Silicon Valley is immersed in a profound transformation in which it has happened to have offices full of slidesarcade machines and free food at all hours, to force their engineers to work 92 hour work week and fire them when the financial results are not what investors expected.
In this transformation, an executive has emerged as an example of efficiency for the elite of Silicon Valley startup founders and CEOs: Hock Tan, CEO of Broadcom.
Hock Tan and efficiency capitalism. As and how did he count The InformationBroadcom has radically changed its strategy under Hock Tan. According to Kenneth Hao, Silver Lake CEO and director of Broadcom, Tan’s management success comes from his “focus on basic principles that do not come from conventional wisdom. Not copying others.”
His management has become synonymous with extreme efficiency and obsession with profitabilityto the point of eliminating any company welfare policy if it does not provide financial value to the company. The most notable example is what happened after the acquisition of VMware in late 2023.
The first meeting already set the tone. Just as I collected The Information in his article, shortly after close the purchase of VMware for about $69 billion in December 2023, Tan organized a meeting with his new employees to explain his plans.
When asked if they would maintain staff benefits offered by VMWare, such as daycare, couples therapy services, wellness bonuses of up to $1,000, or all-day coffee and meal service, Tan responded bluntly: “Why would I do something like that? I’m not your dad.” That response was not a simple comment, it was the first warning that the management philosophy was going to completely change under Broadcom.
Layoffs and downsizing. Just like collected Business Insiderthe cuts began almost immediately. In the first days after the acquisition, about 1,300 workers were laid off in California alone, and over time VMware’s workforce went from about 38,000 initial people to about 16,000 employees.
Broadcom has defined these layoffs as part of its strategy to eliminate duplication, reduce intermediate layers and focus on the areas of greatest financial impact. Furthermore, among their demands was also that of return to the offices.
Only the turtles were saved from the campus. A similar fate befell the VMware campus in Palo Alto, a space famous for its gardens, open areas, ponds with turtles, outdoor amphitheaters and services designed for the daily well-being of employees.
After the arrival of Broadcom, most of those spaces disappeared. Of the 18 buildings that made up it, all but five were sold, all garden surfaces, all additional services and even cafeterias were eliminated.
Tan has skyrocketed profitability…and his bonus. After the purchase of VMWare, Broadcom’s revenues skyrocketed because the reorganization was not limited to personnel. Broadcom too modified the product catalog and VMware prices, which is reflected in an increase in 20% on company income. Since 2018, Broadcom’s share price has increased by 1,800%.
This commitment to efficiency in its annual turnover has a very well-defined reason for Tan. Its good financial results have led it to achieve some of the biggest bonuses that have been paid to a CEO, receiving 161.74 million dollars in 2023. In September, the board of directors
In addition, part of Tan’s salary is given in the form of shareswith which the manager already accumulates more than 1.2 million shares of Broadcom with a value of approximately 492 million dollars.
Image | VMware, Wikimedia Commons (Greg Bezat)
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