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Fortune marks the launch of its Crypto 40 list with Artist IX Shells the future of digital finance. Cover illustration by IX Shells Cover illustration by Ix Shells
On March 9 Chance CEO Alan Murray and I hosted a luncheon for 30 executives in Lake Nona, Fla., and asked them to poll: How many of them felt we were headed into a recession soon? Only a few did.
If we had asked the next day, the answer might have been different. On the short flight home, Silicon Valley Bank said: Depositors withdrew $42 billion from their accounts in 24 hours, partly due to a VC-led Twitter frenzy. That weekend, SVB and another regional player failed to sign a bank. The biggest reason: Interest rates have been flat-footed since last year’s rapid rise.
More than three years after the outbreak of Covid-19, we are finally starting to see the negative impact of our unusual pandemic behavior on businesses. As I write this, the shockout is sweeping through two of the most powerful industries, technology and finance. Meta, Amazon, Zoom, Salesforce, and Google have benefited from years of free government money at the expense of shrinking manpower. Now they must readjust, exchanging pleasure for efficiency; In total, the technology sector has laid off more than 150,000 workers since its inception.
The spending has fueled higher inflation, which Federal Reserve Chairman Jerome Powell is trying to control with rate hikes—which in turn are crushing banks that are now overexposed and unregulated. It’s causing the rest of us to keep an eye on our accounts, worrying about whether our money is safe.
When times are good, it’s easy to think they’ll last. And that’s when leaders can lose discipline.
Meta, for example, has seen its stock fall by more than two-thirds from its 2021 peak, with CEO Mark Zuckerberg declaring 2023 the “year of efficiency.” Meta recently announced his second round of layoffs in six months. Meta stocks have given back some. But as Geoff Colvin points out in this issue’s story: “If this has been a year of success, what have been the previous years — the years of destruction?”
There’s no industry that’s down from crypto, whose market cap has fallen since early 2022. In the inaugural Crypto 40 pack, editor Jeff John Roberts and his team pick the companies best positioned to survive and transform what’s left of the industry. One of these choices is Binance, which was the leader of the cryptocurrency exchange in terms of trading volume. Jeff’s team punished him at our level.
ChanceSean Tully spent months sifting through some of the startling details of those financial affairs. Binance’s explosive growth in recent years has been aided by an extremely expensive influencer marketing scheme. The rest of the industry should hope that Binance founder Changpeng Zhao has used the best time to prepare for the Black Swan. As we’ve seen with SVB and Binance’s rival FTX, in the age of social media, consumer distrust can be swift, widespread and deadly.
It is not clear how widespread the current epidemic is. But the lesson is clear: CEOs can’t assume their best days will be ordinary days. Breakdowns are unexpected – and inevitable.
Allison Shawntell
Editor-in-Chief, Chance
@ages
This article will appear in the April/May 2023 issue Chance Titled “Efficiency Is Cool Again.”
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