What do mediocre people in Silicon Valley do?

Anon User

They work at startups that aren't good at hiring. As an example, when my startup puts out job descriptions, we get tons of mediocre applicants that we have to wade through. Other startups that aren't as good at filtering will hire these people and then eventually fire them. There's a whole class of mediocre to bad employees that circulate. Because startups are always changing and no one's still around from their previous employers, they're able to keep this up for a long time.
They work in less important roles at larger companies. Certain parts of Yahoo, AOL, Oracle, Microsoft have lots of these people. The companies actually make reasonably productive use of them. They generally have structures in place that prevent them from doing too much damage and make sure they are always making forward progress, even if it's slow.
They work for their friends. If a friend who isn't especially loyal to a company manages to get into a management position at a big company (or starts a company of their own and raises money from investors they don't care about), they'll hire them and give them an easy job.
They can sometimes sneak by for a year or a few years at "hypergrowth" companies that grow too quickly to ever get around to managing or firing underperformers.