“Today is a tough day,” read the subject line of an email from the boss of Carvana, an online used car retailer, to Shelly Little.
A note showing that Little was one of about 2,500 staff members fired from a US-based company this week and felt like another employee described it as “group hysteria.” Since the beginning of this year, the company’s inventory, famous for its towering high-rise “vending machines,” has fallen by 84%.
“The impact it has is everything I can think of. It’s amazing,” Little wrote to LinkedIn, telling friends and colleagues that she was one of the 12 percent of Carvana who was shown the door. I let you know.
Her experience reflects the sudden calm that has hit the U.S. tech sector, triggered by the massive sale of stocks, as investors are resentful of rising interest rates and slowing economic growth. ..
Private companies are being forced to realign their expectations for valuation, access to funding, and risk-taking motivation among venture capitalists who may no longer pay attention to the wind.
Semil Shah, founder and general partner of, said: Haystack, a venture capital firm based in San Francisco.
“If you’re actually counting chickens before they hatch, or if you’re thinking about all the wealth that comes in, it will take a while.”
In the public market, Carvana is one of the worst hits, but it’s not the only one. DoorDash, the US market leader in restaurant food delivery, has fallen 49% year-to-date. Affirm, one of the biggest that was previously very fancy Postpay The sector has crashed 75 percent. Shopify, an e-commerce operator who is regularly billed as the most serious threat to Amazon’s e-commerce dominance, is down 67%. The situation was even darker until it rose all the way during Friday’s trading.
Even big tech companies, some of the most solid growth stocks in the last decade, have been hit hard. Apple, Amazon, Alphabet and Meta have wiped out a combined market capitalization of $ 2.1 trillion. For Apple, that $ 600 billion drop was enough to see it Abdicate this week According to Saudi Aramco as the most valuable listed company in the world.
Jeffreys analyst Brent Chill said that energy giants should take over their mantles, investor confidence, top-line growth, but bottom-line more solid. It shows that it is shifting to.
“This is a full-fledged, complete tech chunk, a full-fledged eject button,” he said. “In less than a year, all high-growth software companies are now evil and have no profit. I think this is a major shift from technology to the defense sector, energy and utilities.”
Technology companies are responding by tackling the basics, such as reducing costs, reducing cash burns, and focusing on fundamentals.
“I’ve been talking about free cash flow more than I think since I took my first accounting class. It’s a kind of wild,” said one of the big public tech companies.
Similarly, in Uber, where inventory fell by 45% this year, CEO Dara Khosrowshahi told staff in a memo last weekend: Now it’s about free cash flow. “
“Investors demand security during uncertain times,” he added, first reported by CNBC and verified by the Financial Times. “They recognize that we are a scaled leader in our category, but don’t know how much it’s worth. Channeling Jerry Magwire and giving them money. Must be shown. “
After dramatically changing the name and direction of his company last year, Meta’s CEO Mark Zuckerberg’s enthusiasm for the Metaverse has turned to a sharper enthusiasm for large-scale investments. I did. Social media companies last month Expenditure forecast Billions of dollars this year as a whole.
To achieve that, Meta has put a handbrake on aggressive staffing. According to an internal note from Meta Chief Financial Officer David Wehner, obtained by FT, we hired more employees in the first quarter of this year than in 2021 as a whole, but this is the end.
“We need to revisit our priorities and make some tough decisions about which projects to run, both short-term and medium-term, in order to achieve the low-cost guidance we have committed during our earnings.” He added. Almost every team in the company. “
According to another meta-executive note, scheduled job interviews that would have been future junior and middle-level engineering employees are “carefully canceled.”
Twitter, potentially On the brink of acquisition Elon Musk said Thursday that he had “reduced non-labor costs to ensure responsibility and efficiency” because he had not achieved his own “intermediate milestone” for growth.
Companies across the tech sector are looking carefully at personnel as an immediate way to reduce costs. Layoffs.fyi, a site that tracks layoffs between public and private tech start-ups, is well below the early stages of the coronavirus pandemic, but has surged since February. Delivery “Ghost” Kitchen Startup Reef, Celebrity Screaming Platform Cameo, Diet and Wellness App Noume are one of the private companies that strip staff.
How the sale of technology is beginning to impact the private sector, and the funding ecosystem that underpins it, is just beginning to be felt.
According to a report released this week by analytics group PitchBook, companies that are closest to the transition to the open market and are looking to raise larger rounds have “feelings that are significantly different from investors” compared to the 2021 highs. Experienced and experienced headwinds first.
According to CB Insights, global venture capital funding in the first quarter of 2022 fell 19% from the previous quarter, the largest decline since the third quarter of 2012. — Decreased by 45%.
Haystack’s Shah said it’s already hard to get funding for start-ups for companies that don’t have a well-established business model.
“People are still writing checks,” he said. “But if you’re raising 500k, 5 million, or 50 million, you have to fight for it, much more than you had to fight a year ago.”
Technology Group Reduces Jobs and Risk Takes In The New Reality Of Market Routs
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