See correction for May 27, 2022, under the John Fetterman heading.
Gig economy (neoliberal wet dream)
VC high priests often argue that these downturns are macroeconomic acts of God, like some 100-year storm, or, OK, fine, maybe a 15-year storm—anyway, no need for anyone to moderate their selfishness or learn other pesky lessons. In this case, the argument goes, two decades of low interest rates cast tech companies as alluring investments, sending a flood of capital from public markets their way. Competition to back the most promising startups then drove valuations to unsustainable heights, until an unprecedented confluence of bad news (Covid-19, Ukraine, inflation) brought it all crashing down. It’s comforting to blame the world. But the truer explanation, one that necessitates a real reckoning, is that the industry, once again, is facing up to the compounding impact of its bad decisions.
It started with the two things that motivate all venture capitalists: 1) a paralyzing fear of missing the next big thing, and 2) greed. A decade ago, new companies began making their way out of startup schools such as Y Combinator asking to be valued in the millions of dollars before they’d ever earned a cent. To attract the most promising startups, certain VC firms, notably Andreessen Horowitz, eagerly endorsed this high-stakes grade inflation and often allowed founders to cash out before they’d proved their business models. High-profile collapses, such as the blood-testing disaster Theranos and the office-sharing supernova WeWork, led to some bingeworthy TV but didn’t prompt a serious retreat from this Monopoly-money mindset. Instead, VC firms and their new rivals, such as SoftBank Group Corp. and Tiger Global Management LLC, continued jockeying to invest and bid up prices every step of the way. “There was so much money available at every stage and everywhere you looked,” says Jeff Clavier, managing partner of early-stage investment firm Uncork Capital.
On the one hand, as I’ve previously mentioned, I feel somewhat disconnected from a possibly popping bubble. I’m not where I was for the dot-com bust in 2000-2001. So it’s hard for me to sense what I did then, that yes, what Brad Stone and Lizette Chapman describe is real. On the other hand, white the names and specific modalities are different, what they describe most definitely sounds familiar, but if I’m reading them correctly, on a far more massive scale. And if Laura Forman is right, it makes Uber and, now, Lyft look relatively responsible—the two companies are both reacting to what Uber Chief Executive Officer Dara Khosrowshahi called “the ‘seismic shift’ in investor sentiment.” Whether that’s enough very much remains to be seen.
What I can say is that the pattern of business I’m seeing personally as a driver, on that other hand, profoundly vulnerable to the business cycle seems strikingly to have shifted in recent days. I can’t really say my bottom line is affected yet but I’m seeing fewer rides and a lot of time between them, particularly on Tuesdays and Wednesdays, always the worst two days of the week, at a time of year when business should be on the upswing following dreadful winter doldrums.
I don’t know what, if anything, this portends. It could be that somehow I ride this out like I did the pandemic. It could be I don’t. It could be that what I’ve seen over the flast few days is a meaningless flash in the pan. Or it could just further signify a return the bad old days pre-pandemic. I don’t know, I’m a single case, and as always, there are confounding variables I’m not accounting for, like that I’ve really become intolerant of passenger nonsense, in which I intend to limit who is getting in my car.
Preetika Rana and Emily Glazer, “Lyft to Pause Some Hiring and Trim Budgets, Citing Economic Slowdown,” Wall Street Journal, May 24, 2022, https://www.wsj.com/articles/lyft-to-pause-hiring-and-reduce-budgets-to-reduce-costs-as-shares-plunge-amid-investor-concerns-11653426208
Laura Forman, “Tech’s Reckoning With Reality Is Still Half-Baked,” Wall Street Journal, May 25, 2022, https://www.wsj.com/articles/techs-reckoning-with-reality-is-still-half-baked-11653476401
Brad Stone and Lizette Chapman, “The Tech Rout Isn’t Just Cyclical—It’s Well-Earned, and Overdue,” Bloomberg, May 26, 2022, https://www.bloomberg.com/news/features/2022-05-26/meta-amazon-tesla-big-tech-s-stock-selloff-is-long-overdue
So there is now a huge question whether John Fetterman is fit for a six-year term as U.S. senator:
The uncertainty stems from how [John] Fetterman’s campaign and his wife, Gisele, have characterized his heart condition: a common, irregular rhythm called atrial fibrillation (A-fib). They said the A-fib led to his May 13 stroke, and that is indeed a common cause of stroke. But when he got the defibrillator four days later, they said the device was implanted to treat the A-fib.
But that’s not what defibrillators are for, leading cardiologists not involved in his care to suggest that Fetterman, 52, has another heart condition the campaign hasn’t disclosed.
I am not a psychologist, but I think John Fetterman’s appeal to a lot of Pennsylvania working class folks, folks whose votes he’ll surely need to win in November, rests on something of a plain-speaking tough guy persona. Much as I want to trust his wife, Gisele, who has her own incredible backstory—she’s the one with real courage in that family—we’re clearly not getting the plain-speaking part with Fetterman’s heart condition and I have to wonder if the reason for that might be that disclosure would undermine the tough guy persona.
Whatever the truth of that is, it leaves that question of fitness wide open. There is also a question how much it will matter to Pennsylvania voters, at least until his tough guy persona falters. Something I noticed right away upon arrival was that obesity and tobacco smoking are both much more common here than in California. It’s another nuance I really don’t have a grasp on: Will Fetterman’s heart attack serve to humanize him further? Would Dr. Mehmet Oz, apparently a real doctor—and a cardiac surgeon at that—who only plays a quack on television, shred the claim that it was “only” atrial fibrillation on the campaign trail?
Update, May 27, 2022: So my mom saw this and sent me several authoritative articles saying that, yes, defibrillators can be used for atrial fibrillation and have in fact been approved for this use by the Food and Drug Administration since 2001. So I don’t know what’s going on with the Philadelphia Inquirer article.
Tom Avril and Julia Terruso, “John Fetterman got a defibrillator after his stroke. But doctors say the campaign’s story ‘doesn’t make sense,’” Philadelphia Inquirer, May 26, 2022, https://www.inquirer.com/politics/election/john-fetterman-stroke-health-pacemaker-defibrillator-afib-20220526.html