If you’re a person who occasionally goes online (and you’re here, so you must be!) you’ve probably seen news by now about how the ‘tech bubble is bursting’. If you’re also someone who is considering a career in the tech industry (and you’re here, so you could be!) this has maybe given you some cause for concern.
We’re not going to sugar coat it. When tech bubbles burst, it’s definitely not good. But is it the end of the industry and of your tech career dreams? Absolutely not!
Sensationalist headlines make it look like ‘tech bubble bursting’ is synonymous with ‘entire tech industry collapsing’. But tech bubbles have burst before, and the industry has never stopped. It has only kept on growing. In fact, tech is growing at incredible speeds.
Even at the beginning of the latest burst, huge tech companies including Duolingo, Revolut, and countless other startups were still urging new tech applicants to apply.
So what’s really going on?
First Things First: What is a Tech Bubble?
In venture capitalist terms, tech is sexy. Hot new startups with smooth marketing and disruptive products land on the scene and take everyone’s breath away. Success stories of unicorns catch investor’s eyes and everyone wants to be an early adopter of the next big thing.
So investors start pouring money into tech companies, hoping to pan for gold. But what ends up happening is that excitement takes over and common sense goes out the window. Companies end up with valuations that are overinflated and the amount of money being pumped into the industry far exceeds the amount of potential revenue it’ll likely give back.
The dot com bubble 1990-2002
Time for some internet history!
You’ve likely heard about the dot com bubble of the late 90s, a bubble which burst spectacularly in 2002. The 90s really were a different time and the internet wasn’t just new…it was game changing.
Which means it was a true feeding frenzy for investors. But not everything was a great idea, despite how much capital investors threw at them. Companies started to crash and investors went running. While not solely responsible, the dot com bubble bursting has been linked to the 2001 stock market crash in the US, which rippled across other territories.
While there are aspects of the 2002 bubble that we can see mirrored in the 2022 bubble, it’s true that the tech industry has learned some valuable lessons on how not to run the show.
Where did the 2022 tech bubble come from?
The 2022 tech bubble (AKA the one that burst last year) actually began in 2011. And it was, reportedly, one of the bubbliest bubbles of all time. A small but mighty group of startups launched their first IPO and reached unicorn status - a startup company that has raised $1 billion USD in funding. This success sent investors into a feeding frenzy and a further $45 billion was thrust at hungry US startups.
It was when Facebook went public in 2012 that alarm bells started ringing. At the time, Facebook had only $4 billion in revenue – that’s a lot, but it’s child's play compared to larger corporations. Its IPO became the largest in American history and Facebook was valued at $100 billion. That was the first sign that the tech industry was starting to get out of control.
Next came Uber in 2015, which was valued at $51 billion…more than major airlines that had been around for decades. But it was in 2017 that Silicon Valley went truly crazy. Masayoshi Son, Chief Executive at Japan’s Softbank, invested $100 billion alone in Silicon Valley startups. Any warnings about how bubbly the tech scene was getting were soon forgotten and this display of confidence in the tech scene had other investors throwing their hats in the ring.
What Happens When a Tech Bubble Bursts?
When a tech bubble bursts, it’s certainly not a good thing. But is it the end of the entire industry? No. Far from it.
A tech bubble bursts when investors start to realize that the amount of money they’re putting into startups is more than they’ll ever get back. Stocks become less hot and slowly go back to more normal prices.
For startups, this means that the amount of cash investment they’ve been working towards is suddenly sliced. Some companies choose to freeze their hiring process in order to cut costs, and some may have to lay off some employees, teams, departments, or even locations. In extreme circumstances they may shut down for good.
The tech bubble bursting doesn’t mean that the whole industry is over and done with. It just means that, in investment terms, it’s not the playground that it used to be. Startups have to account for their new valuation and plan their growth accordingly. Smart business owners can smell when the tech bubble is about to burst and try not to get ahead of themselves in their budgeting.
What does the 2022 tech bubble mean for the industry?
The scariest thing you may have seen from the 2022 tech bubble are the layoffs. If you’re an aspiring techie, it’s understandable that you might feel a bit concerned.
We’re not looking to downplay the seriousness of layoffs. Each stat is a real person with bills and a life to pay for, and no one in the industry is happy to see people lose their jobs. That being said, is a tech bubble bursting the end of all potential and opportunity in the industry? Not at all.
Many tech recruiters and tech companies are adamant that they still have a need for talent. While exact stats on which roles and experience levels are most impacted by tech layoffs this month, we’re still seeing companies across Europe, Latin America, and the US desperately seeking fresh junior talent.
At Ironhack, our hiring partners are still working with us to fill their talent needs. A burst bubble may slow the tech industry down, but it’s far from grinding to a halt. Many companies are still looking for new people to help them grow as they navigate these new waters.
How To Get a Tech Job in a Burst Bubble
If you’re an aspiring techie, whether you’re choosing a mid-career pivot or a career path to take straight out of school, this means a couple of things. The first thing you’re probably wondering is ‘are my tech career dreams still within reach?’ And the answer to that is yes. But you may have to adapt your job hunting approach to fit the climate.
Search for remote tech jobs
Jobs are still out there, but it’s true that the competition may get fiercer; this depends on your situation. If you live in the home city of a tech company that has just laid off an engineering team, then they’ve re-entered the local talent market and may be looking for the same jobs as you. If that’s the case, consider broadening your search to remote jobs.
Remote positions by nature have a wider talent pool, and aren’t limited to hiring in their local area. This does mean that there will be more applicants, but it also means you get to widen your net as well. Instead of applying for the small handful of jobs available in your hometown, you get to job hunt all over the world.
Change your niche
If you were aiming to get into Fintech, one of the tech niches most impacted by layoffs so far, you may need to manage your expectations when job hunting. Until recently, Fintech startups were the hottest place to work, with recruiters going crazy trying to fill the gaps on rapidly expanding teams. But with companies like Klarna laying off 10% of its workforce, rivals like Wise and Revolut are swooping in to claim new talent.
These companies are still hiring for hundreds of roles, so if you’re really keen to get into this niche and you have the right experience, you can absolutely make your dream a reality. Just be prepared to face fierce competition. There’s few things more valuable in a candidate than experience with a direct competitor.
Take on some freelance projects
Use this time to expand your portfolio. Not only can freelance work be a good financial bridge between jobs, but it also helps you become better at what you do, and you’ll have more to demonstrate to potential employers.
You can get started on freelance marketplaces like Upwork and Fiverr for short term projects, or you can look for 3 and 6 month contracts on more traditional job sites. If you’re looking for remote freelance work (hello digital nomads!) try No Desk.
For some tips, check out how Ironhack alumna, Clémence de Robert, launched her career as a freelance UX/UI designer.
How to Future Proof Your Skillset
Everyone in tech knows how fast things can change, but a tech bubble bursting is something that brings it home.
If you’re just breaking into the industry, whether you’ve just graduated from your bootcamp or you’re considering which path to take, the best thing you can do for yourself is to future proof your skill set.
That means making sure you’ve got a broad range of skills, some specialist knowledge in your chosen discipline, and hands-on experience to demonstrate your strengths.
If you remember nothing else, keep in mind that a tech bubble bursting is absolutely not the end of your tech career dreams. If the world fell apart every time an investment bubble burst, we’d all be living back in the stone age!
So stay focused, stay resilient, and make your dream job a reality.