This is a return to sanity -- businesses need to control costs and be sustainable, product ideas need to actually make sense, you have to prove you have a good idea to get investment, etc. This is good for the long-term health of the industry.

The real problem right now is not the layoffs. The layoffs are needed, because many companies cannot reasonably justify their headcount, and it's destructive to a culture to have so many new people join so fast. If you've worked at the same company since 2021 you might have more tenure than half your coworkers!

The real problem is the hiring freezes. These especially impact new grads, but also experienced people will have trouble finding jobs simply because few companies are actively hiring. If you get laid off from a FAANG you might be able to find a startup job paying ~1/4 to 1/2 of your previous total comp. Might as well just not work for a year. Businesses overhired so much they need to shed more employees before they can even backfill or grow teams that work on things that make sense.

This happened in 2001 too, but the big difference between now and then is we aren't seeing a lot of tech companies completely fail and go out of business.