Turning the page on the Second Tech Boom
One chapter ends, another begins.
Around the time the above picture was taken, I took a trip to San Francisco. A friend of mine had just left academia to take a job as an engineer at Google — a decision more and more people I knew seemed to be making — and I went to housesit and take care of his cats over winter break. He lived close to Dolores Park, and every day I’d wander through, watching the young tech workers and hippies of San Francisco fly drones, practice acrobatics, and smoke weed. I felt that inescapable tug that I had felt visiting Japan in college; I had discovered the Place To Be.
Back in 2012, the Second Tech Boom was just coming into full swing. The IT industry had taken a decade to fully bounce back from the dotcom crash, but Facebook’s titanic IPO in May of that year showed that it had was back, and stronger than ever before. With the development of mobile computing and social networks, the internet had finally come into its own as the center of human life, and worries that advertising was insufficient to sustain massive business revenues were proving unfounded. Meanwhile, behind the scenes, cloud computing was transforming the way every company did business, enabling a new explosion of productivity tools and making it far easier to start a high-growth startup on a shoestring budget. The venture capital industry took advantage of the boom, with big new players like YCombinator and Andreessen Horowitz creating both new business models and a new startup culture.
That boom transformed the economic opportunities for the highly educated members of my generation. $100,000 a year for a job teaching in some little college town out in Indiana or Oregon is a career the vast majority of Americans would envy. But it looks like a bum deal compared to making $500,000 working in a shiny new tech office in San Francisco. If you were a recent college graduate, the choice was even easier. In 2005 investment bankers in NYC were the “masters of the universe”; ten years later, it was the hoodie-and-laptop set.
But this post isn’t a reminiscence about what life and business were like during the Second Tech Boom — it’s a retrospective. Over the past year, tech stocks have crashed, some big companies have stumbled badly, and a wave of layoffs has begun. The sudden evaporation of the crypto exchange FTX in a highly ridiculous burst of financial fraud will probably put a final fork in the era that began in 2012. But that’s merely a spectacular coda; the end of the boom has been driven by much deeper and more systemic factors that built up over a long period of time.
How do we know the Second Tech Boom is really over? Why did it end? And what does that mean for the future of the tech industry as we know it? I have some very definite thoughts on the first question, and some more speculative thoughts on the second and third. I think we’re at an important turning point, but that the tech industry will bounce back in a new form after a few years.
No “bubble” this time, but a slow deflation
No sooner had the Second Tech Boom began than people started calling it a bubble — and being wrong.
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