Google and Meta employees do “dummy work,” says VC Keith Rabois

• Silicon Valley VC Keith Rabois says mass layoffs are due to hiring becoming a vanity metric in tech.
• Rabois, speaking at an event hosted by Evercore, said companies like Meta were overstaffed by thousands of employees.
• “These people have nothing to do… It’s all make-believe work,” Rabois said.

Thousands of tech workers at Meta and Google do “sham jobs” and were hired to meet the hiring’s “vanity metric,” according to outspoken investor and tech veteran Keith Rabois.

Rabois is Managing Director of OpenStore, which funds merchants who sell with Shopify, and General Partner of venture capital firm Founders Fund. He is also known as one of the “PayPal mafia,” having worked as an executive at the payments company in the early 2000s.

Speaking remotely from Miami at an event hosted by banking firm Evercore, Rabois said big tech companies are responsible for overhiring and that the industry’s current mass job cuts to contain costs are overdue.

“All these people were strangers, that’s been true for a long time, the vanity metric of hiring employees was kind of this false god,” he said.

Later on the call, he estimated that Alphabet’s Google and Facebook owner, Meta, has thousands of employees who aren’t doing anything.

“These people have nothing to do – they are real – it’s all make-believe work,” he said. “Now it’s revealed what these people actually do, they go to meetings.”

Google, he continued, has deliberately over-employed engineers and tech talent to discourage them from moving to other companies, a strategy he called “pretty coherent.” But, he added, it meant the engineers were happy “to have a right to sit at their desks and do nothing.”

Rabois’ view is shared by other Silicon Valley figures such as Marc Andreessen, Andreessen Horowitz’s general partner, who has criticized a manager “laptop class”and also thinks that companies are overstaffed.

Rabois said he expects the industry’s focus to shift away from a growth-at-all-costs model to profitability metrics like revenue per employee. Rabois noted that reducing headcount is one of the best ways to conserve and generate free cash flow.

The comments come as rising interest rates and inflation in recent months have prompted tech companies across the industry to hand their employees an ax to control costs and weather the economic storm. More than 1,000 companies laid off more than 160,000 employees in 2022, according to layoff tracking website Layoffs.fyi. – That number has already surpassed 100,000 for 2023, according to the website.

The job losses mark the first major decline for the tech sector in a decade of growth that took several of the big companies to market caps in excess of $1 trillion — and diverted talent away from smaller companies and industries.

Despite the already reduced number of employees, some companies will make further cuts. Meta, which laid off more than 11,000 workers in November, could be preparing to cut thousands more jobs this week, according to Bloomberg.

Rabois was full of praise for Twitter CEO Elon Musk, who is estimated to have shed about half the social media company’s workforce a month after taking office in October.

“People see Elon and Twitter and he’s clearly setting an example — maybe it’s an extreme example,” Rabois said, later adding that he wouldn’t bet against the Tesla mogul.

Not everyone agrees with Musk’s methods, and his drastic cuts have thrown him back on occasion. Twitter has had security issues since Musk acquired it, including a major outage earlier this week. He’s also come under fire for trolling fired Twitter employee Haraldur Thorleifsson, accusing him of using his disability as an “excuse” not to work – the Twitter CEO has since done so apologized for his comments and said that Thorleifsson “is considering staying on Twitter”.