Tech Companies Coddled Their Employees. Now They're Firing Them

The Silicon Valley venture capitalist and entrepreneur wrote a story about Musk's startup days. At Space Exploration Technologies Corp., Musk noticed a group of interns milling around while they waited in a line for coffee.

To a normal chief executive officer, that scene would have seemed normal. It was an insult to productivity. Musk responded by threatening to fire all the interns if it happened again, and had security cameras installed so that the company could monitor compliance.

The employees of the social networking site are in for a rude awakening.

The story is impressive, I suppose, in a way, but it's probably worth pointing out that Musk had other options besides threatening to fire everybody. He could have given the coffee breaks a break and bought another coffee machine since the interns have joked about working 80 hours a week for their boss.

It's not Musk, the famously demanding CEO who has been known to sleep under his desk during production pushes and who liberally deploys threats of dismissal at anyone who dissents. The tech industry has been in retrenchment since a boom that lasted for nearly 15 years. Since October, the share prices of newly public tech companies have lost roughly 60% of their value, and investors are worried about zombie unicorns, or high-valuation startups that are unable to raise additional capital and thus must drastically cut costs.

The hiring pace was slowed by Facebook parent Meta Platforms Inc. Several high profile companies have already announced layoffs in recent weeks, and an investor class that until

It is difficult to overstate how dramatic this shift is. Tech's leadership class has seen overpaying and even coddling talented engineers as a point of pride. In his book, How Google Works, the company's former CEO boasted of his efforts to retain smart creatives, arguing that bosses should defer to them. The company encourages its workers to take a 30-day sabbatical every five years. During the Pandemic, the company added company-wide mental health breaks called days of rest, on top of already-generous leave policies.

The perks are now being derided. Tech employees who were once encouraged to bring their whole selves to work are publicly mocked by venture capitalists who see Musk as the leader of a righteous cleanse. David Sacks, a tech investor and a friend of Musk, compared Musk's takeover of Twitter to the fall of the Berlin Wall. Musk's acquisition is coming in fits and starts like the Soviet-era borders. He said Friday morning that the deal is temporarily on hold due to concerns about fake accounts but that he is still committed to buying the company.

It felt like the staff of Twitter really got to run the show, Sacks told Will. He warned that CEOs were being pushed around and bullied by the employees, and that the answer was a purge.

It is telling that the plans Musk is actually proposing seem to be much more modest than the fantasies that his friends and backers have proffered.

It is not clear if employees have lost their leverage. With the labor market tight and stock prices depressed, big companies have been forced to compromise on planned office re-openings, allowing employees to work from home indefinitely, while agreeing to big salary increases. Three months ago, with its stock sliding, Amazon.com doubled its maximum base pay. Silicon Valley's investor class may have gotten into austerity mode because of these developments.

It has become commonplace to attribute the provocations of tech venture capitalists to a sense of self-pity. That may be part of it, of course, but their hostility to workers also reflects that their portfolio companies are in the midst of a high-stakes negotiation with their own employees. With growth prospects limited and employee pay showing no sign of slowing down, Musk is promising, even without a full blown ideological purge. VCs love to frame what they do in grandiose cultural terms, but usually it's about money.

The big story

A sleepy California city gets a new look thanks to a small army of engineers. Hawthorne, California, has become an unlikely focal point for a new era of manufacturing because of its current and former employees.

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