A bloated Silicon Valley is paying for its waste and extravagance

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Over the past 10 years, Amazon has gone from 56,000 employees to 1.6 million employees, making it one of the largest private sector employers in the world. The list goes on and on. It was one of the greatest employment booms of all time.

Spending on these people was often exorbitant. When it emerged this week that Netflix was making more than $300,000 (£242,000) a year to a flight attendant on her private jet, it wouldn’t have surprised anyone in Silicon Valley. In the UK, the average Google salary was £385,000 over an 18-month period according to the latest figures. The perks were legendary.

At Google, employees were offered free food throughout the day, fitness classes and even stress relief capsules for anyone who wanted to relieve their stress. At Meta, employees were offered a free laundry service, so they didn’t have to stress about washing and ironing their own clothes — assuming the headgear needed to be ironed, that is — while Facebook and Apple at one point offered to freeze female employees’ fetuses, presumably so they could focus on their work. And leave worrying about becoming a father until later in life.

Of course, all of this was great for anyone lucky enough to be on the payroll. But the costs were huge.

Twitter’s experience suggests that overstaffing was on a scale that Aslef, the train drivers’ union, might have felt embarrassed about. Musk has cut the workforce in half, laid off critical staff like the Human Rights department – and even though there was a lot of speculation that the site would go bust in a matter of days, even now it’s still causing the same angry, nonsensical nonsense (sorry , an important political debate) I have specialized in for years.

In the years of rapid expansion, and especially during the pandemic, technology companies have expanded exponentially. This is now about to end.

This will have two consequences. This will create a cash dividend for shareholders, as all the money saved goes straight to the bottom line. Share prices of all major technology companies have fallen 30 percent to 40 percent over the past year, but if the layoffs improve profitability, they will bounce back, and that could be enough to change the entire direction of the stock market.

Most importantly, it will create healthier and fitter companies. The tech industry was slow to catch on, but it needed to grow up one day, and start operating as a normal business. Being extravagant can be fun for a while. But in the long run, it doesn’t benefit anyone — even if the tech workers who receive repeat notifications may not feel like it right now.

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