4 ms·

There has been a lot of talk about a correction coming and a bubble bursting specifically in tech for years now. Is this it?

zeroonetwothree 4y ago
If so it’s very mild so far
- gedy 4y ago
  Agreed, these recent moves are not a great sign, but the dot com crash was so much worse from a people and company perspective. The moment that sticks with me is (former) employees wheeling all the Herman Miller chairs through the parking lot with the facilities guy holding the door open saying "Take it. Take it all..."
  - nkingsy 4y ago
    That’s every startup failing/divesting right? There’s a moment of chaos where priorities aren’t aligned and company assets disappear.
UncleOxidant 4y ago
Probably? But it's mostly just a return to sanity at this point, though it probably will overshoot as these things usually do. Meta going from 47K employees in 2019 to 81K employees in about 3 years was just crazy, for example. How do you even assimilate that many new employees in such a short time?
- gwd 4y ago
  > But it's mostly just a return to sanity at this point, That's what the word "correction" implies: That it's going down, not because the business itself is bad or anything in the market has fundamentally changed, but because it was valued "incorrectly" (where "insane" would be an extreme form of "incorrectness"), and that its value is being "corrected".
  - majormajor 4y ago
    I see UncleOxidant as saying it's a 2020-2021 correction, distinct from the larger talk of a correction that's been going around for years now even pre-Covid. I haven't seen signs of that latter, larger one yet. Fingers crossed...
    - UncleOxidant 4y ago
      Exactly. Look at graphs of employee growth at the large tech companies between 2019 and 2022 - we're lopping off some of that growth... probably will end up lopping off a lot of that growth before this is over.
sharemywin 4y ago
I just don't see where the tech growth is going to come from to keep the high multiples?
dvngnt_ 4y ago
the correction is happening now. the pandemic pushed all these tech companies up artificially. they hired in record numbers to meet demand and thought it would be permanent/the new floor. The economy has since rebounded and companies are returning to previous levels. The war isn't helping however
- bogomipz 4y ago
  >"the pandemic pushed all these tech companies up artificially. they hired in record numbers to meet demand and thought it would be permanent/the new floor." This is the really surprising thing to me - many(most?) of these companies are data driven companies. Companies with teams of analytics folks, data scientists, modeling-experts and teams of engineers working on tools to do ML and large scale data analytics. Do none of them actually use their tools and internal expertise to model their own hiring practices and historical market trends? Or maybe they did and always knew they would need to do mass layoffs when inevitably the cheap money pump got shut off?
  - anikom15 4y ago
    No amount of machine learning, analytics, statistics, models, and experts can predict the future.
    - bogomipz 4y ago
      No of course not but I would think it could certainly help to temper exuberance. Especially if you were considering a spectrum of uncertainties.
  - mjr00 4y ago
    I hope that if we've learned anything from the past few years, it's that you can interpret and manipulate data to make it say whatever you want to say. That's true even when analyzing data about the present, doubly so trying to predict the future. Being data-driven is a method for justifying decisions. But it's still a human making a decision in the end.
paxys 4y ago
People have been saying "the tech bubble is going to burst" since like 2011. The current round of job cuts and stock drops puts the industry back to ~mid 2020 levels. So it is definitely a correction, but hardly world ending.
- fnordpiglet 4y ago
  Realistically they’ve been saying this since the 1950s
  - NineStarPoint 4y ago
    There was the dot com bubble burst in 2000, so there has actually been one. A few years after the 2008 crash sounds about right to when people started talking about tech bubbles again to me.
    - sqeaky 4y ago
      All the signs were there for everyone to see in the 2000 Dotcom Dotbomb. The root problem was a bunch of investors wildly investing in crappy tech companies, like tinder for cats. There were toxic assets, huge and publicly visible waste, low product output. This time, there is a lot more growth from many companies but we also see the results of that work, products and services exist as a result. There is waste but not like in 2000.
      - fnordpiglet 4y ago
        It wasn’t tinder for cats. It was pets.com that was the poster child.
    - fnordpiglet 4y ago
      I lived and worked through it and I’ve not seen tech slow down measurably, even then. There was a correction, and a shake out, but then it picked up basically where it left off and shot up. There have been other busts over the last 70 years but they’re more like a system that overheats, slows, then resumes.
fnordpiglet 4y ago
All the layoffs announced (sans the Musking that just happened) are in line with normal annual attrition plus a bump given the huge hiring spree during the pandemic to meet pandemic demand. I’ll bet $20 if you took HC growth prepandemic and straight lined it through to today inclusive of layoffs you would see normal YoY growth between those two points, which an aberration in 20/21 of high hiring. I think you’ll see a bit of party hangover and if the whole economy sinks it’ll get worse. But overall I’ve not observed any material structural shift in the world or in tech, unlike say the dot com bust or the global financial crisis. There’s some cold spots though like real estate tech that’ll probably go through a tough time. I think a lot of folks here have never been through a down cycle before though and anything that’s not frantic growth and double digit comp growth YoY will feel like a nuclear winter.
P_I_Staker 4y ago
Yup, I'm worried about what else could fall, but I think this was a necessary correction, and hope this stays contained.

zeroonetwothree 4y ago

If so it’s very mild so far

gedy 4y ago
Agreed, these recent moves are not a great sign, but the dot com crash was so much worse from a people and company perspective. The moment that sticks with me is (former) employees wheeling all the Herman Miller chairs through the parking lot with the facilities guy holding the door open saying "Take it. Take it all..."
- nkingsy 4y ago
  That’s every startup failing/divesting right? There’s a moment of chaos where priorities aren’t aligned and company assets disappear.

UncleOxidant 4y ago

Probably? But it's mostly just a return to sanity at this point, though it probably will overshoot as these things usually do. Meta going from 47K employees in 2019 to 81K employees in about 3 years was just crazy, for example. How do you even assimilate that many new employees in such a short time?

gwd 4y ago
> But it's mostly just a return to sanity at this point, That's what the word "correction" implies: That it's going down, not because the business itself is bad or anything in the market has fundamentally changed, but because it was valued "incorrectly" (where "insane" would be an extreme form of "incorrectness"), and that its value is being "corrected".
- majormajor 4y ago
  I see UncleOxidant as saying it's a 2020-2021 correction, distinct from the larger talk of a correction that's been going around for years now even pre-Covid. I haven't seen signs of that latter, larger one yet. Fingers crossed...
  - UncleOxidant 4y ago
    Exactly. Look at graphs of employee growth at the large tech companies between 2019 and 2022 - we're lopping off some of that growth... probably will end up lopping off a lot of that growth before this is over.

sharemywin 4y ago

I just don't see where the tech growth is going to come from to keep the high multiples?

dvngnt_ 4y ago

the correction is happening now. the pandemic pushed all these tech companies up artificially. they hired in record numbers to meet demand and thought it would be permanent/the new floor. The economy has since rebounded and companies are returning to previous levels. The war isn't helping however

bogomipz 4y ago
>"the pandemic pushed all these tech companies up artificially. they hired in record numbers to meet demand and thought it would be permanent/the new floor." This is the really surprising thing to me - many(most?) of these companies are data driven companies. Companies with teams of analytics folks, data scientists, modeling-experts and teams of engineers working on tools to do ML and large scale data analytics. Do none of them actually use their tools and internal expertise to model their own hiring practices and historical market trends? Or maybe they did and always knew they would need to do mass layoffs when inevitably the cheap money pump got shut off?
- anikom15 4y ago
  No amount of machine learning, analytics, statistics, models, and experts can predict the future.
  - bogomipz 4y ago
    No of course not but I would think it could certainly help to temper exuberance. Especially if you were considering a spectrum of uncertainties.
- mjr00 4y ago
  I hope that if we've learned anything from the past few years, it's that you can interpret and manipulate data to make it say whatever you want to say. That's true even when analyzing data about the present, doubly so trying to predict the future. Being data-driven is a method for justifying decisions. But it's still a human making a decision in the end.

paxys 4y ago

People have been saying "the tech bubble is going to burst" since like 2011. The current round of job cuts and stock drops puts the industry back to ~mid 2020 levels. So it is definitely a correction, but hardly world ending.

fnordpiglet 4y ago
Realistically they’ve been saying this since the 1950s
- NineStarPoint 4y ago
  There was the dot com bubble burst in 2000, so there has actually been one. A few years after the 2008 crash sounds about right to when people started talking about tech bubbles again to me.
  - sqeaky 4y ago
    All the signs were there for everyone to see in the 2000 Dotcom Dotbomb. The root problem was a bunch of investors wildly investing in crappy tech companies, like tinder for cats. There were toxic assets, huge and publicly visible waste, low product output. This time, there is a lot more growth from many companies but we also see the results of that work, products and services exist as a result. There is waste but not like in 2000.
    - fnordpiglet 4y ago
      It wasn’t tinder for cats. It was pets.com that was the poster child.
  - fnordpiglet 4y ago
    I lived and worked through it and I’ve not seen tech slow down measurably, even then. There was a correction, and a shake out, but then it picked up basically where it left off and shot up. There have been other busts over the last 70 years but they’re more like a system that overheats, slows, then resumes.

fnordpiglet 4y ago

All the layoffs announced (sans the Musking that just happened) are in line with normal annual attrition plus a bump given the huge hiring spree during the pandemic to meet pandemic demand. I’ll bet $20 if you took HC growth prepandemic and straight lined it through to today inclusive of layoffs you would see normal YoY growth between those two points, which an aberration in 20/21 of high hiring. I think you’ll see a bit of party hangover and if the whole economy sinks it’ll get worse. But overall I’ve not observed any material structural shift in the world or in tech, unlike say the dot com bust or the global financial crisis. There’s some cold spots though like real estate tech that’ll probably go through a tough time. I think a lot of folks here have never been through a down cycle before though and anything that’s not frantic growth and double digit comp growth YoY will feel like a nuclear winter.

P_I_Staker 4y ago

Yup, I'm worried about what else could fall, but I think this was a necessary correction, and hope this stays contained.