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The tech sector teardown is more catharsis than crisis

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Re: The tech sector teardown is more catharsis than crisis

#5

Post by JCM9 »

There’s a whole generation of tech employees that have never seen a down market. All indications are that these folks are woefully unaware of what’s on the horizon now.

It’s going to be all about cash flow. If you’re burning cash and not making much of it from operations then it’s going to be a bumpy road ahead. Buckle up.

Re: The tech sector teardown is more catharsis than crisis

#6

Post by stackbutterflow »

JCM9 wrote: post #5

There’s a whole generation of tech employees that have never seen a down market. All indications are that these folks are woefully unaware of what’s on the horizon now. It’s going to be all about cash flow. If you’re burning cash and not making much of it from operations then it’s going to be a bumpy road ahead. Buckle up.

I've heard the argument that the dotcom crash was so catastrophic because the Internet as a market wasn't proven at that point. That'd mean a dotcom like crisis is the lowest point this industry can reach. Which in some way is reassuring.

Re: The tech sector teardown is more catharsis than crisis

#7

Post by JCM9 »

stackbutterflow wrote: post #6
JCM9 wrote: post #5

There’s a whole generation of tech employees that have never seen a down market. All indications are that these folks are woefully unaware of what’s on the horizon now. It’s going to be all about cash flow. If you’re burning cash and not making much of it from operations then it’s going to be a bumpy road ahead. Buckle up.

I've heard the argument that the dotcom crash was so catastrophic because the Internet as a market wasn't proven at that point. That'd mean a dotcom like crisis is the lowest point this industry can reach. Which in some way is reassuring.

That was a factor, but more fundamentally it was companies with wild valuations and no realistic prospects of becoming a profitable and self-sustaining business. There is some of that out there right now. Market corrections exist in part to flush those companies out of the system.

Re: The tech sector teardown is more catharsis than crisis

#8

Post by RandomLensman »

stackbutterflow wrote: post #6
JCM9 wrote: post #5

There’s a whole generation of tech employees that have never seen a down market. All indications are that these folks are woefully unaware of what’s on the horizon now. It’s going to be all about cash flow. If you’re burning cash and not making much of it from operations then it’s going to be a bumpy road ahead. Buckle up.

I've heard the argument that the dotcom crash was so catastrophic because the Internet as a market wasn't proven at that point. That'd mean a dotcom like crisis is the lowest point this industry can reach. Which in some way is reassuring.

Not sure that follows. If (big "if") interest rates go up a lot, then a lot of investors might not reach for VC or PE to enhance their returns at even close to current allocation (and growth would be heavily discounted).

Look at how the telecoms industry looks now compared to the heights of 2003 or so.

Re: The tech sector teardown is more catharsis than crisis

#9

Post by plaidfuji »

My biggest question behind all of this is how interconnected is the tech bubble, and how self-perpetuating will a downturn be?

The venture-backed startups that I’ve worked at have themselves utilized tools built by other venture-backed startups. It seems like there’s an entire cottage industry of SaaS tools designed to make it easier to scale up small companies. What will the effect of a startup downturn be on companies like Carta (high revenue but no profit from what I could find, and whose revenue likely comes from other companies with no profit…) How many Cartas are out there, whose customers are primarily unprofitable startups?

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