Is Silicon Valley’s golden era coming to an end?
Huge layoffs at Snapchat, dramatic valuation drops at Meta and Apple, and hiring freezes at other Big Tech firms have given new fuel to an increasingly common question: Is Silicon Valley’s golden era coming to an end?
The answer is complicated, experts say. The tech industry has been on a run of impressive growth for some time, bolstered in recent years by a pandemic that forced most of the world online and sent demand for tech services booming. That explosion – and the high salaries and office perks that came with it – seems to be slowing.
“This party couldn’t go on for ever,” said Margaret O’Mara, professor at the University of Washington and author of The Code: Silicon Valley and the Remaking of America. “In many ways, we are just going back to normal after a huge run up during which everything became supersized.”
Those trends are exacerbated by a larger global downturn – one the tech world is not immune to, she added. The Federal Reserve has raised interest rates three times already in 2022, and more increases are expected.
The previous low-interest-rate environment had bolstered the tech boom, helping to create a parade of “unicorns” – companies whose valuations exceed $1bn. Notable examples include Airbnb and Uber – valued at $47bn and $82bn at their respective public offerings. But as interest rates shift, O’Mara said, there is “less money sloshing around” and investors are going to be deploying cash “in a much more judicious fashion”.
“Certain investors will still have cash, but during a bust like this the deal flow is going to be cooling,” she said.
Fast growth has also been tempered by a series of high-profile cautionary tales, from the decline of WeWork to the collapse of Theranos, the blood testing firm that rose
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