Alternatively, the window of ultra-low interest rates that fueled the rise (now rising) was unprecedented in business history. This led to ample speculation. It also created valuations we are quite unlikely to revisit. People will have a hard time letting go of those prices.
Similar to 2009, the founders & executives that run VC backed companies have been quick to recognize and adjust. They understand that the cost of capital just went way up & that high cash burn rates are now impossible. The "game on the field" has changed & they are adjusting.
That said, these adjustments are meeting with shock & surprise when it comes to the employee base, particularly those employees in the Bay Area. During this rate induced boom, competition for employees created a Disney-esque set of experiences/expectations in high tech companies.
For employees that have only known this world, the idea of layoffs or cost reduction (or being asked to come into the office) is straight up heresy. In many ways this is not their fault. Excess capital led to excessive showering of employee benefits and heightened expectations.
Unfortunately, you can't "wish away" the fact that if your company isn't cash flow positive & capital is now expensive, you are living on borrowed time. "Culture" won't matter if your company isn't around. Sorry to say it, but these realities are ... realities. Hard to swallow.
During the Pandemic, many companies experimented with remote workers, most from outside of the Bay Area. Based on anecdotal conversations, this trend is likely to continue post-pandemic. Which means the Bay Area employee is now competing with a broader set of alternatives.
In today's world, positive cash-flow matters & surviving requires out maneuvering your competitors. You need teammates that are ready to roll up their sleeves & get to work. Sadly, we may have conditioned a contingent of employees in a way that is incongruent with this mindset.
If you find these perspectives cold or heretic, I have a thought exercise for you. Spend 51 minutes listening to
@patrick_oshaginterview Frank Slootman and imagine you are competing with his team at Snowflake. How do you like your odds?
There is no doubt that layoffs are brutal & real lives are negatively impacted. But "not adjusting" is a losing strategy for everyone. Layoffs are now widespread (see list). The most dangerous move you can make is being a late add to this list. news.crunchbase.com/startups/tech-…
We often want someone to blame in these situations. But just as spiking inflation is catalyzing this reset, ultra-low interest rates fueled the 13 year boom. No single individual or manager could have predicted either. Yet they are both real externalities we have to navigate.
"Good times become good memories and bad times become good lessons in life." - Unknown "Hard times are sometimes blessings in disguise. We do have to suffer but in the end it makes us strong, better and wise." - APR