After the hangover of 2022, the real pain for high-tech will come in 2023
calcalistech.com
calcalistech.com
> Nasdaq composite, a tech-heavy index, losing a third of its value. Tech’s five giants have collectively lost a dizzying $3trn in market value ... These difficulties mean that the year ahead will be a lean one in techland. Most have made a resolution to trim their costs.
This article:
> Funding rounds created a cash cushion that allowed all the players in the private market, in complete contrast to the public market, to simply not look in the mirror.. With the end of the age of valuation, the spotlight was turned in the direction of revenues and profits.. growth of high-tech companies was based on sales of software to other high-tech companies. Now they are all re-examining the budgets.. After personnel, the biggest expense in a high-tech company is computer infrastructure and software.. many SaaS companies starting to receive cancellation notices as quickly and easily as they received.. subscribers just a year ago. A company whose product is not sufficiently unique or critical for the user, may suffer a severe hit in revenue..
The biggest issue I see is that startups failed to build self sufficiency and over spent. For example, deep discounts. Uber and Lyft could outspend on discounts lowering the price of a cab. However it’s not like cabbies we’re high income, so really the we’re competing with cities selling medallions. Nyc, sf, Chicago were great markets, the rest of the low density us(especially without a cab market) probably not so much. They kept spending to support the growth, and once the incentives are removed we can see the actual market share captured, and the actual return in investment.
I don’t think investors would have supported the growth first strategy as much as the did without low interest rates.