Not really. Having been a low-level employee on several of these sinking ships in the past few years, the pattern is despicably predictable. Everyone who works for a startup knows the game they are playing. Many of the experienced ones will even see the writing on the wall and bail early. The laid off employees have no trouble finding their next job. Just like in Vegas, there's always another game starting up in Silicon Valley.

The VPs plan for failure going in. They may lose some money, but they'll cover the loses with some of their other investments. They play the odds.

I think the only real harm is to the state of California when hundreds of people are suddenly on unemployment for a month or two between jobs.