Last week, I reported on how Zenefits resorted to 250 layoffs to rebuild and restructure the company. Apparently, that’s just the tip of the iceberg. Is Silicon Valley in trouble?
The tech bubble in Silicon Valley could be bursting. Investors are losing confidence, especially in start-ups. Investor company Fidelity is slashing their investments to companies such as file hosting service Dropbox, biotech company 23AndMe, and cooking delivery service Blue Apron. Last year, Fidelity dropped the value of it’s share in Snapchat. From June to September 2015, their shares went from over $30 a pop to under $23. The funding faucet by investors has gone from free flowing to, in some cases, trickling. Silicon Valley deals decreased by over a third. Venture capital funding is down 13%. Some magazine articles even forecast an outright Silicon Valley bubble burst, similar to the dot com crash of the early 2000s or the Great Recession of the late 2000s. Companies like Zenefits and Jawbone have laid off employees. Other startups like Uber are being urged to go public. That’s not a guarantee either. Since September 2011, no tech company has been giving an initial public offering. Many Yahoo employees have either walked out or been laid off. And news stories like what Uber customers endured in Kalamazoo, Michigan don’t help either.
But it’s not just Silicon Valley showing signs of economic slowdown. So far, 2016 hasn’t been kind to stocks at all. Some businesses have lost 20% of their stocks. Then there are the layoffs, and I’m not talking just talking about the technology industry. Retail giants like Macy’s and Sears are expected to lay off thousands. Small businesses are being shut down and boarded up. Our beloved financial powerhouses like Chicago Stock Exchange is now owned by China. It seems like the economy all over America shows cracks. So is Silicon Valley in trouble? Or is the American economy in trouble?