VP of Package.json - Why Does Title Inflation Happen in Tech?

I once saw a VP of <Database Name> at an unrelated startup. That's one example of title inflation. When the title (like "VP") inflates, the area of responsibility (Engineering, Frontend, Backend) usually deflates. But why does this happen?

First, it's compensation. If one is not paid market salary, the company can still offer him a title that the market won't. It's a legitimate strategy if the person can grow into the title eventually. But more often than not, the title is seen as an "end" rather than the beginning.

Second, the person's history. A CTO of a small startup would probably not want to become a SDE-III at a medium-scale startup. So the medium-scale startup invents a position between an engineer and the CTO.

Third, to make room for internal promotions. Everyone expects their designations and salaries to grow. But an organisation might just have junior & senior engineers, with a CTO at the top. And the only way to promote senior engineers would be to invent new titles yet again, even if the job responsibilities don't change.

All this leads to a designations not being comparable between companies. You have to look closely at the areas of responsibilities rather than the title alone.