YouTube disallowing adblockers, Reddit charging for API usage, Twitter blocking non-registered users. These events happen almost at the same time. Is this one of the effects of the tech bubble burst?
I think it’s a consequence of higher interest rates drying up VC money, meaning that tech companies now have to actually be profitable, rather than just grow.
If the plan was grow now, profit later, then later has come
Nailed it, investors are demanding profit increases, it’s not just interest rates (though they’re the main reason) but also the corporate tax cuts in 2018 basically dumped a ton of profit onto corporations because they repatriated all their offshore cash they’d been hoarding.
That bump lasted 2 years, but the expectation of higher revenue is still there, it doesn’t matter if you got lucky at slots last month, if you make your normal salary this month investors will be absolutely pissed.
This sounds too stupid to be real but I was working for one of the largest corporations in the world during this period and we were congratulated on 20% growth even though we did nothing. Of course we didn’t get an extra bonus or anything but they acted like we had an incredible year when we really just had an average year with a massive tax cut.
Then the next year, our goal was to grow at 20% again and when we missed it by 17%, no one got a bonus or raise.
This timeline is the stupid one.
Capitalism: “Numbers go brrrrr”
This is also a great example of why higher interest rates aren’t automatically a terrible thing. In general, it’s probably a good sign for the economy that companies are expected to be profitable. Means resources are being used well. The limitless VC money kinda meant any dumb idea regardless of merit got funding.
I wish we lived in a society where not everything needed to be profitable. People deserve treats and sucks to have things that made our lives better go awake because shareholders demand money
This seems like a non sequitur: what is good about only profitable ventures getting funding? These unprofitable ventures were creating good jobs and providing enjoyable and sometimes useful products to consumers for low prices. So why is it good that funding is drying up?
maybe inflation.
just because U don’t see a price tag doesnt mean its not there.
if you cant see the product, then you are the product!
the state of wellbeing had never really been that great to start.
Venture capital has shifted very quickly from companies HOSTING content to companies SCRAPING content (LLM’s). This means renting compute is now very expensive and moving into the hands of ‘AI’ companies. It’s like trying to fly a plane while monkeys are tearing the wings of.
That plus interest rates are going up. For twenty years VC’s has near limitless cheap loans, now they’ve got to be marginally more careful than before and the companies which grew large but only ever broke even (if that) now need to pivot to profitability to justify all the debt they took on. Would not be surprised if Uber and Lyft start really hiking rates soon.
I think most taxi companies have adapted, so they are pretty competitive now.
It’s because the 2024 election is coming up.
No tech burst.
It’s just a cold recession. No one is admitting it, including consumers who keep spending away savings.
But companies are aware of it enough they are tightening purses preparing for harder times ahead.
Of course, it’s a self-fulfilling prophecy.
If everyone makes their products worse chasing this quarter’s dollar, and people leave, those companies are going to have a harder time.
Especially as it becomes easier and easier to compete against them at scale.
Just wait until new feature requests and bug reports for something like Lemmy can be handled within moments by AI at dirt cheap pricing.
A very interesting future awaits around the bend.
Others have basically captured it, but my read is a massive change in the overall risk profile held by venture capital firms. The time of reckoning has come, and it’s time for everyone’s (or at least VCs’) favourite three letters: ARR (Annual Recurring Revenue).
The last twenty years, we’ve seen this sort of spray-and-pray model, where 99 bad investments could be offset by 1 “unicorn”. The risk appetite seems to have shifted largely because 1.) there’s a higher volume of early stage concepts (so there’s more bad ideas), and 2.) there’s either fewer unicorns, or the unicorns that mature are ultimately less valuable.
Crunchbase put out a good analysis of the current trend of global venture dollar flow:
The Party’s Still Over: The VC Downturn In 6 Charts
You can read news from various outlets - some say it’s a post-pandemic correction. Some say it’s because labour is too expensive. But the bottom line is that VCs aren’t willing to spend money on “users-in-lieu-of-revenue” like they once were, and I honestly don’t blame them. There were a lot of really, egregiously stupid ideas coming out of SV, and their wax wings melted. sad_trombone.mp4
Adam Kotsko summed this entire phenomena up nicely:
free money has dried up, now they need to monetise your habits.
Because usually the greed, money and power corrupts, no matter how good you are in the beginning.
It’s called Enshittifiction
This
Because investors are tired of the model where they dump a shit load of cash into something that has no good path for monetization. So they’re forcing them all to make money which hurts users.
This worked when there was basically no interest on money that was lent from banks. But now when the interest is on the uprise. Well, naturally investors and banks pull the plug.
To be fair. I’m quite surprised that the plug wasn’t pulled several years ago. Twitter has almost never being in the black, always in the red. Reddit has never publicly showed it’s numbers, not yet. But would not surprise me if it was red numbers every year.
i e read this mostly because of AI…
Not really “all of a sudden”, this has been a long process. The often repeated enshittification thing is fully valid. The short version is:
- start out
- grow and expand as much as possible
- bring in advertisers
- make everyone depend on your service
- abuse your powers, since everyone “needs” your service
Google, Amazon, Facebook, Twitter are the more obvious culprits, but every big tech company does something similar, one way or another, even hardware companies like Intel or Nvidia
SOXL - an EFT for US semicondutor companies is doing well.
All of a sudden?
My dear, sweet summer child.
I’m not sure YouTube ever wanted you using adblockers.
The tech companies tend to follow the leader on unpopular actions. The first-mover bears the brunt of the backlash, allowing the copycats to implement the same policies without the same flak. Witness Twitter introducing fees and then Facebook following suit. Witness Twitter banning third party apps and Reddit… you know the rest.
