MV #020: Ikarus, dangers of startup hubris, ChatGPT everywhere and why you need $20m to retire.
B2B tech continues its journey back to the ground of reality with valuations dropping and expectations adjusting. The tech correction reverberates beyond tech.
👋 Hi there, happy Sunday!
Did you have a good week?
I did.
I was enjoying some time off in Tenerife with my family. I also spent time exploring the nearby Teide National Park and visited the Peak at 3704 meters altitude.
The altitude was a challenge. At the peak, I felt so close to the sun. I could almost touch it.
That’s probably how many high-flying unicorns must have felt in 2020-2021 before they came crashing down.
Some of you might be familiar with the story of Ikarus. The ancient greek story teaches us not to fly too close to the sun, or we might risk coming crashing down. But hubris led us to believe we could despite all warnings. The story of the correction continues as we wrap up the second month of 2023.
Let’s dive into this week’s edition of More Value.
☀️ 2 news stories for B2B leaders
👔 Layoffs spread outside tech - a leading indicator?
The FT reported (source) that consulting companies like McKinsey and KPMG plan to cut staff. The boom times are over, and strategic analyses from the likes of McKinsey are not as in demand since transformations wouldn’t get funded anyway.
The layoffs are now spreading beyond tech and affecting the supporting cast of digital transformation - or any transformation.
KPMG and the likes - think Accenture, Deloitte or PwC are in a similar boat. Many of them run technology transformations. These are now being put on hold, and consultants find themselves sitting on the dreaded bench.
If a consultant’s utilisation is down, margins are down. And nobody likes low margins in 2023.
The logical consequence is to reduce the cost by cutting staff. I think this is an indicator of the reduced tech spend by many companies in and outside tech.
First, you don’t cut the check for purchasing new tech, then you don’t hire the consultants to implement.
Conversely, companies plan on spending money on technology projects despite macroeconomic headwinds. Particularly, the old economy will continue to transform as the NY Times reports (source).
“In a recent poll of corporate technology managers in the United States by the research firm IDC, 82 percent said they expected a recession this year. But 62 percent replied that technology spending at their companies would be the same or increase compared with 2022.“
Companies may try to implement software themselves more and use existing talent and tech to transform. I’m not entirely sure what’s behind this, time will tell.
Other job groups also feel the pain of the tech slow down like VC. This article in Business Insider (source) describes.
'I feel like I got catfished': Young VCs who left investment banking and consulting jobs are having career second thoughts in the downturn
Many more professionals are in for a rude awakening as tech companies continue to announce earnings and aim for more efficiency going into the rest of 2023.
🚂 Everyone jumps on the ChatGPT train
Zoominfo is the latest player announcing generative AI as part of their product.
According to CEO Henry Schuck, these are some use cases that the company will tackle.
Identify contacts to reach out to based on simple prospects
Craft & optimize cold emails
Isolate a call to action from a sales call
This is an effort that I’ve observed across the industry. Companies continue to try and gain efficiencies by making current staff more productive. If SDRs and AEs can increase productivity with generative AI, it would help improve margins since they could do more with less.
That’s only one of many use cases. An interesting side note to this is the battle between features and products. Copy.ai and Jasper already try to create text for sales using generative AI.
How much space do companies like the above have if the Zoominfos of the world embed generative AI features natively in their product?
It’s a question of time until everyone else hops on the generative AI train. Many generative AI startups will have to deliver more value to justify their existence at that point.
🧠 1 thing I learnt on LinkedIn
🙈 Somewhere out there is a CRO who thinks Sales Engineers should be compensated for the number of demos given. How ridiculous is that? (here)
📌 4 things you might have missed in B2B tech
📉 The slowdown in B2B tech is the same across all segments by Tomasz Tunguz
💰 PLG vs. Sales is not the question. It’s how you will make PLG + Sales work by
✂️ Where is SaaS spend down? by Sifted
🧱 The evolution of the B2B go-to-market tech stack: a few areas to watch by Balderton
👋 Parting thought
According to Bloomberg (source), some people believe you need more than $20 million to retire with ease. Most think around $3m does the trick.
Either way, if you’re anything like me, you will probably have to win a whole lot more deals to get close to those figures.
🙏 That’s it. Have a great Sunday!
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Thank you so much. I’m Semir Jahic, and I hope to see you again for the next edition in two weeks.