Is the thinking that VCs will stop funding remote companies? Because one advantage a fully remote org will have a slightly extended runway not spending money on rent, office furniture, and other costs associated with operating in-person operations.
To me, an office sounds like something a tech company should only obtain after a strong and established revenue stream.
That doesn't make much sense. Nobody is going to decide that a few percentage points bump in interest rates is going to stop them from pursuing profit entirely.
Also, it's silly to compare current conditions to post-bust conditions: the market at the time of the bust was incredibly immature and people had been throwing money at ridiculous garbage just because someone had a landing page and a marketing team. We've gone through several entire generations of startups at this point. VCs are far more sophisticated than they were back then, and far more people have made in the tech / startup industry.
Millennials and Zoomers are far more hedonistic than their parents and grandparents. They will gladly go into debt to fund their lifestyles rather than cancel that 8th streaming service they haven't watched in 3 months. They're so bad at managing money that we literally have services like Trim to remind them that they're being stupid with their bank accounts.
We're not entering into a recession because the economy is collapsing and value has disappeared. We're entering into a recession because of a myriad of supply chain issues and because people are literally making and spending too much. While I believe that our entire monetary system is a disaster waiting to happen... we're a long way from being in a bad spot in terms of investment.
I'm always surprised that more people can't see the writing on the wall.
The startup boom exists because money was so cheap you had to spend it. Then consumer spending started to ramp up again and money was flowing both ways. Worrying about profits was viewed as silly since that would get in the way of maximizing growth under the assumption that you could one day flip a switch and generate profit.
With inflation rising consumers have much less to spend (and are already starting to rapidly take on more debt), this alone would hurt tech companies (you see this in cancelation rates rising with streaming services and a drop in e-commerce spending), but the end of cheap money will have disastrous consequences for the startup ecosytem.
The number of IPOs is declining rapidly. Investors saw this coming when the pandemic hit and started to get everything together so the could cash out their chips before the casino closed.
Massive layoffs are coming in tech as unprofitable companies will be forced to demonstrate that they can in fact make money (if they really can) and even profitable companies start to see their income drop (since their income is primarily other tech companies or consumers who will be increasingly tightening their wallets).
What's coming is going to make the dotcom bust seem mild.
There is no scenario in which tech declines without the US entering a recession and when the US enters a recession, the "cheap money" is going to be coming back.
There is no way the dotcom crash is repeated because today IT is integrated inside every aspect of every business. It will be just another regular recession.
The biggest threat to programming jobs in the US is outsourcing (and, in the longer term - automation), not an imaginary apocalyptic event.
If you think you will be able to tell by looking at a period of 6 months whether a contraction (that hasn't actually even started yet in terms of total employment) is just a regular recession or the apocalypse you prophesize, I have a brooklyn bridge to sell you.
- Have interest rates higher than they are today (i.e. cheap money does not return)
- Major layoffs across the board at tech companies
- It will be much harder to find a tech job after layoffs
- Inflation still not tamed despite interest rate hikes and declining employment
- Clear sentiment that this is worse that the dotcom bust
I'm not sure how anyone working in tech, looking at the data behind the scenes, seeing where all the math doesn't quite add up, can possibly think what we're heading for will be a "regular recession". "apocalypse" is a bit hyperbolic, but this is going to be bad and I will be delighted to realize that I'm foolishly wrong on this one.
For the record, this is what I thought would happen during covid, but never imagine the insane[0] amount of money the FED would pump into the market. However we've exhausted that option, and I don't see how we're going to print money out of this one.
I agree. Its not going to be good. My main concern is staying employed for that whole period of time. As long as I can stay employed, I think I can come out on top, since people currently employed get hired easier than people who get laid off, ironically.
I don't expect the economy to ever "return to normalcy." Our economy is currently diabetic and we are pumping it full of insulin to offset the years of sugar we pumped into it last decade. It may even out after a REALLY long time...everything does eventually. But until then things are going to be rocky.
And I think your hunch is about as correct as your rationale for posting the M1 graphic without reading the note below it or noticing that it jumped 4-fold in a single month.
I'm well aware of both the note and the jump. If you think that increase is merely an artifact of a change in methodology then you should spend a bit more time researching on what you're looking at. The jump is quite real.
> In late February and early March of 2020, the Fed cut its policy interest rate dramatically to help ease credit conditions during the COVID-19 crisis. The resulting acceleration in the supply of M1 can be understood largely as banks accommodating an increase in people’s demand for money.
This leads back to your original "money will be cheap again" point. It won't, since we're partially living in the consequences of doing this during covid. Inflation is being driven by many factors, but the FED will continue to increase interest rates to try to fight it.
Again I'll be more than happy to see you proven right but so far your responses haven't given me much confidence.
If you are well-aware, why didn't you use a more adequate money supply measure like M2 or M3? Is it maybe because the growth there was nothing out of the ordinary looking at the past 10 years?
