Prediction 5 – Tech Wreck Refocus
There will be more layoffs, less investment in R&D, and a focus on ROI. This will result in a refocus on business outcomes that, in turn, will encourage SaaS product developers to continue to develop their tools’ unique selling points through continued specialisation, modularisation, and integration.
The dot-com bubble (or dot-com boom) was a stock market bubble in the late 1990s. The period coincided with massive growth in internet adoption, a proliferation of available venture capital, and the rapid growth of valuations in new dot-com startups.
During the dot-com crash, many online shopping companies failed and shut down, notably Pets.com, Webvan, and Boo.com, along with several communication companies, such as Worldcom, NorthPoint Communications, and Global Crossing. Others, like Lastminute.com, MP3.com and PeopleSound, survived the burst but were acquired. Larger companies like Amazon and Cisco Systems lost significant portions of their market capitalisation, with Cisco losing 80% of its stock value.
More recently, billions of dollars in value were wiped off major technology stocks like Meta (the owner of Facebook), Alphabet (Google), Netflix, and Amazon last week as investors punished companies for failing to meet expectations.
But that doesn’t mean we are headed for another tech wreck as experienced in the early 2000s, says Stake’s Eliot Hastie.
‘I think it’s different. There’s a lot of talk about it. You’ve got all these different signals flashing across the market. But is it at the bottom? Is it a crash? I’m not quite sure because people are still using technology to do things. They’re still shopping on Amazon, we’re still watching Netflix, we’re still buying Apple and interacting with Microsoft software.’
Shares in technology companies rose strongly in 2020 and 2021, buoyed by people forced to work from home under the COVID-19 pandemic conditions. Hastie said the Nasdaq 100, which comprises the biggest technology stocks in the USA, rose 700 per cent during the pandemic. However, post-pandemic, it’s now becoming clear that predictions on this growth’s sustainability were over-exaggerated, and many of these tech companies appear to have over-resourced in the wake of slumping profits.
In 2023, layoffs have yet again cost tens of thousands of tech workers their jobs; this time, the workforce reductions have been driven by the biggest names in tech, like Google, Amazon, Microsoft, Yahoo, and Zoom. Startups, too, have announced cuts across all sectors, from crypto to enterprise SaaS.
The reasoning behind these workforce reductions follows a familiar script, citing the macroeconomic environment and a need to find discipline on a tumultuous path to profitability. Still, tracking the layoffs helps us understand the impact on innovation, which companies are facing tough pressures, and who is available to hire for the businesses lucky to be growing. It also, unfortunately, serves as a reminder of the human impact of layoffs and how risk profiles may be changing from here.
One of the most alarming stories is from Sam Bankman-Fried, former CEO of now-defunct FTX.
Until recently, Sam Bankman-Fried, or SBF, was crypto’s golden boy, known for building his cryptocurrency exchange, FTX, into a $32 billion giant in just two years.
Shortly before the downfall, Sam Bankman-Fried consented openly and now, in hindsight, over confidently to an eye-opening interview where he openly described Crypto as a Ponzi Scheme, essentially claiming the value of anything is what people will pay for it, whether or not it works or could ever work.
Source: Coffeezilla – YouTube Video.
Startups can use exchanges like this to trade real money for tokens or coins, and these tokens or coins can represent real-world rewards for investing in those companies, an alternative to traditional stocks and shares. With companies and CEOs like this enabling the investment of ‘just a box’ startups, investors may also have invested, and this also helps to explain why investors now may be feeling pragmatic rather than looking to ride the coattails of anything that looks like the next PayPal or Google, instead hoping for some actual returns.
That’s going to affect our MarTech Stacks and our data, but hopefully, we’ll see companies look to refocus on their core offerings rather than greedily eating into each other’s tech stack pies. It is also likely to mean less investment into custom projects and a subscription to technology that can be cut if budgets require it. Companies do remove whole departments if they need to. This can make choosing the wrong tool extremely expensive. In the early 2000s, when WordPress reigned king, there was also Adobe Business Catalyst, which had spent over 10 years building a customer base. Business Catalyst was a hosted (SaaS) all-in-one solution for building and managing business websites, but in 2019 it announced its abrupt closure.
‘Adobe is committed to delivering exceptional software and services to our customers. It’s in our nature to innovate and try new things, and it was in this spirit we acquired Business Catalyst in 2009. As we refocus on products that broadly provide our customers with the most value, Adobe is announcing the end of development for Business Catalyst as of March 26th, 2018. New sites will no longer be available for purchase starting on June 18th, 2018.
‘Adobe will stop hosting existing sites on Business Catalyst on March 26th, 2020. Adobe encourages customers to download their data and migrate to other systems well before March 26th, 2020.’
As the name is coined, Tech Wreck could come in many different forms. It is now more important than ever to truly assess the tech companies we choose to pair with and how much we recommend investing our time and money in them.
After reading this chapter, you can make your predictions about where you think things are heading.
Do we need to watch our Fitbits nervously? Will Amazon deliver our milk, or should we have just stuck with the local milkman?
What can we do as marketers and customers to encourage the kind of future we want to be part of?
Next, we’ll look at bringing this all to a firm conclusion as we review, and look to break, The Circle of F**ked Data.
