This article is Part Two of our Mid-Year Report on an eventful 2023 in tech, startups and venture capital. Part One took a look at data and trends over the last six months. Coming up, we’ll dive deep into trends and data in AI venture funding and their impact.
Most of you still think a recession this year is more likely than not. You’re tinkering with AI tools, but not yet convinced they’re world-changing. Your companies are still slashing costs. And almost a third of you say your companies only have six months of runway left in the bank. (Yikes!)
Those are some of the takeaways from our latest quarterly Crunchbase News reader survey, where we gauged your sentiments about the state of the economy, company financials, and yes, AI.
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Most readers surveyed still say a recession is more likely than not this year. Nearly 59% of readers rated the chances of a global economic downturn in 2023 at 6 or above, with 10 being “most likely.” That is down from previous surveys — last quarter, 65% said so, and at the end of 2022, it was a whopping 82% — but it’s not exactly unbound optimism, either.
More than a third — 37.5% — of respondents say they’re feeling more pessimistic now about the state of the global economy than they were at the start of 2023. A similar number feel more upbeat, and about 27% say their outlook is more or less the same compared to the end of 2022.
“Consumers are running out of savings accumulated during the pandemic. This will cause a weakening of demand for goods which will further stress businesses. Many businesses took advantage of the pandemic shortages and interest rate increases to raise prices on consumer goods. As consumer demand weakens, business will feel the pinch, prices will lower and the U.S. economy will go into recession,” said one reader, who works in management consulting.
Another reader, who works in marketing in the retail or restaurant sectors, was more sanguine: “I don’t think we’ll have a recession, and I’m cautiously optimistic that things will start to level out in 2024 as lingering pandemic effects shake out and central banks begin to stabilize interest rates. Of course, that only happens if foreign policy doesn’t completely fall apart.”
With all the mixed signals in the economy, it’s not surprising that the most common word readers use to describe their outlook for the rest of the year is “confused.”
“This is a strange time to say the least,” noted a reader who identified as a tech executive, founder or owner. “On one hand, some areas are booming, such as real estate where homes are disappearing from the market very fast. On the other hand, there are layoffs and caution among business leaders to move forward on new endeavors.”
Others are having flashbacks to the dot-com bust. “The economy seems slightly better than the end of Q4 2022/Q1 2023 although it feels it could go either way at any moment,” said another reader who is a tech executive or owner. “Worst business climate I’ve seen in startup tech since 2000.”
Almost 40% of respondents in the recent survey said their companies or employers are cutting costs this year. That compares with 45% a quarter ago.
Still, the majority said their companies had not conducted layoffs either this year or last. Given that the largest area for cost-cutting, per the survey, is headcount, presumably many companies are reducing staffing through attrition rather than outright job cuts.
“I think 2023 is a good year for companies to review costs, review employee evaluations, and continue to refine their hybrid work environments,” said a reader who works in real estate operations.
Fewer than half of survey respondents said their company is actively hiring for open roles.
“It feels more likely that the tech hiring rebound will start (moderately) either Q4 2023 or Q1 2024,” predicted a reader who works in professional services.
As with previous surveys, readers are more bullish on their own companies’ financial prospects than they are about the economy at large. The majority rated their optimism about their company at a 6 out of 10 or higher.
Interestingly, two distinct groups of companies seem to be emerging from the current environment: Those with plenty of cash, and those with very little.
Of the readers who answered the question, almost a third said their companies still have more than 24 months of runway in the bank.
But a pretty high percentage — more than 27% of those who answered the question — said their coffers are running dry, with less than six months of runway left in the bank. That lends credence to the idea that there could be a “mass extinction event” on the horizon for many startups.
AI sparks intrigue, skepticism
Artificial intelligence tools have gone mainstream in the past six months and sparked talk of a new technological revolution on the scale of the internet itself.
“Massive changes,” said one reader when asked how AI tools will change the way they work in 2023. “Unlike the crypto hype bubble, there is real value being generated from AI. I am using it every day and so are lots of people. This is going to be a real massive paradigm shift for how humans use technology going forward.”
Other reviews are mixed.
“Lots of solutions looking for a problem with some genuinely innovative use cases mixed in,” said one reader, who works in marketing in the professional services industry. “The key will be separating those useful insights, tools, and processes from the noise.”
Some of the ways readers say they’re already using AI in the office include: Drafting contracts, reviewing marketing materials, doing sales research, outlining presentations, offering internal IT help, writing basic emails, and editing images.
Another reader said the reality of AI doesn’t quite meet the hype: “The tech is still pretty basic and not solving the more complex tasks I was hoping it would accomplish,” said the person, who also works in professional services.
Among the tools listed in the survey, the vast majority of readers — more than 81% — said they’d used OpenAI’s ChatGPT or GPT4 generative AI tools in a professional context. Just over 42% have used Grammarly, an AI-assisted writing and proofing tool.
Many readers feel it’s still early innings for AI, but that more profound changes are to come. Said one reader: “It will have a minimal impact in 2023, but I suspect it will greatly alter how we do our work 5-10 years into the future.”
Results are from a survey of Crunchbase News readers conducted between June 1 and June 28 in which 121 readers responded. Readers self-identified their industries and roles and were not required to answer all questions to complete the survey.
- Q1 2023 Survey: Readers Less Pessimistic About Recession Odds, Split On Potential Of AI
- Q4 2022 Reader Survey: Crunchbase News Readers Preparing For Recession In 2023
Illustration: Dom Guzman
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