There’s a lot of copycat B2B startups that extremely dependent on crypto and fintech for their revenue. They will be the next domino to fall.
After that, it would be infrastructure, security, and analytics vendors that will face a revenue crunch and will be unable to raise another round of funding. And then, all the startups for startups vendors like Rippling and Brex.
And the final domino would be currently well funded private companies such as Airtable, Notion, Loom, and possibly even Figma. We’ll learn that none of these products had any significant traction outside of VC-land.
This would be even worse for the Bay Area than 2000. Remote work is still the norm here (I’m typing this on my lunch break in my nearly empty SF office). An economic downturn coupled with destigmatized remote work is an environment ripe for outsourcing.
The problem is: way too many staff, not enough revenue, no route to profit. It doesn't matter if you have a "best-in-class" tool...where is the money coming from, how are you making payroll next month with no VCs.
The main problem with tech companies isn't the products, the products are fine. The issue is that they have taken a profitable product and built an economic model around that product that incinerates money.
With Google Workplace having pageless Google Docs now, and other shops having content centralized on Office 365, a lot of cost-cutting companies will ask "we just use Notion for a wiki anyways, can we migrate over to the system we're already paying for?" And sure, Notion is making the right move here, to move rapidly on becoming a hub for project planning and other structured content, which is harder to move into a plain collaborative document. But is enough of Notion's userbase using those table features to such a level that it would cause pain? I'm truly not sure.
Maybe, anyway
Firma has a deeper moat around it
How can you make such claims? These are great products
All of that doesn’t matter when 90% of your revenue comes from series C startups that will go bust in a year, or switch to cheaper and marginally worse alternatives.
Otherwise, I don’t think there’s much you can do to insulate yourself. It’s never obvious how resilient your employer is relative to the rest of the industry.
Just reset your expectations on what working in tech will be like for the next few years. And prioritize learning and building your network - whether at work or outside - over trying to climb the career ladder. It will pay off in the long run and you’ll be happier.
Also, articles like this show that we’re nowhere near capitulation. When we actually get there, stay passionate about tech. There will be another boom.
It isnt. That cheap outsourced software engineer wont be staying for ages with any company. They get promoted or found their own businesses. They dont keep slavering away for dimes for an US company that wants to have them as sweatshop labor.
Designing, engineering and maintaining highly scalable systems is not something that you could outsource to have it done for $15/hour.
I agree. Ecomm broke first in other markets, and I am seeing profitable ecomm companies still having to raise capital. Uber is one of the worst ones (they took a business that is very profitable, and lost absolutely staggering amounts of money, they probably need to cut 50% of the workforce to start with, and then keep doing 50% until the business finds a level) but there are many others that have no business model or route to profit...and these are the best of the best that managed to actually list.
The public ones have a route to survival, some will raise, a lot of expense will go away with the stock price collapsing (employees getting bailed in). But most private ones won't survive. Too many staff, too little cash generation, and too reliant on the kindness of strangers (who remembers a few years ago, IPOs were so unfashionable, very old money...lol).
It is probably worse than 2000, the sector is much larger, private markets are far larger, there is so much hot money in the hands of brainless investors, it is a recipe for disaster. It is also worth saying, there will be a reprieve for a few months, then a story will break about one of the largest companies filing for bankruptcy overnight, then the private marks will come in. The losses sustained already have been some of the largest in the history of capital markets, it is the first inning.