Winter Is Coming: How to Survive a Downturn

Kevin LaBuz
10 min readMay 22, 2022

Things are getting chillier on Wall Street and in Silicon Valley. With the Nasdaq in a bear market and growth slowing, an increasing number of tech companies including Facebook, Netflix, and Salesforce are pulling back on hiring. Cycles are nothing new. Below, advice on how to survive a downturn.

Cycles Happen

Hiring is now a privilege in tech. Citing shifting investor sentiment, on May 9th Uber CEO Dara Khosrowshahi sent an all-company email saying that Uber needs to slow hiring, reign in marketing, and start generating free cash flow. Uber isn’t alone. In April, Robinhood laid off 9% of its workforce. Netflix is cutting too. So is Carvana. Facebook, Salesforce, and Wayfair are slowing hiring and it’s rumored that Amazon’s retail division will follow suit. Google searches for, a site aggregating startup layoffs, are skyrocketing.

Source: Google Trends. Layoffs FYI search term.

First quarter earnings reflected slowing growth and heightened uncertainty (war, inflation, interest rates). Recent stock market volatility is churning investor’s stomachs. After a decade-long bull run, things are slowing down in tech.

The transmission mechanism of slower growth moves from public markets to private markets. Late stage privates are already digesting this new environment. In March, grocery delivery firm Instacart slashed its internal valuation from $39 billion to $24 billion. It’s rumored that buy-now-pay-later company Klarna is raising a down round. Barring sudden macro improvements, this pain is likely to filter down to smaller startups.

Cycles are normal. Economies expand and contract. There are bull markets and bear markets. Inflation vacillates from hot to cold. Mr. Market is manic depressive. Yet we’re hardwired to extrapolate. Pain occurs when these two facts collide. The risk of long runs is forgetting about cyclicality. Since history repeats, it’s helpful to see how investors and operators dealt with past downturns.

Bubble. com (Howard Marks, 2000)

Valuations untethered from fundamentals. Unprofitable companies raising boatloads of money. Investors giddy about new technologies. A surge in retail investing. Sounds a lot like 2021 or 1999, but it’s actually describing the South Sea Bubble of 1720.

Kevin LaBuz

Head of IR & Corporate Development at 1stDibs. Previously finance at Etsy, Indeed, and internet equity research at Deutsche Bank. Find me on Twitter @kjlabuz.