351–360 of 443 posts
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> 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.
If a business model works based on current conditions, how is that "bullshit"?
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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…
And with all the stories coming out of Berlin's scene, and to a lesser degree Munich's, I came to the conclusion: "lifestyle businesses" businesses without external funding are hard. They are traditional small companies, the have to rely on positive cash flow, profitability and banks to keep running. Quite tough, especially if the founder and employees have to actually live from the profits.
Startups on the other hand, they life of VC money. As long as the founding team can sell their vision to VCs to get more VC money, they run just fine. So the founders can live the startup life with other people's money. Sounds more like lifestyle businesses to me.
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This is the thing I've seen a lot of tech people missing, they are all "I'll be fine, my company already works from home and our business isn't effected". Yes, but what about your customers businesses? What if they stop paying? Or what about _their_ customers. The entire economy is going to be hit hard, and that will ripple through.
I think startups that cater to providing services to government funded organizations will probably do better, especially with all this new government debt globally in the form of "stimulus".
Source: I don't work at Big Tech, but personally know many folks who do. For the most part, they are not really thinking very far into the future, because they think (with some justification) that their jobs are much safer than startups and smallish companies.
1 The usual reasons of less people spending money on stuff holds, of course. If your customer is now unemployed, they will eventually cancel your software subscription too.
2 Most employees working at these companies have stock options which will plummet once people start pulling money out of the stock market because they actually need the cash to survive.
3 There will be the usual letting go of people because the manager doesn't like them. In a big company, ironically, this is much easier because no single employee is indispensable.
4 The actual problems are not going to start at Big Tech till about a year from today. This is one of the main problems. Most predictions of economic recovery are way too optimistic. Unless something extraordinary happens (e.g. a combination of off-the-shelf medicines, all in large supply, which miraculously just negates the virus, and we learn about it tomorrow). There is an excellent chance that the layoffs will hit Big Tech precisely when most of their employees think they are safe.
5 The biggest problem, in my view, is how much these employees are used to the cash cushion. There will always be a few prudent folks who save a large chunk, but generally the lifestyles have already been elevated to match the income. The folks who never raised their lifestyle to that level will not really have much to worry about, but that is a small minority.
One can imagine these folks - who are basically going to be the last to be laid off, having to compete with much more hungrier folks while simultaneously having to significantly downsize their lifestyle. And suppose they also bring an "attitude" with them (not that everyone does, but some do), who will want to hire them?
Some folks will point out the large cash holdings of these companies and easy access to credit. But how far can that runway last, realistically, under these types of circumstances?
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Small-medium hotel owner here, that used to write code for a living. What just happened in my industry, is forcing me to go look for a job. I don't think we are going to open for summer season or even if we do its not gonna make enough to live by. Hundreds or thousands of years ago, a few had all the wealth and then most people were poor. We even had slaves. I can't believe that in 2020 and with all the knowledge we'…
What hotel? I did mostly Ruby, Python, and engineering management before opening a Hostel :)
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…
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> Maybe I didn't know that a global pandemic was going to shut down the economy. Then you are a fool. The tech economy crashes on 5-7 year cycles. See: Dot bomb. 2008 Financial Crash. Covid-19 in 2020. I can go backwards in time, too. 3D graphics card startup crash. Microprocessor startup crash. AI winter. etc. Too much money flows into the sector and then eventually the VC funds want it back. Roughly on 5-7 year tim…
My point isn’t that you or the parent that I’m replying to are incorrect at all. You seem to be missing my point entirely. Feeling schadenfreude when a business fails is tantamount to being happy that someone loses their job. That’s fucked up- and I can’t believe anyone would be stoked about this. Seek help.
This is part of why I think we need a much stronger economic safety net with UBI and universal healthcare. Too often, we protect objectively bad institutions and companies because of the very real need to preserve the jobs they provide. If involuntary job loss became a less disastrous event, we might be more keen to cut out waste and inefficiency in the system because we're no longer potentially destroying people's lives in the process.
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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.
“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…
But honestly I think it's too complex to attempt. Perhaps some form of managed debt jubilee will work "no rent for six months" or something. but the unintended consequences will be huge.
Good luck to your friend
Edit: we should probably focus on the areas that can be easier made whole - finding landlords with extant contracts and just paying them for the contract will be easier than getting their tenants paid, finding businesses with employment contracts easier than paying individuals...
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?