Silicon Valley’s Layoffs and Failures Signal Return To Normalcy

April 15, 2016, 12:38 PM UTC
Water Tap
BERLIN, GERMANY - APRIL 23: Water drop falling from a tap on April 23, in Berlin, Germany. Dripping water tap. (Photo by Thomas Trutschel/Photothek via Getty Images)
Thomas Trutschel Photothek via Getty Images

This essay originally appeared in Data Sheet, Fortune’s daily tech newsletter. Sign up here.

Silicon Valley has a leak. A steady drip of layoffs and failed startups over the past year is a sort of mini reckoning for the technology industry after years of flush times.

Or maybe, like a leaky faucet, it’s nothing to be alarmed about. After all, it’s merely a drip.

The latest Silicon Valley to circle the drain is Shuddle, a typically oddly named startup that ferried children to school, play dates, and soccer practice. Some referred to the two-year old company, which raised $12.2 million from investors, as an Uber for kids.

Shuddle, which announced its closing on Thursday, was part of a once-hot niche of so-called on-demand startups that cater to customers who don’t want to bother with fetching their own meals, taking buses, or parking their own cars. Such labor-intensive businesses have turned out to be particularly leaky, or rather, prone to failure.

Last year, fellow on-demand company Homejoy, a home cleaning service, shuttered as did Zirtual, which provided personal online assistants. This year has seen the demise of food delivery service SpoonRocket and valet parking startups Vatler and Carbon.

But the on-demand economy, for all its shortcomings and wishful thinking by the investors who funded it, was also the spawning ground for some of the tech industry’s biggest successes of the past decade. Uber, the taxi alternative, has gained so much traction that it was most recently valued at $62 billion while apartment rental company Airbnb achieved a valuation of $25.5 billion. Both dwarf the losses of all the on-demand economy small fry that have gone out of business or laid off staff.

Are there failures in Silicon Valley? Sure. There always have been and always will be. Startups are a risky business. And a return to normalcy, i.e. actually trying to make money, is probably for the best considering the past few years of me-too companies and free employee massages.

Working at a startup.

But amid the return to normalcy, and therefore the occasional messy flameouts, there are also signs of promise. When I read about yet more tech industry layoffs, as I did Thursday about two Seattle startups, Qumulo and Chef, I remind myself of the companies like Google (GOOG), Facebook (FB), and Snapchat that are hiring like crazy and try to put the job losses in perspective.

Leaky faucets are annoying. On the other hand, leaks are far preferable to having no water at all.

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