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Oracle Laid Off Thousands More on Monday to Pay for the AI Data Centers It Is Building on Borrowed Money · Minds, Bodies, and Terawatts

• 0:00
  [Host] This is Minds, Bodies, and Terawatts, the show where the layoff email and the building permit come out of the same budget. Business Insider reported on Monday, September fourteenth, that Oracle started another round of layoffs, with an email telling people that today was their last working day.
• 0:16
  [Guest] Some of them found out before the email arrived, because their badges stopped working and their inboxes went dark first. A product development director just short of twenty-nine years at the company posted that his access was cut before the notice could reach his corporate inbox.
• 0:31
  [Host] How many people are we talking about?
• 0:33
  [Guest] Oracle hasn't said, and the people posting say thousands. What is on paper is last fiscal year, when twenty-one thousand jobs went, before Monday's round even started.
• 0:42
  [Host] So AI is doing their work now. That's the story, right, a software company automating its own software people?
• 0:49
  [Guest] Oracle's own annual filing does say AI deployment has reduced its workforce. But read the same filings for the money, and the reason changes shape.
• 0:57
  [Host] What does the money say?
• 0:59
  [Guest] Oracle spent twenty-eight and a half billion dollars on data centers last quarter, more than every dollar of revenue it collected in the same three months. Even with customers paying up front, it paid out five point four billion more cash than it took in, and it is borrowing and selling stock to cover the gap.
• 1:17
  [Host] And it's cutting payroll to cover that?
• 1:20
  [Guest] Business Insider reported last month that the plan was to reduce payroll because of the debt from the buildout. Then a filing last week added to the severance budget, the pot that pays people to leave, because more cuts were coming.
• 1:34
  [Host] Is this a company in trouble? Because it sounds like one.
• 1:37
  [Guest] It sounds like one and it isn't. Last week Oracle reported revenue up thirty percent, record cash coming in from operations, and the biggest pile of signed contracts in its history.
• 1:48
  [Host] So record cash coming in, and thousands of people lose their jobs the following Monday.
• 1:53
  [Guest] Because the good quarter is the reason. Every one of those contracts is a promise to deliver computing power that doesn't exist yet, in buildings that aren't finished. Much of that cash is a deposit on computing Oracle hasn't built.
• 2:06
  [Host] If I'm one of the people cut, what do I walk out with?
• 2:10
  [Guest] Severance that Oracle's standard plan caps at twenty-six weeks no matter how long you stayed, according to Business Insider. The director with twenty-nine years hits that cap. Microsoft's last round went up to thirty-nine weeks.
• 2:22
  [Host] So the company telling Wall Street it can't build fast enough is also the tightest one on the way out?
• 2:29
  [Guest] The severance comes out of the same pot as the concrete. Every week of severance Oracle doesn't pay is cash that can service the data center debt instead.
• 2:38
  [Host] Let me push back. Oracle's old software business is shrinking while its cloud business explodes, so weren't these jobs in the part of the company that is going away anyway?
• 2:48
  [Guest] That's true, and it's the honest version of Oracle's case. The people leaving built the old software business. The business replacing it needs transformers and turbines, not the people whose badges stopped working on Monday.
• 3:00
  [Host] Then this isn't AI replacing anyone, it's just a company changing what it sells?
• 3:05
  [Guest] It's a third thing, because Oracle isn't claiming a model did those jobs on Monday. The cuts came ahead of the capability, to pay for it, and the payroll became the construction budget. And the label matters: the same cut blamed on a shrinking business reads as distress, while framed as funding AI it reads as ambition.
• 3:24
  [Host] Ambition only if the bet pays. Does it?
• 3:26
  [Guest] The order book is six hundred and sixty-four billion dollars of signed contracts, broader than it was a year ago, but the biggest single piece is still OpenAI, whose commitment far outstrips what OpenAI earns today. If OpenAI's growth slows, the buildings still owe interest and the people are already gone.
• 3:43
  [Host] So the workers pay first, and the customer pays later, if at all?
• 3:48
  [Guest] That's the order of operations, and it is the one to remember if your own employer just announced a big AI plan.
• 3:55
  [Host] Meaning what, for the person sitting in that all-hands meeting?
• 3:58
  [Guest] That a good quarter is not protection. When a company decides to become an AI company, the payroll is the first place it looks for money, before the product exists and before any machine does anyone's job. The announcement is the good news, and the announcement is the risk.
• 4:15
  [Host] So who is paying for the AI buildout? At Oracle, this week, the answer is the people whose badges stopped working before the email arrived.
• 4:23
  [Guest] Patrick Deglon asks that exact question in Unscarcity, and one of his answers is the Automation Dividend, the savings the machines throw off once they have actually replaced the work. Oracle is spending that dividend before a single machine has earned it. For more on how the transition gets paid for, head to unscarcity dot ai. The book is on Amazon, the audiobook is on Spotify. This has been Minds, Bodies, and Terawatts.