And they’re cutting advertising expenses, because that’s the easiest to cut…..Google about to get hit with much lower advertising revenue and it will only get worse the next few reporting quarters..
In this crazy era, SIVB multiplied by nearly four, from $190 to $750, between late 2019 and the peak in November 2021. And so far, shares have given up about two-thirds of that gain.
SIVB is a barometer of what is happening in the startup ecosystem: The funds from the stock market have nearly stopped flowing into the ecosystem, and early investors are having trouble unloading their shares at sky-high prices, which changes everything.
There is now a new prudence among these investors. Valuations are getting slashed. Suddenly startups are exhorted to cut their cash burn-rates because they won’t be able to raise new money to burn if the prospects of positive cash-flow are in eternity somewhere.
There is now talk among startup CEOs about the length of their “runway,” meaning how much time they have left before they run out of money.
Startups of all kinds, from crypto to biotech, are laying off people left and right in order to cut their expenses and lengthen their runway. And they’re cutting advertising expenses, because that’s the easiest to cut.
And the whole thing goes into low gear, and when these companies run out of money, they vanish, and their employees go somewhere else to find a job. At this point, there is still huge demand for tech workers, and it seems they’re getting picked up pretty quickly for now. But this is just the beginning – the first two quarters of deflating the biggest startup bubble and stock-market bubble ever.
