Disrupting the Disruptors
Russia’s invasion of Ukraine will likely be remembered as the event that ushered in a new economic era, with interest rates, inflation, geopolitical tensions, and instability at significantly higher levels than in the past decade. The new conditions will leave the tech industry particularly vulnerable.
STANFORD – After a decade of unconstrained growth – when it seemed that a new billionaire was minted every day – the tech industry has finally hit a rough patch. Elon Musk’s erratic behavior following his takeover of Twitter has left the financially leveraged platform in a precarious state. The crypto exchange FTX’s sudden implosion has vaporized a business that was recently valued at $32 billion, taking many other crypto firms with it. Meta (Facebook) is laying off 11,000 people, 13% of its workforce, and Amazon is shedding 10,000.
What are we supposed to make of these setbacks? Are they isolated incidents, or signs of structural change?
Twitter was already struggling. After taking on debt and overpaying for the platform, Musk immediately began cutting costs, declaring that the company was losing $4 million per day. His first layoffs swept out 80% of the company’s contractors and half of its permanent staff, including key engineers and most of the content-moderation team.