Thread regarding SAS Institute layoffs

"OK, so mistakes were made. That was recognized at the highest level."

Did the OP ever follow up on this site? If not, then add that to the list of "mistakes were made".

Those posts reads like these posts. More trauma bonding!

From: https://news.ycombinator.com/item?id=38381573

But once you achieve market dominance, your priorities have to shift. It's no longer "why wouldn't you try this" or "let's do the right thing." It's "why would you rock the boat and risk the nice thing we have?" It's not just about profit. Careers and incomes are at stake. People will get hurt.
Risk tolerance aside, your organizational structure ossifies too. When you have people who have been running processes or departments in a particular way for fifteen or twenty years, they have little desire to start over from scratch. And that's not necessarily a bad thing, because what's the alternative? A cutthroat corporate environment where you're never sure about the future of your job?

"Therefore , if you are within one to three years of retirement and you have skills that SAS still needs then you’re probably OK.

If you’re young, well educated In advanced STEM and possess a hard-core work ethic, and you will probably survive in whatever remains of SAS, the question is do you want to?

Current employees between 35 and 60 who are not on the leading edge of ML/AI, cloud operational infrastructure, advanced systems programming, etc. may want to rethink your probability of a long-term career at SAS or whatever comes after the sale, IPO, etc."

This actually pretty well sums up the whole thread and about 75% of what gets posted on this site. Time to to lock the thread and move on.

Therefore , if you are within one to three years of retirement and you have skills that SAS still needs then you’re probably OK.

If you’re young, well educated In advanced STEM and possess a hard-core work ethic, and you will probably survive in whatever remains of SAS, the question is do you want to?

Current employees between 35 and 60 who are not on the leading edge of ML/AI, cloud operational infrastructure, advanced systems programming, etc. may want to rethink your probability of a long-term career at SAS or whatever comes after the sale, IPO, etc.

"Point being....different paths leading to the same outcome. Am I thinking through this clearly?"

You're not wrong. It's fun to come on here and speculate about future outcomes, but when it comes to the workforce at the 5 - 10 year time horizon, it's all the same.

1. Goodnight & Sall sell to another company. Maybe there's a gentlemen's agreement in the sale to not doing any mass layoffs. But those agreements only ever last a few years at most. Expect mass layoffs at the 3 - 5 year mark.

2. Goodnight & Sall sell to private equity. Expect mass layoffs immediately as the new owners try to turn make SAS more profitably as quickly as possible, either for onward sale to another PE firm or to take it IPO for real.

3. Goodnight & Sall actually manage to take the company IPO. If the founders maintain a voting majority after the IPO expect slow to medium rate of layoffs until either the founders pass or the stock sinks because profits are lagging behind inflation and then mass layoffs under new management.

4. Goodnight passes away before sale or IPO. His heirs control a majority share of the company. As far as I know, none of them have any real interest in the company, so they probably force a fire sale as quickly as possible to cash out. New owners conduct mass layoffs to turn a profit on their investment.

5. It's always possible that a new CEO after Goodnight is able to reinvent the company and get back to meaningful growth and start hiring again. But that will only come after he/she conducts mass layoffs in the near-term to restructure the company.

Different paths, but all roads tend to lead to the same place eventually.

"I guess nothing will change until a sale or IPO, and we’ll all watch this drama for several more years."

Let's assume there is no sale or IPO before the founders pass away. If so, is it safe to assume that whoever is named in the respective found's will become the next owner? Someone having WAY more estate knowledge than I might be better at speculating an answer to that question.

If that happens, one has to assume the majority of SAS gets left to the children of the founders. Children who seem to have no interest in the company. Which means they would get rid of it VERY expeditiously and SAS becomes something entirely different than what it is presently. SAS becoming something entirely different than what it is now, likely happens even if their is a sale or IPO.

Point being....different paths leading to the same outcome. Am I thinking through this clearly?

The suggested valuations are reasonable, but it’s not “delusional” to ask twice what a company is worth. The Majority Owner is an experienced businessman. He knows that asking a high price does no harm — and sometimes it works. Elon paid twice what Twitter is worth (https://www.theverge.com/2023/10/30/23938969/x-twitter-valuation-19-billion-employee-shares).

Also, if private offers are in a low price range, preparing for an IPO is a logical move. Becoming IPO-ready gives you more options, so it might bring a higher price.

Several of us are mystified as to why less-profitable products aren’t canceled to raise cash. I was mystified by that when I worked at SAS, so it seems to me that nothing has changed. That’s fortunate for our friends who need only a few more years until retirement.

We seem to have some consensus that a) the way forward requires new and profitable revenue streams; b) their development could be funded by a mass layoff to raise cash; but c) a mass layoff won’t happen under current ownership.

I guess nothing will change until a sale or IPO, and we’ll all watch this drama for several more years.

"But what about the children!!?!?" (Legitimate and otherwise)

"This includes pretty much completely completely revamping their current management hierarchy."

This is a problem. They won't do it. They should do it but they won't do it.

... and if an investor is willing to place somewhere $5B and $8B into various government, healthcare, and enterprise, etc. related new AI and "leapfrog/next gen" technologies, what kind of future valued is that going to generate?

That's from where I sit the best play SAS has is to not sell, possibly IPO, but to do what the previous paragraph suggests themselves.

That is the way forward WRT value. The problem is in any scenario SAS is looking at a headcount reduction of several thousand current employees and the hiring of a few hundred world-class ones. This includes pretty much completely completely revamping their current management hierarchy.

It's hard to guess what SAS is worth without full financial disclosure, but it could be a nice little earner for a few more years.

Consider this...

Revenue of $3.2B in 2022 with around 12,000 employees (source: Forbes).
Let's assume SAS is more or less breaking even (so around $3.2B in expenses), and average loaded cost of each employee is $180,000 (SAS is known to not pay that well). That's $2.16B in salaries which is about 67% of total expenses which would be not unusual for a software company.

Question is, how much could a buyer reduce that headcount by, without materially impacting the revenues? If SAS were stripped back to it's bare bones to simply support existing customers and keep the legacy revenue flowing, I'd guess they could cut headcount by at least two thirds...so down to 4,000. That'll save $1.44B per year.

Assuming they are currently around break even, that'll suddenly put them into turning a $1.44B profit per year. Let's now assume that the revenue will decline over the next 10 years to the point where those profits are eroded away to nothing - beyond that is anyone's guess. So it could be reasonable to assume an average of half the annual $1.44B in profit per year over that 10 year timeframe, so $720m per year....that's $7.2B in profit over 10 years.

The question is, if you're a buyer, how much are you prepared to pay now for $7.2B in profits over 10 years and a company worth considerable less at the end of that period..and with a lot of ifs and buts and maybes? $5B perhaps? Tweak the numbers however you like, perhaps assume headcount goes to just 1000...maybe the picture will look a bit brighter, but it would have to be a very optimistic scenario for SAS to be worth much more than that, I would have thought.

@5waq+1pAuPTtd

As the author of the post you reference, as well as the author of @3scb+1pAuPTtd, I fully agree with your assessment!

@5wcf+1pAuPTtd

Delusion, denial, and a lack of awareness are real psychological phenomena. Acknowledging and accepting these phenomena will help you understand why someone would believe that their object or enterprise is worth more than it truly is.

This is how you reconcile the requested sales prices with the market realities.

At this current juncture in time, I still cannot get my head around anyone paying more than $8B for the company SAS alone (remember the real estate a separate). Just don’t see the buyer gets sufficient ROI, when paying more than $8B when the they are well aware the primary source of revenue as in decline. Even at that lowball number they’re going to have to lay off 60% of the employees and move what remains to significantly less luxurious digs to make it work.

Unless, of course, there is a buyer out there who can do magic and integrate existing SAS technology into their own in order to make it even more profitable long-term. Cheaper and easier alternatives to do this have been discussed ad nauseam on other threads.

If anyone other than JG is in charge, a massive headcount reduction of current SAS employees will occur. He may be willing to tolerate a near zero or even slight negative bottom line for a few years. No one else well.

"Is SAS still an S Corp?

The SEC-compliant software was being installed in 2002, so why the delays in getting the books in order?

Who is on the board of directors?

Who is the underwriter?"

SAS is still and S Corp.

Looks like they abandoned the effort to get the financials SEC compliant when they decided not to go public earlier. SEC regs have changed over the past 20 years, so even if they were close in 2002, they can't just pick up where they left off.

No Board. A year or so ago they seemed to imply we'd have a Board and a stock option plan before going public. Doesn't seem likely.

SAS has no underwriter. Last I heard they've had banks come through who've provided some advice but none formally engaged.

A lot of people will say that JG is spending a lot of money if he's only going through the motions and not really intending to IPO. I think that's half right. He knows that he needs to eventually IPO or else sell the company as a matter of estate planning. But he has to have known this 20 years ago as well and did nothing. He could have remained on the track to be IPO ready back then and just waited to pull the trigger until after the stock market slump was over, but didn't.

In the end, JG just can't give up control even if he knows that's what's best for the company. He just can't. Also, SAS just isn't worth as much as he thinks it is. (Especially not now after 9 years of flat revenue.). He wanted $15-$20B from Broadcom. It's worth maybe $10B with the current leadership team. Maybe if an investor took a majority stake and could replace the C-suite and directors, it would be worth $12, but that, again, would require JG giving up control.

JG knows that he needs an IPO (or sale), but he also knows that would lead to his life work getting valued at half of what he thinks it's worth and losing control. So what to do? Go through the motions and kick the can down the road.

SAS has said it will invest $1B in AI-powered industry solutions in the next three years.
How realistic is this? Is SAS even capable of doing this? Can SAS even compete in the AI space with other big players (Microsoft, Google, Apple, Amazon, Meta, IBM, OpenAI, Nvidia, Salesforce, etc...) and many other smaller players out there already doing it. What do you think?

@5ghh+1pAuPTtd

"The SEC-compliant software was being installed in 2002, so why the delays in getting the books in order?"

Hey, I asked that exact question earlier in this thread, here:
@3qmi+1pAuPTtd

What is taking so long?

"SAS destroyed its reputation over time by taking its customers for granted. Once a customer makes the effort to leave, they aren't coming back. There's no recovering SAS, the damage is done."

That is true...as a customer facing employee of SAS for many years, I can speak from experience here. SAS is widely considered by even it's most loyal customers, to be very expensive and inferior to many alternatives. They resent the fact that it's so hard to migrate off SAS, and know that SAS has commercially exploited that for many years.

However, there comes a point where the cost to migrate is less than the cost to remain on SAS indefinitely, and many customers have passed that threshold and are executing on a SAS decommissioning strategy. From what I hear, this pattern of behaviour is becoming more widespread and is accelerating.

From the Andre B. article (February 22, 2002) in regard to going public:

"SAS is still an S Corp. (a type of incorporation status). You can’t take that public. They still have to install SEC compliant software accounting, although they have started that. They need a board of directors. Shouldn’t you have an underwriter? There is no official underwriter."

Is SAS still an S Corp?

The SEC-compliant software was being installed in 2002, so why the delays in getting the books in order?

Who is on the board of directors?

Who is the underwriter?

SAS destroyed its reputation over time by taking its customers for granted. Once a customer makes the effort to leave, they aren't coming back. There's no recovering SAS, the damage is done.

"How well does open-source scale to solve the hardest problems in business and industry?"
Very well actually. There is a lot of spin from SAS about how Viya is so fast, etc, as if this is a major competitive differentiator. It's not. There are multiple open source options that scale just as well and are proven in the world's largest data driven companies.....Spark, Cassandra, SAMOA, Pandata, etc.

"Do you not think it's possible for SAS to build new enterprise products (with risk/fraud as successful models for doing so) that are heavily based in analytics, some open source and some proprietary?"
It's possible, and probably the last hope that SAS has of having something sustainable that can compete, but they haven't produced anything new of significance for years and there is plenty more competition now that there was a few years ago.

Are the risk and fraud product suites analytics pure plays? Aren't they really enterprise software base heavily in analytics capabilities?

How well does open-source scale to solve the hardest problems in business and industry?

I will admit that leading edge Analytics is not my strong suit. Do you not think it's possible for SAS to build new enterprise products (with risk/fraud as successful models for doing so) that are heavily based in analytics, some open source and some proprietary? Especially when you consider that with CAS, SAS already has a scalable distributed systems framework for building much of this -- albeit a framework that needs tighter integration with cloud services, etc.

"What they can do is figure out how to build better enterprise software that deploys and optimally runs in modern (mostly Cloud) environments."

With all due respect, I think you're dreaming. SAS only knows traditional analytics and nobody is going to commercialise traditional analytics anymore, even if it is cloud and modern and easy to deploy, given the open-source landscape is already doing that.

If it's not traditional analytics....it's not SAS....you'd launch another company for that.

"There is no "basic research" that is going to be able to undo open source analytics"

I don't think any of us are suggesting this is the case. We are suggesting that basic research is the foundation of engineering in constructing effective products that best integrate in modern computing platforms, like the cloud and Linux.

It's not like SAS is going to make some groundbreaking proprietary discovery that will guarantee capturing significant share of markets with $10-$100 billion/year potential.

What they can do is figure out how to build better enterprise software that deploys and optimally runs in modern (mostly Cloud) environments.

SAS could also become a significant open source AI/ML contributors, which could help them gain considerable credibility for the proprietary products and services they do sell. This has been lost on executive management for the past 15 years.

Children weren't the only common theme. The preciousness of time and time with family? Nice try.

The lack of innovation, insular culture, arrogance, nepotism and waste. Let's not ignore those themes. That's how companies get into these positions.

On the customer side, and we are (perhaps stupidly?) upgrading our Solution. The one we have in place works "well enough". The upgrade will be better even if not really competitive with the big dogs. If SAS had semi-rational management, it would keep investing in those relative "winners" and coming up with other alternatives to deal with the slow platform death. There is no "basic research" that is going to be able to undo open source analytics taking over the world. Unix isn't returning in the face of Linux being the standard. SAS9 and Viya aren't going to return from the dead to magically displace python or R or whatever comes next. To paraphrase Bill Joy, most of the smartest people in the world don't work for you. Getting rid of the naivete and hubris would also help. Not really sure that's possible. Even some of the comments display that attitude while acknowledging it's a losing battle.

"The Lauder family should sell and focus full time on being New York socialites."

Yes, there are similarities.
Both JG and JS have children. As I suspect the same for the Lauder family.

Re SAS....If any of those children are interested in running SAS, that has to be the best kept secret about SAS!

Time is the most precious gift. Did any of those children get much time from their respective father?

Been watching this thread for awhile. Gravity pulls stuff down way easier than the effort it takes to lift stuff up. It appears that gravity has got control of SAS.

All that had been requested by the OP has been supplied. Let's back away and allow them to do as they see fit with the ideas.

The Wall Street Journal ran an article about Estee Lauder.
https://www.wsj.com/business/retail/the-estee-lauder-family-built-a-beauty-empire-a-succession-rift-threatens-it-2eb2515f

Here's a comment from the article. Compare and contrast:

"I bought the Estee Lauder stock many years ago thinking that because I used some of the products in their men's Clinique line, especially their after-shave balm, and thought they were excellent, and many women I knew used their products and thought they were great, and that cosmetics generally were a high margin business, the stock would do well over time. I was mistaken., and learned the lesson that unless there was some compelling reason, public companies run by families could be extremely problematic propositions.

Over the years Clinique has made virtually no effort to market its men's line, while sticking to a department store strategy long after department stores are becoming dinosaurs. This apparent historical inability to innovate, at even the most basic level, and many years of nepotism is well-described in the article. While an outsider as CEO is a welcome development from a shareholder perspective, all I can say is good luck. EL has been a family piggy bank with an insular culture for far too many years for this Titanic to change its direction fast enough to survive. I still use the Clinique products, which have been increasingly harder to obtain because of supply chain issues. The men's cosmetic line continues to languish with no marketing support of consequence.

I would be pleasantly surprised to see this company succeed, but based on its history I fully expect it won't. The Lauder family should sell and focus full time on being New York socialites."

Recognize any familiar themes?

Have you watched "Succession"? JG is pulling your legs.

It didn't work out so The Forester (BG) left SAS in January 2021.
Soon it will be 3 years since BG left.
Has things gotten worse, or stayed the same with current CTO since January 2021?

"Last idea: if JG is unwilling or unable to quicken the pace to a level necessary for an IPO or sale to happen by 2025, JG needs to hire an interim CEO. Andre B is not the only person who does that...he just arrived at SAS before JG was ready to act. Let's hope the next interim CEO does not arrive too late."

Andre was never an interim CEO... he was temporarily a COO.
The Forester (BG) was a temporary COO (in addition to CTO).
No one else has ever been a CEO, temporarily or not.
There has only ever been one and only one CEO of SAS. He will never give it up until The End!

"Well folks, I just got back from my physical. The doc says I'm in tip-top shape for an old ge---r. We're thinking I'll be around until 2040, at the very least. So....I've decided to push the IPO to 2035. By that time our books will be in great shape! We'll even give them an extra spot of polish beyond that, if I still have it in the tank. Anyway, stick around. The IPO will bring tons of benefits, for someone at least. Maybe even you!?

Ha! .... Ha! Ha! .... Ha! Ha! ...oh, that's rich. I really crack myself up sometimes! The doc's always said that laughter is the best medicine.

Anyways, stop reading this tripe and get back to work!"

Love, JG.

“The one thing that I've seen at SAS (in my area at least) is more long term thinking.”

This could be interpreted a couple of ways:

1. SAS is willing to invest in basic research and take the necessary time to do things, right (without losing a sense of urgency.), because this is the most proven way to build correct products, keep your best/brightest tech folks motivated and ultimately succeed.

Scores of current and former SAS R&D employees can testify that basic research during normal work hours is not a priority among the rank and file.

2. SAS does not answer to “ arrogant 26-year old Wall Street analysts” (quote straight from JG) but instead its customers. Because we are not playing the quarterly earnings call reporting numbers game, we have time to get things right.

And how is this been working out for the last several years?

Unfortunately, this kind of thinking is also now 20+ years old and time is up for SAS which as a company has become progressively more delusional as the years have worn on. This is a direct result of having lived in a Shangri-La mentality enabled by the very thinking that not being public there’s some kind of superpower at SAS.

———-

“The fire in the belly left the employees at the public companies in the early 2000s when everything went into the cr-pper. Changing how stock options worked (in the mid-2000s) reduced it even further.”

There is some truth to this, especially for old-school tech companies, like IBM, and even more recent juggernauts like Oracle and (eventually) Microsoft1.0, but it doesn’t explain how FAANG, SalesForce, Tesla, Nvidia, ServiceNow, Microsoft2.0,, etc. have and continue to innovate while making thousands of employees millionaires (even to this day), and a handful of early ones Billionaires.

I've worked at public companies and at SAS. The fire in the belly left the employees at the public companies in the early 2000s when everything went into the cr-pper. Changing how stock options worked (in the mid-2000s) reduced it even further.

The one thing that I've seen at SAS (in my area at least) is more long term thinking. At the public companies there was short-sighted decision making based on how it would look to the investors to the point of choosing the wrong technology on a frequent basis.

This comment from Andre is spot on...

"It was very interesting. There were two philosophical differences Goodnight and I couldn’t bridge. One is equity. I’m a strong believer in equity driven companies. Look at at Microsoft, SAS and Oracle; Bill Gates became richest man in world, by creating 24,000 internal millionaires. He does over $2 billion a month. The second richest man is Larry Ellison (Oracle CEO). He created 10,000 internal millionaires. My issue with Jim is that he’s created two billionaires and you don’t see the same fire in their (the employees) bellies that I did in the other organizations. And the proof is in the pudding. He does less than $100 million a month (in revenues.) Larry does in month what Jim does in a year."

For all JG's benevolence and talk of valuing his employees, he had no interest in sharing the spoils and as a result his empire is collapsing. And the only reason I can think of that he looks for an IPO now, is to cash up for his family - it was never about rewarding the employees. I actually feel stupid and duped for wasting 15 of my best years there...hindsight, eh...a wonderful thing.

Left SAS for an equity position in a publicly traded tech company years back and It has paid off handsomely. I find Andre’s WRAL Techwire article observation about employee engagement and “fire in their eyes/belly” at a publicly traded tech company to be true.

OTOH, JG has practiced a form of corporate Socialism for a long time and it is the true Achilles’ heel of SAS. Smart, hard-working people not properly motivated because they don’t have equity and are often under the thumbs of passive/ineffective managers, or even worse controlling micromanagers. Then there is the significant population of mediocre employees doing jobs that make little to no practical contribution to the company’s productivity nor growth.

The best and most motivated R&D employees I worked with all recognized that you could get rid of half the employees and nothing would really change, except the best people would likely get more done.

That article about Andre is telling. The reasoning sounds solid to me.

Don't waste your current and future career at SAS listening to the PR nonsense, the excuses, or other half-hearted explanations. These are intended to gaslight you and string you along, waiting....waiting. Don't do it.

SAS never had to open its (financial) books to anyone outside 23 years ago, 5 years ago or even now. To go IPO, it has to open the books and be audited so I doubt it will go through with the IPO. It will drag it out for as long as it can.

The best SAS can hope for is for a white knight (company) with lots of cash and give SAS an offer that is acceptable to the two owners. The big players all have their own analytics software and the smaller players do too, and even the startups can use open source to make analytics software. I don't see any white knight other than a robber baron type of company that will cut staff and chop up SAS. SAS campus buildings and lands may be more valuable than the software in 10 years.....Who knows!!!

Nothing will change or will be fixed unless the Big Guy says so. Only he can decide if he wants change or if he wants to fix the company to leave a legacy for the future.
He may just decide to continue as is, do small batches of layoffs at a time in order to not generate too much negative publicity, reduce expenses as much as possible, continue to milk the cow (classic SAS Foundation), and keep going until the end. How long will be until the end, no one really knows.