2023 Reflections

Last year I published an article titled 2022 Reflections that captured my personal "year in review" for 2022. That year, I simultaneously experienced life's highest of highs and lowest of lows, so my article captured a lot of the emotions I was feeling at the time. I found that writing about it helped me process my thoughts and acted as a sort of therapeutic release (who knew LinkedIn could also be great for shrinking). I'd like to make this an annual tradition, so here are my reflections on 2023. This year I will be zooming out to make it less personal and more about my observations of the world and business, a year which seemed defined by chaos in business and geopolitics.

Business Themes

Artificial Intelligence

This was the year of AI in the business world, as AI burst onto the scene seemingly out of nowhere with the introduction of Chat GBT to the world in late November 2022. Almost immediately, it felt like if you weren't talking about or experimenting with AI, you were falling behind the pack. At first, it seemed like it might just be another technology fad that would be great at making stunning new cat memes with few other practical applications, but as the year progressed, this technology has been introduced in all sorts of consumer and business-facing applications, from workplace software like Microsoft Office, Confluence, and Zoom, to a myriad of consumer-facing applications (like chatbots, writing tools, and image recognition). AI was even used to help recommend the best size fit when I was recently shopping online for clothes (quite accurately I might add). It has been incredible to witness the astonishing speed from introduction to rapid deployment and adoption of this technology, and it demonstrates just how fast-paced the business world is today. Perhaps this is what makes the U.S. economy so resilient, is its adapt-or-die mentality.

The Economy

Speaking of the economy, while most people believed we were on the cusp of a recession, U.S. economic growth was surprisingly resilient, notching 4.9% real GDP growth in the 3rd quarter (https://www.bea.gov/news/2023/gross-domestic-product-third-estimate-corporate-profits-revised-estimate-and-gdp). The economy defied the odds of an inflationary, high interest rate environment, delivering broad-based job growth, a low unemployment rate (~3.7%), and a declining rate of inflation (https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category-line-chart.htm). The dark clouds of layoffs, inflation, high interest rates, and low growth have parted with increasing consumer confidence as we enter 2024.

While the U.S. has many challenges in needs to address on a societal level, there is no question that it is the most innovative, resilient economy in the world, and I wouldn't bet on any other country. Given the chaotic scenes across the world from Ukraine to Israel to Gaza, I consider myself fortunate to live in such amazing place with abundant opportunity, which wouldn't have been possible without the ability of my parents to immigrate to this country a generation ago. I believe it is our diversity of people, thoughts, and industry that makes our country successful on so many levels.

However, it was still a painful year for people across many industries, particularly in the technology sector, which saw over 260,000 layoffs in 2023 according to https://layoffs.fyi/. As we ring in the new year, let's remember to support our friends and colleagues who have been impacted by these job cuts. Experiencing job loss and unemployment is one of the most difficult experiences (financially, psychologically, impact on career path) you can endure (speaking from experience), so please have empathy for and support people in this position.

The Stock Market

With the economy avoiding a recession and the introduction of game changing technology, it's interesting to see how this translated in the stock market. The big winner and most widely talked about company this year was Nvidia, which benefited from a surge in demand for their chips which power the burgeoning use of AI. Nvidia shares returned 246% in 2023, far outpacing the gains of the overall market and other tech titans, and the best performer in the S&P 500. However, some other surprising winners in 2023 had nothing to do with AI, such as Abercrombie and Fitch (+274%), real estate iBuying company OpenDoor Technologies (+307%), cruise line operator Royal Caribbean (+163%), and home builder Pulte Group (+127%). While the technology sector remains a big driver of growth and innovation, this is a reminder that great businesses exist in all corners of the economy.

We can't mention the winners without taking note of the losers, such as Silicon Valley Bank, which declared bankruptcy in March due to a run on the bank by depositors after customers became worried about the bank's solvency. AI couldn't have saved SVB, but some basic asset-liability risk management sure would have. We also witnessed the collapse of the crypto exchange FTX, after allegations, and later convictions of fraud began to surface. Fortunately, this was exposed and the legal process served its purpose, but it still amazes me how such enormous cases of fraud can go on for so long while the founder is simultaneously heralded as a business genius and icon. As a society, we seem to have a habit of elevating people to stardom who achieve quick success and riches without questioning the integrity of their character and morals. Perhaps we should focus more on applauding and elevating the people who dedicate their lives in service of others rather than money, such as veterans, teachers, and other public servants. This is not to say business leaders are not deserving of this recognition as well, just that we should be less reliant on using billionaire status as the qualifying criteria and standard for success in our society.

So, while 2023 may have been the year of AI in business, this sample of returns across various industries reflect other powerful dynamics at play, such as resilient consumer spending on goods, services, and travel, and persistent challenges with housing supply and affordability, all in the face of high interest rates and high (but declining) inflation. What does 2024 have in the cards? I suggest you ask Chat GBT.

Personal

On a personal level, I made several big strides in 2023. This year I not only became a father, but also completed my MBA at the University of Washington . When I moved to Seattle in 2019, it was not with the intent to go back to school. But as I became more familiar with the school and how deeply woven into the fabric of Seattle it was, I felt a calling to apply. Standing here today, I couldn't be happier with my decision, as I was pushed to learn and supported by great faculty, made lifelong friends, and now get to watch the Husky football team play in the National Championship game! Sports always seem to serve up great analogies for business and life, and these Huskies epitomize a style of resiliency and grit that sets a great example to follow. Go Dawgs and congrats on the win!

As I'm sure all new parents out there can attest to, managing work and life with a newborn is one of the most difficult challenges of all, but it is also the most rewarding. It's been amazing to watch my daughter grow over these last 9 months, and it makes me appreciate how delicate and precious life really is. Heading into 2024, I am energized to make the world a better place and support my family through my work and actions, and hopefully, I can catch a few more hours of sleep.

I hope 2024 brings prosperity and peace after a tumultuous 2023.