San Francisco panicked by a new tech collapse

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San Francisco panicked by a new collapse of techno

View of the city ​​of San Francisco, California.

Behind its whiteness and mysterious light, San Francisco hides its game well. weeks.

It started with hiring freezes and small layoffs, but it was rather a trickle. This week, however, it turned into a wave of layoffs, says Gerrit de Vynck, tech reporter at Washington Post, during an interview with Radio-Canada.

For several years and especially since the pandemic, technology companies in the city and Silicon Valley have greatly increased their profits. Hiring followed and many mistakenly believed that the party was going to continue. But inflation and the economic downturn spelled the end of recess.

Companies are having difficulty increasing their income as before and, with the rise in interest rates, it is more complicated to invest. The quickest way to reduce their expenses is to lay off workers, says de Vynck.

The industry is now panicking at the idea of ​​seeing techno stumble for several months and somehow relive the bursting of the bubble of the early 2000s.

We see more and more comparisons with the collapse of techno. It is certain that there will be bankruptcies, especially for start-up companies, believes the journalist.

More and more stakeholders also believe that the latest layoffs are the prelude to even greater waves in 2023. Since the beginning of the year, Tesla, Meta , Twitter, Microsoft, Lyft and OpenDoor announced layoffs.

We're talking about people like you and me losing their jobs, families, it's not easy. Unfortunately, markets have changed and companies have to adapt, says Marie-Michèle Caron, president of international markets at Thryv.

Not so long ago, tech giants were snapping up young talent from all over the world. But today the situation has changed. The report of our special correspondent in San Francisco, Olivier Bourque.

The latter decided to settle in California eight years ago. She has no regrets about her choice and believes that the city remains attractive despite everything.

California is the sixth largest economy in the world and will soon overtake Germany. It is still a perfect place to invest, she believes.

This is also the opinion of Gabriel Dion, consultant in economic development and commercial real estate at Newmark. He does not believe in a brain drain in the next few years.

I think San Francisco is still an attractive city, despite the high cost of living. It is a city that attracts talent, people who want to excel professionally. It is still the Mecca of venture capital, he believes.

It is certain that another cycle is coming, but I believe that San Francisco will be reborn, he continues, seated outside a small Italian shop, not far from his accommodation.

In addition to the tech crisis, the region is facing other headwinds. Foreign investment was at its lowest since 2009 last year.

San Francisco's Famous Streetcar

The level of taxation, social inequalities and the cost of living are increasingly repelling investors, so much so that some no longer hesitate to say that Silicon Valley has lost its former luster.

It is one of the most unaffordable places in the world, because the tech employees have been paid way too much. If you don't work for one of these companies, if you don't have a salary of $200, 300, 400,000, you can't buy a house here, says Gerrit de Vynck.

And even when renting, you have to plan to allocate a large portion of your salary to housing, noted Jean-Sébastien Royer, a Quebecer who works for Reddit.

It's easily US$2000-2500 for a studio. There are a lot of people who share a flat to have two bedrooms. It can then go up to 4000, 5000 $, he assures, during an interview with Radio-Canada at the famous Union Square.

Mr. Royer is not too worried about the wave of layoffs that is coming.

I have a temporary status. So if I lose my job, I will have one month to leave the country. I will visit my family, my friends in Quebec. I could apply for other jobs or go around the world, he says, a philosopher.

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