Cartoon: What recession?
“What recession?” by Ian Foley
This new cartoon illustrates how private market valuations have been more impacted than tech workers in the current environment.
Current headlines are full of talk about tech company layoffs. However, most large tech firms over-hired during the last five years and are now becoming leaner. For example, Alphabet (the holding company of Google) went from 80,000 employees in 2017 to 187,000 in 2022 and just laid off 12,000 employees, leaving the company still 2x its earlier size.
Meanwhile, hedge funds and VC funds that got into the tech market have seen whopping drops in valuations (65% in fintech and up to 90% in crypto). As an example, Tiger Global (a crossover fund with $125 billion under management) marked down its investment in Stripe at a lower revenue multiple than publicly listed fintech rival Adyen, and it applied a 20% discount to its investment in Databricks. Tiger Global wrote, “We underestimated the impact of rising inflation and overestimated the sustainability of Covid-driven growth tailwinds for software and internet-enabled businesses.”
While many may think this is probably just deserts for hedge funds and VC funds, it is worth bearing in mind that these firms are investing the money of pension funds and investment trusts of the general population.
You can find more of Ian’s cartoons here.