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   Strategies & Market TrendsThe Financial Collapse of 2001 Unwinding

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From: elmatador1/23/2023 7:12:59 AM
   of 12734
China tech talent eager to work in Japan, Tokyo entrepreneur says
Digital signage startup's founder sees opportunity amid Beijing tech crackdown

Luo Youhong, an entrepreneur based in Japan, founded a startup that projects video ads inside elevators. (Photo by Shuhei Yamada)
SHUHEI YAMADA, Nikkei Asia Tech chief editorDecember 31, 2022 13:31 JST

TOKYO -- With China continuing to crack down on internet-based businesses, one Japan-based entrepreneur sees a golden opportunity to recruit Chinese tech engineers frustrated by dimming prospects at home.

Luo Youhong, founder of the digital advertising startup Tokyo Inc., spent eight months in China this year raising funds from potential investors in Beijing, Shenzhen and other cities. He said around 30 of them simply refused to hear him out.

"The conversation died as soon as I mentioned that our business was internet-based," Luo said.

Luo, who is of Chinese descent, founded his startup in 2017 as a graduate student at the University of Tokyo. The company offers video advertisements inside elevators, including by projecting them on the doors, through a joint venture with property developer Mitsubishi Estate.

The system has been installed in around 1,800 locations so far. The company booked its first operating profit for the fiscal year that ended in November.

With the business gaining momentum, Luo embarked on a lengthy trip to China to source projector parts, study technological trends there and, most importantly, raise money to diversify into online business.

But the venture capital firms and other investors he met "were only interested in 'deep tech' like semiconductors and new materials," Luo said. China has cracked down on internet-based businesses in recent years and pushed to increase domestic production of semiconductors -- a focus of its growing tech rivalry with the U.S.

As he scrambled for new topics of conversation, Luo realized that everybody he met jumped at the topic of Japanese visas for highly skilled workers.

"Talented engineers can no longer move to the U.S. because of bilateral tensions, so they are turning their sights to Japan instead," Luo said.

The Japanese government has been expanding the visa program, which is designed for professionals with an expertise in technology, management and other fields, as a way to bring more foreign talent to the country.

Anecdotal evidence suggests many Chinese tech entrepreneurs and engineers are looking to move abroad, discouraged by China's increased regulations in the field, a maturing home market and harsh zero-COVID restrictions. Japan is considered one of the most popular destinations, after Singapore, where Chinese is more widely spoken.

Luo said he is preparing to bring Chinese engineers to Japan to lead his startup's new internet businesses. He will be seeking funds mainly from Japanese investors.

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From: elmatador1/23/2023 11:04:41 AM
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South Africa plans to hold joint training exercises off its coast next month with Russia and China on the one-year anniversary of the start of Russia’s invasion of Ukraine on Feb 24

South Africa to Hold Naval Drill With Russia and China Amid Ukraine War
The 10-day naval exercises are a show of diplomatic independence for South Africa, which is part of an alliance with Brazil, Russia, India and China — known as BRICS.

A sanctioned Russian container ship, center left, docked in South Africa’s naval port outside Cape Town, last month.Credit...Nic Bothma/EPA, via Shutterstock

By Lynsey Chutel and John Eligon

Jan. 19, 2023

JOHANNESBURG — South Africa’s military announced on Thursday that it plans to hold joint training exercises off its coast next month with Russia and China, a move criticized by the United States, which has been trying to rally other countries to isolate Russia over the war in Ukraine.

The exercises will coincide with the one-year anniversary of the start of Russia’s invasion of Ukraine on Feb 24. South Africa was among three dozen countries that abstained last year in a vote in the United Nations to condemn Russia for its claim to have annexed several regions of Ukraine.

South Africa has conducted military exercises with Russia and China before, as well as with the United States and NATO countries. The South African National Defense Force said that the upcoming drills, to be held from Feb. 17 to 27 near the coastal towns of Durban and Richards Bay, are a “means to strengthen the already flourishing relations between South Africa, Russia and China.”

The United States, which has fostered a decades-long strategic partnership with South Africa, immediately expressed disapproval. David Feldmann, a spokesman for the United States Embassy in Pretoria, South Africa, said in a statement, “We note with concern” the plan by South Africa to move ahead with the joint exercises “even as Moscow continues its brutal and unlawful invasion of Ukraine.”

He added, “We encourage South Africa to cooperate militarily with fellow democracies that share our mutual commitment to human rights and the rule of law.”

The naval drill is a show of diplomatic independence for South Africa, analysts said. South Africa is part of an alliance with Brazil, Russia, India and China — known by the acronym BRICS — and this naval exercise reasserts South Africa’s position that it will not allow the conflict between Russia and Ukraine to dictate its diplomatic relations.

“It is seen as a war that is happening in Europe, and as far as South Africa is concerned, it’s not part of this war,” said Denys Reva, a maritime researcher with the Institute for Security Studies in South Africa.

Although the European Union is South Africa’s largest trading partner, South Africa’s governing party, the African National Congress, has held deep historical ties to Russia and China because of the help those countries provided in the fight against apartheid.

Many South Africans who led the efforts to overthrow the apartheid regime studied and received military training in the Soviet Union. China also provided military training to members of the A.N.C., the liberation party that would eventually come to govern South Africa.

For Russia, which has faced international sanctions since starting the war, the joint naval exercise is a welcome display of friendship from a diplomatic partner, several analysts said.

For China, while the stakes are lower, February’s drill will be a reminder that the BRICS alliance is still a global player, said Elizabeth Sidiropoulos, head of the South African Institute of International Affairs. BRICS may not be a military alliance like NATO, but it is still presenting itself as a “countervailing force to the West.”

While South Africa’s military is among the most powerful on the African continent, a declining defense budget has eroded its capabilities.

South Africa, China and Russia first held such a naval drill in 2019, running antipiracy drills and rescue exercises. Darren Olivier, director of the African Defense Review, a security consultancy, said that at the time, he and other security experts did not attach much diplomatic significance to the cooperation.

Now, against the backdrop of the Russia-Ukraine war, the exercise has taken on “a stronger ideological importance at a political level,” Mr. Olivier said. He added that it would have been more “sensible and pragmatic” if South Africa had postponed the exercise.

But South Africa has also worked with the armed forces of its Western partners. Since 2011, South Africa has conducted joint military drills with the United States four times, most recently last July.

South Africa’s navy has also previously conducted similar exercises with NATO, as well as its member states like France and Germany, said Mr. Reva, the maritime researcher.

The European Union ambassador to South Africa declined to comment on Thursday.

While many South Africans have said they support their country’s refusal to condemn Russia for the war in Ukraine, the military exercises provoked some domestic criticism.

Kobus Marais, a member of the Democratic Alliance, South Africa’s main opposition party, who serves on Parliament’s joint committee on defense, said that the military exercise will bring little benefit to South Africa’s ailing and underfunded naval fleet. South Africa’s government should have prioritized relations with larger trading partners, like the European Union and the U.S., he said. Instead, it has repeatedly shown favor to Russia.

“Clearly what they are showing now is a lack of neutrality,” Mr. Marais said.

Last month, the Lady R, a Russian container ship that had been sanctioned by the United States, was allowed to dock in South Africa’s naval port outside Cape Town. The ship’s mysterious nighttime arrival raised speculation among South Africans, as well as some concern because a commercial ship under sanctions had been permitted to use a naval facility. Only after the ship departed did South Africa’s defense minister, Thandi Modise, offer an explanation, saying that it had delivered “an old outstanding order for ammunition.”

More than 350 members of various branches of South Africa’s military will participate in the drills, named Exercise MOSI.

The announcement of the exercises comes a few days before Russia’s foreign minister, Sergey V. Lavrov, is scheduled to visit South Africa for bilateral talks with his South African counterpart, Naledi Pandor.

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From: elmatador1/24/2023 11:44:05 AM
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A top tech analyst just warned another 15% to 20% of big tech employees could be laid off over the next 6 months

Will Daniel
Mon, January 23, 2023 at 8:32 PM GMT+3·4 min read

Big tech giants have laid off tens of thousands of employees over the past few months as recession fears, persistent inflation, and rising interest rates continue to weigh on earnings results. The likes of Google, Amazon, and Meta have let go of nearly 40,000 employees combined.

But Gene Munster, managing partner at the tech-focused investment and venture capital firm Deepwater Asset Management (formerly Loup Ventures), believes the worst is yet to come.

“There’s still another 15% to 20% of headcount reductions for these big tech companies in the next three to six months,” he told CNBC on Monday.

Munster, who has worked for decades as a tech analyst on Wall Street, said that employee headcounts at big tech firms grew at the same pace as their revenues did between 2019 and the end of last year—and that’s not a sustainable pattern.

“Ultimately, it keeps coming back to, simply, these companies added too many people too fast,” he explained.

The analyst pointed to Apple as the one “standout” firm that didn’t grow its employee headcount as dramatically over the past three years—and Apple has yet to begin layoffs. Apple grew its revenues by 52% since 2019, but its headcount rose just 19%, according to Munster.

“I bring that up as a case study for what I think will be a guidebook for other tech companies,” he said.

In order to get their employee headcounts in line with the current economic environment, one by one, Apple’s big tech peers have begun slashing jobs. The cost-cutting began when Meta let go of 11,000 employees in November of last year, citing its falling revenue and mounting losses. Then in early January, Amazon slashed 18,000 positions. CEO Andy Jassy said in a note to employees that the move would help Amazon “pursue our long-term opportunities with a stronger cost structure.”

Google’s parent company, Alphabet, joined in the carnage last week, slashing 12,000 jobs as CEO Sundar Pichai ??told investors the company needed to “reengineer” its cost base and direct talent and capital to the “highest priorities.” And Microsoft’s management revealed on Wednesday—the night after execs hosted a lavish private concert with the rock legend Sting—that it was cutting around 10,000 jobs due to difficult “macroeconomic conditions and changing customer priorities”

Despite the big layoff numbers, Munster said that the latest cuts to big tech employee headcounts may not be enough.

“Just to put Google’s recent cuts into perspective: their operating margin goes up by 1% because of these cuts,” he noted. “So these cuts, even though they catch a lot of headlines, but that really doesn’t move the needle.”

The analyst went on to argue that big tech companies will likely continue layoffs now due in large part to two recent developments that have given them the “cover” to do so.

First, after Elliot Management’s latest investment into Salesforce, Munster said that the activist investor will likely push for further cuts to the software giant’s workforce. Salesforce already laid off 10% of staff earlier this month, but if Elliott Management is successful in provoking increased headcount reduction, that could help other tech CEOs do the same.

“I think it gives them cover, probably enough cover to take a step in the right direction,” Munster said.

Second, Elon Musk has shown that making far more “significant” headcount cuts is a “plausible approach” after his $44 billion Twitter acquisition, Munster said. Twitter has already laid off more than half of its workforce and plans to continue cutting positions in coming months, eventually reducing the company’s headcount to under 2,000, Insider reported last week. While critics have argued that the company’s cost-cutting strategy could end in disaster, Munster believes it’s evidence that major platforms and tech businesses can operate with a much leaner labor force.

But while more layoffs will likely come, Munster said that most big tech firms won’t slash as many jobs as they should—and definitely not as many as Twitter has—because it would be politically and reputationally challenging.

“You can’t go and take that full measure that you need to do,” he argued. “Twitter took more than a full measure, but these other companies haven’t taken enough.”

This story was originally featured on

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To: elmatador who wrote (10248)1/24/2023 1:15:33 PM
From: John Vosilla
3 Recommendations   of 12734
Pure stupidity monetary and fiscal policy especially in the COVID era.

Looking at when yield curve inversion started around July 2022 (16 months prior to last recession)

the rate of the inversion unprecedented ever is projected at 1.38 after two more .25% raises
(4.83 Fed Funds / 3.48 10 yr treasury)

homebuilders topped second half of 2021 (last time May 2005 or 29 months before recession)

oil prices post Biden's 40% strategic petroleum reserve drawdown should be going back up to cycle highs this summer/fall

NASDAQ asset bubble bursting also shakeout from remote work, overstaffing with much more layoffs to come

if you take out the top market cap stocks apparently most public companies record debt to equity so even higher default risk in coming recession

commercial RE especially urban office and 2nd and 3rd tier retail vacancy levels not seen since RTC days (check VNO stock chart)

inability to fund option ARM type products low start teaser rates this cycle quickly took huge percentage of buyers out of the market

spread between so many locked in at 3% fixed versus trading up or to a different area at over 6% makes very low transaction volume for the foreseeable future perhaps 7-10 years likely with tons of job losses multiple industries tied heavily to housing activity

record new construction either recently CO'd or soon to be completed to flood the residential markets already seeing price drops 20% in some cases basically half the COVID bump already

did I mention the federal debt approaching $32T with interest rate reset adding hundreds of billion a year to interest this year with many ramifications

we had a recession 1990 oversupplied commercial RE and high all prices main drivers

we had a recession 2001 NASDAQ bubble burst

we had a near depression 2008 over leveraged overbuilt overvalued residential RE, high oil prices, banking crisis

this time is combination of all the above except banks for now in somewhat better shape than 1990 and 2008, rents very high, government involvement all incentivizes people to stay rather than lose the house to foreclosure.

playing out more and more like Biden 2021-24 = GWB 2005-08 ????? Will be interesting to see if recession hits late 2023 and it stock market indexes still go up most of this year like 2007???

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To: John Vosilla who wrote (10254)1/24/2023 2:12:49 PM
From: Broken_Clock
2 Recommendations   of 12734
The Senate is on it. With the entire world political system "mostly peacefully crashing", this is the answer from the mighty USA Senate
Yahoo Finance's Allie Canal reports on the Senate hearing looking into Ticketmaster after Taylor Swift concert ticket sales crashed the site.

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To: John Vosilla who wrote (10254)1/25/2023 2:31:17 AM
From: elmatador
1 Recommendation   of 12734
Employees need to understand that this is not the end. It is not even the beginning of the the end. This is the end of the beginning.

“How are we supposed to ever feel safe again?” the employee wondered. His comments were reported by Insider.

People are seeking safety in an unsafe world.

'Speculation about a potential recession has plagued much of 2022, and is now seen as all but inevitable in 2023." Time Magazine

"Big Tech layoffs are not as big as they appear at first glance" While 12,000 is a lot of workers losing their jobs, it is still less than the net number of hires Alphabet made in just the third quarter of last year, which totaled 12,765." Dow Jones.

"Importantly, these figures don’t include the downstream layoffs, such as advertising agencies laying off staff as ad spend reduces, or manufacturers downsizing as tech product orders shrink – or even potential layoffs yet to come." The Conversation

The yeallow line shows how much lower it must go to reach pre-Covid levels.

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To: DinoNavarre who wrote (10124)1/25/2023 6:17:11 AM
From: elmatador
1 Recommendation   of 12734
BREAKING: The Biggest Corporate Fraud In History? The World's Third Richest Man, Gautam Adani's Adani Group Plunges After Short Seller Hindenburg Alleges Fraud ??

Gautam Adani has amassed a net worth of $120 billion, adding over $100 billion in just the past 3 years largely through stock price appreciation in the group’s 7 key listed companies, which have spiked an average of 819% in that period.

Who is Hinderburg?
They are an investment research firm that is a very reputable short-seller. They have called out companies such as Nikola Motor Company, Lordstown Motors Corporation, Clover Health, Kandi and Tecnoglass among others.

Hinderburg has revealed the findings of a 2-year investigation, that presents evidence that the $218 billion Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades.

“Even if you ignore the findings of our investigation and take the financials of Adani Group at face value, its 7 key listed companies have 85% downside purely on a fundamental basis, owing to sky-high valuations.”

These are pretty big claims and shares have dropped hard on this report, let's see how this develops.


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From: elmatador1/25/2023 6:21:29 AM
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Adani Group shares tumble as short seller Hindenburg alleges fraud

The Adani Group is India’s second-largest conglomerate, and saw its share valuations skyrocket over the past few years, valuing the firm at about $218 billion. This made its founder and Chairman, Gautam Adani, the third-richest man in the world, with a personal valuation of $120B.

Losses in the Adani firms appeared to have spilled over into broader Indian markets on Wednesday, with the Nifty 50 and BSE Sensex 30 indexes falling 0.7% and 0.5%, respectively.

Stock Markets 6 hours ago (Jan 24, 2023 11:38PM ET

By Ambar Warrick -- Shares of the seven publicly listed firms under the Adani Group tumbled on Wednesday after short seller Hindenburg Research said it had taken positions against the firms, alleging that the company had likely engaged in fraud, and that it was significantly overvalued.

Adani Enterprises Ltd (NS: ADEL), Adani Total Gas Ltd (NS: ADAG), and Adani Green Energy Ltd (NS: ADNA) fell between 1.9% and 3%, while Adani Wilmar Ltd (NS: ADAW), Adani Power Ltd (NS: ADAN), and Adani Transmission Ltd (NS: ADAI) fell between 3% and 4%.

Adani Ports and Special Economic Zone Ltd (NS: APSE) was the worst performer in the lot, down nearly 5% in early trade.

Hindenburg said in a report that it had taken a short position in the group through its U.S.-traded bonds and Indian-listed derivatives.

The short seller said that it sees an 85% downside from current valuations for the seven firms, based solely on their fundamentals. Hindenburg said that multiple firms under Adani were highly leveraged in comparison to their peers, and that the situation was worsening due to negative free cash flows.

The short seller also alleged that the firm “engaged in a brazen stock manipulation and accounting fraud scheme” in pushing up its valuations, and also accused the firm of engaging in money laundering.

Hindenburg is a U.S.-based activist short seller that had famously alleged foul play and taken positions in Clover Health (NASDAQ: CLOV) and Nikola (NASDAQ: NKLA), the latter of which attracted a high-profile inquiry by the U.S. Securities and Exchange Commission.

Concerns over Adani’s debt position came to the fore in 2022 after the release of a CreditSights report that described the group as largely overleveraged - an allegation that the firm has repeatedly denied.

According to CreditSights, which is part of the Fitch Group, Adani Group’s total gross debt in the financial year to March 31, 2022, jumped 40% to INR2.2 trillion ($1 = INR81.553).

The Adani Group is India’s second-largest conglomerate, and saw its share valuations skyrocket over the past few years, valuing the firm at about $218 billion. This made its founder and Chairman, Gautam Adani, the third-richest man in the world, with a personal valuation of $120B.

Losses in the Adani firms appeared to have spilled over into broader Indian markets on Wednesday, with the Nifty 50 and BSE Sensex 30 indexes falling 0.7% and 0.5%, respectively.

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From: elmatador1/25/2023 10:57:55 AM
   of 12734
Chris Hohn wants to see job cuts of 150,000 jobs, at 20%, not 6%. Hohn controls approximately $20 billion in various companies, and between $6 billion and $7 billion of Alphabet, in particular. This gives him “a lot of sway, a lot of power” over Google, Joseph Carlson said on Jan. 23.

Written by Kelly Teal January 24, 2023

Activist Investor Out for Blood at Google, Wants 138K More Layoffs

Chris Hohn wants to see job cuts at 20%, not 6%.

TCI’s Chris Holm

Tech’s high-flying days are over, and nowhere is that more apparent than at 24-year-old Google, once among the most coveted of places to work. After doubling its headcount in five years, Google now is shedding 12,000 jobs — the largest number in its history. Yet that figure could jump as high as 150,000 if activist investor Chris Hohn gets his way.

That’s going to raise eyebrows.

YouTuber Joseph Carlson

“If you’re a Google employee, there’s no one in the world you hate right now more than Chris Hohn,” said Joseph Carlson, host of The Joseph Carlson Show, which provides guidance on stock purchases, on YouTube.

Hohn controls approximately $20 billion in various companies, and between $6 billion and $7 billion of Alphabet, in particular. This gives him “a lot of sway, a lot of power” over Google, Carlson said on Jan. 23.

On Jan. 20, the day Alphabet, parent company of Google, announced its first wave of layoffs, Hohn sent a letter to CEO Sundar Pichai. He called the 12,000 job cuts “a step in the right direction.”

But they are not enough, Hohn said.

“Ultimately management will need to go further,” Hohn wrote.

He wants Alphabet to cut 150,000 jobs, or 20% of its total workforce.

What Is Activist Investor Hohn Thinking?Defending his position, Hohn noted a couple of key items.

First, he pointed out that Alphabet doubled its employee count in the last five years. Within that window, the company hired 30,000 new people in the first nine months of 2022. Hohn then told Pichai that Alphabet needs to axe more workers, to the tune of a total headcount reduction of 20%. That would equate to about 150,000 jobs and put Alphabet’s employee rolls close to where they stood at the end of 2021.

Hohn then went after Google’s compensation. He said Alphabet’s median salary comes out to $300,000, with the average falling “much higher.” Carlson agreed, noting that many employees make at least $500,000 and even up to $1 million per year with bonuses and stocks. Forty percent of Google’s free cash flow goes into stock compensation, Carlson pointed out. That’s a huge figure, he said, especially considering that competitor Apple, which has slimmer margins and more device and supply chain considerations, runs more efficiently.

Keep up with our telecom-IT layoff tracker to see which companies are cutting jobs and the ensuing channel impact.
All in all, it seems the tech sector’s unbridled approach to hiring and compensation are coming to a close. Consider the activist investor activity over at Salesforce, where layoffs are happening, as well as the job losses at other tech-centric (though not all channel-centric) firms including Microsoft, Spotify and Meta.

Carlson, for his part, lays the blame for widespread cuts at the feet of over-eager executives.

“I wish these companies took a more disciplined approach to iteratively and slowly and in a measured way hiring employees instead of hiring 30,000 in less than a year,” Carlson said. “It’s a very undisciplined way to grow a company and we’re seeing the pain being felt by peoples’ lives being upended now.”

What’s Happening at Google Cloud?Some of those layoffs are impacting Google Cloud. While many of the losses are showing in Google’s strategy, recruiting and sales departments, reports are circulating indicating that staff in the cloud division also are affected. Google has viewed its cloud group as a key growth driver, investing heavily in sales, technology and partner programs. (It still remains unprofitable, though.) Yet even as Google Cloud sees some involuntary staff attrition, its CEO, Thomas Kurian, is talking about additions.

Google Cloud’s Thomas Kurian

“We will continue to expand our global Cloud region footprint and invest for growth by expanding our go-to-market organization in both sales and services teams across all our geographies and industries, including public sector,” Kurian wrote in a memo cited by Business Insider. “In addition, our technical infrastructure teams will continue to deliver the critical systems and services that keep Google’s products running smoothly.”

Let’s Examine This ‘Psychological Safety’ QuestionOne of the most surprising aspects of the Google layoffs is the level of shock employees are expressing. In an all-hands meeting on Jan. 23, one employee asked, “How can we reestablish psychological safety for Googlers after these layoffs?” Another questioned, “How are we supposed to ever feel safe again?” (Both comments come via Business Insider.)

Google’s Philipp Schindler

Philipp Schindler, chief business officer at Google, had this to say, per Business Insider: “If you interpret psychological safety as removing all uncertainty, we can’t do this.”

It may seem cold to point out but investors are not concerned with “psychological safety,” and it’s odd that staff would think otherwise. Corporations exist to make money — and publicly held corporations remain at the mercy of Wall Street and its whims and demands. Fair or not, if a company is not producing as shareholders like or expect, layoffs ensue. Investors do not care one whit about employees’ psychological safety, and looking to a money-hungry entity for assurances in that regard will only result in disappointment.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn.

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To: Elroy Jetson who wrote (10247)1/26/2023 12:13:55 AM
From: elmatador
   of 12734
For Tech Companies, Years of Easy Money Yield to Hard Times
Rock-bottom rates were the secret engine fueling $1 billion start-ups and virtual attempts to conquer the physical world. But in 2023, reality bites.

By David Streitfeld

David Streitfeld has written about technology and its effects for more than 20 years.

Published Jan. 23, 2023Updated Jan. 24, 2023

Eighteen months ago, the online used car retailer Carvana had such great prospects that it was worth $80 billion. Now it is valued at less than $1.5 billion, a 98 percent plunge, and is struggling to survive.

Many other tech companies are also seeing their fortunes reverse and their dreams dim. They are shedding employees, cutting back, watching their financial valuations shrivel — even as the larger economy chugs along with a low unemployment rate and a 3.2 percent annualized growth rate in the third quarter.

One largely unacknowledged explanation: An unprecedented era of rock-bottom interest rates has abruptly ended. Money is no longer virtually free.

For over a decade, investors desperate for returns sent their money to Silicon Valley, which pumped it into a wide range of start-ups that might not have received a nod in less heady times. Extreme valuations made it easy to issue stock or take on loans to expand aggressively or to offer sweet deals to potential customers that quickly boosted market share.

It was a boom that seemed as if it would never end. Tech piled up victories, and its competitors wilted. Carvana built dozens of flashy car “vending machines” across the country, marketed itself relentlessly and offered very attractive prices for trade-ins.

“The whole tech industry of the last 15 years was built by cheap money,” said Sam Abuelsamid, principal analyst with Guidehouse Insights. “Now they’re getting hit by a new reality, and they will pay the price.”

Cheap money funded many of the acquisitions that substitute for organic growth in tech. Two years ago, as the pandemic raged and many office workers were confined to their homes, Salesforce bought the office communications tool Slack for $28 billion, a sum that some analysts thought was too high. Salesforce borrowed $10 billion to do the deal. This month, it said it was cutting 8,000 people, about 10 percent of its staff, many of them at Slack.

Even the biggest tech companies are affected. Amazon was willing to lose money for years to acquire new customers. It is taking a different approach these days, laying off 18,000 office workers and shuttering operations that are not financially viable.

Carvana, like many start-ups, pulled a page out of Amazon’s old playbook, trying to get big fast. Used cars, it believed, were a highly fragmented market ripe for reinvention, just the way taxis, bookstores and hotels had been. It strove to outdistance any competition.

The company, based in Tempe, Ariz., wanted to replace traditional dealers with, Carvana said grandly, “technology and exceptional customer service.” In what seemed to symbolize the death of the old way of doing things, it paid $22 million for a six-acre site in San Diego that a Mazda dealer had occupied since 1965.

Where traditional dealerships were literally flat, Carvana built multistory car vending machines that became memorable local landmarks. Customers picked up their cars at these towers, which now total 33. A corporate video of the building of one vending machine has over four million views on YouTube.

In the third quarter of 2021, Carvana delivered 110,000 cars to customers, up 74 percent from 2020. The goal: two million cars a year, which would make it by far the largest used car retailer.

An eye-catching Carvana car vending machine in Uniondale, N.Y.Credit...Tony Cenicola/The New York Times

Then, even more quickly than the company grew, it fell apart. When used car sales rose more than 25 percent in the first year of the pandemic, that created a supply problem: Carvana needed many more vehicles. It acquired a car auction company for $2.2 billion and took on even more debt at a premium interest rate. And it paid customers handsomely for cars.

But as the pandemic waned and interest rates began to rise, sales slowed. Carvana, which declined to comment for this article, did a round of layoffs in May and another in November. Its chief executive, Ernie Garcia, blamed the higher cost of financing, saying, “We failed to accurately predict how all this will play out.”

Some competitors are even worse off. Vroom, a Houston company, has seen its stock fall to $1 from $65 in mid-2020. Over the past year, it has dismissed half of its employees.

“High rates are painful for almost everyone, but they are particularly painful for Silicon Valley,” said Kairong Xiao, an associate professor of finance at Columbia Business School. “I expect more layoffs and investment cuts unless the Fed reverses its tightening.”

At the moment, there is little likelihood of that. The market expects two more rate increases by the Federal Reserve this year, to at least 5 percent.

In real estate, that is trouble for anyone expecting a quick recovery. Low rates not only pushed up house prices but also made it irresistible for companies such as Zillow as well as Redfin, Opendoor Technologies and others, to get into a business that used to be considered slightly disreputable: flipping houses.

In 2019, Zillow estimated it would soon have revenue of $20 billion from selling 5,000 houses a month. That thrilled investors, who pushed the publicly traded Seattle company to a $45 billion valuation and created a hiring boom that raised the number of employees to 8,000.

Zillow’s notion was to use artificial intelligence software to make a chaotic real estate market more efficient, predictable and profitable. This was the sort of innovation that the venture capitalist Marc Andreessen talked about in 2011 when he said digital insurgents would take over entire industries. “Software is eating the world,” he wrote.

In June 2021, Zillow owned 50 homes in California’s capital, Sacramento. Five months later, it had 400. One was an unremarkable four-bedroom, three-bath house in the northwest corner of the city. Built in 2001, it is convenient to several parks and the airport. Zillow paid $700,000 for it.

Zillow put the house on the market for months, but no one wanted it, even at $625,000. Last fall, after it had unceremoniously exited the flipping market, Zillow unloaded the house for $355,000. Low rates had made it seem possible that Zillow could shoot for the moon, but even they could not make it a success.

Ryan Lundquist, a Sacramento appraiser who followed the house’s history closely on his blog, said Zillow realized real estate was fragmented but perhaps did not quite appreciate that houses were labor-intensive, deeply personal, one-to-one transactions.

“This idea of being able to come in and change the game completely — that’s really difficult to do, and most of the time you don’t,” he said.

Zillow’s market value has now shrunk to $10 billion, and its employee count to around 5,500 after two rounds of layoffs. It declined to comment.

The dream of market domination through software dies hard, however. Zillow recently made a deal with Opendoor, an online real estate company in San Francisco that buys and sells residential properties and has also been ravaged by the downturn. Under the agreement, sellers on Zillow’s platform can request to have Opendoor make offers on their homes. Zillow said sellers would “save themselves the stress and uncertainty of a traditional sale process.”

That partnership might explain why the buyer of that four-bedroom Sacramento house, one of the last in Zillow’s portfolio, was none other than Opendoor. It made some modest improvements and put the house on the market for $632,000, nearly twice what it had paid. A deal is pending.

“If it were really this easy, everyone would be a flipper,” Mr. Lundquist said.


An Amazon bookstore in Seattle in 2016. The store is now permanently closed.Credit...Kyle Johnson for The New York Times

The easy money era had been well established when Amazon decided it had mastered e-commerce enough to take on the physical world. Its plans to expand into bookstores was a rumor for years and finally happened in 2015. The media went wild. According to one well-circulated story, the retailer planned to open as many as 400 bookstores.

The company’s idea was that the stores would function as extensions of its online operation. Reader reviews would guide the potential buyer. Titles were displayed face out, so there were only 6,000 of them. The stores were showrooms for Amazon’s electronics.

Being a showroom for the internet is expensive. Amazon had to hire booksellers and lease storefronts in popular areas. And letting enthusiastic reviews be one of the selection criteria meant stocking self-published titles, some of which were pumped up with reviews by the authors’ friends. These were not books that readers wanted.

Amazon likes to try new things, and that costs money. It took on another $10 billion of long-term debt in the first nine months of the year at a higher rate of interest than it was paying two years ago. This month, it said it was borrowing $8 billion more. Its stock market valuation has shrunk by about a trillion dollars.

The retailer closed 68 stores last March, including not only bookstores but also pop-ups and so-called four-star stores. It continues to operate its Whole Foods grocery subsidiary, which has 500 U.S. locations, and other food stores. Amazon said in a statement that it was “committed to building great, long-term physical retail experiences and technologies.”

Traditional book selling, where expectations are modest, may have an easier path now. Barnes & Noble, the bricks-and-mortar chain recently deemed all but dead, has moved into two former Amazon locations in Massachusetts, putting about 20,000 titles into each. The chain said the stores were doing “very well.” It is scouting other former Amazon locations.

“Amazon did a very different bookstore than we’re doing,” said Janine Flanigan, Barnes & Noble’s director of store planning and design. “Our focus is books.”

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