What Recession?

What-Recession-iantoons

“What Recession?” – a cartoon that illustrates how private market valuations have been more impacted than tech workers in the current environment.

Current headlines are full of talk about tech company layoffs. However, most large tech firms over-hired during the last five years and are now becoming leaner.

For example, Alphabet (the holding company of Google) went from 80K employees in 2017 to 187K in 2022, and just laid off 12K employees leaving the company still 2x its earlier size.

Meanwhile, hedge funds and VC funds that got into the tech market have seen whopping drops in valuations (e.g. 65% in Fintech and up to 90% in crypto).

As an example, Tiger Global (a cross-over fund with $125Bn under management) marked down its investment in Stripe at a lower revenue multiple than publicly listed fintech rival Adyen and it applied a 20% discount to its investment in Databricks. 

Tiger Global wrote, “we underestimated the impact of rising inflation and overestimated the sustainability of Covid-driven growth tailwinds for software and internet-enabled businesses.”

While many think this is probably just deserts, it is worth bearing in mind that these firms are investing the money of pension funds and investment trusts of the general population.

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“And as those general population fund balances decrease, that pain in retirement account planning, particularly those in more advanced stages of their careers, has impacts on financial decision making today…for example reducing non-essential consumerism, which can exacerbate recession dynamics.

It’s all connected.”
Andrew Wright
Healthcare | AI | Innovation
“So true”
Andy Swett
Private Equity Investments
“Increasing interest rates no longer works effectively at reducing inflation in a fair and equitable manner, firms are simply giving inflation pay rises to the well paid causing wage inflation causing cost of goods to rise. Meanwhile it is simply financially destroying the lives of the lower paid, the pensioners, people who are unable to work, disabled etc. The public sector are striking every other day. The public debt rises.

It is a politically repugnant and ineffectual policy causing the rich to get richer and the poor to become destitute.

Amazingly the idiotic labour party have not even used it as a political campaign point as they are too scared.

What ever happened to Maynard Keynes”
Charlie Green
Headhunter (Available for Interim COO roles), Non Executive Director (Chairman of Audit Committee)
“”However, most large tech firms over-hired during the last five years and are now becoming leaner.”

Did they, though? I know that’s a common narrative, and there may be something to it.

But I’m also seeing companies like Google and Amazon hiring a lot of _contractors_ now. Which seems to me a lot like dumping your more expensive FTE folks to take advantage of ultimately cheaper labor (when non-pay compensation is considered). And it leaves them and their shareholders a little more profitable at the expense of causing massive social turmoil, and degrading the plight of ordinary citizens along with it. Not only that, but it’s _normalizing_ this toxic pattern.

I’m calling bullshit on this narrative. It’s missing a lot of nuance, and justifying these patterns basically due to their profitability while ignoring the cost and damage they do.”
Pearl A. 
Mass Murderer of Sacred Cows | Grain of Sand in the Oyster of Humanity | Tree On The Mountain | Patron Saint of Swearing AF, FFS | Undermining the professional credibility of this platform since 2007
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