- Silicon Valley VC Keith Rabois says mass layoffs are due to hiring becoming a vanity metric in tech.
- Rabois told an Evercore-hosted event that firms like Meta over-hired by thousands of staff.
Thousands of tech staffers at Meta and Google do "fake work" and were brought on to fulfill the "vanity metric" of hiring, according to the outspoken investor and tech veteran Keith Rabois.
Rabois is chief executive of OpenStore, which finances merchants selling with Shopify, and a general partner at venture capital firm Founders Fund. He is also known as one of the "PayPal Mafia", having worked as an executive at the payments firm in the early 2000s.
Speaking remotely from Miami at an event hosted by banking firm Evercore, Rabois said that major tech firms were responsible for over-hiring and that the sector's current mass shedding of jobs to rein in costs was 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," he said.
Later on the call, he estimated that Alphabet's Google and Facebook owner Meta had thousands of employees who don't do anything.
"There's nothing for these people to do — they're really — it's all fake work," he said. "Now that's being exposed, what do these people actually do, they go to meetings."
Google, he continued, had intentionally over-hired engineers and tech talent to stop them from moving to other companies, a strategy he described as "pretty coherent." But, he added, that meant engineers had been happy to "be entitled, sit at their desks, and do nothing."
Rabois' view is shared by other Silicon Valley figures such as Marc Andreessen, the Andreessen Horowitz general partner who has criticized $4, and likewise thinks firms are overstaffed.
—Marc Andreessen (@pmarca) $4
Rabois said that he expects the industry's focus to shift away from a growth-at-all-costs model to focus on profitability metrics such as the revenue generated per employee. Rabois noted that $4 was one of the best ways to preserve and generate free-cash flow.
The comments come as soaring interest rates and inflation in recent months have led tech companies across the industry to $4 in a bid to manage costs and weather the economic storm. In 2022, more than 1,000 companies laid off more than 160,000 staff, according to the layoffs tracking site Layoffs.fyi. — that figure has already surpassed 100,000 for 2023 so far, according to the site.
The job losses mark the first major contraction for the tech sector after a decade of growth that supercharged several of the major firms to market capitalizations above $1 trillion — and kept talent from smaller companies and industries.
Despite already reducing head counts, some firms are set to make more cuts. Meta, which laid off more than 11,000 workers in November, could be $4.
Rabois was full of praise for $4, who is estimated to have cut roughly half of the social-media company's workforce a month after taking charge in October.
"People are watching Elon and Twitter and he's clearly setting an example — maybe it's an extreme example," Rabois said, adding later that he wouldn't bet against the Tesla mogul.
Not everyone $4, and his drastic cuts have occasionally come back to bite him. Twitter has experienced $4 since Musk took over, $4 earlier this week. He is also under fire for trolling laid-off Twitter employee Haraldur Thorleifsson and $4 not to do work — the Twitter CEO has since $4 and said that Thorleifsson "is considering remaining at Twitter."