Tech has been a massive game of shuffling around VC money to create the illusion of a massive part of the economy when it's really all the same money being shuffled around looking for profit and failing to find it.
The heart of the problem boils down to this: There are basically two types of tech companies a.) unprofitable ones, and b.) profitable ones who make most of their money from companies in group a. For over a decade investors have been focusing more and more on growth while completely forgetting the basics about how a business need to run.
This same issue happened in the dotcom bust, PG even has a great description of this from a earlier essay [0]:
> It was not just our price to earnings ratio that was bogus. Half our earnings were too. Not in the Enron way, of course. The finance guys seemed scrupulous about reporting earnings. What made our earnings bogus was that Yahoo was, in effect, the center of a Ponzi scheme. Investors looked at Yahoo's earnings and said to themselves, here is proof that Internet companies can make money. So they invested in new startups that promised to be the next Yahoo. And as soon as these startups got the money, what did they do with it? Buy millions of dollars worth of advertising on Yahoo to promote their brand. Result: a capital investment in a startup this quarter shows up as Yahoo earnings next quarter—stimulating another round of investments in startups.
I remember the dotcom bust and the big difference between then and now is that the duration of the bubble was much smaller during the dotcom. People back then proclaimed we where in a "new economy" where profits didn't matter anymore. The boom was only a few years and so those critics where proven correct in a short window of time. This time we've been in a bubble so long people don't even remember that companies need to make profits and be sustainable.
During the period of cheap money VCs flooded the industry with so much cash it started to get weird. Wayfair is a great example of this, they had 150 data scientists at one point, what in the world does a furniture reseller need with that many DS people?
Now we're starting to see the conditions that allowed this bubble to form relax very quickly. Not only is cheap money no longer a thing, but the consumers who have been gleefully pouring their extra money into apps that don't quite make sense are starting to feel their wallets get tighter (actually the data looks like they're starting to max out their credit and being forced to reduce spending).
And that's just tech. We truly are in an "everything bubble" [1] were asset classes across the board are wildly overvalued. Unlike the dotcom, this will not stop with tech.