Gerstner says AI is creating massive bottom-line opportunities as companies like Uber continue reducing headcount.
“The re you know, and Dara told you yesterday, quarter over quarter we've actually reduced head count again. Right. We have this massive bottom line opportunity in all these businesses because of AI.”
Gerstner notes Zuckerberg's March 'year of efficiency' followed his own 'time to get fit' letter.
“I wrote a letter last year about time to get fit. Right. You know, Andrew, Mark Zuckerberg in March wrote the year of efficiency.”
Gerstner notes Meta reduced headcount from 87,000 to 67,000 since his letter in Q3 2022.
“When we wrote that letter in q three of twenty two, the head count at this company was 87,000 people. As of this quarter, it was 67,000 people.”
Gerstner says Meta went from 87,000 to 67,000 employees and nearly tripled earnings per person in fifteen months.
“As of this quarter, it was 67,000 people. They've nearly tripled their earnings per person working at the company in in over that fifteen month period of time.”
Gerstner says Meta nearly tripled earnings per employee in fifteen months.
“They've nearly tripled their earnings per person working at the company in in over that fifteen month period of time.”
Gerstner contrasts Meta's headcount reduction and earnings explosion with Google's minimal changes and weaker stock performance.
“Facebook is actually reduced headcount significantly and their earnings per employee has exploded and Google kind of, you know, they're fine, but they really just haven't made many changes.”
Gerstner reports major tech CEO plans 50% revenue growth with 10-20% personnel cost reduction over three years via AI.
“And he said, over the course of the next three years, we'll grow our top line 50%, and we'll reduce our personnel costs by 10 to 20%.”
Gerstner says Meta grew net income from $22B to $55B while cutting headcount from 85,000 to 69,000 in two years.
“In two years, that company has gone from $22,000,000,000 in net income to $55,000,000,000 in net income. They've reduced their headcount from 85,000 people to 69,000 people.”
Gerstner warns excess capital distorts company behavior and makes efficiency difficult when all options can be funded.
“There is absolutely no doubt in my mind that excess capital distorts company behavior. Okay? And in particularly these early phases, it's very difficult.”
Gerstner praises Jassy's efficiency focus at Amazon retail, expects margin expansion as investment thesis.
“Why are we in Amazon? Because we think the retail businesses margins are gonna go up. Jassy has absolutely found religion.”
Gerstner says Amazon CEO Jassy is aggressively focused on running the retail business efficiently.
“Jassy has absolutely found religion. He's in animal mode when it comes to making sure that they're running that as efficiently as possible.”
Gerstner says NVIDIA generates $4M revenue and $2M profit per employee, unprecedented efficiency.
“You know NVIDIA is in a league of its own really, know, at about 4,000,000 of revenue per employee, about 2,000,000 of profits or free cash flow per employee.”
Gerstner observes companies can now cut tens of thousands of employees while increasing customer satisfaction, unprecedented historically.
“Never have has he seen or have I seen the ability for companies to take out 10,000 people and actually see customer satisfaction scores increase.”
Gerstner says COVID and zero interest rates led to gross excesses and misallocation.
“You know, we had these negative interest rates, this zerp period that just led to gross excesses across the economy, misallocation of resources.”
Gerstner says NVIDIA is one of the most efficient on token per watt per dollar basis.
“Token per watt per dollar. NVIDIA is one of the most efficient in the world.”