In September 2022, we kicked off our inaugural newsletter and I predicted a rebound in the tech sector. Here’s what I wrote: “Watch for a return to business this fall as entrepreneurs and investors alike get back to work.” That’s not exactly how things turned out! Instead, it’s been a series of ups and downs. Let’s take a quick look at the highlights:
- Interest rates go up, VC investing goes down. A lot.
- While bitcoin remains robust, crypto crashed in the wake of a series of scandals including the largest of them all: FTX.
- Large tech firms across all sectors slashed jobs amidst budget cuts in an effort to return to pre-pandemic staffing levels.
And the up..
- Large tech led the rally in stocks, pushing us firmly out of bear market territory.
- New crypto legislation? Bitcoin shrugged it off and continues to be surprisingly robust. It helps that large institutional investors like BlackRock are pushing forward with plans for new regulated crypto products.
- Artificial Intelligence has been the breakthrough story of the year with increasing expectations that it will drive a new wave of tech innovation that will sweep through the entire sector. Hype or not, we’re already seeing it at work outside of ChatGPT. Check out our client, Netail.ai, which is revolutionizing retail pricing strategy for businesses.
As communicators, what do we make of this? First, there is no dominant story. As my co-founder, Dorian Langlais, says: “when each media outlet has a different top headline, you know there is no consensus on what the central story really is.” That type of environment feels directionless, but it also offers space to be heard. Any organization that can lend perspective or insight into what’s happening has an opportunity to drive awareness and credibility.
Finally, allow me to make another prediction (oh no!) This environment isn’t going away for the rest of 2023. Big tech will continue to boost profitability while overall softness in the sector persists. The real problem continues to be interest rates – not just how high they are but also the Fed’s purposeful opacity on direction moving forward. The end result is a broad startup die-off that will continue through the rest of the year. My hope is that this won’t result in a multiyear decline of innovation in the United States. As always, I remain optimistic – but it’s been quite a ride so far.
~ John Cook