2023 is well underway. But there were some great lessons (or reminders!) from 2022.
Let’s dive in.
Lex Twitter
AKA demonstrating that: yes – you can run tech companies with very little staff. And software does really scale incredibly well.
Elon Musk took over Twitter and laid off more than half of the company. And proved that it could still run seemingly just fine. Agreed – the story isn’t over yet. But – like him or loathe him – this was a seismic event in the tech sector.
Lex Gorillas
AKA What happens when you invest in companies with upside-down unit economics.
Delivery group Gorillas was valued at as much as $3bn in 2021. In 2022 it was sold to Getir for $1.2bn. That was less than the $1.3bn the company had raised. And – here is the clincher: Only $40m of the purchase price was in cash. So Gorillas investors swapped their 100% ownership of one delivery company for a small stake (12%) in another delivery company. Plus $40m spare change. Probably not the outcome they were looking for.
Lex OpenAI
AKA what happens when tech’s most unassailable moat suddenly looks vulnerable.
For years the world looked enviously at Google’s profit margins. Google search was ubiquitous, and Google’s ad revenue looked impervious to assaults. And suddenly, the partnership between Microsoft and OpenAI throws all that up in the air. Note: this movie is going to play out in 2023. And Google still looks formidable. But ChatGPT was enough of a scare for Google’s CEO Sundar Pichai for him to declare a “code red”. Lesson: even the seemingly most invincible organisations can be disrupted.
In summary:
- software is the ultimate scaling asset
- unit-economics matter more than ever
- even Goliath isn’t invincible