The appetite for lofty tech visions has waned

Have investors had enough of the grand visions and lofty rhetoric that did much to fuel the tech boom?

When stocks were riding high, it seemed every tech start-up wanted to change the world. Big claims were used to justify big bets. They were also used to get investors to look beyond the lossmaking present — where often there was not even a plan for how to get to profit — and focus instead on the sunny uplands far in the future.

These days, only cryptocurrency start-ups still seem to cling wholeheartedly to the revolutionary rhetoric — though after the market meltdown that set in late last year, even the email pitches on behalf of new crypto projects arrive in the inbox with an almost apologetic shrug.

It is unclear how much this merely represents a stylistic change to suit the times and how much it is a genuine retreat from the kind of risk-taking that characterised the long tech boom. The language that floated a thousand start-ups is being refashioned. Finding a new rhetoric — and investment approach — to match the new mood is a work in progress.

One of the starkest signs of this change has been the startling retreat by Masayoshi Son, the SoftBank chief executive who has long been the arch-exponent of the visionary style. Son played on his reputation as a tech seer to justify some of his largest bets, even when his explanations slipped into the nebulous.

A humbled Son last week declared himself “ashamed” of the glee he had felt over SoftBank’s earlier investment gains — many of which only existed on paper. It was unclear whether he was laying the ground for a complete reversal that will see one of the biggest risk-takers of the tech boom adopt a purely defensive strategy from now on, or whether the new humility was mainly for public consumption as SoftBank licks its wounds and prepares for its next iteration.

Some other investors who fuelled the boom — though with less overt cheerleading than Son — have also been lining up their mea culpas. Tiger Global, the US investment firm that placed more bets than any other company on late-stage tech start-ups, disclosed its latest losses earlier this month, including that its long-only fund was down more than 60 per cent this year. In a letter to investors, it admitted to having overestimated the power of technology to keep inflationary forces in the economy at bay. Apparently, this was a case of believing too much in the supposedly transformative nature of the very companies it was backing.

If this new tone of chagrin is the order of the day, it has not been adopted universally.

When venture capitalist Marc Andreessen this week disclosed a big investment in the latest start-up from Adam Neumann, founder of WeWork, it brought together two figures who embodied the expansive style of the tech boom. To their fans, they have a clearer view than most of the big opportunities thrown up by today’s technology shifts — and are willing to place larger bets as a result. To their critics, their sweeping pronouncements represent the apotheosis of hype.

Details about the new company, which will be involved in residential real estate, are scarce. But in a blog post, Andreessen said that what was needed was a “seismic shift” and “rethinking the entire value chain” in “the world’s biggest asset class”.

Silicon Valley hasn’t always relied on such language to promote potentially world-changing ideas. Take Google’s announcement in 1999 that it had raised $25mn in its only round of venture capital. It used the news to declare what, in retrospect, seems a relatively modest ambition: to build “the best search experience on the web”.

True that co-founder Sergey Brin added that a “perfect” search engine — which Google hoped to be one day — would be able to “process and understand all the information in the world”. But the focus was squarely on a single technology goal: to make search better.

Despite the retreat in tech stocks, the long-term investment opportunities in the rise of the digital economy haven’t changed. But the appetite for lofty claims has diminished, as backers focus on shorter-term questions such as whether there is a demonstrable demand for a new idea and whether it has a sound economic foundation.

The winners in a less overheated investment climate will be the companies that keep the long-term opportunity squarely in their sights, but also find a new way to convey how they plan to get there.

richard.waters@ft.com