Part of the excesses that became ubiquitous with Silicon Valley is starting to get reigned back and that’s a good sign for the tech sector ($COMPQ).
It also means the boom years for the tech sector are over.
I am not talking about the full set of perks tech employees receive at their fingertips in order to entice them to spend most of their time at the office.
I am more referring to ideas that were hyped up as grand but never made a material dent in the tech ecosystem.
Not all tech ideas hit it big and some are complete busts.
Ideas like the Uber of battery-powered scooters are now getting the thumbs down and capital is getting pulled by from these marginal business concepts.
From the get-go, these companies presided over poor unit economics and they could only sustain operations in a world of cheap capital that doesn’t exist anymore.
Rates ($TNX) are high and could shoot higher.
Legally, cities have a say in whether they want their beautiful promenades and piazzas littered with ugly scooters.
In France, Parisians voted to ban battery-powered scooters, confirming that many regarded them as absolutely infuriating.
Banned from the French capital by popular vote, self-service electric scooters are enjoying their last day in Paris on Thursday, marking the end of five tumultuous years of controversial use, much to the dismay of their users.
From 1 September, Paris will become the first European capital to completely ban these self-service two-wheelers.
Many Parisians have become fed up with seeing them as not only an eye sore but also a safety hazard.
Since August, the 15,000 scooters have gradually been taken off the streets.
Of the 5,000 scooters going out to pasture produced by the German company Tier, a third will remain in the Paris region, in 80 communes around Marne-la-Vallée or Saint-Germain-en-Laye. The rest will go mainly to Germany.
In Paris, some 400,000 people chose a scooter to get around in 2022, according to operators.
The operators are banking on their customers switching to bicycles, which are already offered by everyone, which should enable them to avoid redundancies, at least for the time being.
There most likely will never be another boom of battery-powered scooter platforms dressed up as technology companies.
These types of low-quality tech firms are feeling the heat and examples are plentiful such as Peloton (PTON) which has also hit rock bottom.
The next big idea down the pipeline is generative artificial intelligence, but even that has been dialed back somewhat after stocks were priced in for parabolic growth rates.
As the expectation for better technology ideas results in the need to improve business models, there seems to be no room for bottom-of-the-barrel tech like the Uber of battery-powered scooters.
It seemed like a bad idea from the start so it’s surprising it took this long for them to get exposed.
Moving forward, expect tried-and-tested brand names in tech to outperform these mediocre businesses. It’s never been more difficult to grow tech companies with these high interest rates and the death of bad tech ideas will go into overdrive as interest rates continue to surge.
This will help our trading because knowing the pulse of the tech sector is half the battle.
