Massive job cuts at Snapchat, dramatic valuation drops at Meta and Apple, and hiring freezes at other big tech companies are giving new fuel to an increasingly popular question: silicon. Is the golden age of ballet coming to an end?
The answer is complicated, experts say. The technology industry has seen impressive growth over the last few years, fueled by the pandemic that forced most of the world online and soared demand for technology services. That surge, and the high salaries and position benefits that come with it, appears to be slowing.
Margaret O’Mara, professor at the University of Washington and author of The Code: Silicon Valley and the Remaking of America, said: “In many ways, we are just getting back to normal after a massive uptick that made everything super massive.”
These trends have been exacerbated by the greater global recession, and the tech world has not been affected, she added. The Federal Reserve has already made her three rate hikes in 2022, and more are expected.
The previous low-interest-rate environment fueled a tech boom that helped create a parade of “unicorns,” companies valued above $1 billion. Notable examples include Airbnb and Uber, worth $47 billion and $82 billion in public offerings, respectively. But O’Mara said that as interest rates change, there will be “less money moving around” and investors will put their cash in “more sensible ways”.
“Some investors still have cash, but deal flow will cool during a recession like this,” she said.
Rapid growth has been tempered by a series of high-profile warnings, from the decline of WeWork to the collapse of Theranos. Theranos became popular in a hot press environment, which ultimately earned him a valuation of over $1. Billions of years ago before that claim turned out to be untrue.
Such stories, combined with more scrutiny of the tech industry at large over the past decade, including whistleblower revelations against Facebook and the public questioning of tech executives in Congress. – Shaking the image of Silicon Valley. Even some of its most vocal defenders, including former President Barack Obama, seem to have reconsidered. He praised Facebook, but in a recent speech at Stanford University he denounced its role in spreading disinformation, particularly about elections.
“One of the biggest reasons democracies are weakening is that there have been major changes in the way we communicate and consume information,” President Obama said.
Lawmakers and US federal agencies are now jumping into the fray. With moves from the Federal Trade Commission (FTC) intensifying and legislation coming from Congress, big tech may be facing its biggest obstacle yet.
Public perceptions of technology in general are also changing, with 68% of Americans saying they believe tech companies have too much power and influence in the economy, up from 51% in 2018. increasing from
“Americans don’t like big things. People worry about the concentration of power,” O’Mara said. “No one can be a golden child and become a $2 trillion company. It’s part of the life cycle.”
Silicon Valley expands from California
The geography of Silicon Valley is also changing, according to experts. For nearly a century, the Valley, as the collective name for the region south of San Francisco, has established a public ethos as a center of innovation. Technology his rise as a hub began when US military operations established sites for research contracts beginning around the 1930s. This trend extended into the civilian realm over the following decades.
But the tech industry is expanding far beyond the California Bay Area, a trend accelerated by the pandemic. In 2021, electric vehicle company Tesla will move its headquarters to Austin, Texas, following similar moves by other technology companies such as Oracle and Hewlett-Packard.
This is reflected in hiring, said Brent Williams, who works for recruitment firm Michael Page, adding that the impact is what the industry has dubbed “venture capital winter.”
“Covid has changed the whole game,” he said. “It’s become very competitive for companies to get talent because they’re going against everyone in the United States, not just people in the Gulf.”
This trend, combined with increased work-from-home policies, would have been shocking in the pre-pandemic era. Tech companies invested billions in sprawling campuses and offered perks to employees such as transportation to and from work and dining in elaborate facilities.
“Industry obituaries are written prematurely”
Despite the growing list of obstacles, “Silicon Valley is still incredibly strong,” says Nicholas A. Bloom, an economics professor at Stanford University. It has endured “multiple cycles”, including recessions in 2001 and 2008, and has recovered each time, he added.
“Some companies may have moved externally for work-from-home and globalization, but Silicon Valley is still zero and no other area in the industry stands out,” he said. .
Indeed, O’Mara said it’s unlikely we’ll see much change from the Valley’s heritage or its physical location in the heart of the bay.
“The Bay Area and San Francisco have a resilience and a unique quality that can’t be replicated anywhere else,” she said. “There’s a reason people come there to live. They want to be there.” There is no change in the fact that they are gathering at
“Industry obituaries have been written prematurely several times,” she added. “This may be the end of an era for Silicon Valley, but it is unlikely to be the end of Silicon Valley.”