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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#181

Post by ska »

ilamont wrote: post #77
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")

> I know biotech investors have long timeline, but surely they are

Inherently long timelines has pluses and minuses, but can make you very sensitive to timing.

Raising a bunch of money to go through a long dev cycle just before a downturn/recession can be a pretty comfortable place to be. Coming out of that development into the face of one - brutal.

Re: Y Combinator's Message to Founders

#183

Post by victorology »

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…

When COVID first hit, we were forced to go default alive. We didn't let anyone go but implemented a hiring freeze for 6 months and we managed to grow revenues to become cash flow positive. Default alive doesn't necessarily mean having to let go of employees.

Re: Y Combinator's Message to Founders

#184

Post by 650REDHAIR »

mikeg8 wrote: post #146
MaxHoppersGhost wrote: post #135

Earlier quoted context omitted.

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.

The largest portion of "unfettered stimulus" went to private companies in PPP loans... but that's rarely brought up, which I always find interesting.

Every once in awhile I look up PPP loans of companies I know didn’t suffer any Covid-relates downturn (some even thrived) and am never surprised to see fat checks fully forgiven.

Must be the greatest theft in US history.

Re: Y Combinator's Message to Founders

#185

Post by heurist »

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?

Find a strong engineering team and learn.

Re: Y Combinator's Message to Founders

#186

Post by CallMeJim »

sbierwagen wrote: post #128
irthomasthomas wrote: post #123

Bleak. "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…

>- If you get a meeting, don't take that as a good sign, we still take a lot of meetings. They don't explicitly spell this out, but this is because being a VC is still a job. Even if they're not actually making any deals, management doesn't want to see everyone sitting at a desk scrolling twitter for 8 hours, so instead they do pointless meetings. Matt Levine had a fun Great Recession story which I cannot find right…

When the first deals started closing again, who would have won the deals?

The company that stayed home for 12 months? or the company that continued working for 12 months?

Imagine swimming hard against a strong current. You get nowhere (or maybe even go backwards slightly!), but when the current changes you make a lot of progress.

If you don't swim at all, you go backwards. When the current changes, you may get to where you were at the start.

Re: Y Combinator's Message to Founders

#187

Post by rkk3 »

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 , they wanted to capitalize on that, but they had laid off too many engineers who knew their infra and had enough outages and slow product development that they lost to their competitors and are now way underwater on their valuation.

It sounds like it was an unhealthy company and just didn't realize it till the tide went out. Seems doubtful that a quarter or two of fewer engineers slinging code was the root of its inability to attract & retain customers in a growing market.

Re: Y Combinator's Message to Founders

#188

Post by deltree7 »

UncleOxidant wrote: post #154

I still get a couple dozen emails/week from recruiters in addition to phone calls, linkedIn connection requests,etc. - it seems like it's still close to the peak number. However, I suspect that's about to stop abruptly.

employment is a lagging indicator.

Re: Y Combinator's Message to Founders

#189

Post by supersync »

mason55 wrote: post #118
VirusNewbie wrote: post #93

Earlier quoted context omitted.

I cannot imagine a way I would interpret a 70% layoff as anything other than the CEO/management team being incompetent. I mean, if you can actually execute with 70% less, why did they hire in the first place? The only way this might work is if a company was expanding into a completely new market and pivots away from that (ie, software startup gets a hardware division going, etc)

> I mean, if you can actually execute with 70% less, why did they hire in the first place? Hiring and onboarding takes awhile. VC-funded companies are intended to grow quickly. Those two things put together means you need to hire for where you want to be in a year or two and not where you are right now. The actual goals & constraints have changed. When you hired those people your goal was scaling up as quickly as pos…

A very good example of how easy it is to assume incompetence when you don’t understand the constraints.

Re: Y Combinator's Message to Founders

#190

Post by TameAntelope »

altdataseller wrote: post #5
SkipperCat wrote: post #3

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.

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.

And the idea needs to be profitable quickly. Don't try starting a business where your sales cycle take months.
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