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It might just be my British shining through but I had no problem understanding that bit.

Not sure it needs to mean firing people as much as giving any constructive feedback to an experienced engineer can be difficult, even if done perfectly.

How is this specifically a Valley euphemism?

I think they are just hoping that it is highly localized.

For most working persons globally, getting fired isn't something that involves a "difficult conversation". Working stiffs do not get that degree of attention to their feelings. Suggesting that this phenomenon is common to (or even characteristic of) the high-income and acutely socially-aware circles of Silicon Valley should not be construed to exclude its observation elsewhere, but SV is one of the few places where the behavior is common, and hopefully the only place that feels the need for a polite euphemism.