Headline, December 20 2022/ TECHIES : ''' '' HYPE HOOVERS HUFF '' '''

 

TECHIES : ''' '' HYPE

 HOOVERS HUFF '' '''

A REALITY CHECK FOR SILICON VALLEY : the tech industry soared during the pandemic, but the good times are over.

Last year, a start-up called Party Round announced itself with a flurry of memes. For months, amateur investors had been buying up stocks, cryptocurrencies and digital art known as NFTs. But getting in early on the next hot tech start-up was still a professional game.

Party Round's big idea was to let start-ups easily raise money from family members, former co-workers, bosses and others in the networks. ''Invest in friends,'' Party Round's tagline urged ahead of its introduction.

FOR a while it was fun. The tech industry soared to record heights during the pandemic, and Party Round rode through the frenzy with self-aware marketing stunts that poked fun at and celebrated start-up culture.

There was a venture-capital-themed puzzle with corresponding NFTs and a game called ''Burn the Runway,'' in which players killed start-ups by spending all their money on silent retreats and Teslas. In one stunt, Party Round paid a woman $50,000 to quit her job at Facebook and start a company focused on cryptocurrency literacy.

THEN the party abruptly ended. Russia invaded Ukraine. Inflation soared. Tech stocks crashed. Crypto crashed harder. Funding dried up. Start-ups began laying off workers and cutting costs. Investors who had cheered on the exuberant market switched to ominous warnings about a downturn. The woman with the crypto start-up got a job.

So Party Round adjusted. Making jokes about the absurdities of tech culture is fun when everyone is getting richer by the day, but they don't land the same way when everyone is getting laid off. ''Party Round is now Capital,'' the company announced last month.

With the new name, the company moved into banking services. It plans to trade absurdist marketing campaigns for something more practical - a co-working space that its customers can use in New York.

''The Capital brand is definitely an evolution,'' said Jordi Hays, the company's chief executive. ''It's more mature. It's more sustainable.''

It is one of the signs that the start-up world's season of unbridled euphoria is really, truly over. Technology was largely immune to the pandemic's economic devastation, and many in the industry had hoped the current slump would be a momentary reset.

But after months of funding declines, layoffs and cost-cutting, the realization that start-ups are stuck in a sustained, gloomy, no-fun downturn has finally set in.

''Founders are starting to see the writing on the wall,'' said Angela Lee, a finance professor specializing in venture capital at Columbia Business School. For years, market observers have predicted a downturn that never arrived, she said. Now, ''we're finally right.''

BETWEEN July and September, start-ups around the world raised $81 billion, a 53 percent drop from the same period, a year ago, according to Crunchbase. It is the largest such decline since the site began tracking funding in 2007.

More than 700 start-ups have laid-off 93,000 workers this year, according to Layoffs.fyi, which tracks job cuts at start-ups.

Over the past two weeks, weaker quarterly results at big tech companies, including Snap, Meta, Amazon and Microsoft, sent the broader tech industry spiraling further downward.

Techies are optimistic by nature. And some companies, including those focused on artificial intelligence and climate tech, have managed to whip up a modicum of hype. But at techCrunch Disrupt, an enormous start-up conference in downtown San Francisco last month, speakers urged founders and tech workers to accept reality.

''The next few years are going to be a lot harder, and there will be less resources,'' said Sheel Mohnot, an investor at  Better Tomorrow Ventures.

''You can't keep doing what you were doing last year and hoping for the same results,'' said Vieje Piauwasdy, a director at the equity planning project Secfi.

''The market has changed. Everything has changed completely.''

Thejo Kote, the founder of Airbase, a provider of financial software, said many start-ups ''are either moderately overvalued, very overvalued or you're in La-La Land and you haven't realized that yet.''

On one panel, investors assured founders that it made sense to moderate their ambitions from building a $100 billion company to building, say, an $8 billion company.

''We're going back to fundamentals now, which, I think, is good for everyone,'' said Kara Nortman, an investor at Upfront Ventures.

The Honour and Serving of the Latest Global Operational Research on Markets and Reality Check, continues. The World Students Society thanks author Erin Griffith.

With respectful dedication to the Tech Market, Techies, Venture Capitalists, and then Students, Professors and Teachers of the World. See Ya all prepare and register for Great Global Elections on The World Students Society - for every subject in the world : wssciw.blogspot.com and Twitter - !E-WOW! - The Ecosystem 2011 :

Good Night and God Bless

SAM Daily Times - the Voice of the Voiceless