True, I agree with you that if they can credibly convince the remaining employees that this is a one-time event due to extraordinary circumstances, and they are

True, I agree with you that if they can credibly convince the remaining employees that this is a one-time event due to extraordinary circumstances, and they are sure (as much as anything can be sure) it is not going to be repeated for >=5 years, culture is recoverable. I've never seen that happen before, but I also mostly have information about more bureaucratic companies (especially my dad working for a top-100 global conglomerate as I was growing up), so Valve might do it right. One reason to think they might is the lack of lots of layers of management: multiple layoff rounds are often due to trying to cut the least possible to fulfill a target, but using the most optimistic assumptions, so finding out a few months later that, surprise, it wasn't enough. I also agree that one round is pretty much the max you can explain away. Once you've gone to two, nobody believes that this is the last one.