📉 Tech’s sell-off, explained

PLUS: The startup making the workplace safer. January 25, 2022 [The Hustle] Residents of fast-growing Hoboken, New Jersey, will be voting today on a $241m proposal for a new high school building. Critics say the money could be better spent, though we have a feeling Hoboken’s youth think the proposed building — complete with a rooftop football field and indoor ice rink — is an absolute must-buy. Today’s rundown: - Technical difficulties: Why are tech stocks in the red? - Like Watermelon Oreos? You may be a “harbinger customer.” - Phylagen: The startup making the return to work safer. - Around the web: Robot bricklayers, how to make perfect pour-over coffee, and more wild web finds. Let’s do it. The big idea [stonks meme gif]( High-growth tech stocks are tumbling. Why? In recent years, the face of innovation investing has been Cathie Wood and her Ark Innovation ETF (ARKK). The fund — which includes hot tech [names]( like Tesla, Roku, Zoom, Twilio, Coinbase, Square and Spotify — had a huge runup in the first year of the pandemic. But the high-tech growth investing story has had a very very very ugly 2022, though. (Like, really ugly.) ARKK is down 24% year-to-date… … which is much worse than the 8% loss for the broad market S&P 500 index. An even more interesting comparison is Ark and Berkshire Hathaway, Warren Buffett’s ~$680B conglomerate, which has significant stakes in much less sexy industries like energy, utilities, insurance, housing, and railroads. Since the beginning of last year (2021), Ark is down 40%+ while Berkshire is up 30%+. What’s happening? According to the [Financial Times](, the recent market gyration is a rotation from growth to value stocks: - Growth investors prefer companies “that may not be profitable but are expanding rapidly” (like many of the aforementioned Ark names) - Value investors are “are more price-sensitive, and often look for bargains in dowdier or beaten-up industries [energy, banks]” The shift is being brought on… … by the US Federal Reserve, which plans to hike interest rates and pull back on the loose monetary policy enacted to boost the economy during covid. Higher interest rates will help to fight rising inflation. But it also historically hurts high-growth tech stocks. Why? Because the valuation of these companies are [based]( on future profits, which are worth less in a higher interest rate environment. Today, the Fed [begins]( a 2-day meeting to discuss the central bank interest rate and bond-purchasing plans. Depending on what they decide, things could get uglier still. [Share on Facebook]( [Share on Twitter]( [Send as email to a friend](mailto:?subject=The%20Hustle%20wrote%20something%20I%20think%20you%27ll%20like...%0A&body=High-growth+tech+stocks+are+tumbling.+Why%3F%0Ahttps%3A%2F%2Fthehustle.co%2F01252022-High-growth-tech-stocks%3Futm_campaign%3DHigh-growth%2Btech%2Bstocks%26utm_content%3D01252022-High-growth-tech-stocks%26utm_medium%3Demail%26utm_source%3Ddaily%0A%0AYou%20can%20subscribe%20with%20my%20link%20here%20to%20get%20the%20latest%20in%20tech%20and%20business%20daily:%0A [View on our website]( SNIPPETS Slurpee subscription: 7-Eleven [launched]( 7Now Gold Pass, a $5.95-per-month subscription that allows customers to choose from an inventory of 3k+ items for free delivery. Hot sector: AR/VR startups [raised]( $1.9B in funding in 2021, capitalizing on excitement around the metaverse, and other potential applications for the technology (e.g., healthcare). Delivery unicorn: Deliverect, a startup that integrates the ordering and delivery processes for restaurants, [raised]( $150m at a $1.4B valuation. Air taxis are coming? Boeing [invested]( $450m in Wisk, a joint venture with Google founder Larry Page that builds small, pilotless planes for short trips around cities. --------------------------------------------------------------- Hey — enjoy getting quick updates on what you care about? Take [20 seconds]( to personalize your Snippets. Pick your preferences👇 and we’ll send you more of what you love. Boom. [Personalize my Email →]( Is this you? [harbinger customers' effect on product success]( What do you call someone who buys Watermelon Oreos? In 2015, a team of researchers at Northwestern and MIT analyzed 6 years’ worth of transaction data from 130k customers at a large national retail chain. They found that ~25% of customers — known as “harbingers” — consistently buy products that end up flopping within 3 years. Think Watermelon Oreos, Frito-Lay Lemonade, or Cheetos Lip Balm. Though harbingers’ purchase activity throws a wrench in sales forecasts, that doesn’t mean corporate America should attempt to ferret them out and ignore them. Harbingers can teach us what doesn’t work. And sometimes, in business, that’s just as important. [Read the full story →]( Cool AF Business [pathogen gif]( How Phylagen uses pathogen monitoring to make the workplace safer WHAT’S THE DEAL? - Studies conclude that covid can live on nonporous surfaces for up to [3 days]( - Office occupancy in the US rose to [40%]( in December 2021, the highest level since March 2020 - Following the omicron variant surge, only [28%]( of the workforce in 10 major cities returned to the office in January 2022 Commuting, bad coffee, and awkward small talk are reasons enough to dread returning to the office. But the pandemic introduced a far greater concern — getting exposed to covid at work. [Phylagen](, founded in [2014]( by engineer and scientist Jessica Green, mitigates this risk with its pathogen-monitoring service. The service… … called Ecology, alerts employers to the presence of airborne illnesses in the workspace by collecting samples from high-touch surfaces (e.g., vending machine buttons, door handles, and toilet seats). - Customers use test kits to swab 25 surface test points around the office, then return them to Phylagen for analysis. - The firm’s lab will make results available on its online platform within 24 hours. And the results get granular Workspace data is broken down by room, and the analysis not only measures if the virus is detected but also how high the viral load is. The company says that this method of data collection has an edge over traditional testing: sampling from shared workspaces rather than swabbing individuals is both cost-effective and less intrusive. Next up for Phylagen? The home office. In September, the company partnered with Scotch-Brite to launch a home cleanliness [test kit]( to bring its data collection services to the WFH crowd. (Have an idea for a Cool AF Business story? Tell us about it [here](.) TRENDS Trends you could’ve known about weeks ago Hey. No time to waste. From our weekly [Trends flare](: - Abstract line art: Yup. Searches are rising in several regions, so there are a ton of lucrative opportunities to be claimed right now. - E-scooters in India: They’re expected to comprise ~74% of total scooter sales by 2040, but don’t start Scooter Spiff Express just yet. Plus insights from Trendsters: - The rise of the crypto XXXXXX XXXXX: the bandwagon rages on. - XXXXXXX robotics: a growing field that’s bracing to boom in 2022. - Sextech meets XXXXXXXXX: your worst nightmare or best dream. We deliver Trends articles [like this one]( weekly with hard data, deeper digging, and plenty of relevant business ideas. Try Trends for $1 to access our full content arsenal and killer community. [First week for $1 →]( AROUND THE WEB 📺 On this day: In 1949, the 1st Emmy Awards [occurred]( at the Hollywood Athletic Club. Winners included “Pantomime Quiz” for Most Popular Television Program. 👾 Wow: This guy turned his coffee table into a functional, playable [pinball machine](. 💻 Useful: You can use [Nimbus]( for photo and video screenshots. It even works while scrolling. ☕ How to: People wait in lines at cafes for pour-over coffee. Experts [explain]( how to do it yourself at home. 🧱 That’s interesting:[Everything]( you’ve ever wanted to know about robot bricklayers and why, despite efforts dating back to the 19th century, we don’t have them yet. 🎺 Haha: And now, [playing]( a trumpet into a bowl of Jell-O. Tweet of the day [investing meme] Buckle up. (Source: [Twitter]() SHARE THE HUSTLE Hey. Stop keeping us a secret. Refer just 3 people and we’ll start to send some goodies as a thank you. 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