Post-Bull Depression

Ed Zitron 7 min read

The vibes in everything are off at the moment. My own vibes. Work’s vibes. Everybody feels exhausted.

There is a malaise over everybody in tech, with a tinge of nihilism that everything is inevitably coming to a conclusion where most people will lose. I will admit that it’s been hard to write this week due to this incredibly dour mood. On a personal level, things have been tough, and seeing light in things has been tougher.

It’s easy to see why, though. The travails of Silicon Valley Bank deeply alarmed the entire tech industry, in part because the stewards of The Official Bank Of Startups were also abiding by the “Move Fast And Break Things” mantra. It isn’t just that this was a critical part of the ecosystem – one that handled the cash of thousands of startups and venture capital firms – but that the tech industry had willingly put itself in the hands of a deeply reckless institution.

Venture funding plunged by more than 50% in the last 12 months, specifically meaning that investors have chosen to deploy less money into the startup ecosystem specifically after crying about how critical it was these funds stayed solvent. While SVB’s death might have damaged startups directly (by reducing their access to credit lines, for example), one can also argue that venture capitalists failing to actually venture with their capital is also to blame.

Venture has plenty of money to deploy, but has decided it wants to hoard said cash just like many other large American enterprises. Peter Thiel’s founders’ fund cut the size of its eighth venture fund from $1.8 billion to $900 million in March, pushing the remainder into a 9th fund to be accessed once fund 8 is deployed. Founders Fund’s growth fund still has billions left undeployed, but Thiel — the guy who may be partially responsible for the SVB crash — has decided that the current crop of startups simply do not deserve it.

And that’s part of the problem of venture. It has almost complete control over the startup ecosystem, to the point that some investors are literally telling startups to shut down and hand back their money. It’s not that there is a drought in funding, or a drought in available capital, but a drought in interest from large investors to actually deploy it at a time when the ecosystem desperately needs it.

There is a degree of addiction, too. The 2021 (and early 2022) bull run of venture capital meant that many companies actually believed that venture capital would be readily and perpetually available and acted as such. This was absolutely a mistake on their part, but one perpetuated by a venture community that promoted growth over stability and revenue. The result is a depressed startup ecosystem where venture somehow has more power than before,  with the industry-wide drop in deployed capital meaning that startups are more desperate for cash than ever.

While I am not suggesting this is a coordinated effort, I do believe that venture capital is punishing startups for venture capital’s mistakes. The abundance of 2021 was focused on extremely stupid shit like cryptocurrency and metaverse startups, while also propping up companies that wouldn’t last a day without venture’s existence. One could easily argue that this wasn’t startup funding, but taking mid-market companies and dressing them up for a liquidity event.

North American Seed Stage and angel funding grew 35% year-over-year in 2021, but that was $12.8 billion, a paltry sum compared to the $108.5 billion put into Series A and B funding deals, and barely a blip on the $329.5 billion that went into companies that year. Seed and early-stage funding didn’t even account for half of what venture was doing in 2021.

The point I am making is that while there was a large growth in investment, venture pumped it into already-existing companies rather than risking capital to make something new. The depression within the ecosystem is that this is what people have got used to, and is a large part of venture’s outsized power.

In 2021, too many venture capitalists chose to make startups functionally dependent and then yanked their supply in 2022. We are in an era of venture-based social Darwinism, where you’re either strong enough to stand on your own two feet or divinely ordained by the money-gods to continue. While it may have always been like this, I believe the ridiculous, reckless mid-to-late-stage opulence of post-2020 venture has inflicted significantly more damage to the startup ecosystem than any other event since the dot-com bust.

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All the while, there are very loud and annoying voices in tech claiming that generative AI is going to replace every job.

Generative AI appears to be the only way to get funding at the moment, and yet Bill Gates and other major tech leaders (including Steve Wozniak and Elon Musk) are now calling for a halt on developing “any AI systems more powerful than GPT-4,” the latest iteration of OpenAI’s popular generative chatbot.

There is genuine fear about what generative AI can or could do, with Goldman Sachs suggesting that AI could impact 300 million jobs in an indeterminate amount of time, and ChatGPT itself claiming it will replace 4.8 million American jobs. The thought leadership industrial complex has already gone into high gear, with people saying AI will take our jobs, or won’t take our jobs, and that the government should either do something now or in the near future.

You see, the problem about everything I’m discussing isn’t that we’re in the end times, but in a deep, dark pit of uncertainty. While there is a mass panic in the tech industry about a drought in funding, it doesn’t appear to be because the money isn’t there. It’s that the lens through which venture chooses to deploy it keeps shifting.

Generative AI is supposed to take millions of jobs away, but I am struggling to find a cogent explanation as to how, why or when. There’s just the sense that it will happen, and that if you squint hard enough you can sort of see what somebody might be saying. The many, many rounds of layoffs that have happened seem to be due to the fact that tech companies have all agreed it’s a great time to do so. Silicon Valley Bank’s collapse was scary, but the actual ramifications are rather opaque to the average person in tech — or, at the very least, do not seem to be well-publicized or discussed.

Sidebar: The lack of a robust labor movement within tech also contributes to this anxiety, with no unions to protect against layoffs caused by a company’s focus on generative AI. The Writers Guild of America has brought up similar concerns (and made it clear they are willing to strike to protect the rights of their workers) and will likely successfully protect writers as a result. Though it might cause Marc Andreessen to have a heart attack, I really do wish there was a Coders Guild of America.

The people with the money are not investing it as much as they used to, and when they do, they are investing it in things that suggest that they want to try and automate away labor. And it’s scary. Every story is about layoffs, or AI, or Saudi Arabia. And at the time when venture capital could and should be helping encourage and foster hope and excitement within the industry, it seems alarmingly focused on navel-gazing and panic.

While I am not advocating for recklessly deploying capital, I do believe the current levels of tech doomerism are created by entirely avoidable conditions. This is a self-inflicted wound — a needless darkness driven by venture capital refusing to venture with its goddamn capital.

The problem is that venture is a necessity to make these companies happen, something that is difficult to solve without robust government funding of small businesses. Venture is both responsible for the past and the future of tech, and in its current state has become so focused on hyper-growth and liquidity events that the “tech” part of the tech industry is now an afterthought.

What I’ve come to realize is that while there is an overwhelming sense of helplessness and uncertainty, things are not dying. Progressive mayor Brandon Johnson defeated police union-backed Paul Vallas to become mayor-elect of Chicago. Progressives won a simple majority in Wisconsin’s Supreme Court, allowing them to walk back the GOP’s anti-democratic efforts. A better world is possible.

I acknowledge that at times like these it’s hard to breathe. I know how I feel some mornings when I wake up — anxious and troubled, thinking about just closing my eyes and going back to sleep, and then realizing that there are people that depend on me. It’s isolating, even more so when you open up a newsletter and think “will 17,000 people give a shit about what I have to say?”

I have no idea if feeling this way makes me weak or incapable, nor do I know if you care to read it. If you don’t, well, at least I put it at the end of the newsletter. These conditions are not unique to tech, or really, any job. I believe there are plenty of people feeling like this in the world.

I definitely have it very easy compared to most, and I am grateful for it, and feel embarrassed to even admit feeling anything like this when my job is about typing words on the computer.

The truth is that you really don’t know if today will be better or worse than the last, and sometimes the feeling that it will or won’t is entirely based on the first email or message you receive. So perhaps that’s all I’ll tell you — send somebody a message when you wake up telling them hello, or that you love them, or that you’ve purchased gluten from the dark web.

These little moments are the reason that sites like Twitter have truly saved me — and people like me — from feeling like they’re drowning. As burdened as we might feel by the abundance of digital connections, sometimes those notifications can save you. It is sometimes enough to know that somebody else has thought of you.

It is very easy to feel lost, and much easier to believe that you will never find your way again, even when you’ve successfully done so before. If you feel like that, shoot me an email at or DM me on Twitter. I don’t mind. The world can be cold, and it does not always have to be.

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