In 2022, the top 10 US-market tech stocks lost a combined $4.6 trillion in market cap.
With the tech industry changing at an incredible speed due to economic shifts and technological advancements, at Pixelmatters, we understand the importance of staying ahead and embracing change.
In this blog post, I aim to showcase how we’re adapting to the current market challenges and this new industrial revolution that is artificial intelligence, with a focus on efficiency, leveraging our expertise in product design, product management, and web & mobile development.
Note: All the below information was part of a talk I gave to the team at Pixelmatters back in March 2023.
What’s happening: the macro-economic environment and paradigm shifts
The Everything Bubble
81% of all existing US dollars was printed between Jan ’20 and May ’22. This means around 17 billion dollars were created from thin air in just 2.5 years.
As the world battled a global pandemic in 2020 and 2021, economies around the world were halted and governments stepped in to save businesses and help people. Three main factors led us to what is called the “Everything Bubble”:
- Enormous amounts of money were printed.
- Massive fiscal stimulus packages were given to support the economy.
- Central banks kept interest rates low for several years in the past decade.
The “Everything Bubble" refers to a situation where multiple asset classes (e.g. stocks, startups, real estate, cryptocurrencies) are all overvalued at the same time. Because money was cheap, investors and people have been pouring money into all types of assets, causing prices to rise to unsustainable levels. This is what we’ve been living through over the past few years.
Stock prices went up. Bitcoin price went up. House prices went up. Everything went up.
The Tech Bubble
The excess capital available also made its way into the tech sector. In 2020, venture funding reached $335 billion. In 2021, that number almost doubled to $643 billion.
As money was so cheap, corporate investors were willing to fund startups at record-high valuations. The focus was on growth at all costs and hiring as many people as possible to ride the wave of cheap money while it lasted. No one was worried about profitability.
All bubbles pop 💥
As with all bubbles, one day, they pop. 2022 was the year corrections started to happen.
The public stock market suffered major losses. Big tech was the most affected with companies like Apple losing 27%, Amazon -50%, and Meta -64%. Money was no longer cheap. And all that hiring companies did? Well, that had to be corrected too.
With (maybe) the exception of AI, money stopped being cheap. The capital still exists but because it costs more, the exigence is higher, valuations are lower, and only the best of the best can get it.
Growth is now second to financial sustainability. Companies are more focused than ever on profitability and extending runway. Cost-cutting happens everywhere, with massive layoffs left and right. Everyone is focused on efficiency.
Our response as a digital product studio in 2023
We felt it was appropriate to be super transparent with the team on the current economic environment. The goal was to set the stage to talk about how we are reacting to it and how it impacts our focus and goals.
In parallel to the tech bubble popping, generative AI gained mass adoption extremely fast thanks to the release of ChatGPT in November ‘22. AI was now also part of the game and part of how Pixelmatters will be shaped as a tech company. We’re embracing it as a productivity and efficiency booster, but not as a human replacement.
So, in summary, there are two major paradigm shifts going on:
- The shift to focus on profitability and efficiency in tech.
- Artificial intelligence evolution and mass adoption.
As a digital product studio, our clients are all tech companies (and many VC-backed). We know they are now tracking every dollar spent. We know the smaller ones will have a hard time raising new rounds. We know they will be reluctant to sign long-term agreements. And most importantly, we know they will be extremely focused on speed, quality, and on the impact of our work on their products and businesses. Perceived ROI matters more than ever.
On top of this, the market is now flooded with talented people and AI will potentially automate part of our work. So, how can we protect ourselves?
Pixelmatters' 2023 North Star ⭐
Considering everything stated above, we decided it was important to set a North Star for 2023. And this is what we decided to go with:
“Embrace the new tech industry paradigms, focused on efficiency, productivity, and opportunities boosted by automation and AI, while raising the bar on quality standards. An understanding that the industry is going through a highly disruptive phase, but also knowing that a "new normal" is on the horizon and that the organization has to be prepared for it at all levels.”
These mottos work quite well from our experience. It helps to inspire the team and serves as a high-level guiding light.
We’re already seeing efficiency and productivity gains with the adoption of some AI tools in our workflow. From coding to writing emails, AI is part of our day-to-day work already.
The bar on quality is also the highest it has ever been. Our client’s success is our focus and we only deliver work that makes a difference in their businesses.
Doing what we know best
Experience tells us that, in difficult times, we gotta focus on what we can control: our client’s satisfaction via our culture of excellence and the quality of our work. Keep bringing our A-game to work!
From Product Design to Product Management to Web Development, and Mobile Development, all the way to DevOps, Infrastructure, and QA, the quality of our work is our brand. We’re proud of what we do and confident in our abilities. And we’re doubling down on that.
These are the main ideas behind our strategy 👇
- Quality of the service, done "our way": culture of excellence, proactivity, critical spirit, attention to detail.
- Specialization: we do few things, but do it extremely well.
- High complexity and customization level: focus on product and digital transformation.
Conclusion
In conclusion, after years of low-interest rates and the pandemic’s financial stimulus, the economy was flooded with cheap money. All assets’ prices were inflated. Everything was expensive, especially in tech. As with everything that goes up, prices had to come down.
Then, Chat GPT was released and generative AI gained mass adoption in just a few weeks. If companies were already focused on capital efficiency because of being harder to raise money, AI came to boost everything as it will dramatically improve workers’ productivity.
These two major paradigm shifts are changing the way Pixelmatters thinks and operates as a digital product studio, and serve as the foundation of our 2023 North Star, which will hopefully positively influence the company's direction in the years to come.
We’re more motivated than ever to embrace this new reality and help more tech companies elevate their products to whole new levels.
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