" No one cannot predict how bad the economy will get... " ??? I get that it's twitter, but grammar is still a thing.
I'm betting the sentence started as "We cannot predict..." and someone decided that phrasing sounds a bit too much like YC specifically is bad at predictions (instead of the intended collective 'we'), so they switched it to "No one", forgetting to swap out 'cannot' for 'can' in the process. Interestingly, I've been learning Indonesian and they actually have a solution for this ambiguity: two words for 'we'. There is…
Y Combinator's Message to Founders
241–250 of 264 posts
Re: Y Combinator's Message to Founders
#242Earlier quoted context omitted.
It will be harder for startups than other companies. The 'storm' will be focused heavily on capital and so all that liquidity will tighten up. Big waves up, big waves down. Healthcare won't miss a beat.
Would you add more detail as to your comment on healthcare? Are you saying that this downturn will not affect healthcare investments? Curious as I am a digital health founder looking to raise our pre-seed soon
Healthcare is an economy that tends to be much more recession proof, for a variety of reasons.
First is obviously less elastic demand - if your arm is broken, well, you need to fix it.
Second, is that it's really institutional and operational. Healthcare is not a highly leveraged industry, like Crypto - they're not subject so much to the whims of the market. Healthcare is not quite as 'capitalist' as other industries either, obviously in some ways it is, but there's an underlying kind of goodwill.
Third, is that 1/2 the industry is government spending, which doesn't get hit bad like markets, so there's a smoothing effect.
Fourth, is that investment cycles are much longer, to the point where they almost rise above most of the short term 5-10 year macro cycles.
Beyond that, there are indications that people 'get sick more' in downturns and there may be an increase in demand in some ways.
Healthcare tends to be a bit recession proof for those reasons. You may want to Google up on that a bit.
Re: Y Combinator's Message to Founders
#243Earlier quoted context omitted.
I think the technical term is "policy levers" and secondly, your dialectic there is over-simplified, reduced to talking points. Real money supply goes somewhere through some mechanisms with some costs .. not a fan of the Fed and, this is not sufficiently detailed to be representative IMHO
Its not an inaccurate summary of the fed's actions. Bringing down employment whenever wages rise certainly stops inflation, but it does so while preserving capitol holders margins. Individuals only have bargaining power when the labor market is tight. The fed is effectively cutting off the labor side of the business cycle.
yeah - overly simplistic conclusion.. for example, you do not recognize classes of business activity at all, yet some classes of employer are affected differently or even in the opposite direction; misleading.
Re: Y Combinator's Message to Founders
#244Earlier quoted context omitted.
In the fundraising environment of the past few years, well-connected companies could raise a series A before even having a commercial product. ( https://techcrunch.com/2019/12/17/anyscale-ray-project-distr... is the example I remember most clearly)
This is actually traditional venture for real technology. The only companies with customer before the series A are variations of websites and apps, a narrow slice of the tech sector.
Re: Y Combinator's Message to Founders
#245Earlier quoted context omitted.
Getting laid off is not a good feeling, but if I can rank order who I should reserve my sympathy, especially during an economic downturn, a laid off tech worker in a startup is the one I’d sympathize with the last. It has never been hard even during downturns to find work in tech. At least comparatively.
Were you around for the dot coms? I know of CS PhDs that were applying to Circuit City.
Re: Y Combinator's Message to Founders
#246Bleak. "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.
Re: Y Combinator's Message to Founders
#247Earlier quoted context omitted.
Its not an inaccurate summary of the fed's actions. Bringing down employment whenever wages rise certainly stops inflation, but it does so while preserving capitol holders margins. Individuals only have bargaining power when the labor market is tight. The fed is effectively cutting off the labor side of the business cycle.
> is effectively cutting off the labor side of the business cycle yeah - overly simplistic conclusion.. for example, you do not recognize classes of business activity at all, yet some classes of employer are affected differently or even in the opposite direction; misleading.
Dominant first order and second order effects often have simple sounding narratives. Inflation, interest rates, and growth are complex relationships. The Fed's actions on the market are however simple instruments.
The above comment points out that since the Fed started using modern monetary theory to regulate the economy. Wages and Productivity have decoupled, while one may not cause the other - it's reasonable to hypothesize a relationship based on bargaining power.
Re: Y Combinator's Message to Founders
#248Earlier quoted context omitted.
You joke, but a 5% ROI isn't bad YoY in the long run. Especially if it's low risk.
With 8% inflation it is essentially better to stuff your bed with some commodity than go for 5% ROI.
Re: Y Combinator's Message to Founders
#249Earlier quoted context omitted.
> 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 underw…
The hiring market for software engineers went absolutely bonkers during COVID. Salaries shot up. Nearly everyone was hiring. This "70%" advice was getting thrown around by every two-bit "thought leader" back at the start of COVID. I could totally see how following that advice would result in your competitors scooping up all of your former employees. And then you would be stuck in long and expensive rebuilding process…
Re: Y Combinator's Message to Founders
#250Layperson here, I didn't know we were in an economic crisis that bad, is it global? What are the reasons?