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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#131

Post by tshaddox »

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…

If the numbers add up to justify the layoff, then doesn't that mean that in the time leading up to the layoffs the numbers didn't even come close to adding up? I'm not sure the transparency and fiscal competence the company demonstrated to justify its layoffs would dazzle me enough to make me miss the fact that they had overhired by 3x or more.

Re: Y Combinator's Message to Founders

#132

Post by tschellenbach »

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 issue impacts any high growth companies. It's pretty much all of tech both public and private. You can't avoid it unless you go work outside of tech

Re: Y Combinator's Message to Founders

#133

Post by kaycebasques »

ditonal wrote: post #102

This “default alive” advice is repeatedly shared. One thing it obviously does not address is the human element of who you cut and whether they will be “default alive” unemployed in a recession. A huge amount of YC advice in general positions founders as protagonists and employees as NPCs then are shocked people pick Google over their startup offer. Funny thing is I’ve seen this exact advice destroy a company. In Marc…

> Funny thing is I’ve seen this exact advice destroy a company. In March 2020 they did deep layoffs and cited the need to be “default alive.” Then their main market surprisingly quickly grew in the rest of 2020

I recognize that later in your comment you say "Of course if 2020 had gotten worse maybe they would look smart" but I think it's worthwhile to compare/contrast the pure macroeconomics of early pandemic versus now. To the Fed the pandemic was an exogenous shock and they unleashed all their tools to keep the economy going. Now they are dealing with the backlash of unleashing all their tools (inflation) and are making it very clear that their priority is to bring down inflation and they are very aware that they do that by bringing down employment. So encouraging startups to go default alive is very much what the Fed wants right now. Big difference in policy direction. Exogenous shock versus endogenous course correction.

Re: Y Combinator's Message to Founders

#134

Post by bushbaba »

liuliu wrote: post #96
wolverine876 wrote: post #82

Like inflation, it's self-fulfilling. Perception is reality. Some people who strongly influence public perception - to whom we seem to have ceded our power to think critically and independently - who look for social disruption, want it. If businesses pull in their horns, stop supporting innovation, the economic result is easy to predict.

That's why it is extremely frustrating to watch this unfold. The easiest way to kill inflation is to kill growth. But that won't help people in need anyway. An empty shelf of baby formulas are not a sign of "economy is too hot". It is a sign of supply issue.

Worse yet, everyone over-ordered due to the supply chain issues to reduce future disruptions. We're going to end up in a recession with huge surplus of inventory.

Re: Y Combinator's Message to Founders

#135

Post by MaxHoppersGhost »

gen220 wrote: post #122
quadcore wrote: post #114

Layperson here, I didn't know we were in an economic crisis that bad, is it global? What are the reasons?

There's a trend of global economic inflation, caused by supply issues in energy (oil, gas in all forms) related to the war in Ukraine, supply issues more broadly related to a hangover from COVID's supply/demand shocks. Interest rates are rising, to appease inflation. As the interest rate goes up, allocators of capital have less appetite for risky allocations. This makes access to capital for VC firms becomes more com…

Energy prices being high are only a small part of it. Unfettered stimulus, even when we didn’t need it (eg rent payment moratoriums and stimmy checks while at full employment), is what’s driving it.

Re: Y Combinator's Message to Founders

#136

Post by tharne »

jimhi wrote: post #108
ditonal wrote: post #102

This “default alive” advice is repeatedly shared. One thing it obviously does not address is the human element of who you cut and whether they will be “default alive” unemployed in a recession. A huge amount of YC advice in general positions founders as protagonists and employees as NPCs then are shocked people pick Google over their startup offer. Funny thing is I’ve seen this exact advice destroy a company. In Marc…

> If you even think about doing 70% layoffs you clearly over hired and are not making good leadership decisions leading up to the layoff. 100% agree with this part. Going default alive was not the cause of whatever this company was dying. At best, it would slow or kill your growth, not your company. It sounds like it was mismanaged and prioritized something else over fixing their product. It is not bad for a company…

> More employees also does not mean faster product development, every developer knows this is often the complete opposite.

This is only true up to a point. Otherwise, every startup would be a one man show.

Re: Y Combinator's Message to Founders

#137

Post by karaterobot »

sirius87 wrote: post #67
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.

As someone who has witnessed such a deep layoff and was left in the 30%, I began job hunting and moved on soon after. When I eventually quit, senior management then explained how I was part of their grand comeback plans and offered a salary bump, and in my mind, all I could think of was how they were trying to balance a cost equation. People far more talented than me had landed pink slips, presumably because of how "…

I was in the same boat, and this is right on. The founders assumed everyone who got spared was going to be so happy they stayed with the ship until it went down. In reality, we experienced a combination of survivor's guilt for our unemployed friends, burnout at the increased workload, and anger at the founders for making choices that led to that situation. The remaining people on my team just used the reprieve to find new positions while being able to pay their bills, and we all quit, coincidentally on almost the same day.

The founders did not adequately think through the ramifications of their decisions, and it did seem (as another commenter in this thread succinctly put it) that they viewed everyone as very predictable NPCs in their narrative.

Re: Y Combinator's Message to Founders

#138

Post by tharne »

matwood wrote: post #78
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.

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…

Even a 20% cut tells you that management is incompetent. If you're a CEO and you can cut 20% of your staff without destroying the business, why on earth did you hire all those extra people and add all that expense in the first place?

Put another way, if you couldn't staff right in the good times, why would remaining employees trust that your "one big cut" will work now? Hint: they won't

Re: Y Combinator's Message to Founders

#140

Post by mupuff1234 »

paulgb wrote: post #27
sokoloff wrote: post #8

Earlier quoted context omitted.

> I think the era of stupid money chasing silly ideas are over It's quite possible that this era of that is over, but I'll eat my hat if another era of stupid money chasing silly ideas doesn't spring up within a decade.

“Yeah, but this time it's different!” - Someone in 5-10 years.

"We called it fin-tech cause it kept going under"
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