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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’

#261

Post by ClumsyPilot »

ghaff wrote: post #186
hodgesrm wrote: post #152

Earlier quoted context omitted.

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…

The thing that annoys me about "lifestyle business" is that it also suggests this idea of short days, tons of vacation, etc. Which is usually not the case.

I feel the phase means something different entirely - let's say I start a software consultancy with my friends, and my goals are to run the firm how I want, be my own boss and that we have fun working on interesting projects together. That to me is a lifestyle business.

If there is a profitable decision I could take, like investment / partners / whatever, I prioritise the fact that I want to keep running this company myself without interference over profit. I prioritise my job satisfaction.

Maybe I could hire a more competent CEO, but that's not what I am trying to do here. I could get a mentor thou.

This business could be funded by debt, or investment, though not normally.

Now I might make a lot of money and grow the firm to 10k people, or I might take long holidays and go bankrupt - that's a different problem entirely.

Re: Startups are pummeled in the ‘great unwinding’

#262

Post by [deleted] »

shoo wrote: post #213
filmgirlcw wrote: post #138

Earlier quoted context omitted.

This strikes me as wishful thinking and also incredibly myopic about the realities facing many startups. A startup that recently closed a big round (and the need to close the round wasn’t necessitated by massive debt or existing expenses — so think almost all of the money can be used as future runway) might be in a better short-term position than a business that is relying on net-30 or net-90 payments from clients th…

> Plus, they get the additional disadvantage of trying to figure out an actual business model during a recession. this has a bit of a silver lining: it'll help filter out bullshit business models that appear to work in the times of plenty.

[deleted]

Re: Startups are pummeled in the ‘great unwinding’

#263

Post by dehrmann »

vinayan3 wrote: post #231

Article's premise is right but they primarily used start-ups in the travel and transportation space for examples of insane revenue drop. If people are sheltering no one is gonna be using these services. So, it's really not surprising. The longer term impact is going to be the lack of funding in the coming couple of years and lack of customers for the services/products coming out of startups. How will VC funds fair in…

> How will VC funds fair in this?

Probably not well. https://news.ycombinator.com/item?id=20985687

Re: Startups are pummeled in the ‘great unwinding’

#264

Post by dehrmann »

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…

> Entertainment subscriptions

$15 per month for Netflix might be one of the cheapest forms of entertainment in a recession. Classpass, not quite so much.

Re: Startups are pummeled in the ‘great unwinding’

#265

Post by da02 »

0xff00ffee wrote: post #170
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.

RIP The Pets Dot COM sock puppet. I was there to see him live fast and die hard. (I don't acknowledge his zombification.)

Did you work for pets.com?

Re: Startups are pummeled in the ‘great unwinding’

#266

Post by derekdahmer »

meritt wrote: post #225
aphextron wrote: post #220

Earlier quoted context omitted.

It all depends what you want in life. Pittsburgh you can afford a beautiful home and support a family on $100k. That's studio apartment survival money in the bay. The portion of us who will ever make it to the big leagues and land that $300k FAANG job that allows you to buy a home and raise a family in the bay is infinitesimal. But if you just want to live that single lifestyle, enjoy the big city, and play the start…

> big leagues and land that $300k FAANG job that allows you to buy a home and raise a family in the bay is infinitesimal. $300k/yr is nowhere near big leagues to buy a home and raise a family in the Bay area, just fyi. It's more like a comfortable single income where you aren't worried about paying rent or going out to dinner. You try and raise a family on a mere $300k in SF/SV, you're one layoff or recession away fr…

You can absolutely raise a family in the SFBA on less than $300k of household income. (Source: me). You think everyone with kids in this region of 3.6m people is pulling down that kind of money?

There’s plenty of 3BR houses in the east bay for less than a million, which puts your mortgage+property taxes at around $60k, which is totally doable at even half the salary you’re talking about.

Re: Startups are pummeled in the ‘great unwinding’

#267

Post by sershe »

axiom92 wrote: post #209
irrational wrote: post #184

I work for a Fortune 150 company as a programmer. I've had lots of people ask me why I don't move to California and work for a startup. The main reason is because I'm risk adverse and I really don't like the Bay Area (I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return). Now I have a new reason to be grateful I work for a Fortune 150 company. I've been able to w…

>I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return I understand that this is not center to the point you're making but I am curious! What makes you hate the Bay area? I lived there for ~4 years and recently moved to Pittsburgh. I can't wait to move back. In fact, the mere mention of these places evokes a strong sense of homesickness in me for some reason.

Never been to Pittsburgh, but what do you miss, other than the weather? I lived there for 3 years (Mountain View, SoMa, Inner Richmond), and outside of work it's basically a giant cluster of generic burbs and gridlock, with a filthy medium-quality city in the middle, priced 3-4 times the amount of an average burby gridlock (e.g. San Antonio) or a medium-quality city (e.g. Denver then). There's awesome nature but it's 3-5 hours away, driving thru gridlock, whereas Seattle, Portland, Denver, SLC, etc have it next door.

Re: Startups are pummeled in the ‘great unwinding’

#268

Post by jimbokun »

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 .

Companies are called start ups by people old enough to clearly remember when they really were just a start up, and haven't internalized just how long ago that really was.

Re: Startups are pummeled in the ‘great unwinding’

#269

Post by dehrmann »

grapehut wrote: post #188
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?

It'll be a couple more months before we can say with certainty, but I think Sweden has done an excellent job of balancing economic, life and liberty trade offs.

I heard an interview of someone from the Swedish chamber of commerce. He said "Social distancing is part of Swedish culture." Having spent a decent amount of time in Stockholm, I don't disagree. I remember the custom on mass transit is to stay quiet and as far away from any other passenger as possible...unless there's been drinking.

Re: Startups are pummeled in the ‘great unwinding’

#270

Post by jeremyjh »

qppo wrote: post #36
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.

It is impossible to get loans from banks for unproven business models and it always has been. Banks invest in businesses with proven models, revenue histories, collateral and audited financial statements. Its just not in any way comparable to what a venture needs.
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