big tech is in trouble.

• JPMorgan dumps Kanye West’s Yeezy business.

• Shein badly exploits workers (it’s nuts).

• Spotify adds 300k audio books. Wonder why they waited so long.

Let’s get into it.

Estimated reading time: 4 minutes & 37 seconds.

Big Tech Is In For A Rough Ride:

It sounds like clickbait, but hear me out.

Two key factors:

• HR - layoffs, hiring freezes, suspect return-to-work policies.

• Drops in productivity with “quiet quitting” and another study from the UK.

Here's the breakdown.

Layoffs & Hiring Freezes

You’ve heard of this before. The market is tanking and big tech is struggling.

• Meta - recently announced.

• Google - the article covering their announcement writes “blood in the streets” in the headline. Yikes.

• Twilio - check it out.

That’s just a few. Crunchbase has a big list with many more.

Remember: people build companies, and the right team makes all the difference.

While employees are taking a big hit, it’s not necessarily their fault. More on this later.

Drops In Productivity & “Quiet Quitting”

Studies have verified that U.S productivity is down. The workforce is disengaged or not as engaged as it used to be.

This actually pre-dates remote work. A U.K study confirmed that employees are only productive for 2 hours & 53 minutes (8-hour workday).

Pretty sad.

It goes on. Here’s a snippet from a previous post on quiet quitting. It’s subscriber-only, so here’s the important part in case you're not on the list (which you really should be):

Details here. 

The Repercussions:

Who's fault is it that these companies are so inefficient? The leaders. It's their fault.

They're the ones who let it get so bad.

Sure, some CEOs are leaving their posts and "sharing the pain." Yahoo Finance posted a Youtube video on 668 executives who did this. But it doesn't mean as much.

Some of these CEOs make 1000x the average salary (in the same company). Really sharing the pain here.

It’s actually a pattern now.

Leadership makes big mistakes (overhiring in this case). When things start going wrong, they take it out on employees. It sounds too simple to be accurate, but it is.

You might wonder why we only see it now if it's such a bad practice.

The market used to be so good that it covered their mistakes. Growth has that effect on companies (until it slows down as it has now).

I know what you're thinking.

Big tech will never run out of candidates because they pay so well. But trust is easy to lose.

They won't run out of talent, but they'll pay more to make up for the loss of job security. It’s a salary spiral. Here's how it works (it gets ugly eventually).

• Pay keeps going up,

• Efficiency keeps going down,

• Job security is less,

• Raise the pay again to make up for it and repeat.

Plus, inflation and the market are still crushing big tech (and everyone else).

I’m pretty confident a nose-dive is coming. Just look at the trajectory.

The only way out of a salary spiral is a reset. It's straightforward but tough. Requires mass layoffs and new positions at lower salaries. Boom, reset.

Compare all this to a small team of 6 or 7 people at a startup just crushing it right now.

That's the other thing.

This Startup Is Buzzing

Beehiiv is the platform I use to build The Level Ups. Sorry for the cheesy headline (just had to).

It's one of many startups that works faster and does a better job than "big tech." Yes, I'm biased, but their rapid growth tells the story. They're on a winning trajectory for a reason.

You probably know this, but I’m not the first person to make a business out of a newsletter.

Morning Brew is goals (one of many examples) They're past 4 million subscribers and did over $50M in revenue in 2021.

The team at Beehiiv is the same group that built Morning Brew, and they have the best email platform. I know because I’ve used over a dozen others (Mailchimp, Hubspot, etc).

While Intuit (who bought Mailchimp) is laying off hundreds and hundreds of employees, Beehiiv is shipping new features weekly.

They’re growing fast and should make Intuit very nervous. They're not the only ones. Why else would Adobe buy Figma for $20B? 

If you’re interested in starting a newsletter, check out Beehiiv.

JP Morgan Cuts Ties With Kanye West

They told Kanye to move Yeezy to another bank by November 21st.

They say this decision was made before controversies like wearing the “white lives matter” t-shirt (at Paris fashion week) and anti-Semitic comments on social (got locked out of his accounts).

They say it’s before the controversy, but I’m not convinced.

It’s been a rough run for Kanye, regardless.

Celebrities are often controversial on purpose so they can make headlines. It’s free publicity, so they do semi-outrageous things for attention.

But Kanye is going too far. Will his fame carry him through it? Time will tell.

Shein Exploits Workers (It’s Bad)

Shein is the biggest “fast-fashion” brand in the world. Their designs look good on the website, but the prices are the best part. Shein is cheap ("fast-fashion").

Looks like the great prices are because they abuse their employees so badly.

Their Chinese factory workers are on 18hr shifts and make pennies for each completed garment.

It gets worse. Undercover filming got all the details.

The footage will be shown in "Untold: Inside the Shein Machine," which will be available to stream on Channel 4's on-demand channel, All4, starting today.

Their problem now is that people who buy Shein products imply they’re okay with exploiting workers, right? It's probably going to hurt sales.

Not necessarily. The controversial documentary on Foxconn (Apple’s factory) came out, but Apple’s still one of the biggest companies in the world.

Curious to see where this goes.

Spotify Adds 300k Audio Books

Spotify’s one of the biggest platforms for music and podcasts. I wondered why they didn’t add audiobooks sooner. It makes so much sense. They’re starting with 300k titles (for U.S users).

This creates exposure for authors to a new audience. Parents can be happy that Spotify might push something other than Drake’s new album on their kids. It's a win-win.

But, what makes it better than audible?

• A smoother buying experience. You can buy straight on Spotify instead of purchasing credits like Audible.

• Flexible pricing.

• Recommending audiobooks during podcasts (mixing mediums) for better discoverability.

More details here.

Amazon never had much competition for the audiobook space until now, for good reason.

While audiobooks are a $3.3B industry today, it's estimated to hit $15B by 2027. Great time to get in the game (even if I think they could have done it sooner).

How are they making this move? They bought Findaway (great name).

I love books (audiobooks count) and am excited to see how this plays out.

Thanks for reading and happy Monday!

See you tomorrow,

Darwin