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Sunday, January 29, 2023

NFL and Tech Layoffs

The NFL playoffs and tech layoffs have a lot in common. Both rely heavily on data to guide their decisions, yet both are still prone to making mistakes due to psychological biases.

Take the story of Brock Purdy, a quarterback who was drafted by the San Francisco 49ers as the last pick in the NFL draft. Purdy was seen as irrelevant and unlikely to make an impact on the team. However, due to a series of unexpected events, Purdy became the starting quarterback and led the 49ers to an undefeated season.

This story highlights the inefficiency of the talent market, even in professional sports where performance is quantified and analyzed. NFL teams have access to more data than ever before, but they are still prone to cognitive biases that can skew their hiring and firing decisions.

The same goes for tech companies. The recent wave of layoffs in the tech industry can be explained by irrational behavior and a herd mentality. Companies are laying off workers not because of economic concerns, but because other companies are doing it. This type of social contagion is driven by a fear of missing out (FOMO) on the success of other companies.

This herd mentality led to overhiring during the pandemic when money was cheap and remote work created room for growth. But now that interest rates have climbed and stock prices have dropped, tech companies are shedding

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