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Startups are pummeled in the ‘great unwinding’

nytimes.com

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Re: Startups are pummeled in the ‘great unwinding’

#31

Post by Klinky »

benatkin wrote: post #14
cowsandmilk wrote: post #5

Classpass was founded in 2013. Wonderschool was founded in 2012. Can we stop calling companies that age a startup? Or at least stop using them as examples? I mean, the article then goes on to call Airbnb a "home rental start-up". It isn't a start-up, it is over a decade old and has over 10,000 employees.

Another thing that's more than half a decade old is your objection. The term "startup" has come to have a broad meaning. The meaning of words changes over time. Fortunately, new terms often come along to fill gaps. In this case there is the term early-stage startup .

This just sounds like marketing spin. It's hip to be a "startup" because that conjures up the idea that the company possesses certain advantages over larger organizations, even if it doesn't anymore.

Re: Startups are pummeled in the ‘great unwinding’

#32

Post by daenz »

cowsandmilk wrote: post #5

Classpass was founded in 2013. Wonderschool was founded in 2012. Can we stop calling companies that age a startup? Or at least stop using them as examples? I mean, the article then goes on to call Airbnb a "home rental start-up". It isn't a start-up, it is over a decade old and has over 10,000 employees.

I worked for a self-proclaimed "startup" that was 10 years old. At some point, it's really just another word for "we don't have our shit together."

Re: Startups are pummeled in the ‘great unwinding’

#33

Post by tedd4u »

Startups have had years to prepare, work on their plan, strengthen their fundamentals, and raise capital if necessary. I think the shock is that probably this is a faster onset and deeper drop scenario than most had modeled.

Every [1] startup has been thinking for the past couple years about their plan for when the recession would come. Probably hundreds of articles written in mainstream and economic/financial press over the last 2-3 years about "the coming recession" [1]. Trade war? Debt bubble popping? Auto loan credit crisis? Nope, turns out it's pandemic. Nobody saw that coming until January [3].

[1] No evidence but my guess. If they haven't it seems negligent.

[2] here's an example from 2018 from the NYT contemplating what will be the cause of the next recession (note, not whether or if it will happen, just what will cause it) https://www.nytimes.com/2018/08/02/upshot/next-recession-thr...

[3] I mean the specific timing of this pandemic. As we've all learned now many in and out of government had warned the public.

Re: Startups are pummeled in the ‘great unwinding’

#34

Post by vhvjkyhkogvv »

hn_throwaway_99 wrote: post #7
bluedino wrote: post #2

Isn't this just accelerating the inevitable for many of these companies?

Yes and no. Certainly the unit economics for some start ups always looked problematic. But for others, it's not hard to see how they would have solid businesses in normal times, but have no resources to weather this downturn. I mean, it's not like people are never going to travel again or eat out at restaurants. But I certainly wouldn't want to be a travel startup or restaurant startup (at least of the dine-in variet…

It may be that travel never has big enough margins to support a 10k employee middleman.

Re: Startups are pummeled in the ‘great unwinding’

#35

Post by save_ferris »

hn_throwaway_99 wrote: post #17

> For start-up workers, the past few weeks have been sobering. Many had bought into the tech industry’s change-the-world ideals, had few boundaries between their work and personal lives and hoped for big payouts if their start-ups went public. This saddened me, because it's a refrain that we hear over and over and over. Same exact thing happened during the .com bust (which scares me to believe that was 20 years ago a…

> I’ve also found that the best folks in business tend to have rich, fulfilling lives outside of business as well.

Totally agree, but I’ve been burned multiple times by startups that see any kind of multifaceted lifestyle as “not fully committed” to the team or company, which is ridiculous. I’ve been so disappointed how frequently this happens in tech.

Re: Startups are pummeled in the ‘great unwinding’

#36

Post by qppo »

yingw787 wrote: post #3

I've heard numerous times startups have had a hard time getting a smaller amount of funding from angels and VCs. As in, "I want $500k" and "no, we only do deals with $1M+", or something like that. I thought that was crazy. This is probably the pendulum swinging back, as pendulums do. I am interested in how this situation affects larger companies. My guess is since they're so much larger this time around than back in…

I mean VC's aren't banks giving out small business loans. If you want $500k you go to the bank or find an angel investor, not a VC. The math doesn't work out for them.

I think we just need better infrastructure for startups to bootstrap with debt. It's not impossible or unheard of but it's more difficult for fledgling startups to get decent small business loans.

Re: Startups are pummeled in the ‘great unwinding’

#37

Post by digitaltrees »

StavrosK wrote: post #22
benatkin wrote: post #14

Earlier quoted context omitted.

Another thing that's more than half a decade old is your objection. The term "startup" has come to have a broad meaning. The meaning of words changes over time. Fortunately, new terms often come along to fill gaps. In this case there is the term early-stage startup .

So "startup" now means "company" and "early-stage startup" means "startup". I look forward to having to call them "incipient early-stage startup".

Start up has come to mean a company attempting hyper growth as opposed to a traditional business like a mechanic or brewery.

Re: Startups are pummeled in the ‘great unwinding’

#38

Post by digitaltrees »

yborg wrote: post #28
StavrosK wrote: post #22

Earlier quoted context omitted.

So "startup" now means "company" and "early-stage startup" means "startup". I look forward to having to call them "incipient early-stage startup".

I guess startup is generally understood now to mean a VC-backed company that doesn't make any money.

I think it’s more about the nature of growth potential. Hyper growth with a hockey stick is the measure.

Re: Startups are pummeled in the ‘great unwinding’

#39

Post by travisjungroth »

yborg wrote: post #28
StavrosK wrote: post #22

Earlier quoted context omitted.

So "startup" now means "company" and "early-stage startup" means "startup". I look forward to having to call them "incipient early-stage startup".

I guess startup is generally understood now to mean a VC-backed company that doesn't make any money.

Airbnb claims to make money.

Re: Startups are pummeled in the ‘great unwinding’

#40

Post by hn_throwaway_99 »

vhvjkyhkogvv wrote: post #34
hn_throwaway_99 wrote: post #7

Earlier quoted context omitted.

Yes and no. Certainly the unit economics for some start ups always looked problematic. But for others, it's not hard to see how they would have solid businesses in normal times, but have no resources to weather this downturn. I mean, it's not like people are never going to travel again or eat out at restaurants. But I certainly wouldn't want to be a travel startup or restaurant startup (at least of the dine-in variet…

It may be that travel never has big enough margins to support a 10k employee middleman.

Expedia and Booking have been around nearly 25 years and both have well over 20k employees. Seems like travel has more than enough margins to support multiple companies that size.
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