The tech industry has witnessed substantial changes recently, with evolving dynamics impacting job markets, VC funding, and corporate structures. While these changes seem unprecedented, they reflect trends seen in the past. This article explores these shifts, focusing on industry examples like Blue Sky and Instagram, insights from seasoned experts, and what these trends mean for software engineers and the broader tech ecosystem.
Over the past few years, we’ve seen small teams achieve remarkable growth and success, delivering scalable solutions more quickly than ever before. An example is Blue Sky, a Twitter competitor that started with just one CEO and two developers in 2022. Within six months, Blue Sky launched a mobile app, quickly scaling to millions of users with a team of only 12 developers. This mirrors the success of Instagram in 2010, which scaled rapidly with a small team, leveraging iOS and Android platforms alongside a website.
The Blue Sky and Instagram stories show that achieving rapid growth with small teams is not entirely new. In 2010, Instagram built an iOS app, an Android app, and a website with a small team, reaching millions of users within a year. The tools available in 2022 made development easier, but the principle remains: small teams, when empowered with the right tools and resources, can scale fast and deliver impactful solutions.
Kent Beck, one of the Agile Manifesto’s founders, notes that feedback loops have lengthened over the years. This shift reflects a growing tendency to avoid accountability and to pass issues along rather than addressing them immediately. Such trends, Beck suggests, were also prevalent in the early 2000s, highlighting how cycles of responsibility and feedback have come full circle in today’s tech environment.
The tech job market in 2021 was exceptionally strong, but by 2022 and 2023, unexpected layoffs swept through the industry. While initial layoffs seemed confined to startups struggling with profitability, even profitable companies like Meta and Amazon followed suit, letting go of thousands despite record profits.
From 2011 to 2021, VC funding increased steadily, reaching a peak in 2021. Since then, funding levels have dropped, reflecting a more cautious approach in a high-interest-rate environment. Data from Pitchbook shows that funding in 2024 is comparable to 2018 levels, with less money flowing into startups and fewer opportunities for IPOs.
The boom in IPOs in 2021 saw a drastic decline in 2022 and 2023. Fewer tech companies went public, making it more challenging for employees and investors to see returns on their investments. The implications extend to big tech companies, which, despite high profits, continue to lay off workers.
A significant change came in 2022 with the Federal Reserve’s largest interest rate increase in 28 years. As interest rates rose to combat inflation, spending decreased, impacting various sectors, including tech. This shift has broader implications for the industry, as high-interest rates make it less attractive for VC firms to invest in high-risk startups when safer investment options offer competitive returns.
Historically, low interest rates fueled the growth of many tech companies by creating a favorable environment for high-risk investments. The zero-interest rate periods since 2008 coincided with significant advancements in technology, such as the launch of smartphones and cloud computing, which allowed startups like Uber, Instagram, and Airbnb to scale rapidly. With today’s high-interest rates, the tech industry is experiencing a challenging recalibration as growth and profitability become increasingly prioritized.
With fewer job postings and an increase in applicants, the job market has shifted from a candidate’s market to an employer’s market. Companies are now more selective in hiring, with fewer opportunities for career advancement and slower promotion cycles. For example, Supply Pike, a scale-up in Arizona, received an overwhelming number of applications for every open position, illustrating the competitiveness in today’s market.
Companies like Shopify have adapted their promotion processes to accommodate slower growth by introducing Mastery scores instead of traditional hierarchical advancements. This approach enables employees to receive recognition and incremental raises without necessitating promotions, offering a structured path for continuous development without title changes.
With the industry emphasizing cost efficiency, software engineering practices are evolving to prioritize proven, reliable technology over trendier, high-cost solutions. Monolithic architectures, for example, are experiencing a resurgence as companies realize they may not need the complex microservices architecture unless they plan on scaling teams significantly.
Full stack roles have gained traction, allowing smaller teams to handle iOS, Android, and web development through unified tech stacks like React Native and TypeScript. Blue Sky exemplifies this shift by using TypeScript across their backend, frontend, and mobile apps, enabling their small team of 12 engineers to work on various parts of the stack seamlessly.
With developers now taking on more responsibilities, including security and project management tasks, the role of a software engineer has expanded. This trend, known as “shifting left,” places more ownership on developers for testing, deployment, and security, aligning with the push for efficient, streamlined operations.
In today’s resource-constrained environment, companies are moving away from building custom internal solutions in favor of buying established software or adopting open-source solutions. The industry has seen numerous large companies attempt to reinvent technologies like React Native for internal use, only to retire these custom solutions after limited success. Moving forward, companies are more likely to leverage readily available solutions, minimizing the need to “reinvent the wheel.”
Monoliths are seeing a resurgence, as startups and tech companies reconsider the scalability and simplicity of a single codebase over a sprawling microservices architecture. Shopify, which uses a modular monolithic structure, serves as an example of how companies can achieve growth without the complexities of microservices. For smaller or mid-sized teams, the monolithic approach can streamline development and improve manageability, reducing communication overhead and the complexity of multiple services.
The recent downturn has parallels to the dotcom bust in 2000, where exuberant investment in web companies led to widespread layoffs and failures. Industry veterans recall the scarcity of job opportunities and the intense competition for available roles. Today’s market mirrors these conditions, as companies emphasize cost efficiency and reduce managerial layers, focusing on the essential roles that contribute directly to product development.
A quote from Ken Beck highlights this cyclical pattern: “Fixed specifications, more handoffs, and extensive documentation are coming back.” As companies prioritize stability and predictability over rapid iteration, engineers find themselves in an environment with longer feedback loops, less autonomy, and more structured workflows.
The tech landscape in 2024 is different from that of the early 2000s. AI and large language models are now a significant area of investment, accounting for 25% of all venture capital funding. The prominence of AI is comparable to the role of the internet during the dotcom era, positioning it as a transformative force for future innovations. However, AI is emerging within a high-interest-rate environment, presenting a different set of challenges and opportunities.
The scale of today’s tech industry is also far larger, with companies like Google, Microsoft, and Apple among the largest public corporations. In 2003, tech companies occupied only a fraction of the top publicly traded companies, reflecting the massive growth and influence tech holds today.
With increased competition for fewer jobs, building and leveraging a network is essential. Applying early to job postings and being prepared for intensive interview processes can help candidates stand out. Emphasizing relationships and securing referrals where possible can also improve job prospects.
Understanding the business model and revenue generation methods of your company is invaluable. Engineers who can contribute to cost-saving measures or revenue generation are more likely to be seen as essential. Building a close relationship with product managers and collaborating with departments like customer support can help engineers align their work with the broader company goals, enhancing their value.
In a volatile market, maintaining career security through continuous learning and building diverse skills is crucial. Alen May, a tech manager with experience in multiple layoff cycles, emphasizes, “There’s no such thing as job security, but career security can be built through challenging projects, learning, and networking.”
With large language models like ChatGPT and AI-driven tools becoming more accessible, engineers can enhance productivity and accelerate learning. Tools like GitHub Copilot and specialized AI solutions provide support for brainstorming, coding, and even project management. Rather than viewing AI as a threat, developers can integrate these tools into their workflows, benefiting from their capabilities to streamline tasks and learn new frameworks faster.
Though current conditions may seem challenging, they reflect patterns from previous tech cycles. While high-interest rates and market corrections introduce uncertainty, they also encourage a return to core principles—practicality, efficiency, and sustainable growth. The tech industry thrived in the 2000s, and there’s every reason to believe it will continue to innovate and grow, even as it adjusts to these new realities.
The evolving tech landscape demands adaptability and resilience. By focusing on career security, embracing AI, and aligning with business objectives, software engineers and tech professionals can navigate this period successfully and continue to make meaningful contributions to the industry.
