The bubble has burst, music and dancing have stopped, and we are all in "business".

The bubble has burst, music and dancing have stopped, and we are all in "business" whether we want to be or not.

As part of the last few weeks of the AMA (Ask me anything) initiative, I got an opportunity to connect with a few past colleagues. One particular conversation that stuck with me was with a colleague who mentioned that they joined a bootstrapped and profitable company from day one after a recent layoff. There was an infectious sense of optimism in their voice, and for good reason.

This mention of profitability over growth was nowhere to be seen in the last decade in tech; myself included. All around, there was talk of company valuation at 30x-40x revenue multiples, equity and options assignment, and signing bonuses. And, it lasted so long (a little over a decade, from 2010 to 2021) that it felt real. There seemed no reason to doubt it.

This reminded me of an infamous, yet very apt I'd say, quote from ex-CEO of Citibank, Charles “Chuck” Prince: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We are still dancing.”. That was in the year 2007, right before the 2008-09 financial crisis.

Guess what! now in 2022, the music has stopped, and dancing has stopped. And yet again, history repeated itself. While there are differences between what happened in 2008-09 and now, one major driving factor is common. Money was cheap for a long time and then it stopped being cheap. If you are still wondering what money, credit, and interest rates have to do with the downturn in tech now, you should take a little bit of time to catch up on discounted cash flow (DCF), the time value of money, and opportunity cost.

OK, so here we are. What lesson can we learn and re-learn from this? To a certain extent, I sympathize with all the layoffs and how well companies handle them. More importantly, I want us all, especially tech workers and employees, who have been easily characterized as faultless victims in this saga, to take some responsibility for ourselves. If you have been part of a layoff recently, please take the time to reflect on our most recent department/project/initiative and compare it with those within the company that did not get cut. Inevitably, the difference is which initiatives had no reasonable timeline for profitability. These are all rational decisions on the company's part. Moving forward, as you consider a new opportunity, evaluate like a business owner, whether that opportunity and work make sense as a profitable undertaking; if not currently in what reasonable timeframe. Keep evaluating quarter over quarter, whether that remains the case. And, make the move before it's too late.

As they say -- Do your job, but mind your own business.