The thousands of layoffs in Big Tech are thanks to an over-hiring spree to satisfy the "vanity" of bosses at the likes of Meta and Alphabet, according to a member of the so-called PayPal Mafia.
Speaking remotely at an event hosted by banking firm Evercore, Silicon Valley VC Keith Rabois said Meta and Google had hired thousands of people to do "fake work" to hit hiring metrics out of "vanity".
Rabois, who was an executive at PayPal in the early 2000s alongside Tesla CEO Elon Musk, said the axing of droves of jobs is overdue. "All these people were extraneous, this has been true for a long time, the vanity metric of hiring employees was this false god in some ways," Rabois said, according to Insider.
"There's nothing for these people to do —it's all fake work. Now that's being exposed, what do these people actually do, they go to meetings."
The DoorDash investor added Google had intentionally hired engineers and tech talent to stop them from being snapped up by competitors.
The downside, Rabois said, was that the new hires just had to "be entitled, sit at their desks, and do nothing." Rabois suggested that this was not a bad strategy, even going as far as to say that hiring skilled workers to keep them out of competitor's offices is "pretty coherent".
The job cuts across the tech sector have been painful for employees. Google owner Alphabet cut 12,000 jobs in January with CEO Sundar Pichai saying he took "full responsibility" for the job losses. Meta laid off 11,000 in 2022 at a reported cost of $88,000 per head—and there could yet be more to come.
Google and Meta did not immediately respond when approached by Fortune for comment.
As part of founder Mark Zuckerberg's "Year of Efficiency", Meta is rumored to be slashing even more jobs in 2023, saying middle managers and those working on underperforming projects would feel the sharpest end of the policy.
Take a leaf out of Musk's book
Rabous lauded his old friend in his on-screen appearance at the Miami event, saying the SpaceX founder's axing of half the Twitter team since his takeover in October should provide inspiration to other tech bosses.
"People are watching Elon and Twitter and he's clearly setting an example — maybe it's an extreme example," Rabois said, before swiftly adding he would never bet against the Tesla mogul.
Musk has always been a critic of apparent paper pushers.
Silicon Valley veteran Marc Andreessen has previously claimed many tech firms are overstaffed, while taking to social media to criticize those in the "laptop class", which he describes as "Western upper-middle-class professionals who work through a screen and are totally abstracted from tangible physical reality and the real-world consequences of their opinions and beliefs."
Laptop Class (noun): Western upper-middle-class professionals who work through a screen and are totally abstracted from tangible physical reality and the real-world consequences of their opinions and beliefs. Synonyms: Professional-Managerial Class; Orwell’s “outer party”.
— Marc Andreessen (@pmarca) April 10, 2022
Musk responded to the tweet, adding the laptop class are "disconnected from what it takes to make stuff."
Rabois added that shifting away from a focus on growth and instead looking at profitability metrics—revenue per employee—will be the next frontier for tech giants. He adds that cutting employee headcount is the easiest way to preserve and generate cash flow.
However, while shifting focus has been suitable for those at the top of the tree, for the 150,000 people who lost their jobs in 2022—and the additional tens of thousands who have been let go this year—it's been "devastating".
One Google staffer said she discovered her job had been axed when she was feeding her newborn daughter in the middle of the night while on maternity leave, while Twitter employees claimed they hadn't been paid severance pay two months after being let go.
