Tens of thousands of global technology leaders, workers and investors have been swarming Toronto this week, as one of the industry’s biggest conferences returned in person for the first time since 2019.
But behind the hoopla and excitement at this year’s Collision Conference, tech executives are quietly acknowledging the sector’s trillion-dollar troubles as stock prices crater, valuations crumble and an era of widespread risk-taking gives way to a sudden sobering up across the industry.
Collision organizers framed the event’s sold-out attendance of 35,000 as a signal that the world may be returning to normal after more than two years of the COVID-19 pandemic. However, public and private companies around the world have spent recent weeks adapting to layoffs, reduced valuations, deteriorating financing rounds and a plunging cryptocurrency market, after a technology-sector slowdown that began late last year has since rapidly accelerated.
That dichotomous reality punctured the positivity of many prepared remarks at the conference this week, as speakers pulled out amid corporate collapses and COVID-19 infections.
The Globe and Mail spoke with more than two dozen chief executives of North America’s largest and most-heavily-funded technology companies at the conference. In interviews, they described the rout in the industry as dire and difficult to grapple with. Still, some bellowed optimism on the large stage in front of hundreds of booths set up by tech startups and companies from around the world at the one-million-square-foot Enercare convention centre.
Roham Gharegozlou, chief executive officer of Vancouver-based blockchain company Dapper Labs, took the stage on opening night to assail cryptocurrency skeptics, such as software multi-billionaire Bill Gates. “With all due respect, I don’t worry too much about people that don’t see the future,” Mr. Gharegozlou said.
Yet nearly a quarter of the crypto and blockchain companies that had planned to attend Collision pulled out at the last minute, including the large crypto lending platform Celsius Network Ltd., which last week indefinitely froze customer withdrawals and transfers, and has since said it will need more time to restore operations.
“Quite a number of the other leading lights in crypto, we were informed, got COVID – all collectively, it seemed – late last week, and were therefore unable to travel,” said Paddy Cosgrave, the conference’s chief executive and co-founder, in an interview.
Executives at venture capital firms attempted to provide hope to crypto companies and startups at the conference, but at the same time, many said they are now holding back on their investments in the sector.
“When it comes to crypto, we’re going to hold off for a longer time,” said Anis Uzzaman, founder and CEO of Silicon Valley-based Pegasus Tech Ventures, as digital assets such as bitcoin and ether continue to plummet beyond multiyear lows.
“Unfortunately, corporates have a reputation of only investing in innovation and being very interested in startups when times are good. And right now, times aren’t so good,” said Christophe Bourque, partner at White Star Capital, a New York-based technology investment firm.
“I think the popular sentiment is to be doom and gloom about this. But when you think about what early-stage companies are doing, they’re bobbing and weaving and figuring out how to build their businesses,” said Beth Ferreira, a partner at New York-based FirstMark Capital. “It probably isn’t the bottom yet, so there’s more pain to be had.”
Even the federal government sought to cast an air of positivity at the conference, as Innovation Minister François-Philippe Champagne announced on Wednesday how the Liberals would earmark $443-million from a previous federal budget toward a national artificial-intelligence strategy.
When asked about the recent downturn in the tech sector, Mr. Champagne told The Globe he’s seen some of its effects play out, but remains bullish as a whole. “I’ve never had so many CEOs calling me, wanting to invest in Canada,” Mr. Champagne said, pointing to potential growth in advanced manufacturing, car innovation and AI.
The federal funding will include $60-million in funding for AI institutes such as Montreal’s Mila, Edmonton’s Amii and Toronto’s Vector Institute; $125-million in funding to help small and medium-sized companies commercialize AI technologies; more than $200-million for the Canadian Institute for Advanced Research; as well as funding for research computing capacity and the development of industry standards.
But CEOs from at least a dozen technology companies confirmed at the conference they are now either de-escalating their plans for hiring or freezing any new employment entirely. Some said they are also laying off staff, as several companies announced just last week.
“I think the talent crunch is coming to an end, that’s what we’re seeing... There will be a reset,” said Hussein Fazal, CEO of Toronto-based Snapcommerce, adding he’s being more “selective” in hiring.
“People could do whatever they wanted, we had the great resignation, salaries kept going up, demands for benefits kept going up,” Mr. Fazal said. “Now, all of a sudden, you have hiring freezes, you have layoffs and now people are pretty happy to be at a good company that is growing.”
Brendan King, CEO of Saskatoon-based e-marketing firm Vendasta, said technology companies can’t have heads in the sand any more. “We’re not hiring ahead of the plan, that’s for sure. We’re even saying, let’s slow down and see what will happen,” said Mr. King, who described Collision as a mix of anxiety and optimism.
“This downturn is going to be something. We don’t know how big or how deep it will be and we don’t know how much it will affect people, so you have to be ready. If you aren’t default alive, you’re in trouble.”
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