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

Re: Startups are pummeled in the ‘great unwinding’

#321

Post by jv22222 » Sun, Apr 05, 2020, 4:30 AM UTC

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…

> We're designed to weather this kind of storm because "zero revenue" is the default state.

Yeaaaaaah, about that...

https://sivers.org/startnow

Re: Startups are pummeled in the ‘great unwinding’

#322

Post by hn_throwaway_99 » Sun, Apr 05, 2020, 4:30 AM UTC

JimTheMan wrote: post #274

Spooky23 wrote: post #255

Earlier quoted context omitted.

“Better” in that you still exist. A friend’s medical practice will implode April 30... their business is down 90% and they won’t be able to pay rent or the employees. They are only staying open in hope for some sort of aid or debt jubilee. The partners will lose pretty much everything. People with cash aren’t going to keep plowing money into startups, they are going to buy depressed assets. Every leveraged real estat…

Out of curiosity, would you be able to elaborate on the type of practice? I wouldn't imagine they are a GP? This crisis would increase their traffic. Cosmetic surgery?

This crisis is hitting medical practices incredibly hard, given that all non-emergency procedures are canceled (by law where I live). You seem to be implying by saying "cosmetic surgery" that it's just personal, cash-pay procedures, but that's totally wrong. Primary care, pediatrics, radiology, sports medicine, dermatology, on and on - they're all getting killed by this.

Re: Startups are pummeled in the ‘great unwinding’

#323

Post by tomashertus » Sun, Apr 05, 2020, 4:32 AM UTC

hogFeast wrote: post #45

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.

The reason AirBnb is a startup is because it makes no money. A company stops being a startup when you aren't relying on someone cutting you a check every month to keep it all going. Most of these companies will now fold. The number of employees or, even, revenue is irrelevant.

I really hope this recession will bust AirBnB. It would lower the rents all over the world...

Re: Startups are pummeled in the ‘great unwinding’

#324

Post by axiom92 » Sun, Apr 05, 2020, 4:35 AM UTC

dragonwriter wrote: post #281

axiom92 wrote: post #278

Earlier quoted context omitted.

Interestingly, in addition to the weather, I do miss nature. I think nature is always next door depending on where you are in the Bay area. For example, you can be in Foster City at 5 pm, get on 92W and reach crystal springs water reservoir on Canãda road by 5:10 (you already feel like you're far away from the city); 15 more minutes and you could be on Skyline (this was also one of my favorite "amaze the tourist" rou…

> Canãda road Cañada Road

Thanks!

Re: Startups are pummeled in the ‘great unwinding’

#325

Post by rukuu001 » Sun, Apr 05, 2020, 4:46 AM UTC

filmgirlcw wrote: post #138

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…

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…

I think both your and the parent's perspectives are correct for different startups.

I don't think life is going to change much for pre-revenue startups still trying to find a market fit. Now, they're back to square one working out if they've got a product that can be sold somewhere.. anywhere! Uncertainty continues as usual.

But if a startup had a fit and were marketing for growth, well.. sucks to be them, unless they were in some kind of remote-collab space.

Re: Startups are pummeled in the ‘great unwinding’

#326

Post by rukuu001 » Sun, Apr 05, 2020, 4:47 AM UTC

Alex3917 wrote: post #221

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…

> I’m much more concerned about people who aren’t venture-backed founders right now. I'm sure most bootstrapped founders are ecstatic that their competitors who have been dumping product at below cost for years are now mostly going out of business. Not seeing much complaining on Indie Hackers.

The tone on IH seems almost.. surreally unconcerned about all this.

Re: Startups are pummeled in the ‘great unwinding’

#327

Post by quickthrower2 » Sun, Apr 05, 2020, 4:57 AM UTC

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…

> 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.

Surely this must be satire. The tech industry has only capitalist ideals, to ultimately seek rent from society like any other big industry, and big payouts for staff are essentially a lottery ticket.

Re: Startups are pummeled in the ‘great unwinding’

#328

Post by torgian » Sun, Apr 05, 2020, 5:04 AM UTC

invertY wrote: post #228

invertY wrote: post #223

Earlier quoted context omitted.

You cannot disrupt a market if the market itself ceases to exist. This is basic stuff. A whole load of VC stuff relies upon the larger market to predate, has stupidly vapid IPO targets (which the actual big boys, Central Banks, are now culling off, since their actual liquidity stuff like Reits etc are crashing) and basically 100% worthless business models. "Juicer" or whatever it was? Go look up what Glencore is doin…

Look: you just got slammed with ~10 mil unemployment in the USA. Call it 10% of workforce. Most developed countries are now running at 15-30% and it's about to get worse. Entire industries are pretty much relying on bailouts or they fold (leisure, air (non-freight), cruise, hospitality, restaurants) and the people who own the real estate (or lend it out, Reits / Mortgages) are going to get hit by their tenants / clie…

Agreeed.

Re: Startups are pummeled in the ‘great unwinding’

#329

Post by Cymen » Sun, Apr 05, 2020, 5:14 AM UTC

I've been contracting lately and I'm on two active contracts. One of the two is winding down. I've been billing at $155/hour via an agency (to be clear, their fee added on top of that $155). They offered me $90,000 salary to go employee. They upped that to $100,000 when I said no (I thought we were done but I said no again). Their thinking is they can take advantage of the situation to get cheap engineering staff.

If you're running a startup and thinking that now you can get cheap senior engineers, you might want to consider that it might be true for those who aren't careful with their finances. However, the talent you attract with this method is going to leave as soon as they find a better offer.

I don't think most management teams are like this one but I'm amazed by the short term thinking. Professionally, I can't really call them on this behavior but I'm glad to have been saving for financial independence (now is the time to go back to working on my own things and yes, I do have a multi-year runway).

Re: Startups are pummeled in the ‘great unwinding’

#330

Post by nopinsight » Sun, Apr 05, 2020, 5:21 AM UTC

filmgirlcw wrote: post #138

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…

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…

> And when investments come back — and it could take years, we just don’t know at this point the extent of the economic situation

Given unlimited QE and huge rounds of fiscal stimulus, the financial markets in major developed countries with debts denominated in their own currency are unlikely to suffer for too long.

Once there is a glimmer of hope that Covid-19 will likely be contained or its effects significantly mitigated, the flood of funds seeking yield should start to pour into discounted assets and other investments with good risk-reward ratio.

Looking at Germany and South Korea, mitigation through concerted efforts should be possible within a year or less. Pessimistically, if containment and mitigation fail, the population will have herd immunity by 1.5-2 years.