Doomsday Times in Technology

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The tech industry is experiencing an earthquake.

this top five tech giants The US stock market has collectively lost more than $2 trillion this year. There are regular announcements of hiring slowdowns or layoffs at companies large and small. Facebook, Uber, Robinhood and famous video app miniature. Start-up founders who turned down enthusiastic investors a few months ago now have to make an effort to make more money. (She gasps.)

Big unknown: Is this it? melting The BIG ONE that will remove technology from its position as the most dynamic and successful industry in the world? Or is it a temporary panic, as has happened so many times in the decade-long tech boom?

I asked my colleague Erin Griffithreporting on tech startups and venture capital to assess the current moment of fear for technology.

Shira: Does this technological doom and gloom make sense?

Erin: I’m going back and forth because I’ve seen this cycle so many times. Every few years over the past decade, when there has been some fluctuation in technology or in moments of doubt, smart people have predicted that the growth of the tech economy since the Great Recession is probably not going to continue. And every time those predictions were wrong.

In the first months of the Covid-19 pandemic, tech investors idea a lot of companies would be deleted. But in a few months, tons of money flowed into everything related to technology and the values ​​of companies went to the moon. past two years technology money craze It was unlike anything I had seen before. We now hear the alerts Again.

Shira: I’m sorry but I have to ask: Is it different this time?

Erin: Maybe. We did not see this combination of economic concerns and high inflation before. economists Weighing the risks of a US recessionand companies in many industries worried He said his business is slowing down. In other uncertain moments for technology, the same combination of economic stresses did not exist.

And since there’s been so much excitement, growth, and cash in tech since 2020, there might be a bunch of companies that aren’t worth close to what they were a year or two ago, and others were initially shaky and shaky. can’t stand the contraction.

Shira: Has anything really changed? Amazon, Zoom Video and grocery delivery startup Instacart They’re much less valuable than they were six months ago, but worse companies?

Erin: Not exactly! So far, this has been more of a reset on what investors think these companies are worth. However changing mood matters. Especially fast-growing start-ups need the faith of investors, customers and employees to maintain momentum. If this forward progress stutters, it could kill companies.

Shira: What signs are you watching that can tell us whether this technological collapse is more than temporary?

Erin: First, if more start-ups go bankrupt overnight. Recently, a payment company worth hundreds of millions of dollars called Fast ran into trouble and close relatively fast. If this continues, it’s a sign that many of the unicorns we thought were built on solid ground could be at risk.

Second, if the so-called “good” companies start to feel the pain. So far, startups that have made significant layoffs or closed have been startups that took huge risks, drained a pile of money, and assumed that investors would always be willing to give them more. If start-ups that preach responsible spending and decent growth also pull back, it could be a sign that it’s different this time around.

Shira: What could happen next?

Erin: The big question is how long the tech meltdown will take. If stock prices rebound in a few months, investors start reinvesting in new companies, and the initial public offering market freezes, the industry may do well. But if investors stay timid for months or years, it could spell a big hit.

The tech industry has basically been booming since the end of the recession in 2010. Now, it makes up a large part of the economy. We don’t know what will happen to this huge and wealthy industry in a broad decline.


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