Up next in 10
It's Over_ Tech Bubble Is Bursting Right Now
13K views
Feb 6, 2024
The video titled "It's Over: Tech Bubble Is Bursting Right Now" likely discusses the current state of the technology industry and suggests that a tech bubble is deflating or bursting. It might analyze recent market trends, such as declining stock prices of tech companies or decreasing venture capital investments in the sector, to support its argument. Additionally, the video might explore factors contributing to the perceived bubble burst, such as overvaluation of tech stocks, concerns about profitability, or shifts in consumer behavior. The aim is to provide insights and analysis on the state of the tech industry and its potential implications for investors, entrepreneurs, and the broader economy.
View Video Transcript
0:00
So what does this mean if you're just starting out, trying to get your foot in the door
0:03
or you're just starting on the path to learn how to code? I'm sitting at my desk, just doing my thing, and my manager arrives later than usual
0:10
But that's not what caught my attention. Her normal, cheerful, bubbly disposition was off
0:16
She's not happy. I mean, she is trying to hold it together
0:20
My heart dropped. I mean, I am completely panicking. Was I completely stupid for being optimistic
0:25
Because you see, a couple days earlier at an all-hands meeting, management had said that there's going to be a shifting of priorities and resources
0:33
There was ongoing chatter in the break rooms of possible layoffs, but that didn't seem right
0:37
Just a couple weeks back, management was praising us for how well we had been doing things and for meeting all of our goals
0:44
A little unusual, my manager called someone into her office for a chat
0:48
Maybe that dude had done something wrong. He came out looking really somber
0:52
And then my manager called another person, and then another person. None of them looked happy
0:57
Is it really happening? Is this what a layoff looks like? I am suspicious but uncertain
1:03
Never been through one before, but I can't help but notice that nagging feeling inside
1:08
that wants to scream that it's true. I'm just waiting for my name to be called
1:12
She's going row by row. Some people are getting called into her office, and some people are getting skipped
1:17
People are looking around at each other. There's confusion, borderline terror, but no one says a word
1:24
My gut is wrenched from nerves. I can't take it anymore. I just want to walk over into her office and ask, am I fired
1:30
Just skip the line. But I don't have to because she calls my name
1:35
And I'm like, oh, crap. I'm going to have to tell my wife about this
1:39
My manager tells me the bad news. Half of our team is getting laid off
1:43
There's nothing that she can do about it. She tells me to wait by my desk until she's had a chance to talk to everyone and asks
1:49
me not to discuss anything with any other employee. Feels like the entire day has passed when she finally comes out of her office
1:56
And she tells everybody who she has spoken to to remain seated and that everyone else
2:02
is to grab their things and follow her to a meeting. Everyone who followed her that day was laid off
2:08
Have you been in that situation before? What was it like for you? It doesn't take a rocket scientist to see that the financial markets are in the dumps
2:15
right now. My stock portfolio is just way down, just like about everybody else
2:20
And tech companies are taking a beating. Facebook and Google are doing hiring freezes
2:24
And in April, Robinhood had a layoff. Better.com has had several rounds of layoffs
2:29
Peloton let go thousands of employees. And layoffs are on the horizon for many more tech companies
2:35
A lot of folks have been talking about the tech bubble for a long time, saying that the
2:39
demand for software developers may be really hot now, but when that tech bubble bursts
2:44
it's going to crash hard and the glory days of great pay and huge stock grants are going
2:48
to suffer like it did after the dotcom crash. Even without this bubble, a lot of people are just worried about the future of software
2:54
development because of all the high quality website builders and template systems out
2:59
there that people can use for their websites. I get asked about that on a weekly basis
3:04
Combine all of this together with this tech bubble bursting and things are looking grim
3:09
for a lot of software developers. Should you be worried about it? Is the future really bleak and unpromising
3:15
Let's talk about what's happening and how we got here. You have to remember that we have been enjoying the fruits of one of the longest bull runs
3:22
For a lot of us, this bull run has taken up most of our working lives
3:27
Most of what we have seen are huge growths in the value of our investments and a growing
3:32
demand for good software engineers. We're used to recruiters and companies pounding on our inboxes on LinkedIn, hoping we'll jump
3:38
ship and join their amazing, earth-shattering startup. They're startups for just about everything
3:43
People are throwing money at just about every idea that is imaginable. Why do they do this
3:47
Because of reckless overconfidence. In a strong bull run, it's easy for everyone to feel like a winner
3:53
We feel like we know what we're doing. We get to be the expert
3:57
And this is a false assessment of our own financial judgment, which leads to more and
4:01
more aggressive investments and ends up turning into wild speculation. I mean, think of all the stupidly high valuations in cryptocurrencies and massive short squeezes
4:11
that we have seen over the last several years. Greed just completely takes over reason
4:16
And the same thing happens with venture capitalists. Investors expect larger and larger wins, and hardly anyone is losing
4:22
So everyone starts investing in every dumb, unscalable idea imaginable. You see, it's not always about building a legit, profitable business for these guys
4:32
for venture capitalists. It's get in and get out quick as soon as possible
4:37
Just dump a ton of money into the startup. Start hiring tons of employees so that you can project rapid and exciting growth
4:44
Then market that company like crazy to create these massive but hollow valuations, hoping
4:49
that either you're bought out by another company or that you go public with an IPO so that
4:55
you can cash out before the craze dies down. This works in a booming market because everything is going up and there is a lot of cash to spare
5:02
The venture capitalists only need a couple of bangers and they're filthy rich
5:06
The easy money policy of super low interest on loans that started with the 2008 crash
5:12
and became even worse during the 2020 drop allowed these speculators to get access to
5:17
massive amounts of money that they could borrow almost for free, and then they can turn around
5:22
and invest that money for higher returns. That, combined with all of the money printing to pay for the stimulus checks, combined with
5:29
supply chain issues, has led to massive inflation. All around us, everything is going up in price and this is making it more expensive
5:37
to do business, especially for all of those sucky startups that are living on borrowed
5:42
money and don't have a solid profitable business plan. So how do they survive this
5:47
Well, many won't. A lot of companies will have no choice but to lay off employees just to stay afloat
5:53
and many of these junk companies are just simply going to go out of business and disappear
5:58
So all we got to do is stop this inflation, right? Well, according to a lot of financial experts, the way to stop inflation is to raise interest
6:06
rates according to the Taylor Rule, which basically means that you need to have massive
6:11
increases in the interest rates to slow inflation, and that the longer you wait to do this, the
6:17
worse it's going to be because you need bigger and bigger rate hikes
6:21
With the situation we're in, we need like 12% interest rates, which is something that
6:25
the feds and politicians want to avoid. That would be the end of their careers
6:30
But we've hit that point where something has to be done. So the fed has been raising interest rates, but they've been doing it half-heartedly in
6:37
really small increments. And as interest rates go up, it's going to be more expensive to borrow money, and it
6:43
becomes a greater risk to invest with money that you have borrowed
6:47
This means that venture capitalists must be more selective with where they choose to invest
6:52
and they will start cutting off investments to the riskiest companies. The whole thing creates a vicious downward correction in the market that we will just
7:00
have to go through if we want things to become stable again. And if the fed starts printing money again, it's going to be a short-term band-aid that
7:06
just creates a worse monster than what we have right now. I'm not going to lie, it's going to be sad seeing a lot of people lose their jobs
7:13
And at startups, it's usually a double whammy. A lot of their compensation is often tied up in equity that is locked until the company
7:21
is bought out or has an IPO. Not only do these developers lose their jobs, they could lose all of that equity
7:27
And this isn't a problem just when there's a correction or a recession, this is an inherent
7:32
problem with working for startups. I've talked about this in other videos
7:36
Even in a good market, only like 1 in 10 startups are bought out or have an IPO, so for most
7:42
people, that equity is worthless carrot bait. Prior to my current job, I had a good offer from a local startup that was working on some
7:49
cool stuff, and they promised me a lot of equity. I am so glad that I passed because 6 months later, they had a massive layoff
7:56
And this was before the current market chaos. That's been one of our biggest problems as an industry
8:02
With so many startups out there, which ones are legit with good products and business plans
8:06
It's really hard to tell. They can be tight-lipped and hire you when they know they only have like 1 month left
8:13
of funding and they're just hoping to get another round of funding
8:16
Then a major correction like we're experiencing right now can turn into a big sieve that just
8:21
sifts out all these junk companies. So as unfortunate as the upcoming pain may be, it's probably a really good thing for
8:28
the tech industry in general. Do you really want to work for one of those companies that could just go out of business overnight
8:35
So what does this mean if you're just starting out, trying to get your foot in the door
8:38
or you're just starting on the path to learn how to code? Should you give up all hope of becoming a software developer because there's an increase
8:45
in competition for jobs? Not necessarily. The average recession is like 10 to 12 months and there is still a lot of need for good
8:53
software developers. There's no way to know exactly how all of this is going to play out and I'm sharing
8:58
some of my thoughts and opinions. So by all means, don't rely on what I've said and what I'm about to say
9:04
You should definitely do your own research. Talk to financial experts. I think there's a good chance more of the larger tech companies are going to slow down
9:11
their hiring a bit just to see how things start to play out
9:15
But these companies usually have a lot of plans and not enough software developers to
9:19
execute all of these plans as quickly as they would like. So once they feel a bit more confident in their situation, they might look to pick up
9:26
more talent without having to be as aggressive with compensation packages. There's also a good chance that some of the smaller companies are going to look for cheaper
9:34
ways to get things done. And this could mean that they become more open to hiring more newer software developers
9:40
Then eventually things will become more stable and these companies will start looking for
9:44
growth again. I really do think that things will get better. It may take a year, which is totally fine because you have some time to really learn
9:51
your craft and develop a really good portfolio. You see, I'm totally confident in the future because the world is continuing to adopt more
9:58
and more technological systems to accomplish great things. And somebody has to build all of that
10:04
It's not like we're all going to go back to building horse-drawn carriages
10:08
If I were starting out right now, I would still go forward with learning to code because
10:12
a ton can change in a year. It took me about nine months to get comfortable with software development and that was with
10:18
an aggressive evening schedule. If I had given myself a year, I would have been much more balanced in my approach
10:25
And if you're thinking about becoming a software developer and you want to avoid a ton of painful
10:29
mistakes, then you should watch this video where I share all of the things that I wish
10:33
I had known when I was first starting out and learning to code
10:36
Thanks for watching and I'll see you in the next one. Lates
#Career Resources & Planning
#Human Resources
#Stocks & Bonds