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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#71

Post by foobarian »

fzeroracer wrote: post #57
aresant wrote: post #18

Dagnabit. Here we go again - this is a fantastic, pragmatic amendment to those notes -> https://dalton.substack.com/p/letter-to-myself-in-late-2008?... For a taste: "Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. Do it decisively. Do it so that you get profitable. In your case that is something like a 70% cut, not a 5-10% cut. Yes you read that rig…

A 70% cut is a great way to kill your company once the remaining 30% start jumping ship. Either because of the destroyed morale or because they're doing a lot more work in a higher stress environment.

I mean, losing money is a great way to kill your company. What's better: cut 10%, lose money, people leave, cut 10% more, still losing money, more people leaving, cut 10% more, still losing money, more people leaving. Likely at 50% now with no pivot and bad morale. Compare to cut 70% + some people leave, but now you can hopefully do a major pivot and do better?

Re: Y Combinator's Message to Founders

#72

Post by imperialdrive »

bachmeier wrote: post #54
aresant wrote: post #18

Dagnabit. Here we go again - this is a fantastic, pragmatic amendment to those notes -> https://dalton.substack.com/p/letter-to-myself-in-late-2008?... For a taste: "Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. Do it decisively. Do it so that you get profitable. In your case that is something like a 70% cut, not a 5-10% cut. Yes you read that rig…

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

I mean, if there is some transparency and the numbers add up, and 70% cut appears to do the trick, then it would be pretty awesome being in the 30% with a real chance to shine. I imagine there would be a big increase in stock and pay to put things in motion too. Sounds great!

Now if the plan is going to end in flames anyway, it still seems like a great reason to stick around and absorb the knowledge and experience.

I'm a fix-it person and would love the opportunity to turn a company around - it's like the ultimate challenge.

Re: Y Combinator's Message to Founders

#73

Post by mdoms »

imperialdrive wrote: post #72
bachmeier wrote: post #54

Earlier quoted context omitted.

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

I mean, if there is some transparency and the numbers add up, and 70% cut appears to do the trick, then it would be pretty awesome being in the 30% with a real chance to shine. I imagine there would be a big increase in stock and pay to put things in motion too. Sounds great! Now if the plan is going to end in flames anyway, it still seems like a great reason to stick around and absorb the knowledge and experience. I…

No post body was provided.

Re: Y Combinator's Message to Founders

#74

Post by raviparikh »

nopenopenopeno wrote: post #20

I am currently graduating with a CS degree and interpreting this as a warning to not accept the offer from the exciting startup and instead accept the offer from the big corporate fintech company. Is there any reason I could be wrong?

This is not necessarily true. "Bigger" does not mean "more stable." Big companies like Netflix did layoffs just now; meanwhile there are plenty of small companies that are profitable and doing great. A friend of mine runs a profitable startup (~50 people). A few months ago, a candidate turned them down to join a 500+ person well-funded company that seemed more stable–that company is now bankrupt, while my friend's startup is continuing to grow.

I wrote a blog about this topic: https://www.airplane.dev/blog/evaluate-startup-offers-in-a-t...

Re: Y Combinator's Message to Founders

#75

Post by micromacrofoot »

S_A_P wrote: post #56
nopenopenopeno wrote: post #20

I am currently graduating with a CS degree and interpreting this as a warning to not accept the offer from the exciting startup and instead accept the offer from the big corporate fintech company. Is there any reason I could be wrong?

Take the safe job when you are old and have family/dependents. Take the long shot bets when you are young. You have the potential to learn way more way more quickly at a startup and if it folds you are still young and have experience. I wish I would have taken this advice when I was 25...

I was young and poor, if you're young and poor don't take the long shot bets. You need to build stability. Long shot bets will burn you out if you don't have a safety net (and living with your parents is a completely reasonable safety net, just unfortunately one I didn't have!). I wasted my 20s thinking if I worked 60+ hours a week for a startup I would be one of the lucky ones, and it was foolish.

As usual, there's no one-size fits all advice.

Re: Y Combinator's Message to Founders

#77

Post by ilamont »

dredmorbius wrote: post #59

https://nitter.kavin.rocks/refsrc/status/1527238287471292417 OCR'd text: 4:11 Greetings YC Founders, During this week we've done office hours with a large number of YC companies. They reached out to ask whether they should change their plans around spending, runway, hiring, and funding rounds based on the current state of public markets. What we've told them is that economic downturns often become huge opportunities…

> This slow down will have a disproportionate impact on international companies, asset heavy companies, low margin companies, hardtech, and other companies with high burn long time to revenue.

Wonder how things will shake out for biotech. I know biotech investors have long timeline, but surely they are feeling pressure too ("LPs will expect more investment discipline")

Re: Y Combinator's Message to Founders

#78

Post by matwood »

bachmeier wrote: post #54
aresant wrote: post #18

Dagnabit. Here we go again - this is a fantastic, pragmatic amendment to those notes -> https://dalton.substack.com/p/letter-to-myself-in-late-2008?... For a taste: "Doing multiple small layoffs is a form of cascading failure. Do one layoff, but much much deeper than seems correct. Do it decisively. Do it so that you get profitable. In your case that is something like a 70% cut, not a 5-10% cut. Yes you read that rig…

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

You're too focused on the 70% used for effect. The point is to make a single cut that puts the company profitable, so there is a chance to survive. And even then it's going to be hard, but gives the company a chance.

No person should have assumed stability in a company that was not yet turning a profit. I'm not saying they are bad companies to take a gamble on, but understand they were/are a gamble. VC money suddenly drying up was part of the that gamble.

Re: Y Combinator's Message to Founders

#79

Post by S_A_P »

micromacrofoot wrote: post #75
S_A_P wrote: post #56

Earlier quoted context omitted.

Take the safe job when you are old and have family/dependents. Take the long shot bets when you are young. You have the potential to learn way more way more quickly at a startup and if it folds you are still young and have experience. I wish I would have taken this advice when I was 25...

I was young and poor, if you're young and poor don't take the long shot bets. You need to build stability. Long shot bets will burn you out if you don't have a safety net (and living with your parents is a completely reasonable safety net, just unfortunately one I didn't have!). I wasted my 20s thinking if I worked 60+ hours a week for a startup I would be one of the lucky ones, and it was foolish. As usual, there's…

But if you are working in a startup you will hardly be poor esp with a comp sci degree.

Re: Y Combinator's Message to Founders

#80

Post by CalChris »

corrral wrote: post #70
bachmeier wrote: post #54

Earlier quoted context omitted.

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

I'd just assume the company's already dead and someone's trying to suck some remaining value out of it or make a hail-mary acquisition deal to bail out their investor pals (at no return to employee stock holders, I'm sure) if that happened. I'd be working on my résumé on the "work" day when that's announced, for sure.

The CEO should be able to spreadsheet an argument at the all hands meeting to the remaining employees that they are now profitable and/or have 48 months of runway. Of course, employees are always unrestricted free agents. They can weigh this with the prevailing economic outlook and make their own decisions. Remember, YC's letter is to founders and not employees.

I believe Ben Horowitz made a similar decision and a similar pitch to his employees that he recounted in The Hard Thing About Hard Things. I don't remember Horowitz getting into the depth of the cut but I remember survivability being a stressed point.

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