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Bits: Daily Report: Still Waiting for Tech’s Downturn

Investors and industry watchers thought Silicon Valley would have crashed by now. But some start-ups may have headed off their own ruin.
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Sean Behr, the chief executive of the parking service Zirx, at the company’s offices in San Francisco. Credit Jason Henry for The New York Times

A funny thing happened on the way to a long-predicted tech bust: It didn’t happen.

At this point a year ago, a crash seemed inevitable. Money was pouring into on-demand delivery start-ups that added a little high-tech sheen to what the local pizza shop has been doing for years. Bigger start-ups like Uber were burning through billions in cash.

But as Katie Benner writes, plenty of start-ups listened to the dire warnings of investors and cut their spending. They made easy calls, ending perks like free laundry. And they made more difficult decisions, like cutting jobs and changing their business plans.

Does this mean the tech industry has avoided a downturn? Not quite. Uber is growing fast, but it still lost more than $1 billion in the first half of 2016. Pulling out of China, as the company recently announced it would do, should cut those losses. But there still isn’t a clear path to profitability.

The industry has also been helped by new financial sources, like sovereign investment funds from countries like Saudi Arabia. That money can extend the spending for a while longer.

But at some point, even the most lavishly funded start-up has to turn a profit.

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