Layoffs and the Pittsburgh Market

Layoffs seem to be all we’re talking about, besides politics, of course. LOL

Layoffs! I know it’s come as quite a surprise that companies like Argo and Fifth Season are closing and Meta (Facebook) and Twitter are laying off staff. But it really should not surprise anyone! We should have seen it coming.

Generally speaking, startups fail.

As Chris Urmson, CEO and co-founder of Aurora, said in an earnings call with investors for the latest quarter, such winnowing in a new industry was “just a natural course of business.”

“When we look at the opportunity in this space, nothing has changed,” said Mr. Urmson, who received a doctorate degree in robotics from Carnegie Mellon University. “This downturn will clear the table, making it more clear who the winners and losers will be.”

And that’s not just true for the autonomous vehicle industry.

It’s true across the board.

According to an article found in Failory and written by Kyril Kotashev, “About 90% of startups fail. 20% by the end of the first year; 30% by the end of the second year; 50% at the end of the fifth year and 70% by the end of the 10th year.”

And again, “Venture — at the earliest stages — is a risky asset class,” Innovation Works President and CEO Ven Raju said. “Two thirds don’t make it. That’s across all sectors.”

That’s a lot of businesses and a lot of failure and, maybe in another time when the economy is not also on the brink of a recession, might not be as newsworthy.

But we are headed towards a recession.

Some economists believe we’re already there. Inflation is higher than it’s been in decades. There’s a worker shortage. We have companies making and keeping large profits. We have war in Ukraine that’s impacting oil supplies. We are coming out of a pandemic that has left us with all kinds of supply chain and employment issues. And while we know why it’s happening, according to Dr. Mark G. Dotzour, a real estate economist who served for 18 years as Chief Economist of the Real Estate Center at Texas A&M University in College Station says, “Based on history we need 1MM to 2MM layoffs in this country to get inflation to tone down.”

Layoffs are part of the economic process.

And, thankfully, here in Pittsburgh, we can honestly say that our market is big enough and strong enough to handle what’s to come. As Innovation Works President and CEO Ven Raju said “We have the talent here, we have the manufacturing capabilities here, we have the world’s largest robotics institution,” he said. “It is more broad based than autonomous driving.”

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