Is this the beginning of the next tech bubble bursting?
Is this the beginning of the next tech bubble bursting?
Original take found on another forum.
"I think we're seeing the beginning of the tech bubble bursting again.
You've got the successful companies that provide a case study in tech industry profitability(Google, Amazon, Apple, etc.) which is why you've got all these venture capital firms plowing so much money into startups, left and right, because they expect that one of them will be the next Google or Amazon. Now that low interest rates have gone bye-bye, the VC firms are demanding that these startups start showing a profit. However, almost all of these startups have one of the following problems:
1.) They were never profitable and can never be profitable because the fundamental concept of what they do is thoroughly flawed
2.) The service or good they provide could be profitable, but due to being formed during a time of easy money, their current business model is incapable of being profitable, and they are too over leveraged to be able to restructure themselves into a more profitable setup
3.) They are perfectly sustainable/profitable, but their financiers expect far more return on investment than they are capable of providing
The result is the trend of "enshittification" as VC investors force unwanted changes onto these startups in the hopes of increasing revenue. This is stuff like locking previously free features behind a paywall, clogging everything with ads, cutting costs somewhere (payrolls, server space, etc) that negatively affects the user experience, raising prices, or needlessly bolting on something that nobody asked for because it's one of the only things that VC firms might still blindly throwing money at(AI).
Even the actually profitable companies are doing this shit because they are just addicted to the ridiculous growth they've enjoyed in the past."
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The growth addiction is a major part of the problem, I think. It's no longer good enough to have a company that makes steady profits year over year, now you've got to be increasing that profit margin. You made $50 million last year, and only $45 million this year? Hell, even "only" $50 million this year? You're failing, investors are pulling out, you're getting bad mouthed in the business world, etc.
This is a major pet peeve of mine. Constant growth is unsustainable and the pursuit of it ruins so many things.
Won't someone think of the shareholders?
It's even worse. Sometimes it's "oh, profits are only 120% of last year? SELL SELL SELL"