The moment of truth has come for the tech industry… and it’s all because of Elon Musk. Since his takeover of Twitter, nearly 50% of Twitter’s staff have gone and it’s estimated that nearly 75% could be headed out the door. Yet… Twitter is still working fine?

I don’t think the thing people are afraid about is that so many people will be laid off, it’s that the company will continue to operate as normal with such a reduced workforce. If he pulls it off, it’ll show the rest of Silicon Valley just how lean a company can operate and put pressure on every loss-making company that is equally bloated to get to profitability. Pronto.

But Elon could also be wrong… here are some possible outcomes for Twitter:

Sidni Standard's avatar
"If he pulls it off, it’ll show the rest of Silicon Valley just how lean a company can operate and put pressure on every loss-making company that is equally bloated to get to profitability. Pronto."

And I truly believe that he will. I don't necessarily agree with everything that he says, but I agree with many points that he makes. It seems to me that people in SV have gotten carried away with scaling fast once they get funding, but are they truly hiring quality people & figuring out how to make consistent profit, or just warm bodies and an illusion of success?

Sad to say, but I think the current "grow as fast as you can" ethos that permeates SV & startup/VC culture in general is making the companies of the world cancers to general society. This is perfectly exemplified by the stock market and the many zombie companies that are kept alive because people choose to hold the stocks as "safe bets" with dividend payouts.

Maybe a consequence of all of this is that SV will switch to an ethos of growing strategically instead of quickly. The incentive structure favors dumping companies onto the public market to receive returns rather than ensuring a company can turn a profit on its own without public funding via the stock market.

A huge shift in how business is done is happening before our eyes!
Abstract Investor's avatar
@sidnistandard Great commentary. To follow on, the public markets have said enough now, and that will have a domino effect starting with late stage growth equity right down to early stage venture capital.
We’ve likely entered a paradigm shift (if interest rates hold), that ought to cause a rethinking of what it means to build lasting tech businesses. Too much capital chasing too few deals, and mediocre and bad VCs will fall away on the side without decent exits. It will hurt the asset class in a big way in total.

Author

Related