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

Re: Startups are pummeled in the ‘great unwinding’

#391

Post by hef19898 » Sun, Apr 05, 2020, 11:53 AM UTC

rukuu001 wrote: post #325

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 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 the…

Remote work solutions should be doing just for now. Logistics would be another field, e-commerce as well.

Re: Startups are pummeled in the ‘great unwinding’

#392

Post by leonroy » Sun, Apr 05, 2020, 11:57 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…

Your comment is insightful - enough that I shared it with my biz partner but yeah I’d tone it down and keep posting, important to avoid herd opinions.

Re: Startups are pummeled in the ‘great unwinding’

#393

Post by hef19898 » Sun, Apr 05, 2020, 12:04 PM UTC

ineedasername wrote: post #232

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…

I'm not sure why you think zero revenue is the default state. That's generally only the default during the short period of time in between selling angel investors on an idea or proof of concept and getting a first round of VC funding. Somewhere in the middle of that is launching a viable product and demonstrating a potential revenue stream while convincing investors there is a sizable addressable market you can poach…

Good point about Force Majeure, definitely have to add this my contacts going forward.

Re: Startups are pummeled in the ‘great unwinding’

#394

Post by quickthrower2 » Sun, Apr 05, 2020, 12:05 PM UTC

thethethethe wrote: post #180

TheOtherHobbes wrote: post #161

Earlier quoted context omitted.

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’…

Are these temps and FTEs even doing the same role? It’s probably going to depend more on the role they are doing than work status.

Re: Startups are pummeled in the ‘great unwinding’

#395

Post by quickthrower2 » Sun, Apr 05, 2020, 12:07 PM UTC

otterley wrote: post #350

TheOtherHobbes wrote: post #161

Earlier quoted context omitted.

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…

Only two of the FAANG companies get most of their revenue from ads, and all of those companies are weathering the storm rather well (except perhaps Google, but I can’t say for certain). Facebook is struggling to keep up with site demand; more people are using it to communicate while shut in during this period of uncertainty. Apple has enough cash on hand to not sell a single product for months - maybe years - and sti…

This is day zero. Let’s see what happens on day 1.

Re: Startups are pummeled in the ‘great unwinding’

#396

Post by hef19898 » Sun, Apr 05, 2020, 12:19 PM UTC

Stratoscope wrote: post #204

wozniacki wrote: post #194

Earlier quoted context omitted.

Are you sure youre replying to my comment? My comment was calling into question the viability & competitiveness of most restaurants that cannot weather a sudden change of fortunes. They are not be confused with long-lived, well-run and meticulously managed restaurants that stand the test of time because they offer something compelling. Most restaurants don't fit that bill and never had those ingredients baked into th…

Mobile friendly quote (don't use code formatting for quotes): > In 2001, my co-workers at PayPal and I would often get lunch on Castro Street in Mountain View, Calif. We had our pick of restaurants, starting with obvious categories like Indian, sushi and burgers. There were more options once we settled on a type: North Indian or South Indian, cheaper or fancier, and so on. In contrast to the competitive local restaur…

that's some survivorship bias.

Re: Startups are pummeled in the ‘great unwinding’

#397

Post by vkou » Sun, Apr 05, 2020, 12:19 PM 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…

A startup, by definition, is a business that hasn't yet figured out how to turn $1 into $1.01 in the best of times, and relies on investment money to fund its operations.

They are in no way shape or form better suited to weather an economic collapse than a traditional business. Traditional businesses know how to turn $1 into $1.01.

Re: Startups are pummeled in the ‘great unwinding’

#398

Post by vkou » Sun, Apr 05, 2020, 12:20 PM UTC

nostrebored wrote: post #283

EthanHeilman wrote: post #273

Earlier quoted context omitted.

It will also filter out sound business models that actually do work in times of plenty, but don't under the conditions of a pandemic.

That's far from a sound business model.

Most business models also don't work if the world plunges into global thermonuclear war, but we still consider them to be sound.

Re: Startups are pummeled in the ‘great unwinding’

#399

Post by JamisonM » Sun, Apr 05, 2020, 1:37 PM 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…

My experience is that "Mom and Pop" shops are generally awash in capital to the point of forgetting to bill customers for months on end. The are "over capitlized and under leveraged" and they offset their thin margins with absurdly low fixed costs. The biggest danger to their businesses is that the proprietors might be older and decide to retire instead of toughing this out.

On the other hand my experience with slightly bigger suppliers/vendors with 5+ employees is that they run into cash flow problems all the time and do in fact seem much more vulnerable to this shock than a startup with no inventory and cash on hand.

Re: Startups are pummeled in the ‘great unwinding’

#400

Post by seibelj » Sun, Apr 05, 2020, 1:41 PM UTC

pixelmonkey wrote: post #337

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?

If you don’t believe competence can exist in federal government administration, then you don’t believe in our representative democracy. If you don’t believe in that, then spare us your participation, and don’t vote. But please don’t express your lack of belief in competence by intentionally voting an incompetent leader into our most important office. This pandemic is a world-wide A/B test on the difference between co…

> If you don’t believe competence can exist in federal government administration, then you don’t believe in our representative democracy.

I have a different idea of what the federal government should be doing than you. I want the government to be as limited as possible and focus on fundamental issues like national defense. The federal government continually fails - see Hurricane Katrina, Iraq / Afghanistan (Obama made the situation worse!), the Great Recession - these are caused because a centralized all-knowing all-powerful actor can’t fix every problem. It’s my philosophical belief.

How will the pandemic be solved? The individual actions of millions people making their own localized choices. That’s how everything ultimately gets solved.

You can dream of a perfect president who could wave his hands and make everything better. But it’s simply not possible.