Startups are pummeled in the ‘great unwinding’ • Hacker News Board

Re: Startups are pummeled in the ‘great unwinding’

#171

Post by burrows » Sat, Apr 04, 2020, 10:34 PM UTC

scarface74 wrote: post #136

ElFitz wrote: post #128

Earlier quoted context omitted.

It's only a lifestyle business if they aren't interested in hyper-growth & all Otherwise, "just" spending less than you make and trying to make it on their own only makes them bootstrapped, don't you think?

Its hard to find investors if you aren’t interested in hyper growth. The financial risk that the company will go out of business is the same but the expected returns are a lot lower. That just doesn’t make sense from an investors standpoint from a risk/reward vantage point.

Raising too much money can increase likelihood of bankruptcy. fight me

Re: Startups are pummeled in the ‘great unwinding’

#172

Post by vikramkr » Sat, Apr 04, 2020, 10:38 PM UTC

cvhashim wrote: post #155

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.

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

Yeah, that's just a small business without any of that claimed cushion of a huge vc raise

Re: Startups are pummeled in the ‘great unwinding’

#173

Post by tedd4u » Sat, Apr 04, 2020, 10:39 PM UTC

JMTQp8lwXL wrote: post #42

tedd4u wrote: post #33

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…

People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. Given someone in the peanut gallery is always claiming recession is near imminent, when are businesses supposed to prepare? Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders.

Sure - different "math" for every stage of business on what to do with cash. But I think it's common (once in the revenue-generating phase) for companies to plan not to burn cash down beyond some contingency level. If the worst case scenario used in calculating that level of reserve cash is relatively mild compared to Pandemic'19 they could be headed for trouble.

Re: Startups are pummeled in the ‘great unwinding’

#174

Post by vikramkr » Sat, Apr 04, 2020, 10:41 PM UTC

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.

That's just a small business - the comment above is referring to companies with a huge VC cash raise in the bank and "runway" as being in a better position than companies like yours that rely on cash flow from customers

Re: Startups are pummeled in the ‘great unwinding’

#175

Post by ghaff » Sat, Apr 04, 2020, 10:41 PM UTC

jaggederest wrote: post #137

closeparen wrote: post #106

Earlier quoted context omitted.

Why is it so offensive to people in this industry that our skills are valued? Sometimes it seems a little crazy to me too, but I'm not, like, excited to need to live with 5 roommates 90 minutes away from work again like you seem to be.

Work remote, move to the midwest (or, really, anywhere outside of the bay area or NYC), own your house outright. The idea that the options are "get paid usurious amounts of money" or "live 90 minutes from work with a bunch of roommates" is a false dichotomy.

A fair number of tech jobs can draw from areas within an hour or so of tech centers where housing is, if not cheap, a lot less than much of the Bay Area. And in many cases the companies aren’t even downtown anyway.

The SF/NYC vs. back of beyond dichotomy is pretty silly.

Re: Startups are pummeled in the ‘great unwinding’

#176

Post by vikramkr » Sat, Apr 04, 2020, 10:45 PM UTC

Akaahn wrote: post #165

Startups are having their great reckoning. No longer can they just come up with fancy catch lines, and get bought by a billion dollar company. Now they actually have to provide something unique, something useful, something worthy of them actually being acquired.

Or just going on to become market leaders. Out of the tech bubble pop emerged google, apple, amazon, microsoft, etc standing strong

Re: Startups are pummeled in the ‘great unwinding’

#177

Post by lumost » Sat, Apr 04, 2020, 10:46 PM UTC

hn_throwaway_99 wrote: post #147

lotsofpulp wrote: post #73

Earlier quoted context omitted.

There’s never been an extended global shutdown of travel like now though.

Yes, everyone fully understands with travel at a complete standstill, none of these companies are viable if the current situation were the norm. But the current situation is not the norm, people will eventually get back to travelling a lot, and when they do there will be plenty of economic activity to support large companies in the travel business.

An extended shutdown with shut borders may have long-term effects on consumer's willingness and desire to travel. If the travel industry remains shut down for the next 12 months it's not unreasonable to think that the travel industry wouldn't fully recover for 10 years.

Re: Startups are pummeled in the ‘great unwinding’

#178

Post by jzl » Sat, Apr 04, 2020, 10:46 PM UTC

TheOtherHobbes wrote: post #161

derekdahmer wrote: post #98

Earlier quoted context omitted.

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…

Anyone who thinks FAANG will survive without a contraction is deluding themselves. What happens to the ad market during a depression? How about luxury IT hardware? Entertainment subscriptions? Web services? If there isn't a bounceback in three months or so, the entire tech sector will deflate like a balloon. FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled proj…

Yup. Google has basically doubled in employee count since 2016. It doesn't seem unreasonable at all that it would contract back a few years or more, headcount-wise.

Re: Startups are pummeled in the ‘great unwinding’

#179

Post by vikramkr » Sat, Apr 04, 2020, 10:47 PM UTC

lotsofpulp wrote: post #73

hn_throwaway_99 wrote: post #40

Earlier quoted context omitted.

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.

There’s never been an extended global shutdown of travel like now though.

9/11 had a similarly chilling impact that shook the airline industry to it's core. Covid is likely going to be worse for the industry than that, but it's not without precedent

Re: Startups are pummeled in the ‘great unwinding’

#180

Post by thethethethe » Sat, Apr 04, 2020, 10:51 PM UTC

TheOtherHobbes wrote: post #161

derekdahmer wrote: post #98

Earlier quoted context omitted.

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…

Anyone who thinks FAANG will survive without a contraction is deluding themselves. What happens to the ad market during a depression? How about luxury IT hardware? Entertainment subscriptions? Web services? If there isn't a bounceback in three months or so, the entire tech sector will deflate like a balloon. FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled proj…

> FAANG will probably survive in some form because of cash reserves, but there will absolutely be cancelled projects and mass lay-offs. And those will have an effect on the the property and rental markets, on startup funding, and on everyone's cash flow

FAANG will lay off their armies of contractors before down sizing FTEs. Google has 125k FTEs but over 300k temps. Will it get to the point where FTEs are laid off? I’m not sure, but it seems pretty unlikely unless things don’t improve over the next few years or so