The Tech Issue: How It Started How It's Going

The market collapse isn't just the inevitable result of macroeconomic forces like high interest rates and inflation. It's also the best opportunity in more than a decade to reckon with the tech industry's excess

- Brad Stone and Lizette Chapman

Over the past half-century, Silicon Valley has toggled between two similar-sounding pursuits that are often in conflict: wealth creation and moneymaking. Wealth creation is the act of invention and patient, long-term business building. It's the rising tide that lifts the boats of employees, shareholders, and everyone else. Moneymaking is the baser impulse: the hunt for a quick buck. The technology industry and its risk happy patrons have learned, time and again, what happens when short-term profiteering takes precedence over the development of stable companies that can create cool stuff. And yet, here we are again. Years of wildly inflated valuations, crypto-flavored pyramid schemes, and all manner of naked opportunism have led us to the Bust of 2022.

So far this year, the tech-heavy S&P 500 has lost just under one-fifth of its value. Among the worst-hit have been Amazon.com (-36%), Tesla (-38%), Zoom (-44%), Meta (-45%), and Shopify (-76%). As a whole, venture- backed companies that have gone public during the pandemic are down 48%, according to PitchBook. “The boom times of the last decade are unambiguously over,” the partners at the venture capital firm Lightspeed Venture Partners wrote in May, in a representative example of the industry sentiment making the rounds in presentations to portfolio companies. “Schadenfreude has set in.”