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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’

#91

Post by harumph »

save_ferris wrote: post #35
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.

Rule of Acquisition 211: "Employees are rungs on the ladder of success. Don't hesitate to step on them."

When you're a "human resource", you will be exploited. The term is dehumanizing. The C-suite requires this abstraction lest they are caught treating their resources like humans.

Re: Startups are pummeled in the ‘great unwinding’

#92

Post by Igelau »

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 had a recent stretch of unemployment that was made a bit more difficult than it had to be by the number of potential hirers who were under the impression that developers go home and just do more development. My GitHub repo? Uhh, yeah sure, here are some dotfiles I backed up a couple years ago...

Re: Startups are pummeled in the ‘great unwinding’

#93

Post by dominotw »

julius_set wrote: post #62

So I’m curious will property and rental prices drop in San Francisco now that funding is drying up? Can’t seem to find much information about that. For example a friend of mine who was laid off still has to pay $3300 / month for his studio. Curious how long this will last for?

I think its unlikely because everyone knows its going to right back up once this blows over. So demand should hold constant.

Re: Startups are pummeled in the ‘great unwinding’

#94

Post by rexreed »

anthony_r wrote: post #89
rexreed wrote: post #79

I'm sorry for some of my schadenfreude here, but really, so many of these startups are overfunded with way too many employees to begin with. They've often paid top dollar for expensive technical talent in locations with very high cost of living. I can't wait to see a pull back to solid fundamentals. I don't see why a daily vacation rental company honestly needs 240 highly paid employees. One company cited in the arti…

See also the "Austrian business cycle theory". But the bust, while clearing the economy of a lot of mal-investment, goes on for quite a painful while before the previous level of output/employment/prosperity is matched. https://en.wikipedia.org/wiki/Austrian_business_cycle_theory

Are you implying that venture funding at previous levels is a function of low interest rates (that's the theory in ABCT linked above). I don't think that specifically applies here. While it's possible venture funding is accelerated by low rates, this was not the case in the late 1990s prior to the 2000s dot-com crash.

Rather we're seeing a Black Swan event causing macroeconomic pull back, and it's pulling back the covers on companies that really had no fundamental underlying value or support. The only real exit for these companies was acquisition or public markets. But with both exits now drying up, there's nothing but overvalued, overfunded companies with revenue streams (if they have any) drying up faster than the glaciers are melting.

The fundamentals were never there, and it was only the fat-times of VC investment keeping them afloat. There might be a role to play with ABCT with regards to VC investment as a whole, but this downturn is more than just a normal business cycle.

Re: Startups are pummeled in the ‘great unwinding’

#96

Post by CPLX »

BillinghamJ wrote: post #75
qppo wrote: post #54

Startups are in way better shape than traditional small businesses. By our very nature, we need months of runway just to keep running. We're designed to weather this kind of storm because "zero revenue" is the default state. Hearing about Bird cutting 30% of their workforce is awful. But it's nothing compared to the thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased o…

Our board and investors have made it clear they think it's highly unlikely any meaningful funding will be able to progress until early 2022 at this point. Recently-funded or reasonably conservative startups should be able to do okay with that, but ones without a lot of runway are going to be in a really difficult position.

Your board and investors clearly have an exceedingly high regard for their own predictive abilities if they can anticipate the reaction of a specific financial sector two years hence, based on the effects of a crisis that's realistically about 3-4 weeks old.

I'm not saying they are wrong. But the premise that anyone has a fucking clue what's going to happen on what timeline is ludicrous.

Re: Startups are pummeled in the ‘great unwinding’

#97

Post by [deleted] »

SpicyLemonZest wrote: post #68
wgyn wrote: post #47

Is the narrative that big companies are safe havens for job seekers actually true? Isn't Airbnb a "big" company?

Airbnb is working on pulling out all the stops to try and prevent layoffs. They might not succeed, but if they were a smaller company they wouldn't even have anything to try.

[deleted]

Re: Startups are pummeled in the ‘great unwinding’

#98

Post by derekdahmer »

julius_set wrote: post #62

So I’m curious will property and rental prices drop in San Francisco now that funding is drying up? Can’t seem to find much information about that. For example a friend of mine who was laid off still has to pay $3300 / month for his studio. Curious how long this will last for?

Employees with high salaries at the larger more stable tech companies are doing most of the Bay Area home buying. Think FAANG, stripe, twitter, slack, etc. These companies can weather economic downturns without laying off people so Bay Area house prices don’t drop much. This was the case in 2000 and 2009.

Supply is also dropping as tons of homeowners are refinancing, which balances out any drop in demand.

The biggest hit is usually on the lower end of the market where you’ll see foreclosures as middle class people lose their jobs.

Re: Startups are pummeled in the ‘great unwinding’

#99

Post by timr »

jedberg wrote: post #67
julius_set wrote: post #62

So I’m curious will property and rental prices drop in San Francisco now that funding is drying up? Can’t seem to find much information about that. For example a friend of mine who was laid off still has to pay $3300 / month for his studio. Curious how long this will last for?

During the dot-com bust, rental prices went down a bit. During 2008, they stayed flat (as opposed to going up a few percent each year). So I'm guessing it will either stay flat or go negative. It depends on how quickly things recover once the shelter in place is lifted and how many people actually leave the area. The housing prices are driven by lack of supply, so even if demand softens a bit, it won't have that big…

Rents fell in 2008. I can tell you this for sure, because I had just moved to SF, and landlords were making deals. My landlord lowered my rent by $100 a month in order to keep me from moving in 2009.

Even as late as 2010 this was happening. I looked at a place on Russian Hill around that time, and it was offering rent incentives.

In my recollection, the market didn't pick up again until around 2012, corresponding with the rise in startup investment.

Re: Startups are pummeled in the ‘great unwinding’

#100

Post by wozniacki »

im_down_w_otp wrote: post #78
qppo wrote: post #54

Startups are in way better shape than traditional small businesses. By our very nature, we need months of runway just to keep running. We're designed to weather this kind of storm because "zero revenue" is the default state. Hearing about Bird cutting 30% of their workforce is awful. But it's nothing compared to the thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased o…

I think this is definitely true for venture-backed startups which scaled conservatively. However, scaling conservatively runs directly at odds with what a lot of venture backed startups are expected, told, or cajoled into doing. For those that went along with the conventional wisdom of the times, they're now extremely overextended having spent all that potential runway with no way to get it back and no hot marketplac…

If a business - any business whether a takeaway restaurant or a food hall or a white table cloth sitdown - cannot scrape by for more than a few weeks without steady revenue, wouldnt you say they are in a highly saturated niche or a highly saturated location or both or that they don't serve anything distinctive whether its their food or the experience, that couldnt be replaced by any other Joe Homecook with comparable resources?

Why is that restaurateurs deserve a special shake when your local HVAC guy does not, especially when the margins are so thin probably because they cant charge a premium for their offerings as they don't offer anything distinctive or compelling?

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