> I mean, if you can actually execute with 70% less, why did they hire in the first place?

Hiring and onboarding takes awhile. VC-funded companies are intended to grow quickly. Those two things put together means you need to hire for where you want to be in a year or two and not where you are right now.

The actual goals & constraints have changed.

When you hired those people your goal was scaling up as quickly as possible and your constraint was having enough people (in this scenario, money is not one of your constraints).

In the new world, the goal is "stay alive" and the gating constraint is runway.

So, no, the fact that you can survive after large staff cuts doesn't mean the CEO was incompetent. It might, but it might also just be a function of the goals/constraints/execution strategy/environment having all changed.