As recently as the early months of the Covid-19 pandemic, tech investors thought a bunch of companies would be wiped out. But within a few months tons of money has been poured into all things tech and corporate values have gone to the moon. The last two years of tech money craze was unlike anything I had seen before. Now we hear the warnings again.
Shira: Sorry, but I have to ask: Is this time different?
Erine: Maybe. We have never seen this combination of economic anxiety and high inflation before. Economists are assessing the risks of a recession in the United States and companies in many sectors are worried about the slowdown in their activities. During other uncertain times for technology, there was not the same combination of economic stresses.
And because there’s been so much hype, growth, and money in tech since 2020, there might be a bunch of companies that aren’t worth anything at all what they were worth a year ago. or two, and others were fragile initially and might not withstand a contraction.
Shira: Has anything really changed? Amazon, Zoom Video and the grocery delivery start-up Instagram are worth much less than six months ago, but are they less good companies?
Erine: Not really! So far, it’s been more of a reset of what investors think these companies are worth. But a change of mood is important. Fast-growing start-ups in particular need the trust of investors, customers and employees to maintain momentum. If this forward progress stutters, it can kill businesses.