When I think of what happened in tech as we went from ZIRP [1] to post-ZIRP, I often think of the kids' game of musical chairs. Everyone walks around a set of chairs while the music plays—and when it stops, you scramble to grab one. If you fail, you’re out of the game. In early 2022, the music stopped abruptly for the tech industry with the end of ZIRP. Funding, hiring, and, by extension, career trajectories all took a hit. Although the rise of AI (most notably marked by ChatGPT’s launch in late 2022) has kept one part of the ecosystem humming, the rest of tech now faces a very different reality.
During ZIRP, hiring was frenetic, but the shift to post-ZIRP triggered a rapid slowdown, visible even before public layoffs began. There have now been multiple years of layoffs, but the number of open jobs has only slightly increased, as seen in this graph [2], leading to a large pool of available candidates relative to jobs. A larger pool of candidates means more conservative hiring behaviors. Hiring managers can wait to hire someone who has already done exactly what they need vs. taking a bet on someone who has the potential. This puts pressure on the flow of people through the system.
The tech job slowdown disproportionately impacts two groups: early-career professionals struggling to enter the market and seasoned leaders finding it difficult to re-enter at a comparable level in case of a layoff or a break. Lateral career shifts are more complex than before. If you take this further, it naturally follows that moving up career ladders is slower since fewer roles are being created at every level. Instead, team sizes shrink, leading to scope and opportunities shrinking. ZIRP was the grease that kept this system flowing freely; its sudden demise has left us with a creaky, jammed-up system that lacks lubrication.
So, what does this all mean for people inside the tech ecosystem?
Good leadership stands out.
In hypergrowth times, it was easy to be a good leader but equally easy to be a bad one. Shreyas has an excellent series of tweets describing an “Incompetent Leader.” There are multiple people I can think of that easily fit the description, and it went viral for a reason. The tweet thread doesn’t mention ZIRP, but it was an essential ingredient in that scenario. Now that we are post-ZIRP, I believe it will be harder for incompetent leaders to follow that particular playbook. When everything slows down, accountability is emphasized at all levels. It is much harder to hide behind constant change, reorgs, growth, and a challenging hiring market. Leadership now demands deeper involvement in daily operations, with greater accountability for tangible results rather than perceived effort. Understanding all parts, i.e., teams, businesses, and technology, is essential. Overall, I see this as a positive for organizations and the people in them.
It's less shiny and fun.
The work of leadership was always more glamorous on the outside than in reality, but now the role is even more demanding and less rewarding. Far less time is spent on hiring, promoting, and nurturing careers and more time is dedicated to managing layoffs, handling performance issues, and making tough decisions. Company strategy shifts, projects being canceled, bad earnings reports, and bad fundraising outcomes – every week brings another difficult decision to make or communicate. Being a leader in this era requires the willingness and ability to take on the messy parts of leadership while facing the reality that you are yourself no longer on an escalator on the career ladder. Leaders must now work harder to maintain team morale with fewer tools and less personal satisfaction.
So why do it at all?
Many people are examining the environment and making the rational decision to return to being an individual contributor or choose an entirely different role. Companies explicitly incentivize this. For those who choose to stay in leadership, this era presents a unique opportunity to refine critical skills. It is a time to go deep and learn hard skills.
Learn critical skills.
No one wants to learn the hard skills of laying off a team, much less repeatedly. But in the previous decade, it was common for very senior leaders to have never had to execute one. Doing hard things with empathy and compassion without losing one's humanity is a skill worth learning. Similarly, making extremely difficult strategic decisions, pivoting, and leading and motivating a team through challenging times are core leadership skills.
Learn the entire business.
In the current market, all leaders must learn how the entire business operates rather than stay in their individual lanes. In the high-growth era, engineering was typically focused primarily on shipping and hiring. Engineering leaders must pay attention to how margins work, understand vendor contracts, and learn about the Cost of Goods sold.
Be in the details - but also have breadth.
In hypergrowth times, hiring managers commonly spent more than 50% of their time hiring. You’ll spend less time hiring, but it will be easier and more rewarding [3]. As time spent hiring is regained, engineering leaders will manage more scope outside of hiring in their role; this will either mean larger teams or more areas covered, or sometimes both. For example, the work traditionally done by program and product managers will be absorbed by engineering managers and tech leads when possible. Smaller, more stable teams reduce the time spent on forming and norming team phases in the Tuckman model and allow for more time spent performing with sustained, steady output. Constraints breed creativity, and budget constraints force focus. There will be faster iteration and quicker learning cycles. Less time shipping projects that aren’t tied to key business outcomes. More time is spent on measurable impact [4].
ZIRP was a decade in the making, so I don’t see things shifting overnight. There are also many compounding factors, such as AI and the geopolitical climate. We live in the best of times and the worst of times. But I think there is a lot to be learned, even in the hard times, for those of us who choose and have the opportunity to stick it out.
[1] https://www.readmargins.com/p/zirp-explains-the-world If multiple of my recent posts have been ZIRP-focused, it's because this post had a major impact on my worldview
[2] https://trueup.io/job-trend
[3] I sometimes learn of people struggling to hire in this market, and I think it’s a very strong negative signal of either their ability or the mission of the company
[4] Another positive upside is less time spent doing work, which had a questionable impact that leaders often had to take up in the service of recruiting brand or morale.