That became clearer than ever last week when a couple of public companies, Tableau and LinkedIn, lost almost half their value in a single day.
But at least one VC says that it won't be as bad this time as it was after the Great Recession or the dot-com bust.
Rich Wong is a partner at Accel, one of Silicon Valley's quiet giants, and the first firm to invest in Facebook back in 2005.
He told USA Today:
Yes, when you step back and look at 2009, after the Global Financial Crisis, and we can all remember 2001, after the Nasdaq peaked. I think there were dramatic resets, to the point a lot of companies went out of business. I personally don't think [the] environment is anywhere close to as difficult as 2008-2009, 2001.
Why does he think it's different? He didn't give much reason, except to point out that Facebook turned out to be a real business and a lot of investors are kicking themselves for missing it.
He did note that a lot of this boom's companies are enterprise companies with "real businesses, they have real revenue, they have real clarity about which customers they're selling to." He's a little more skeptical about the consumer market, particularly the wave of on-demand startups who haven't proven they can be profitable on a unit basis.
Wong has some firsthand knowledge here. He sits on the board of Atlassian - one of the few tech companies in the current boom that's consistently profitable despite spending no money on sales and marketing. (Atlassian was also the last big IPO before the current market malaise, as it went public in December; it's now trading slightly below its IPO price of $21, which is actually better than most of the other IPOs from the class of 2015.)
Still, this is a variation of "it's different this time," which is a dangerous sentiment in a downturn.
One point to note about enterprise SaaS companies: one of the high fliers of last year, Zenefits, reportedly counted as its biggest customer another startup called Jet. That company has taken more than half a billion in venture funding in its quixotic attempt to unseat Amazon, and has already had to change its business plan once.
So today's crop of enterprise startups indeed may have "real customers." But if those real customers are the consumer startups that are first to vaporize in the current bust, that's still trouble.