Over Hiring, Over Investment and Over Innovation

Let’s take a step back for a moment here and talk about what is happening in the market. To tell this story, I must start with a simple graph.

This is a graph indicating the shocking increase in M2 money supply. Simply put: When COVID arrived, the Federal Reserve (probably wisely), injected massive capital via financial engineering to prevent the global economy from collapsing.

In retrospect, this was the correct move. Without radical intervention, a global pandemic where people were forced to stay home would have left millions starving to death and caused governments around the world to collapse into chaos.

This radical intervention was unprecedented and ultimately has proven to be a good move. But this move is not without consequences. Those consequences are:

• Massive rise in inflation
• Corporations used the money to overhire workers, anticipating a tidal wave of growth to come (they were wrong)
• Corporations overpaid the workers that they hired
• Venture Capital and cryptocurrency markets skyrocketed into bubble territory
• Tremendous amounts of future innovation was “pulled forward,” aka “over innovation” which was not justified by the real market
• An unprecedented disconnect between skillsets possessed by workers in the traditional labor market and the needs of the emerging markets (Web3, AI)

What seems to have happened since is that the Federal Reserve has taken proactive action to unwind the effects of this unprecedented financial stimulation. This liquidity collapse has numerous effects and understanding these effects is important.

Economic Restructuring

While companies across the tech sector are laying off workers in the hundreds of thousands, those workers are learning something they didn’t know: The skills they had previously are radically misaligned to the demand from emerging markets like AI and Web3.

My personal experience, having moved from big tech to web3 is that the skill profile of a Web3 worker is dramatically, shockingly different from the skills that were useful over the last ten years.

I’m not the only one, I think I am just early to learn this. Many workers who were “overhired” and waited to get laid off are likely to learn how far behind the curve they are in a less proactive manner.

Over Innovation

So over hiring is a problem which seems to be widely understood at this point. But there is a second aspect to this problem which I am calling “Over Innovation.”

The spending tidal wave has created a raft of companies and platforms which are “too far” into the future. In other words, the availability of excess liquidity pushed out the time horizons for innovation which are now being pulled back.

After the 2022 meltdown, a huge number of these projects have been revealed to be unsustainable from an economic perspective.

This leaves an excess of “too innovative” technologies wondering what to do with their advancements.

Solving Over Innovation

One potential cure for Over Innovation is to organize CTO and technical CEO ecosystems. The foreword thinkers who influence others downstream, and leverage them to affect the rest of the market.

I am seeing Over Innovation across the board as people are left to pick through the pieces of the wreckage left by the market downturn from last year.

Thousands of DAOs and cryptocurrency projects lie in ruins, many of the projects are not likely to return. The survivors are left to pick up the pieces and the lessons learned.

A moment of arbitrage

I believe we are in an unusual moment where meeting and discussing the lessons learned from last year’s collapse represents an extreme potential source of informational arbitrage.

So if you survived and are trying to figure out where to go next, you may find that uniting the top minds offers an extremely unusual payoff profile this year, far more so than last year.

We learned a lot last year, but if the insights are not carefully collected and filtered, the next leg up may happen without us.