Massive Layoffs At Microsoft A Test For Seattle Startup Culture

Jul 21, 2014

Last week, Microsoft began the biggest layoffs in the company’s history: 18,000 total expected in the next year. So far, about 1,300 local workers have been affected.

Jon Talton, business reporter for the Seattle Times, told KUOW’s Ross Reynolds on The Record that this event is a test for the local economy. He said the Seattle area is in the midst of an economic boom – driven by Amazon, Boeing’s 777X and 737, increased exports and low unemployment.

“It is a thing to behold, but you just keep asking yourself how real is this? How deep is this? And Microsoft is one of the big engines, so this is the first big test,” Talton said.

The test comes down to one key question: “Will those people be absorbed easily into the ecosystem of our software companies?”

According to Talton, Seattle has a robust startup culture that is minting new companies at levels not seen since the dot-com boom.

Of course, those Microsoft employees could go out and start their own business instead.

“That would be the ideal scenario,” Talton said. “You’ve got a tremendous talent pool over there at Microsoft, so if you had a few of the higher end people who could attract angel capital, startup capital, and get some new things going, so much the better for the broader economy.”

Microsoft shareholders are already receiving a positive return: Stock value perked up after layoffs were announced.

“Well, Wall Street loves it when there’s blood in our streets,” Talton said. “They see this as a sign that Microsoft is serious about getting lean, about cutting out layers of management and about becoming a more nimble player.”

Talton also discussed with Reynolds the city of Tacoma’s economic recovery – not as strong as Seattle’s, but making a definitive comeback.