Several big names in the tech industry recently announced slowdowns in their operations amid a possible recession.
Instant messaging app Snapchat reportedly had a massive layoff, tech giants Meta and Apple’s valuation dramatically dropped, while others are implementing hiring freezes.
All these issues fuel an increasingly common question: Is Silicon Valley’s golden era coming to an end?
Margaret O’Mara, author and professor at the University of Washington, said that the tech boom could not go on forever. “In many ways, we are just going back to normal after a huge run-up during which everything became supersized,” she added.
Those trends are exacerbated by a larger global downturn – one the tech world is not immune to.
Anxiety about inflation and a possible recession caused companies to deploy 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,” O’Mara stated.
A series of high-profile cautionary tales have also tempered the fast-growing tech industry. Examples include the decline of coworking spaces provider WeWork and the collapse of blood testing firm Theranos.
Facebook’s downfall is also raising concerns in the tech world. Its role in the spread of disinformation, particularly around elections, had tainted its reputation. Former US President Barack Obama even spoke against the firm.
The tech industry has also been expanding far beyond Silicon Valley – a trend accelerated by the pandemic.
Brent Williams, who works at the Michael Page recruitment agency, said, “COVID has changed the whole game.”
“It has become extremely competitive for companies to acquire talent because they’re going not just for people in the Bay, but against everybody in the US,” he added.
Silicon Valley remains ‘incredibly robust’
However, Stanford economics professor Nicholas Bloom believes that “Silicon Valley remains incredibly robust.”
“While some firms may be migrating outwards because of working from home and globalization, Silicon Valley is still ground zero, with no other area even close to its prominence in the industry,” he said.
Indeed, O’Mara said, we’re unlikely to see a significant shift away from the Valley’s legacy or its physical place in the heart of the Bay.
“The industry obituary has been written prematurely a few times,” she added. “It may be the end of an era for Silicon Valley, but it is unlikely to be the end of Silicon Valley.”