Downturns, and after

Paco Xander Nathan
4 min readApr 7, 2021

I think that people tend to get the wrong idea about technology, particularly software.

We make new capabilities.

To have a defensible strategy in business, the “newness” of what you’re making cannot be minor. Firms must aim higher, provide more than simply incremental advances. They must push far enough ahead to drive value, and give themselves runway to grow.

So, about downturns… I’ve participated in a few: 1987, 2001, 2008, and now 2020. Understand that most of the “disruption” occurs after business begins to pick up again.

The reason for that belies what people tend to get wrong about technology. Lots of people in the tech industry think they understand their gig, how to earn big bucks doing a thing. Until a downturn happens, then afterward their thing isn’t especially valuable anymore. Oops.

For example…

In 1986, lots of people with tech jobs believed they understood how to rake in big bucks. Frankly, I was interested in something obscure at the time called “neural networks”. Plenty of people around the industry thought that was stupid and told me so. Hey, if a person really wanted to earn $50K/yr starting salary (good at the time) they should just do the obvious thing and become a COBOL programmer. Or maybe get a corporate job at HP building printers.

When the market crashed in 1987, tech jobs underwent a relatively subtle transformation. On the other side of that recovery, instead some work in Unix and languages such as C++ were considered valuable. People who hadn’t tracked that shift found it increasingly difficult to find good work. Once the WWW thing hit, just a few years later, changes in tech only accelerated.

In 1999, lots of people with tech jobs believed they had their cash cow figured out: launch web sites for ecommerce, count on $80k/yr. Then the Dot Com Boom crashed in 2000 and the worldwide economy crashed even further a year later.

Over the course of the crash and heading into its recovery, things in tech had shifted. Knowing how to write HTML didn’t land you interviews any more. Websites had meanwhile become more complex due to webapps, MVC, Java, Java, Java. I was working in network security, and teaching that plus a new thing we called “Ajax” and the shift in tech became apparent. Web 2.0 lurched forward, and all those “dark fiber” lines suddenly became valuable going into the mid-aughts as YouTube and smartphones prevailed.

I met a lot of people who were convinced, circa 2008, that being a certified Oracle DBA or Business Intelligence analyst was their ticket to a cushy retirement. Except that the tech industry had oversold the “promise” of enterprise data warehouses, and the economy crashed later that year. On the other side of that recovery cycle you needed “data science” on your resumé instead. BTW, did you know how to write any MapReduce? (If HR could even spell the term correctly, but I digress…)

I met a bunch of people who were quite convinced circa 2019 that they had the tech industry figured out, they were set for life. SF was an idyllic paradise for their lifestyle, etc., etc. For many of these people, 2021 is turning out to be rather rude.

Here’s the thing: in tech, we create new capabilities — dramatically improved newer capabilities. Often that involves identifying what had previously been considered “too expensive” then finding ways to change the rules so that it’s not.

You know what’s really expensive in tech? People. Loaded salaries. Expectations that don’t keep apace with the ever-changing reality of what is actually valuable — and what’s no longer quite so valuable.

If you want to do tech well, find a way to make a bunch of expensive headcount unnecessary, while creating an entirely new set of affordances for your product/service/thing which makes it in hot demand. Of course, more people will get hired— they always do. But those will be different people, with different skills. That’s the game of it.

PS, as a note to people who want to manage tech teams well: be wary about hiring people who entered the industry during a boom, and seek out people who entered during a downturn. You’ll thank me later.

The other thing is about timing: companies that have enough capital to double-down on the whole “aim higher” technology investment strategy during a downturn will tend to be among the ones that race into leading positions after the recovery happens. Other companies, not so much. Ergo, even more jobs get disrupted. You see, the economics of aiming high to develop much better capabilities generally don’t work so well during a boom. Not many firms do it. The ones with deep pockets and good leadership tend to leverage downturns as a time to wipe out their competition.

2021 is turning out much better than the previous year. Vaccines are on their way, business is picking up. It’s just that, if you’ve been expecting “things to go back to normal” in the tech industry … they won’t. That’s what we do for a living.