Do Recent Startup Devaluations Signal Tech Market Trouble?

HR, Industry News, Outplacement

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Silicon Valley has become the mythical land of “unicorns”–the term coined to define the 100+ tech startups valued at $1 billion or more. But in the past few weeks that fantasy hit a few snags with news of devaluations of prominent tech unicorns, including social messaging app, Snapchat, and HR benefits startup, Zenefits.  

As Fortune and the WSJ report, Fidelity has marked down the value of its investments in Snapchat by about 25 percent, and of Zenefits by about 48 percent. According to the WSJ, Zenefits has cut employee salaries and curbed employee benefits.
This news comes soon after several recent layoffs in tech, helping fuel talks of an impending pop in what some perceive is a more volatile tech bubble than the dot-com blow of the 90’s.
Related: Webinar – 3 Keys to Protecting Your Brand in a Downsize: Lessons from the Tech Industry
NYT tech and business writer, Nick Bilton, illustrates in his recent Vanity Fair piece how the tech bubble debate is hitting home, becoming the central topic of both opening address and casual conversation at a recent glitzy Silicon Valley event hosted by renown VC firm and major Zenefits-backer, Andreessen Horowitz.
signs of tech bubble silicon valley
Related: How to Prepare for Layoffs – 3 Tips for Tech Companies
One of the most notable points Bilton makes is in reference to the 1,070-ft Salesforce tower now under construction and soon to eclipse the hallmark peak of the Transamerica tower, a defining symbol of San Francisco’s skyline for nearly four decades. Bilton explains why monuments made in the name of empire building may actually serve as signs of bad times ahead:

“Vikram Mansharamani, a Yale lecturer and author of the book Boombustology, has argued that virtually every great bubble bursting has been preceded by an attempt to build the tallest buildings. Forty Wall Street, the Chrysler Building, and the Empire State Building were under construction during the onset of the Great Depression.”

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