Tech's Business Spending Slowdown, and What's Still in Demand

Adam Selipsky of AWS, Ryan Williams of Cadre, Sasan Goodarzi of Intuit

This newsletter took a bit long getting to you, in part because it spawned last week. In case you didn’t see the news: My weekly On the Other Hand segment, which airs on CNBC’s Squawk Box on Thursday mornings and which has been part of this newsletter for the past couple of years, has now spun off into its own On the Other Hand Newsletter. You can subscribe here at debate.forttmedia.com.

On the main stuff — the tech — let me try to catch you up.

To start December, I spearheaded Cloud Week on CNBC, an annual ritual I like to build around Amazon’s AWS re:Invent conference. I interviewed AWS CEO Adam Selipsky to kick things off, and also heard from Microsoft’s cloud chief, Scott Guthrie; ServiceNow’s CEO, Bill McDermott; Intuit’s CEO, Sasan Goodarzi and more.

Here’s my takeaway: The broader global economic slowdown is hurting businesses, and business tech. But the pain isn’t evenly distributed.

The businesses and categories hurting the most right now are the ones that accelerated the most during the boom years and that COVID temporarily juiced: think e-commerce, digital advertising, crypto, PCs, and other stay-at-home plays. Examples of companies weathering things better include those that have diversified beyond reliance on mainstream consumers, and whose business offerings are more essential than aspirational.

Look at Intuit. It did quite well in its earnings report at the beginning of the month, despite weakness in its Credit Karma unit, as lenders get choosier about who gets credit offers. That’s because Intuit software is mission critical for a lot of small and medium-sized businesses.

Meanwhile I also got a sense of how much business customers are pushing for flexibility in how they pay for software. Instead of paying subscription rates for software, customers in these tighter times want more consumption-based pricing so they can pay for only what they use. Informatica has consumption-based options on its menu.

The surprise announcement that Salesforce Co-CEO Bret Taylor is leaving inspired me to dig out a gem from our Fortt Knox interview last fall. Stewart Butterfield is saying goodbye to Salesforce too, but I haven’t gotten around to doing a Fortt Knox 1:1 with him yet — maybe in 2023!

And I also spent a good amount of time talking with innovators who are bringing cloud flexibility to lucrative niches like commercial real estate (Cadre) and productivity software (Smartsheet):

Outgoing Salesforce Co-CEO Bret Taylor on What Brought Him to Salesforce

AWS CEO Adam Selipsky on Supply Chain Optimization to Aid Customers: CNBC Working Lunch

Here’s the full interview with Selipsky from re:Invent 2022:

Cadre Founder Ryan Williams on Commercial Real Estate in a Rising Rate Environment and His New Orleans Roots

Intuit CEO Sasan Goodarzi on Small Business Resilience vs. Tighter Consumer Credit Standards

Informatica CEO Amit Walia on the Rise of Consumption-Based Models in the Slowdown

ServiceNow CEO Bill McDermott is Investing Through Tighter Times

SmartSheet CEO Mark Mader on Quick Time to Value from Software