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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’

#151

Post by pjc50 »

0x0001 wrote: post #107
scarface74 wrote: post #84

Earlier quoted context omitted.

You weren’t around in 2000 or 2008 were you? Your startup is only in “better shape” as long as VCs are willing to keep funding you. VCs are only willing to keep funding you if they have confidence that you will have a profitable exit.

Not all startups require VC capital, some of us are just running without venture funding just clients money, some startups are in better shape because are on right market on the right time. You just need to be in the right time.

Right now, client funding is extremely vulnerable. The startup I was working for in 2001 blew up when clients stopped paying bills due to their own bankruptcy. The one I was working for in 2008 was badly crippled by all the clients we were pre-sales engaged with simply closing their external purchasing.

Re: Startups are pummeled in the ‘great unwinding’

#152

Post by hodgesrm »

scarface74 wrote: post #114
0x0001 wrote: post #107

Earlier quoted context omitted.

Not all startups require VC capital, some of us are just running without venture funding just clients money, some startups are in better shape because are on right market on the right time. You just need to be in the right time.

And you’re probably not looking for a large exit. You are trying that unheard of concept of spending less than you make. What you are doing is running a “lifestyle business”. That’s not a negative despite what the tech bro’s think. I hate the idea of success for a company seems to be “we got another round of funding while losing money”.

The term "lifestyle business" really annoys me. It's Silicon Valley propaganda. There are better ways to build companies than taking hundreds of millions or billions in funding. Pre-crisis startup funding was largely decadence enabled by cheap money.

By contrast early generation SV companies took relatively small amounts of funding if at all. Intel for example took the equivalent of $18.4M US in 2019 dollars prior to IPO. [1]

[1] https://en.wikipedia.org/wiki/Intel#Origins

Re: Startups are pummeled in the ‘great unwinding’

#153

Post by odshoifsdhfs »

scarface74 wrote: post #141
odshoifsdhfs wrote: post #135

Earlier quoted context omitted.

I agree with you but at the same time, a lot of people can't really create a lifestyle business. Yes, if you are a Senior Developer in SV, you can probably save 50k a year and then move to bumfuck Montana and start your lifestyle business, but a lot can't. I know many senior developers in my country that if they save 2000-3000 are probably in the top savers. I already refused investment as I didn't think my goals ali…

I’m assuming you aren’t in the US. Well I am in the US and if I lost my job in the current climate, I think I would have a hard time trying to find a job. I’ve never felt that way before - not in 2000 or 2008-2010. So your friends are far from unique. The entire global economy is screwed. Assuming you’re trying to start a lifestyle software business, your startup costs should be cheap thanks to cloud providers or jus…

I am not (Portugal). And I feel for you (and my friends and even myself, everyone is suffering now).

What I meant was, a lifestyle sw business, while low cost to run, means either someone having savings or a small family/friends angel investment/loan. That is why I mentioned some folks take funding because a lifestyle business is beyond their reach as they are working 40+ hours just to break even.

Re: Startups are pummeled in the ‘great unwinding’

#154

Post by not2b »

tdfx wrote: post #148
pixelmonkey wrote: post #109

One of my good friends is a restaurant owner in NYC and my spouse is a doctor/surgeon in NYC. Startups aren't pummeled -- they're insulated. Restaurant owners and doctors are pummeled. And all of you who thought incompetent federal government leadership was OK in this modern world -- you were bamboozled. You can start apologizing now.

If this crop of federal leadership is rotten, I'm not seeing much hope in the possible followup cohorts. The US government has effectively delegated responsibility for the crisis to state governments, and they all seem to be following the same stupid "stay in your home" model. Federal and state, their only solution has been to throw money at the problem, but that doesn't work when you've got no one around who can exe…

Only the federal government has the ability to borrow money. States have to balance their budgets every year, and whoops, half their tax money has now vanished, because so many can't work. Delegating responsibility to state governments and simultaneously refusing to provide the needed resources is a recipe for failure. Allowing unlimited profiteering on essential supplies and forcing states to bid against each other, while national stockpiles are withheld to be used for political purposes, means it isn't going to get better.

So we need to stay at home until we're able to test on a much larger scale.

Re: Startups are pummeled in the ‘great unwinding’

#155

Post by cvhashim »

0x0001 wrote: post #107
scarface74 wrote: post #84

Earlier quoted context omitted.

You weren’t around in 2000 or 2008 were you? Your startup is only in “better shape” as long as VCs are willing to keep funding you. VCs are only willing to keep funding you if they have confidence that you will have a profitable exit.

Not all startups require VC capital, some of us are just running without venture funding just clients money, some startups are in better shape because are on right market on the right time. You just need to be in the right time.

Don’t wanna be pedantic but a small tech-based business isn’t really a startup.

Re: Startups are pummeled in the ‘great unwinding’

#156

Post by not2b »

numair wrote: post #145
seibelj wrote: post #131

Earlier quoted context omitted.

But I genuinely believe all federal government leadership is incompetent - it’s not a matter of it being “OK”, that’s just the default for every administration. Which country on earth is responding to this well without resorting to authoritarian practices?

Denmark. Norway. Singapore. New Zealand. Taiwan. The fact of the matter is, there’s too many people in America invested in a cynical notion that we should expect the government to “fail,” which makes it easier to keep everything underfunded, which almost guarantees failure (random acts of heroism not withstanding). THAT, more than any single person, is what’s killing America. And that’s a bipartisan cancer.

No, in the US there's only one party that is explicitly anti-government, anti-expert, expecting government to fail. The other party has its own problems (its progressive and centrist factions are are war with each other, for example), but they are different problems.

Re: Startups are pummeled in the ‘great unwinding’

#157

Post by bdcravens »

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…

Founders aren't dumb. They need to survive through the war of attrition, and they will find ways to extend that runway. It's naive to believe it will be business as usual just because you're used to "zero revenue".

If future rounds aren't coming (guess what, in this economy, they aren't), you extend runway by cutting expenses. Anyone with a career older than ten years knows how this will go.

Re: Startups are pummeled in the ‘great unwinding’

#158

Post by rjdagost »

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…

If there's one thing I've learned from the dotcom crash and the 2008 collapse, it's this: when the crap hits the fan, cash is king. Start-ups without profitable business models are extremely vulnerable. All of the pitches about exponential growth and glorious future profits carry little weight when investor psychology turns negative. So if you have a large pile of investor capital and you have investors who can't / won't claw their money back, you may be OK. But don't kid yourself that you are on an easier path.

Re: Startups are pummeled in the ‘great unwinding’

#159

Post by qqqwerty »

dchyrdvh wrote: post #81
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?

These prices are set by the top 30% employees of the big tech firms. Unless there are massive layoffs there (e.g. 250k employees are let go) and this situation lasts for a few years (they have savings for 3-5 years usually), I wouldn't expect the prices to move.

Stock options and RSU's are a big part of the compensation packages for that group. So lower stock prices are essentially pay cuts.

And unlike 2008, many of these companies are more mature and much more exposed to the broader economy. Cloud computing, Ads, GSuite, etc... There are a handful tech companies that will probably thrive (Netflix, Zoom, etc...), but most of them are probably going to see big drops in revenue.

And considering that most of these companies have plenty of fat to trim (how many Alphabet moonshots are bringing in meaningful revenue, let alone profits?), I don't see how declining revenues won't result in some belt tightening. And when that starts happening, how many of the top 30% are going to be buying $2M-3M homes. The mortgages on those things are like ~$15k a month, and CA unemployment maxes out at ~$2k.

It is certainly possible that Bay area real estate weathers the storm just fine. But I really don't see a compelling case for it. Salaries can, and likely will go down. And bay area real estate is at all-time highs relative to incomes.

Re: Startups are pummeled in the ‘great unwinding’

#160

Post by ibero »

seibelj wrote: post #131
pixelmonkey wrote: post #109

One of my good friends is a restaurant owner in NYC and my spouse is a doctor/surgeon in NYC. Startups aren't pummeled -- they're insulated. Restaurant owners and doctors are pummeled. And all of you who thought incompetent federal government leadership was OK in this modern world -- you were bamboozled. You can start apologizing now.

But I genuinely believe all federal government leadership is incompetent - it’s not a matter of it being “OK”, that’s just the default for every administration. Which country on earth is responding to this well without resorting to authoritarian practices?

i been impressed with guatemala’s overall speed and depth. they were on top of the ball in latin america by weeks, to the initial derision of many countries.
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