This only happens when the users are the product or its a marketplace. Most business models dont suffer from shittification. But VCs love investing in the ones that do.
It is a constant struggle to convince people that your higher quality product/service is worth the extra cost, and obviously, many times it is not.
But the formula for operating a successful, long term business is not as simple as “output the best quality product or service you can, and you will be rewarded”. It is more like “output the best quality product or service you can relative to prices of competing sellers, and at prices your clientele can afford”.
Which may or may not include sellers that have access to much cheaper money (VC, bigger companies with other revenue streams, etc), or sellers operating in different jurisdictions with lower costs.
Family owned businesses are often able to maintain very high quality. They’ll just never make enough to satisfy people looking for huge returns, which is nearly anyone who doesn’t have some deeper connection to the company.
It happens when nobody wants to be the first to show flagging growth and investor expectations have not reset yet after a period of growth.
It’s just easier in tech to manufacture growth metrics you cant get checked on
By fired, do you mean receive multimillion dollar payouts and jobs from their friends at another place where they can do it all again?