If anyone has done a comparison of the size of profitless companies in the (tech) market, today and before the dot-com crash, that would be incredibly valuable.

My gut feeling is that they constituted a larger portion of the market back then, but I've never seen a direct comparison.

Not enough time to do a real comparison, but Uber feels a lot bigger than all of the mid-sized startups which dominated the dot-com landscape. They are a lot bigger than Webvan was (22,000 vs. 3,500 employees) not to mention Netscape (2,500 employees at its peak); Webvan and Netscape were the most famous big dot-com flops.

Thanks for the data point. It's helpful, but I'd be worried about extrapolating too much from one outsized data point.

For one thing, BLS stats say that computer programming has grown from 528k to 1666k from 1999 - 2018 (the broad category of Computer and Mathematical Operations went from 2620k to 4384k). For another, just looking at the largest company only works if the distribution is similar.

Still, it is relevant that Uber is so big.

However, the collapse of unprofitable unicorns will propagate across tech. Reduced investments in start-ups and tech companies with risky ventures translates to increased labor supply, which means downward pressure on compensation across the industry (even at the healthy big-5 tech).

Housing prices near tech hubs will also pop. Here in Seattle, housing prices are propped up by tech-couple mortgages with high stock-based compensation - which will suffer even at companies with healthy fundamentals. SFO housing is further inflated by IPO speculation.

Yeah, I mean as a software engineer as long as job availability doesn't reduce too much, I don't mind compensation reducing if housing prices go down with it...

It seems like one of the key characteristics in a crash is a domino effect. Whereby companies' financials that previously looked solid are suddenly cast as untenable in a new economic light. Usually because of an underappreciated correlation with a substantially removed market.

E.g. most recently, banks and leveraged junk mortgages

As you noted though, the biggest tech companies today aren't really externally dependent. They generate substantial cash flow, have relatively modest debt loads (better than heavier industry!), and don't have easy substitutes.

The strongest case I could make for a tech crash: retail activity substantially slows and/or freezes (Apple & Amazon), advertising follows suit as advertising budgets plummet (Google & Facebook)

But it's hard to see that happening with any rapidity in the US with unemployment where it is.

(I can't see a strategic corporate debt crisis as long as the Fed keeps rates low?)

I think there are definitely systemic risks which could hit the US economy (small recession due to everyone cutting back spending to weather the recession, resulting in poorly profitable zombie firms - many of them retail firms - being unable to service bad corporate debt). It's noteworthy that we've been seeing retail bankruptcies like Sears and Payless in a consumer economy this good - what happens to other retailers when the sentiment turns for the worse? Note that low fed rates won't necessarily keep the cost of servicing debt low, if investors anticipate potential bankruptcies and flee from poorly-rated bonds.

And yes, the big tech companies would certainly see revenues hit hard by such a scenario - but the big tech companies have plenty of cash to weather the storm.

Sears (and possibly Payless too) were mortgaged past the point of sustainability.

That's fundamentally different from firms that accrued a lot of cheap debt, but have an ability to service it even under conservative revenue models.

If I have 10%+ profit margins and could increase my revenue with additional capital, why wouldn't I sell as many bonds as the market will eat, at current prices?

Provided I'm not expanding in financially risky ways (e.g. opening new stores or other delayed-revenue choices), there's not much consequence even if the music stops playing.

Which is why you saw Ford and GM announce they're hording enough cash for multiple years of downturn.

There's lots of relationships whereby the fortunes of one company can be effected by another. For example Tesla and Uber are total dogs snd I could see them imploding. Are there smaller startups that sell services to Tesla and Uber in a significant enough way that they could get hurt too?

Another relationship that has been mentioned before is that of mobile games and google and facebook advertising services. A recession and/or anti-lootbox legislation could harm mobile games, which would reduce ad spend on platforms like facebook/google.

While they will survive, there's a ton more people in the rest of tech, and if they don't have jobs and are desperate that's going to change the lives of Google employees.

During the dot com bust that was part of the problem. As the startups started dying, it turned out that the big companies had started to rely on them for their profitability.

Yeah, but the only one of these that might be reliant on a booming tech startup industry for profitability is Amazon (due to AWS - I'm not sure how much of its revenues come from traditional enterprises vs. VC-fueled growth money).

Agreed that it’s not exactly the same but the larger point holds IMO. That is that the tech economy is more like the food web, where it’s not always obvious what chain effect will happen when something starts dying off

Well, two of those companies survive largely on the basis of advertising, which is in turn financed through the Silicon Valley Venture Capital Machine. If that dried up, it would be Bad News.

How is advertising financed through the SV VC machine? Most advertisers are ordinary companies, not tech startups.