The Tech Staffing Edition

On SBF, theories, and narratives that stick

For non-paid subscribers, this piece is about how theories and narratives go viral, in this case, Sam Bankman-Fried’s SBF’s theory of developer staffing. You may draw your on conclusions given how the recent news has played out. We have sympathy for anyone touched by layoffs in the technology sector. -CJN and NRB

Noah here. A few weeks ago, amid Elon’s initial takeover of Twitter, Matt Yglesias made a very interesting point about the layoffs Musk was planning for his new company. Although it shocked many, Yglesias pointed out that the idea that tech companies were overstaffed had become a common refrain amongst the Silicon Valley cognoscenti:

I’m not exactly sure why this happened, but roughly a year ago there was a substantial vibe shift in Silicon Valley which holds that most large technology companies are massively overstaffed. Multiple CEOs of privately held tech companies have voiced this critique of their larger peers to me. They’ve also criticized the venture capital community for encouraging excessively rapid headcount growth, but some influential VCs are now saying they agree with this. And there seems to be some competition to engage in the highest possible estimates of overstaffing. Marc Andreessen says the good big companies should lay off half their staff and the bad ones are worse.

He went on to quote investor Marc Andreessen and former GitHub CEO Nat Friedman, who estimated that big tech was overstaffed by somewhere between 2x and 10x.

Why is this interesting?