The tech industry has been struggling, and one top venture capitalist said it would not rebound anytime soon.
“The situation today, I think, is more difficult and more challenging than either ’08, which was really a protected financial services crisis, or 2000, which was a protected technology crisis,” Leone said during an appearance at the Slush startup conference.
Leone, who’s been with Sequoia since 1988, added the current market has the mix of conditions to create the perfect economic storm.
“Here, we have a global crisis. We have interest rates around the world increasing, consumers globally are starting to run out of money, we have an energy crisis, and then we have all the issues of geopolitical challenges,” Leone said.
Tech giants like Apple, Amazon, Meta and Twitter, which Tesla founder Elon Musk recently acquired, have all had layoffs to cut costs. During this time, Leon said tech entrepreneurs would learn their best lessons.
“Think of what happened in the last two or three years: whatever you did was rewarded by some investor because of the plethora of capital,” Leone said.
“You were rewarded no matter what — you made a sh*t decision, a crap decision, you got money; you made a good decision, you got money — which is a lousy way for you to learn your craft. All that is gone,” he continued.
Leone predicted the tech sector wouldn’t recover from the economic downturn until 2024.
“My forecast is that we’re not going to get away with this very quickly,” Leone said. “If you turn back in the 70s, there was a malaise of 16 years. Even if you go back to 2000, a number of public companies didn’t recover for 10 years.”
“I think we have to be ready for a prolonged time where we’re going to find … consumers running out of money, demand decreasing, tech companies’ budgets being cut,” he added.