Most of what is call the tech sector that went under explosive growth these last ten years has been built around digital consumer platforms; what I often derogatorily call the pizza-delivery sector. The underlying reasons have been pretty clear for a while: the incredible power of network effects build online, the access to cheap capital post-2008, the lack of any updated business regulations practically since WWII, not to mention the sheer shamelessness of the business model of companies like Uber or Facebook.
The unprecedented challenge for these monster companies is now to face markets where discretionary spendings are not a given. We've seen how fast Airbnb went sideways with Covid, but also how Peloton nearly crashed after lockdowns. But now the question is different. The question is can you afford a monthly $18 Netflix subscription if your purchasing power goes down 5%. What if it goes down 20%? Can you now afford a new $1,200 iPhone this year?
It's quite astonishing how this simple fact hasn't yet registered for most analysts. It's true that these last 15 years led us to believe that the U.S. tech sector would be indestructible. But like much of the Amercian economy its only based on avid consumption and consumers optimism. A sentiment that was materfully stroked and fueled during Covid, I must say.
But from now on?
I bet that you'll start to see less journalists thinking that Apple should enter the car market, while they'll start to see how healthcare might be the most obvious battlefield from now on.