Today’s layoffs:

Time to panic, or to just ask the tough questions?

It’s been layoff time in the tech industry – and that makes us all, including in the photo & video tech industry, a tad anxious when hearing of one layoff announcement after another.

From Crunchbase January 5

Were the layoffs in November an anomaly? I’m afraid not: January will be worse, as companies often wait to drop the axe after the holidays.

You probably read some of the serious layoff announcements at Twitter, Meta, Microsoft, Salesforce, Amazon, Stripe, Lyft, Coinbase or, closer to home: Snap, Vimeo, Stichfix, and Mojo Vision. I certainly might have missed a bunch, as most companies are not jumping up and down to shout the bad news from the roof.

So is this going to be a repeat of the Dotcom crash back in 2000?

Well, the picture is a bit complicated and one on which the jury is still out. 

Here’s a helicopter view of what’s happening with the cost of capital, investor expectations, unemployment rate, consumer spending, inflation, and advertising spending. Based on these macroeconomic factors I’ll end with a few words of advice for us all in the photo & video tech industry. 



1. Cost of capital – gone are the days of close to zero (or sometimes even negative) interest rates, which governments across the world had set to mitigate the economic impact of the COVID pandemic. Gone are also the days of inflated tech stock prices, thanks to a double whammy of the currently being raised interest rates and the back-to-earth realization that some tech investments were more driven by FOMO than sound judgement. Gone are also the days of too easy, too early acquisitions and IPOs, driven by an abundance of cheap capital and, again, FOMO.

The result? Raising capital (from VCs, PE firms and lenders; through IPOs) and achieving exits have gotten much harder than in recent years. Last year, exits were down almost 50% against historical norms, with public listings at record lows.

When:

January 19

8:00 am - 9:30 am Pacific Time

(17:00 - 18:30 CET)

Generative AI: From technology Showcases to real-world Apps

Ticket sale ends EOD Jan. 18.

What: Live demos, discussions, virtual

Expected 100+ Attendees: Startup founders and corporate executives in the photo & video ecosystem, as well AI-specialized solution developers.

Presenters:

Sofiia Shvets, CEO & Co-Founder, Claid

Ofir Bibi, VP Research, Lightricks

Champ Bennett, CEO & Co-Founder, Capsule

Lusine Harutyunyan, VP of Product, Picsart

Servi Pieters, Founder, myprint.ai

Dmitry Shironosov, CEO, Everypixel

Lisha Li, CEO, Rosebud AI

Yair Adato, CEO & Founder, BRIA

Buy your ticket now! More info.

2. Investors are looking (more) at sound economics and short(er) term ROI – yes, the hard questions that were avoided to be asked for so long, are en vogue again. Do you really need to already recruit a bloated staff just because it might be hard to hire the right folks down the road when you're really ready for them? And offer them outrageous compensation, as everybody else is trying to recruit them too? Do you really need to pour all this money into projects that are unproven to generate money any time soon? Does it makes sense for Amazon to have physical stores? Or for Snapchat to develop selfie drones? One after another, tech companies, ranging from startups to the big guys, are now going through these types of exercises to determine realistic ROI and payback periods.  

• Who’s not? You guess it: the exception, for now at least, is Meta, whose founder owns the majority of the voting stock and has dug in his heels to pursue the metaverse.

The results of this retrenching towards short-term ROI was quite tangible at CES last week, as described by The Verge: “The event is usually filled with far-out concepts, extravagant tech demos, and promises of gadgets working better together tomorrow — things that aren’t going to happen anytime soon or are wholly unaffordable. But this year, much of what we saw was exciting real tech coming into reach.”

3. Unemployment rate. The layoff news in the tech industry described earlier, combined with the Federal Reserve Bank’s intention to cool off the labor market through higher interest rates, might make you think that unemployment is going through the roof. 

But…

• The overall unemployment rate it still at record low, both in the US and in the Eurozone. 

• In the tech industry specifically, let’s not forget the less attention-grabbing hiring spree that occurred during the pandemic, which in many cases amounted to more newly hired employees then than the number of layoffs since.

Source: Axios

In the 12 months preceding Sept. 30, 2022, Alphabet’s (Google) employee growth was 24%, Microsoft 22%, and Meta 28% (before that, Meta had doubled in employee size between the end of 2018 and the end of 2021).

Why don't we just call these high profile layoffs a partial retraction of what had gone overboard in the past?

4. Consumer spending. Who’s listening to all the doom talk of a pending recession? Well, not consumers – at least not that much, as of yet. Coupled with the low unemployment rate, consumers have not been holding back during the recent holiday season: overall US retail sales went up 7.6% (ecommerce even 10.6%) according to Mastercard. Some of the increase in spending reflected higher prices, but not all of it, according to most economists.

5. Inflation. Well, inflation is definitely still there: US Consumer prices rose 7.1% YoY. While high, it’s a notable drop from the peak price increases of 9.1% back in June. With apparently limited impact on consumer spending so far, inflation has, however, affected businesses, especially those that cater to markets that are less forgiving to price increases to compensate for higher costs, or markets with unfavorable currency rates that make exports to these markets extra expensive. For most other businesses today’s inflation might be a nuisance but has a manageable impact on their bottom line.

6. Advertising spending. U.S advertising spending in 2022 went up 10.2% and is expected to increase, albeit at a slower rate, again in 2023, partially because 2023 won’t feature big advertising events, such as Winter Olympics and the WorldCup that contributed to the high numbers last year. 

Given all these macroeconomic factors, it seems logical to recommend:

• Don't let all the current layoff announcements in the tech world trigger you to go into panic mode. While reason for concern, note that many of these layoffs were are long overdue corrections for overstaffed, and overfunded, tech companies. In fact, these layoffs might also enable you to hire the types of talent who were previously out of reach.

• Still, watch your expenses and set realistic business goals. Today is not the time to run out of money and feel the pressure to raise equity or secure expensive loans with the proverbial knife pointing at your throat.

• Don’t rely on advertising as your sole source of revenues. Instead, diversify your revenues and be creative about other monetization opportunities, such as subscriptions, B2B(2C) licensing, selling photo print products, enabling e-commerce – many of which have been and will continue to be topics of conversation at Visual 1st. 

• Be realistic about when, and under what conditions, you could exit or go IPO. Things ain’t the same as they were 6 or 12 months ago. If an exit or IPO is not realistic in the short term, keep building your business and don’t waste time and resources by pursuing dreams that prove to be unrealistic in the current climate!

And a few more things...

Kandao. Next generation 360 action cam. Kandao announces the Kanado QooCam 3 waterproof 360 action cam, which features two 1/1.55-inch large-size sensors and captures 11K 62MP pictures as well as 5.7K Video 3.

(Kandao won the 2022 Visual 1st Best of Show award with their QooCam EGO stereoscopic camera/viewer).

Bird Buddy. Hummingbird feeder + camera + identifier. Yeah, CES still exists as a place to introduce cool new things: the Bird Buddy Smart Hummingbird Feeder includes a motion sensor-activated camera that will take pictures and video when a bird visits. It then uses AI to determine which species the hummingbird is — it’s supposed to be able to identify up to 350 different types. Preorders for now, anticipated shipping in April.

QuickVid. Generative AI bonanza for your videos. Given as little as a single word, new web app QuickVid chooses a background video from a library, writes a script and keywords, overlays images generated by DALL-E 2 and adds a synthetic voiceover and background music from YouTube’s royalty-free music library.

TikTok. Video-scrubbing thumbnails. TikTok has quietly added video-scrubbing thumbnails to its platform, making it easier for users to find a specific part of a longer video. Hint: and why not select the cutest frame and turn it into a photo print product?

Costco & Shutterfly. Bye-bye Costco photo print products, hello Shutterfly. Costco, which closed its in-warehouse labs in 2021, announced it now also has offloaded its online photo print product offering to Shutterfly. 

Adobe. Your photos and Adobe’s AI training. It’s complicated. First reports: Adobe apparently has had an opt-out policy for them to use your photos to train their AI. Second report: but this policy is not for their generative AI algorithms. Third report: maybe the opt-out is still in effect by combining your content with that of others. Lots of legalize obliqueness.

Mojo Vision. Forget AR contact lenses. It sounded so exciting: finally making these spy movies real. Mojo Vision had already successfully developed prototypes of their smart contact lenses that featured a built-in display of AR content. But then the new normal of cutting back on “way out there” projects set in (see above) and the company couldn’t get additional financing. Mojo Vision has laid off 75% of its staff and is now focusing on shorter term projects of developing micro-LED display technology. 

Picsart. Sketch to image generative AI. After offering text-prompt generative AI image creation, Picsart now launches sketch-prompt digital art creation - or letting users create this through a combination of both sketch and text prompts. I look forward to Lusine Harutyunyan's demo at our Visual 1st Generative AI Spotlight on January 19!