Tech giants are busy laying off workers and shrinking office space. In the process, they could also trigger the emergence of new entrepreneurs and startups, who can collaborate on suddenly affordable prime commercial real estate.
Angel investor Jason Calacanis planned on the All-in podcast that the big winners of 2023 will be “dismissed tech workers who choose to take control of their destinies and build businesses.”
“I think licensed techies who get together in groups of two, three, or four (developers, product managers, people who actually build things) and start businesses together are going to be extremely successful, and they’re going to make amazing lemonade out of those lemons from these big tech layoffs,” he said earlier this month.
From employee to entrepreneur
Some of these employee-turned-entrepreneurs could come, for example, from Meta, which recently laid off about 11,000 workers. The Facebook the owner is also getting rid of offices, both to save costs and because it’s embraced remote work. On Friday, he confirmed that he would sublet office space in Seattle that he no longer needs, according to Seattle Times. He also recently gave up real estate in New York.
Sublet offices are typically rented out at a discount, which could allow startups that otherwise couldn’t afford to move in, noted Colliers leasing expert Connor McClain at Seattle Times.
Like Bloomberg reported this week, the tech pullback is causing problems for landlords in cities like New York and San Francisco, which were already struggling with empty buildings in the wake of the pandemic and the shift to flexible work hours.
Selling power recently announced layoffs—about 10% of its workforce—while indicating that will lose real estate. “It’s a bigger time for cost restructuring, we want to get… between $3 billion and $5 billion out of the business,” CEO Marc Benioff said in a closed meeting. “When we look at how we’re going to do that, real estate will be a big part of that.”
Office rents “will drop”
Salesforce is headquartered in San Francisco. An exchange on January 7 between PayPal co-founder David Sacks and You’re here CEO Elon Musk highlighted the commercial real estate situation there. Bags tweeted“I was just offered office space in San Francisco (SOMA) for the same price as 2009. Yeah.”
Musk replied, “He will go lower.”
As it is, entrepreneurs emerging from tech layoffs could take advantage of cheaper real estate to house new businesses.
Of course, some startups might choose to save money by not renting commercial real estate and having everyone work from home, especially if a widely feared recession hits. But as CEO of big companies like disney and Starbucks have recently argued—while insist that teleworkers return to the office— there are clear business benefits to collaborating face-to-face.
As Disney CEO Bob Iger written to employees in a recent note, “In a creative enterprise like ours, nothing can replace the ability to connect, observe, and create with peers that comes from being physically together.”
This could be especially true for tech entrepreneurs bent on making lemonade from the laid-off lemons.
This story was originally featured on Fortune.com
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