This happened frequently in the dot-com era. There was tons of over hiring to inflate the budget and get more VC money. I remember one company I worked for raised $8 million (a pretty good size A round for late 90's), then immediately dumping $1 million into office renovations for a second location down the street.

That office needed to be full. We'd hire guys who could barely spell HTML. The next round was $20 million or so. More hiring. It was like monkeys banging on keyboards. There were no code reviews, no process, nothing like that. We hired some of the most clueless management you could possibly imagine.

The product itself was half baked and ill-conceived. But we just kept on hiring. Eventually 2001 came and there were mass layoffs. I was not among them, but I left on my own about a year later. Eventually there was a fire sale and everything was sold for pennies on the dollar.