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Is the tech boom over?Quartz Weekend Brief Quartz

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Technology companies are having a tough month. Venture capitalists are trading less, with start-ups announcing layoffs and declining in both the public and private markets. The boomtime atmosphere is over and tech Twitter is full of tips for tightening the belt.

Analysts have warned about the tech bubble many times over the last decade, but the tech bounces every time. So is this year the year when the gravy train finally stops? necessarily.

The watchword of conversations with analysts and investors is uncertainty. The tech market has been reset after a decade of boom and record 2021, responding to inflation, high interest rates and the war in Ukraine. No one knows what will happen for the rest of the year.

It’s easy to imagine a soft landing of technology, rather than the historic recession that some observers warn. The optimistic case begins with the fact that VCs still have unprecedented investment amounts, and eventually goes back to doing just that. If a recession occurs, it could be mild rather than a cataclysm like the 2008 financial crisis. Also, the demand for technology from consumers and businesses remains strong.

The worst-case scenario for the private technology market is accompanied by a prolonged economic downturn and significantly higher interest rates. In that world, venture capital investment has been hampered for most of 2022. After that, interest rates will be much higher than in the last decade. Higher interest rates make stocks less attractive than bonds and may move some investors away from VCs.

So far, transactions are still taking place, especially in early-stage companies. But psychological factors make a difference. The longer things stay bad, the worse they can be. Atmosphere is important and much harder to predict, Michael Chui, a partner at the McKinsey Global Institute, told Quartz. As Founder Collective’s managing partner Eric Paley says, people must be able to dream of investing in things, especially at aggressive prices.

The capital of backstory Venture exploded in the 2010s. The industry has moved from a niche area, almost entirely in Silicon Valley and Boston, to a large global asset class that invests hundreds of billions of dollars annually. VC has made a lot of money for investors, so more money has been poured. Last year, startup investment broke the record. After a short panic on covid, VC invested more money during the pandemic. Startup investment in 2021 reached new highs in almost every region and sector. It is thanks to inflation, higher interest rate expectations, and the invasion of Ukraine. Lowering the reputation of public technology companies has forced late-stage start-ups to lower their expectations, and resetting their reputation has spilled over into technology.Stonks interlude

Last year’s 10 biggest technical IPOs are all struggling. Cryptocurrency exchange Coinbase and electric car maker Rivian are the worst, declining by nearly 80% since the beginning of the year.

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Deloitte-sponsored content

Tech Trends 2022: Design the future of technology. Pioneering companies are automating, abstracting, and outsourcing business processes to increasingly powerful technical tools. In doing so, they provide their employees with supernatural powers to work on innovative projects that bring competitive differentiation. Gain insight and inspiration to unleash innovation, build trust, and design the advantages of your digital journey. Explore 7 trends. Venture capital giant Softbank announced plans this week to cut startup investment by at least half. If other large funds like Tiger Global do the same, funding will be much more difficult. NASDAQ is getting a lot of attention. The Technology Index is a pioneer in the industry and has historically been strongly correlated with VC funding. How low can cryptocurrencies be? Bitcoin has plummeted, Stablecoin TerraUSD is not compatible with its Monica, and Coinbases’ share price has fallen 79% since the beginning of the year. Cryptographic startups have been one of the brightest spots in the technology, but it can change quickly. Instacart IPO. A grocery delivery company that secretly submitted this week reduced its rating by 40% two months ago. If Instacart is published above its adjusted value, it’s a good sign of technology. Expect another 6 weeks of winter if it puts it in an IPO or tank or pulls an offering.

This week, Apple announced that it will not produce the iPod, the generation-defining device launched in 2001. The iPod debuted during the dot-com crash as internet startups closed and investors were looking for a more stable bet. Technology has an old phrase, and the best time to start something is when the market cools down. Employees are easier to hire and less tempted to raise large amounts of cash. Launching something new in difficult times is, well, more difficult. But historically many good products and businesses start when everyone else heads for the exit.

Deloitte-sponsored content

Tech Trends 2022: Design the future of technology. Pioneering companies are automating, abstracting, and outsourcing business processes to increasingly powerful technical tools. In doing so, they provide their employees with supernatural powers to work on innovative projects that bring competitive differentiation.Gain insight and inspiration to unleash innovation, build trust, and design your digital journey’s dominance. Investigate 7 Trend Quartz questions to inspire conversations.

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Banned reading club. In the Washington Post, Hannah Natanson reports that teenagers from all over the country come together to read books that aren’t allowed to be read at school.

The philosophical giant attaches great importance to Russia. Historian Adam Tooze explores the role of 92-year-old Jurgen Habermas in German politics, including his country’s debate on how to deal with Russia.

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Better globalization. Economist Dani Rodrik explores what happens after the era of hyperglobalization and what parts are worth giving up.

thank you for reading! And don’t hesitate to contact us with comments, questions, or topics you want to know more about.

Best wishes for the weekend of the best scenario.

Walter Frick, Editor-in-Chief

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