Companies that have a good ideas and provide needed product/services will survive. I think the era of stupid money chasing silly ideas are over. Same thing happened at the end of the dot-com era.
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Y Combinator's Message to Founders
171–180 of 264 posts
Re: Y Combinator's Message to Founders
#172Layperson 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…
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Re: Y Combinator's Message to Founders
#173Bleak. "No one cannot predict how bad the economy will get, but things don't look good." Clif notes: - Plan for the worst ... cut costs within 30 days... get to Default Alive[0] - Get money if you need it, and if you can - With or without money you must survive 24 months - VCs are people too, and subject to the same downturn. Adjust your fund raising expectations in the same direction. Expect lower valuations, lower…
The stock market is not the economy. If you are working for a money losing VC backed company and the VCs aren’t willing to keep throwing money at you, that’s because the VCs know startup funding is a Ponzi Scheme and they will be left holding the bag instead of being able to pawn their investment off onto the retail market.
The stock market is not the economy but GDP in the US printed negative the other week. If it does the same next quarter, we're in a recession.
Re: Y Combinator's Message to Founders
#174I was at Palintir, and one of the things I learned from visiting is that they thrive in times of war, pandemics and recessions. Why aren't companies designed to be antifragile like this
...?
Companies, by definition, can only be thriving when people are spending money with them. By definition, a bad economy means people aren't spending much money.
Specific sectors may do well during recessions. I knew of a business that used to publish bankruptcy notices for attorneys. A recession meant doubling their sales. But it's necessarily impossible that every business can be "anti-fragile".
Re: Y Combinator's Message to Founders
#175Dagnabit. 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.
Have you not been through one of these cycles before? When things get bad, there is nowhere to jump ship to, for quite some time.
Hopefully we're not heading there, but as the message says, "things don't look good".
Re: Y Combinator's Message to Founders
#176Like 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.
>> An empty shelf of baby formulas are not a sign of "economy is too hot"
The highest rate of inflation since 1981 is a sign of "economy is too hot".
The Fed has two jobs: keep both unemployment and inflation low. Unemployment is near 40 year lows, inflation is near 40 year highs.
You know what is going to happen, and the Fed has said what is going to happen, if you understand Fedspeak. They're going to raise rates, they're going to keep raising rates, they're not going to stop just because inflation slows a little, and there's a good possibility it will cause a recession.
Re: Y Combinator's Message to Founders
#177Earlier quoted context omitted.
Lots of startups provide needed products and services. I don't think that's enough. They need to provide needed products/services in a way that can be sold/marketed profitably, and scaled profitably.
Yes. I always need 1 dollar for 95 cents.
Losing money on every transaction is no problem, they can always make it up on volume.
Re: Y Combinator's Message to Founders
#178I 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?
The corporate job might be less risky than the startup, but neither one is a guarantee.
Either way, you need to ask yourself if 6 months out you get laid off and there is no one hiring, what's your plan?
Re: Y Combinator's Message to Founders
#179Earlier quoted context omitted.
> 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.
That's true, but the intrinsic bias of...well, pretty much everyone...is to overhire, so that's what you need to fight. I don't think I've met anyone who was suffering from under-hiring, unless it was a situation forced upon them by lack of resources. People feel important and "arrived" when they lead a big organization, and also, it can feel like you're doing the right thing, because it alleviates some stress. Even…
> I don't think I've met anyone who was suffering from under-hiring,
I've definitely run into this a handful of times, mostly due to runway concerns and "keeping options open".
Re: Y Combinator's Message to Founders
#180Earlier quoted context omitted.
That's just bad software engineering. In general, I would expect software to scale well as far as traffic is concerned esp in today's environment where scaling infra is not really a big deal. Coping with feature requests on a shoestring staff is a different story.
Aren't you kinda just saying "no matter how many engineers you currently have maintaining your infrastructure, your infrastructure should be just fine with fewer engineers"?
reducto-ad-absurdium: any system can be maintained by a part-timer who doesn't understand it :)