Silicon Valley Vibe Shift

Layoffs with an attitude + trade war = trouble

It’s been a tumultuous week in Silicon Valley, marked by significant layoffs. I don’t normally comment on this sort of thing, but this time it is entangled with what feels like a generational Silicon Valley vibe shift comparable to the dotcom bust of 2000 (though the mix of indicators is different). So I want to take a stab at unpacking the vibe shift by way of a comparison to 2000.

But state of play first.

The highlight of the last week for me was not Elon Musk’s messy circus of an acquisition, which includes layoffs, but the big layoff at Stripe. A well-managed payment processor doing a big layoff is a sign of serious economic trouble, since it is otherwise such a stable business. Axios has a good roundup, but the highlights are:

• Amazon and Apple hiring freezes

• 13% layoffs at Lyft

• Probably 50% at Twitter (3700 of 7500 is the rumor)

• 14% at Stripe

• Big cuts coming at Meta

I’m not an economist, so I won’t try to read the tea leaves on that front. Some of the things economists seem to be talking about include inflation, cost of capital, overbuilding during the pandemic, corrections in valuations of companies like Zoom, and so on. No big surprises there.

Let’s talk about the technological-sociological shift. This is a messy enough story without me trying to be clever about telling it, so I’m going to try and keep it simple. This is not an attempt to present an insightful new take on the story. It is more an opinionated inventory of historical developments (which will be wholly or partly familiar to all but the youngest of you) and an attempt at calibrating relative proportions. I want to look for insights at the right levels and in the right places, and the main challenge in doing so is putting the noisy present in perspective.