The tech superbubble might burst
Good morning! There was a time when layoffs in tech were so novel that workers threw “pink slip” parties to celebrate their emancipation. Part excuse to drink, part networking opportunity, the events centered the notion that these setbacks were temporary and the next job was around the corner. Sound familiar? I’m Owen Thomas, and the dot-com bust left me with a lingering fear of cheese sommeliers.
How to survive a tech bubble bust
The last time was at the turn of the century. The Gen Xers who had poured into the fledgling internet industry would soon learn what a bust really looks like. Unemployment in Santa Clara County, the geographic heart of Silicon Valley, stood at 3% in January 2001; by June 2003, it had more than tripled to 9.2%. So many people were moving out of town that moving-truck rental firms had to scramble to figure out how to get the vehicles returned.
This generation's tech workers have only known boom times; now, they are experiencing the glimmers of a bust. Ask people at Robinhood. Or Mural. Or Cameo.
- This is understandably confusing for those whose tech-heavy 401(k)s, crypto wallets and careers have mostly seen an upward trajectory. What is down? What is loss?
- There’s always the fallback plan: Work at Big Tech! Sure, it’s bureaucratic and awkward and a little shame-inducing when your CEO gets hauled before Congress, but it pays well. And then comes the headline about a hiring freeze at Meta, and a chill sets in.
So is this the bubble bursting? Oh, that’s always the wrong question, isn’t it? Because it’s not one bubble anymore, it’s many, that might just add up to a superbubble.
- At an early-2001 pink-slip party, it was easy to stay bubbly. The Nasdaq had crashed in March 2000 but rallied back almost all the way by October of that year. And the ’90s had seen a series of stock crashes and bounce-backs. What really hurt tech was the doldrums that lasted well through 2006.
- There is a ton of dry powder. VCs raised $128.3 billion in the U.S. alone in 2021, according to Pitchbook. That could fund startups for years.
- But good luck going public. EY reported global IPO proceeds for the first quarter were down 51%, with a pronounced slowdown in February and March.
- Late-stage investors are getting hammered, too. SoftBank is expected to report big losses on its Vision Fund investments Thursday, and Tiger Global is down 44% this year.
One prediction: Big Tech could feast on startups. Don’t call it an “acquihire.” Call it a “snackquisition.” Chomp, chomp!
- Those early-stage funds will only get startups so far. And the high prices VCs paid for their stakes may make it hard to raise the money needed for expansion without a lot of pain.
- Enter the eager corp-dev teams at tech giants. For those that haven’t frozen hiring, adding startups en masse is an easy way to bulk up engineering teams without the tiresome work of recruiting people one by one. As long as the targets are small enough not to set off antitrust alarm bells, these should be easy meals.
- For founders, it can be bittersweet, since these deals usually mean killing the product they and their teams spent years working on. But it’s better than having to lay off people you hired.
For some, reinvention will be the answer. Patty Beron, who briefly ran a business throwing pink-slip parties for the newly unemployed, now sells actual pink slips from her Etsy vintage lingerie shop. But she’s thinking about moving to Los Angeles, she recently wrote on LinkedIn. Through boom and bust, California is still a place for dreams.— Owen Thomas (email | twitter | dog’s instagram)
A MESSAGE FROM WORKPLACE FROM META
100% of C-suite staff surveyed by Workplace by Meta said that frontline workers were a strategic priority for their business in 2022, but nearly two in three of them said that keeping their frontline staff, who bear the brunt of the stresses of the workplace most acutely, had only become a priority since the pandemic hit.
People are talking
Hester Peirce is worried we’re not spending enough time building a framework for crypto:
- “It would be good for financial stability. It would be good for market integrity.”
Shopify’s Tobi Lütke thinks analysts should be held accountable for their track records:
- “‘Company X,Y out-performed analyst expectation’ is just different framing form ‘analysts failed to accurately predict company X,Y.’”
Car companies need tokeep EVs affordable for the middle class, Stellantis' Carlos Tavares said:
- “The big race is going to be on cost competitiveness."
Boomerang’s Aye Moah said keeping your inbox clear can negatively affect productivity:
- “You’re just continuously putting energy into processing junk, and that takes so much of your mental energy throughout the day.”
Grindr is going public via a SPAC. The gay dating app will be valued at $2.1 billion in the deal.
Tapan Bhat is the new president and GM of Yahoo Finance. Bhat had worked at Yahoo before and most recently advised startups and their boards.
Brad Rouse is Protegrity’s new chief revenue officer. He was previously the global VP of SSL Sales at Entrust.
Adam Massey is the new VP of ISV and Marketplace Sales at SADA. Massey spent over a decade at Google Cloud and helped launch Google Workspace.Harit Talwar is joining Better as non-exec chair, Bloomberg reported. Talwar is a former Goldman Sachs consumer-banking leader.
In other news
Match Group is suing Google over anticompetitive practices. The company said it’s an effort to stop its dating apps from leaving the Play store for refusing to give a 30% sales cut.
Tesla stopped most production at its Shanghai plant because it's having trouble securing supplies for EVs, according to Reuters. Shanghai has been under strict lockdowns for six weeks now.
What’s the point of “TC or GTFO” on Blind? Some tech workers said it helps with pay transparency, but others think it highlights Silicon Valley’s obsession with money.
The ACLU settled with Clearview AIover its sale of biometric data. The company can no longer sell that data to most businesses and private firms.
Amazon wants all the rural moms. It's been running an experimental delivery program where mom-and-pop shops deliver orders in sparsely populated areas.
A ransomware attack caused a college to shut down. Lincoln College in Illinois is the first higher learning institution to close because of a cyber attack.
You can now get a degree in TikTok. Kind of. Colleges are offering classes on how to build a brand and make money as a social media influencer.
Go the bark to work
A story came in our inbox this morning that was too important to ignore. It’s about a canine humorist (yes, that’s a real title) named Bark Twain, and a book about returning to work and SpaceX.
Twain, a dog, recently published a book called “Go The Bark To Work,” which is about what people’s dogs really think about all this time working from home. Twain apparently wants his owner, and all other humans, to go back to an office. The dog also wants to buy dogecoin and take a trip to space with SpaceX, according to his publicist. Quite a dog.
A MESSAGE FROM WORKPLACE FROM META
Businesses are starting to turn to workplace communication tools. Such tools enable frontline workers to feel more connected to the rest of their business, to raise concerns and to provide feedback on potential pain points or points of improvement. By bridging that divide, companies can unlock new savings and efficiencies, and build a business that can last for the long run.
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