Good Times Create Weak People: The Reckoning in Silicon Valley
Investors, Startup Founders, Tech employees. It’s been a big party for the last 13 years, and particularly from 2019 to 2022, with the exception of the strange covid global lockdown driven lull in Q2, 2020. Otherwise it was a massive, crazy party for a long time.
Arrogance, Complacency, Entitlement. Plenty of bad behavior. That was in abundance at the peak of the bubble. But then 2022 happened, the stock market dropped, Crypto busted, and all that Hedge Fund & Tourist investor money disappeared. Valuations have dropped anywhere from 30-80%, Growth is now gone. And henceforth the layoffs across the FAANGs & startups of all shapes and sizes. Just track Layoffsfyi: https://layoffs.fyi. The bust is here.
And how are founders and investors reacting to this? Some are like ostriches sticking their heads in the sand and in complete denial. They are using 2020 as a signal that this is just a short lull and good times will be back soon. Others are in panic or fear driven paralysis. Both are leading to inaction. Inaction is the worst thing they can do and sadly leads to doom.
The best founders are trying to be proactive in managing their cost structures, re-thinking their milestones, trying to line up emergency funding sources & communicating regularly with their investors.
But one thing I see a lot of: founders & tech employees in “woe is me” mode, complaining of how tough and unfair this is. Well, sorry, life is unfair.
I have limited sympathy or tolerance these days for this. This is the game you signed up for. You got the upcycle and all the benefits, now is the downcycle with the consequent challenges. And if you think this is tough in Silicon Valley, there is at least a community of fellow founders and experienced investors here who can help you figure stuff out. Not having guaranteed VC money is a feature not a bug. It can be far worse.
I talk to Ukrainian startup founders who experience Russian missile attacks in the middle of a zoom call, where they have to cut off the call to head to bomb shelter. Founders who experience sporadic electricity & internet connections. I’ve talked to a few founders in various places in the MENA region who had to hide in their office for a week or more, when regular gun battles happened in the street & they did not know who was who doing the shooting.
The point: Shake the feeling off. Be grateful, it can be way worse. Re-orient yourself. Scrape everything you think you learned about startups in 2020-2021 out of your brain ie. Unlearn your bad habits. Go to talk to founders & investors who built companies in the early to mid 2010s. Lean on this amazing community we have here!
Be thoughtful, use the constraints and this lull to rethink your product, your business, your business model, your cost structure and your leadership team & your milestones. Take decisive action. Magic happens in times like this. This will be an amazing time for mission-oriented builders to excel.
Times of massive stress and change is when really interesting things happen. It’s when you really learn about who you are. I’ve been there myself in 1998, 2001 and in 2020. Don’t get me wrong, it sucked but I came out better and smarter out of these experiences.
And if you find that you aren’t prepared to stick out and figure it out. It’s okay, just quit and don’t waste anyone’s time here. But you will just be just like the wave of dotcommers who left the SF Bay Area in 2001 or the techies who left in 2008-2010 and missed the most amazing growth run that happened soon after in tech.
Remember this is a long term greedy game. Anything worth doing or of consequence takes at least 10 years. I am maximum bullish on tech and Silicon Valley. And I am putting my money & time where my mouth is.