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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#141

Post by tru3_power »

kaycebasques wrote: post #133
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…

Are they just trying to reduce the amount of capital the working class has? Are there no other ways to reduce inflation right now than to curb demand? Wouldn’t a concerted effort to resolve supply issues have a similar effect?

Re: Y Combinator's Message to Founders

#143

Post by danrocks »

mcguire wrote: post #105
foobarian wrote: post #71

Earlier quoted context omitted.

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?

Could anyone give, say, 3 examples of that happening?

I don't know what "that" refers to, but I was at Nokia for a long time while they did 5,10,15% layoffs and it did destroy the morale, people started running for the hills as soon as they could.

AirBNB did a 25% one-off layoff and is now doing fine.

I don't know of any 70% layoffs but I tend to agree that cutting once and hard is the best approach, given what I experienced with paper-cut layoffs.

Re: Y Combinator's Message to Founders

#144

Post by BryanBeshore »

hef19898 wrote: post #130
StillBored wrote: post #109

Earlier quoted context omitted.

I was at a startup during the .com bust. I survived 3 rounds of layoffs over the space of ~18 months. I like everyone remaining at the company, could see the writing on the wall and I was spamming resume's to anyone who looked like they were hiring. Zero responses, pretty much no one was hiring except when it was an emergency. The big/profitable companies were bolting down the hatches, and everyone else was cutting t…

Which raises the question of when to jump ship, doesn't it? If your current employer is looking like lay offs and bad times are a head, and the market is really good, do you stay and wait or do you start looking now ? You defenitley shouldn't wait to be last one to tirn of the lights, because at the very least your gonna compete with your former co-workers.

If you plan to move in the next 6-12 months, you are probably better off moving now.

Re: Y Combinator's Message to Founders

#145

Post by pjmorris »

hef19898 wrote: post #130
StillBored wrote: post #109

Earlier quoted context omitted.

I was at a startup during the .com bust. I survived 3 rounds of layoffs over the space of ~18 months. I like everyone remaining at the company, could see the writing on the wall and I was spamming resume's to anyone who looked like they were hiring. Zero responses, pretty much no one was hiring except when it was an emergency. The big/profitable companies were bolting down the hatches, and everyone else was cutting t…

Which raises the question of when to jump ship, doesn't it? If your current employer is looking like lay offs and bad times are a head, and the market is really good, do you stay and wait or do you start looking now ? You defenitley shouldn't wait to be last one to tirn of the lights, because at the very least your gonna compete with your former co-workers.

"If you must panic, panic early. Be scared when you can, not when you have to. " @nntaleb

I was an independent consultant from a 2001 dot-bomb layoff to the beginning of 2008. I saw hard times coming and took a job with the most bomb-proof client I had, and it worked out really well.

Re: Y Combinator's Message to Founders

#146

Post by mikeg8 »

MaxHoppersGhost wrote: post #135
gen220 wrote: post #122

Earlier quoted context omitted.

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.

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

Re: Y Combinator's Message to Founders

#147

Post by liuliu »

guerrilla wrote: post #127
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.

This comment seems crazy given that we just had COVID-19, a war causing a massive energy crisis and multiple systemic commodities problems and then climate change... Also you're assuming interest rate hikes have no effect? I have no idea how you could think what's coming isn't entirely material... How can you just ignore all that?

We had COVID-19 for 2 years. The U.S. is surging back with unique challenge of spending transition from goods back to services. It is a challenge.

"A war causing a massive energy crisis" seems to be a good time to increase energy production with more investment in things like fracking, which from what I heard, people are reluctant to invest due to the economy and rates concerns (they borrow from banks too).

Interest rate hike certainly has impact, but that is the Fed to decide. Remember, Trump asked Fed to not raise rate before and JPow kowtowed to that just fine.

China's shutdown is a Black Swan. The market apparently haven't digested that yet (APPL "only" down 20% YTD).

Re: Y Combinator's Message to Founders

#148

Post by shortstuffsushi »

ordu wrote: post #106
liuliu wrote: post #96

Earlier quoted context omitted.

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 Can I ask you why you've chosen this particular example? It is not about I agree with you, or I'm going to contradict in a some way, it is completely unrelated question. A complete off-topic.

I believe the example was likely chosen due to the recent controversial bill in congress [0]. However, I think the choice of baby formula shows that some "core" needs in the economy are missing as well, and that the tech bubble struggling.

0: https://www.bloomberg.com/news/articles/2022-05-19/house-pas... (Picked at random from a search for "baby formula bill")

Re: Y Combinator's Message to Founders

#149

Post by matwood »

tharne wrote: post #138
matwood wrote: post #78

Earlier quoted context omitted.

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

Cuts are done because the business has changed. Some part of the business was destroyed by external factors, and now the company needs to adjust to the new reality. It could be that VC money dries up or that customers stop spending. It doesn't mean that 20% wasn't required in the past, only that they are not required now.

This is also why a company should cut a little more than needed, so they have some cushion for things to get worse before getting better again.

Re: Y Combinator's Message to Founders

#150

Post by toomuchtodo »

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.

That growth would’ve just gone predominately to the wealthy/shareholder class anyway. Better to destroy asset values and growth to destroy demand, which reduces inflation.

Baby formula is a poor example; that was Abbott having regulatory capture and a de facto monopoly [1].

[1] https://mattstoller.substack.com/p/big-bottle-the-baby-formu...

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