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September 21, 2023
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How Red Hat’s CEO navigates layoffs and AI’s rise

How Red Hat’s CEO navigates layoffs and AI’s rise


When Matt Hicks got promoted to CEO at Red Hat last summer, he not only faced the typical challenges of any new chief executive taking over from a veteran like predecessor Paul Cormier, but he was also confronted by twin tests: the macroeconomic environment and the increasing emphasis on AI.

Perhaps he’s more comfortable with the technology side, having spent 16 years at the company before moving to the corner office. But as the head honcho, he’s been dealing with the broader economy, too, and the impact it has had on everyone. His company has not been exempt.

He has also been working with IBM, the company that bought Red Hat in 2018 for $34 billion. While the relationship and rules of engagement for the most part were established by Cormier, Hicks has still had to navigate that relationship, making sure his company maintains its independence, while drawing on the parent company’s sales clout to help drive revenue.

In IBM’s most recent earning’s report, Red Hat revenue was up 8% over the prior year, 11% in constant currency, which takes into account foreign currency fluctuations. All in all, not bad for a software company right now, but it is down from its double-digit 10% growth the previous quarter.

Hicks has had to deal with a lot of competing requirements since he’s taken over, and that includes laying off 700 people, or about 4% of the company’s 19,000 strong workforce, in April.

It hasn’t been an easy first year by any means. We spoke to Hicks ahead of this week’s Red Hat Summit about how he’s dealt with the shifting landscape, the tough decisions and how he has guided his company through a period of uncertainty.

Uneasy is the head

Dealing with the macroeconomic environment is no easy feat, and he has tried several different management strategies, including the aforementioned layoffs.

CRN reported that the layoffs hit hardest in customer success and project management, sparing sales and engineering for the most part. The Register reported that some employees expressed anger and frustration about the layoffs in internal channels, especially in light of positive revenue reports.

“I know it is hard to reconcile that we are a successful, growing company and still need to take these hard actions,” Hicks wrote in a memo to employees about the layoffs.


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