That affects both the good and the bad. Fundamentally strong companies, those with real revenue and prospects, such as Microsoft, are also seeing their value decline, and Musk’s own companies are no exception to the downside. The fall in the price of Tesla has jeopardized its ambition to acquire Twitter, and over the weekend was forced to rule out plans to cut 10% of the electric car maker’s workforce. In addition, the future gains of a big, brazen bet like its Starlink company, which hides the world with satellite Internet connectivity, also seem much worse than a DCF analysis, now interest rates have increased.
In those two decades, the word “technology” itself was devalued: it has long since referred to technology or technology company. As recently as the 1990s it was easy to identify what a technology startup was. It would be a new company considered well placed to take advantage of an innovation with great market potential for the future. For example, when Nvidia floated, it was one of three companies to go public in a round of financing of more than 30, with investors betting that the winner could bring CGI to the masses, to computers and game consoles. .
This required technical knowledge and marketing skills. A bet like Nvidia was risky, as it should be, because headlines usually won. But now “technology” has become so degraded that another phrase has been coined – “deep technology” – to refer to anything really related to engineering or computer science. In the most exquisite sequence of WeCrashed, the dramatic dramatization of Apple TV in the history of WeWork, founder Adam Neumann scandalously renames his sublease office as a “technology company” only to seduce Masayoshi Son of Softbank , which is buying a “disruptive” platform. It works.
Another of Son’s big bets, Klarna, now seems to be the biggest potential victim of the crash. For critics, it is little more than a payday loan operation, only one taking advantage of a borrower market that the credit market rejected, for the very good reason that they make pretty bad debtors: Generation Z impulsives. Klarna is moving towards an IPO as its valuation sinks.
Klarna, which announced layoffs last month, was valued at $ 45.6 billion a year ago, but recent reports said the new funding plans would reduce the valuation to about $ 30 billion. In general, other “tech” fast fashion ersatz companies are collapsing. I would expect food delivery companies to explode next, with repercussions for commercial television advertising revenue and the electronic scooter market.
One of Silicon Valley’s oldest venture capital firms, Sequoia Capital, has now published a bleak 52-page prospectus for its startups with a name reminiscent of those pamphlets of advice on the Cold War nuclear fall, such as see Protect and Survive. In Adapting to Endure, the company warns: “We don’t think this is another strong fix followed by an equally rapid V-shaped recovery as we saw at the start of the pandemic.”
This may seem a bit rich from the company that supported Google’s spyware, Glass, and recently auctioned off an NFT. But we’re all better off when stupid money stops flowing, and to be honest, it’s better without fools pouring money into fools like Sequoia.
Andrew Orlowski is on Twitter @andreworlowski