All right, so

I can't believe it's happened, but

Microsoft is doing more layoffs. I know,

shocking, right? The company that has

not cared about its user in a decade is

having problems actually making money on

the software they've made for consumers.

I know,

>> [laughter]

>> crazy, right? Well, what I'm talking

about today, of course, is the all

employees at Xbox message that Asha,

this new current CEO of Xbox just got

done sending out both on Twitter and

internally. And there's two points

inside of it that I find astronomically

crazy. Like when I look at it, I'm like,

"What am I even looking at?" And I

figured we have to make a video about

this. I have to yap about this because I

can't actually believe what I am looking

at, okay? Because Microsoft has done a

lot of insane things, but I feel like

this right here is the epitome, it's the

epidome of why Microsoft just has to

fail. They're incapable of making a good

decisions. They're incapable of actually

becoming something that makes real

impactful material again. If you look at

the games they've released for Xbox and

everything for the last decade is pretty

much just buying IP, hoping to ride on

the coattails as they take that IP and

mash it into the ground. I.E. Master

Chief. I love you, 117. John, John, I'm

so sorry what they did to you, John.

Okay? I'm just going to pretend that the

last couple Halos don't even exist. All

right, but before we yap about all this

Microsoft stuff and my thoughts, quick

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internet. Hey, welcome back. Hey, so the

first thing we do have to look at is the

actual let go. So, let me just read it

for you. We are beginning the most

significant restructured Xbox history.

After careful consideration, I've made

the difficult decision. By the way,

every CEO always calls it difficult.

They're always firing all these people.

Fire yourself.

HEY, IF YOU have to fire a bunch of

people, you have made some bad

decisions. I'm going to give her a pass

though. She's brand new, making up for a

bunch of mistakes of the previous

generation that was running a running

Xbox. So, maybe just maybe this is just

her being handed a bad plate, okay?

Whatever. Anyways, to reduce our team by

approximately 3,200 throughout the

fiscal year of '27. This will include

approximately 1,600 role eliminations

today and in addition four studios will

leave Xbox to new management. So, I want

to talk about this because this has to

be the most insane way to do layoffs.

Ever. Absolutely undeniably, this is the

worst one I have ever seen in my

lifetime. Because there is like the

classic ones you see, right? Facebook,

8,000. Oracle, 30,000. You know, like

just these layoffs that hit and a bunch

of people get fired on day one. This one

is so much different. This one is firing

half of them and being like, "Hey,

bro, if you look if you look over at

Doom at id Software's Doom. You know,

you heard of Doom. You know how there's

like all those really excellent

engineers? Yeah, we fired half of them.

We're going to fire some more. Maybe

that could be you. I don't know. It's

going to happen over the course of next

the next year and a half." Like to me

that's insane. Saying you're going to

lay off 1,600 more people in the next

approximate year and a half.

>> [laughter]

>> What?

Like everybody working there is knowing

that they are maybe on a time clock.

They know they're going to be let go.

Like how do you produce good work? How

do you become a good teammate when you

think that if you're not somehow the

best of the best maybe that somehow

you're sucking up to management so they

don't fire you. This is going to cause

like a Game of Thrones style culture

where you effectively have to betray

everybody to remain on top like

>> [laughter]

>> oh my gosh. This is it's just the

craziest one to be like hey, I'm going

to fire a lot of people just got done

doing it, but we're going to double that

number in the next 18 months.

JUST LIKE WHY? WHY ARE WE doing this?

But somehow that's not like what I

consider one of the most bizarre points

of this all because that is just kind of

nuts. Next the letter goes through some

basic stuff about like growing pains. I

know this is painful. These changes will

directly affect people who have poured

their creativity into building Xbox.

Many joined us through acquisitions.

Others were recruited here. Our business

today is not healthy. We are operating

at margins that are three to 10x lower

than comparable platform and publishing

businesses i.e. Steam. Gabe just just

being a champion right now. Gabe is just

sitting there just like bro, I nailed

this. I I created the best platform. I

created the best platform ever. In fact,

I even created a bad platform that had

gambling that took advantage of many

young kids and people still love us.

We're the best platform that has ever

existed in humankind. It's hard not to

love Steam. You're like it's good stuff.

They're they're crushing it. We've

entered the Gen 9 with a smaller install

base and a higher cost structure. Thanks

AI. Thanks AI. Also by the way, how did

they get a higher cost structure? I'm

just super curious.

Asha, what were you doing before this?

Oh yeah, you were a VP of core AI,

right? Oh, you were involved in AI.

Yeah, that's why you have high cost

structure is because you've also

devoured THE INTERNET'S HARDWARE AND

SOFTWARE. LIKE

ANYWAYS, BACK TO IT. To grow we bet on

Game Pass a multi-platform and broader

portfolio of content. While those

businesses have created meaningful

value, they did not grow at the pace we

expected. As that happened our core

business weakened and we added more

teams, more investment and more time

hoping for a better outcome. And now the

industry is facing the most severe

hardware crisis in its history. We must

reset Xbox. It goes on and kind of

describes a lot more detail about what's

happening. Of course, this is where the

64 cents lost for every dollar invested

into Xbox. A lot of the stuff across

here. Here's a lot of the troubles and

things that they're having reductions in

including the ZeniMax, which is the

thing that owns id Software, which is

where all the id layoffs happened. In

addition, Mojang, which of course is

Minecraft, their big cash cow, they're

going to be reporting directly to the

CEO. But those are kind of all like the

fuzzy details, right? Where things

really get big is right here though.

This is the other part that I just I I

can't for the life of me imagined how

did this happen? I know this is a lot

like the I don't know what I expected

meme. I'm going to open it up, look

inside, and go, I

I don't know what I was expecting to

find. But this is what Asha has to say

about the state of Xbox and how it's

being ran. We know that great technology

gets better when it gets simpler. Also

true. Very great insight. Not bigger.

Also true. Today, in some parts of the

company, work passes through as many as

14 layers of management. What?

How did this happen? Now I get it. I

don't know a lot about the inner

workings of Microsoft or Xbox or how you

would ever get to there. But in my head,

you'd have something like the C-suite,

right? This is going to be the group of

people that are managing the company.

You probably have large orgs, right? You

have infra. They're running all the Xbox

infrastructure and all that. You

probably have hardware. This is going to

be all the actual hardware operations to

build the Xbox, to produce that, all the

physical world stuff. You probably have

hardware partner {slash} partner

engineering as it's often called, where

you're working with all the established

partners to bring all the stuff together

to empower the hardware right here. You

probably have something that's like a

software org. You have the UI, you have

all that kind of stuff. And then you

probably have some set of sales and

customer-focused stuff, right? So, this

is just me completely riffing, just

completely guessing.

Uh you could imagine that maybe under

software or maybe to the side you also

have some sort of localization language

thing, but my guess is this actually

probably falls under software. And then

somehow, what Microsoft has done in this

crazy little org chart right here, is

that they proceeded to ADD SO A FOUR

LIKE WHAT IS IT? 12 more levels of

software? Like how do you even break

apart a division that much to get 14

levels of management? How is that even

good at all? Like this is what I

constantly talk about. This is what Teeg

has talked about. This is what a lot of

us have talked about on the internet.

Microsoft just doesn't have the will to

get anything done because look at the

size of that. How could you get anything

done with 14 levels of management? What

kind of insane human centipede of

information has been created here? This

can't possibly work. Like this should

have been identified years ago. Like

hey, how did we get to seven managers

between me and a software engineer? Like

how could you even get my message in a

coherent way to that person? This seems

like it's bad. Instead, they go all the

way to 14 in betwixt the CEO and the

average person. Now, I'm sure I'm

missing some organizations up here and

I'm sure it's a little bit more complex

than I made it, but 14? They literally

created a an LLM of managers with

reporting. Like they're actually

simulating how a large language model

works. And this is just like middle

manager hell. Like

they could probably solve some crazy

math problems and undiscovered physics

by just simply passing numbers around in

here. Bro, have you heard about the new

14 T model? Yeah, 14 levels of

management model. It's like this new

model. Like you put something in the top

and what comes out the bottom is 1,000

Google documents explaining how to do

what was put up top. It's a new skill,

you got to check it out. It's actually

native with G brain. She goes on, "Our

platform teams are 40% larger than they

were at the start of this generation

even as our player base and play time

has declined." Meaning they're actually

like going down. Like she's letting it

out. This is actually By the way, I do

like this. I do like that we're having a

bit more candid talk for once as opposed

to just like nonsense. Like as we strive

for a better future. No, it's like, "Yo,

bro." It's like, "Things are going down.

Not as good as they once were. Got to

fix that shit." That complexity has

slowed decisions, blurred

accountability, and made it harder to

deliver for players. As we reset Xbox,

we will simplify. We will reduce

management layers to no more than five

and where possible three. To me, this

makes perfect sense. Like that's a good

goal. I feel somewhat sad for the amount

of middle management that's going to be

absolutely slaughtered. Like they're

people, too. Like hey, middle managers

are people, too. Okay? They also have

homes to go to. Okay? They also have

spreadsheets they like to edit. They

also like to make their own slopware

with cursor. I get it. Like I am not

here judging them, okay? But how do you

get to the point of 14 layers? I just

have to know. Like who was the person?

Who was the VP? Like there's 12 sets of

managers below me to be able to deliver

this feature. This is going to be a very

successful and good endeavor. Like

who thinks that?

The entire organization all the way

down. Like in my head that the why this

happens is that the entire structure

below it is all self-serving. They all

want to keep on living. They all want to

keep on doing land grabs and power

grabs. Therefore, no one's going to

point out the problem. The obvious

problem. Hey, there's way too many of us

because by admitting that problem, you

also admit that maybe you are useless.

And so there's definitely like an entire

preserve preserve preserve Oh my

goodness, what's the word? It preserve I

can't say the word. Oh my goodness, I

CAN'T SAY THE WORD. PERVERSE. PERVERSE.

Got it. There's an entire perverse

incentive problem going on there where

management will buy its own, like,

attempt to grow and survive will grow by

itself. It's like a bacteria, really. We

will deliver success through a flattened

organization that is built around

makers, individual contributors focusing

on building player coaches, leaders who

remain deeply involved in the work while

developing their teams. Is player

coaches, by the way, are those Is that

scrum masters? Is that the new term for

scrum masters that we're hearing here?

Yo, I'm a player, but I'm also a coach.

So, okay. Oh, okay. So, it's just a

manager who slings slop generated from

AI into your code base. Okay, that's

going to be good. Yeah, hey. Bro, that's

Hey, bro, that's super Hey, that's super

cool.

I don't know about that last one. And

directly responsible individuals.

It is funny that they're now How many

years into Xbox at this point? 20-some

years into Xbox going, "You know what?

It's crazy cuz management didn't make

accountability, huh?"

It's almost like how Microsoft runs

things is fundamentally flawed. Crazy.

And we will streamline how we work

across our tools with cleaner code base

and shared services and 50% reduced

vendor spend. I like that last one.

Just, "Hey, we're going to spend less

with vendors." I don't know what that

means, but okay. Also, a cleaner code

base. That's also very interesting. I

think she's saying right now that the

code base totally sucks, but I also

don't know how you're going to get that

with player coaches, right? Cuz I assume

player coaches are, in fact, managers or

their team leads or they're supposed to

be staff engineers that are shepherding

the project, but also expected to

contribute like an IC. Like, very kind

of confusing some of these things. It's

very difficult to get a to a good clean

code base when you're pushed for time to

the point where AI is your only saving

grace. Now, I'm sure there's a lot of

people right now frothing at the mouth.

"DON'T TALK ABOUT FABLE like that." I

hate to tell you this.

Fable's not a girl. She's a model, okay?

I don't know what that phrase means, but

I heard Beeken say it and I think it's

really funny. Anyways, this is just what

I wanted to yap about the management

situation, the firing situation. I know

that Ash is the new CEO, relatively new

in this Xbox thing, and perhaps these

are going to be good changes long-term,

and maybe the Xbox of old, you know, the

bygone days of yore could happen. Maybe

Master Chief

Halo 1 brand new remake cuz we've ran

out of ideas edition is actually going

to be really fantastic. I have no idea.

I can hope for the best,

but it's also Microsoft. It's hard not

to be just just just butt chugging black

pills when it comes to Microsoft. Hey,

the name

is the primogen.