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Weaveworks is shutting down

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Re: Weaveworks is shutting down

#191

Post by asah »

girvo wrote: post #128
ssharp wrote: post #119

Earlier quoted context omitted.

"Shoot for the moon" seems like a reasonable strategy when you're making the investment. However, certainly at some point while they were burning through that $36 million it became evident that "moon" was no longer a viable destination. Why wouldn't everyone be aligned with making the adjustments needed to get back to default alive? Something is clearly better than nothing. Now if it got to the stage where the CEO no…

> Something is clearly better than nothing. To you and I, this is patently obvious. This is not true however for VCs. In a lot of them, they'd prefer you fail entirely rather than limp along making 1x, 1.5x their investment. Zeroing out is preferable sometimes, weirdly.

Clean tax writeoff, zero hassle, no talent locked-up.

Re: Weaveworks is shutting down

#192

Post by scott_w »

KaiserPro wrote: post #103
propter_hoc wrote: post #83

I know this isn't the craziest startup shutdown story, but wow. At $10MM of revenue they can afford to keep a staff of 50 at a fully loaded cost per employee of $200,000. Yet, according to Linkedin they peaked at nearly 200 employees. On top of this, they appear to have raised $36 million three years ago - https://www.weave.works/press/releases/weaveworks-raises-36-... In other words they somehow were running at a lo…

> According to the CEO's linkedin post, they were basically trying to keep up appearances of being a 200 person company until some greater fool bought them out, which appears to have failed. Because that is what startups do. 80% of startups that are "successful" follow this pattern You shoot for the moon, if you don't take massive risks, then you won't be rewarded. It sounded like they were about to be bought out or…

> It sounded like they were about to be bought out or aquihired, but it fell apart at the last moment (It's not uncommon)

Perhaps the buyer didn’t want to be on the hook for the massive losses they were racking up?

Re: Weaveworks is shutting down

#193

Post by KingOfCoders »

propter_hoc wrote: post #83

I know this isn't the craziest startup shutdown story, but wow. At $10MM of revenue they can afford to keep a staff of 50 at a fully loaded cost per employee of $200,000. Yet, according to Linkedin they peaked at nearly 200 employees. On top of this, they appear to have raised $36 million three years ago - https://www.weave.works/press/releases/weaveworks-raises-36-... In other words they somehow were running at a lo…

Also with AI, the "plan-b" of VCs, which is selling the company as a people asset with a people x M = $$$ multiplier breaks down more and more.

Re: Weaveworks is shutting down

#194

Post by m00x »

KaiserPro wrote: post #103
propter_hoc wrote: post #83

I know this isn't the craziest startup shutdown story, but wow. At $10MM of revenue they can afford to keep a staff of 50 at a fully loaded cost per employee of $200,000. Yet, according to Linkedin they peaked at nearly 200 employees. On top of this, they appear to have raised $36 million three years ago - https://www.weave.works/press/releases/weaveworks-raises-36-... In other words they somehow were running at a lo…

> According to the CEO's linkedin post, they were basically trying to keep up appearances of being a 200 person company until some greater fool bought them out, which appears to have failed. Because that is what startups do. 80% of startups that are "successful" follow this pattern You shoot for the moon, if you don't take massive risks, then you won't be rewarded. It sounded like they were about to be bought out or…

They could have done layoffs like almost every startup and big tech company did in the past few years. They could have gone there with 50 good employees. Gumroad almost went bankrupt then came back from the ashes.

Re: Weaveworks is shutting down

#195

Post by preisschild »

stackskipton wrote: post #48
edoceo wrote: post #2

https://www.weave.works/ "Operate and Manage Kubernetes easily" / "GitOps Automation for Kubernetes Stacks"

Probably most popular thing they built was FluxCD if you are confused where you have heard their name before. Their company provided a ton of extra tooling and consulting around the product. Hopefully as FluxCD user, this doesn't impact the development of Flux.

I hope so too. Flux is the best Kubernetes Gitops toolkit IMO.

Re: Weaveworks is shutting down

#196

Post by wbl »

senderista wrote: post #180
PeterisP wrote: post #177

Earlier quoted context omitted.

When it's still enough runway to trim it down, there's often still some hope of greater success - and a VC investor might believe that it's more valuable to have a 1% chance of it becoming a unicorn or a few percent chance of arranging some last-minute buyout, rather than pick up the 100% certain but low price it has as a non-growth business based on its revenue.

Yes, due to their large bankroll and diversified position, VCs can afford to be risk-neutral and only care about expected returns. Founders and employees obviously cannot be risk-neutral, ergo startups are a great bet for a VC and a terrible bet for anyone else.

The amount of VC-founder side deals that are possible is pretty shocking. Stuff like letting them cash out early.

Re: Weaveworks is shutting down

#197

Post by vidarh »

lesam wrote: post #158
girvo wrote: post #128

Earlier quoted context omitted.

> Something is clearly better than nothing. To you and I, this is patently obvious. This is not true however for VCs. In a lot of them, they'd prefer you fail entirely rather than limp along making 1x, 1.5x their investment. Zeroing out is preferable sometimes, weirdly.

Do you have any sense why this is true? I get preferring (10x or 0x) to (1.5x). I don’t get preferring a near-certainty of 0x to some recovery of their capital with a pivot to selling a smaller-but-sustainable business. Is it something like they’re measured by LP’s (or someone?) on only non-zeroed investments?

I've worked at a VC, and consider that it is a low margin business until/unless you returns significantly above your targets. You get a management fee, which is a low yearly percentage of the invested amounts, and then you get carry - a proportion of the returns above a set target for the fund as a whole.

But carry doesn't kick in until you start exiting - for a typical VC fund it takes many years. (I left a year ago, and we were 6 years in when I left; I retained a portion of my carry rights, but still won't know for a couple more years how much I get if I get anything at all)

And surviving on the management fees after the initial phace of placing the investment requires being lean and not putting effort into your low performers.

Meanwhile while a 1.5x is better than nothing, a company that sells at 1.5x is likely to be near 0x for you, because odds are high that to get there there'll be one or more funding events along the way to help that happen at/triggering terms that will dilute you massively. And odds of failure remains high.

And you need the 10x or 100x's, but the low ones means little - most successful funds pay back the entire initial investment from just a couple of investments, and make their return on a couple more. Quite often a single "fund returner" carries the entire fund.

A small recovery here and there at makes almost no difference.

So even a 1% chance of salvaging a "moonshot" is better - most cases where you get back less than 1x is going to be a rounding error of your funds overall performance.

A VC is not where to get capital of you want to pull back and pivot when things get tough.

(And yes, you should keep that in mind if taking a job at a VC backed company as well, and it's part of why stock/options should be on top of your normal salary, not compensating for a low one, unless you get founder-level stock amounts, and even then, think it through; I once almost torpedoed a VC deal as a founder because I demanded a commitment to raising salary levels after the next raise, and I don't regret it for a moment because life would have sucked without it)

Re: Weaveworks is shutting down

#198

Post by nokun7 »

KaiserPro wrote: post #103
propter_hoc wrote: post #83

I know this isn't the craziest startup shutdown story, but wow. At $10MM of revenue they can afford to keep a staff of 50 at a fully loaded cost per employee of $200,000. Yet, according to Linkedin they peaked at nearly 200 employees. On top of this, they appear to have raised $36 million three years ago - https://www.weave.works/press/releases/weaveworks-raises-36-... In other words they somehow were running at a lo…

> According to the CEO's linkedin post, they were basically trying to keep up appearances of being a 200 person company until some greater fool bought them out, which appears to have failed. Because that is what startups do. 80% of startups that are "successful" follow this pattern You shoot for the moon, if you don't take massive risks, then you won't be rewarded. It sounded like they were about to be bought out or…

> It sounded like they were about to be bought out or aquihired, but it fell apart at the last moment (It's not uncommon)

Do you know who was about to acquire them?

Re: Weaveworks is shutting down

#199

Post by pdntspa »

KaiserPro wrote: post #103
propter_hoc wrote: post #83

I know this isn't the craziest startup shutdown story, but wow. At $10MM of revenue they can afford to keep a staff of 50 at a fully loaded cost per employee of $200,000. Yet, according to Linkedin they peaked at nearly 200 employees. On top of this, they appear to have raised $36 million three years ago - https://www.weave.works/press/releases/weaveworks-raises-36-... In other words they somehow were running at a lo…

> According to the CEO's linkedin post, they were basically trying to keep up appearances of being a 200 person company until some greater fool bought them out, which appears to have failed. Because that is what startups do. 80% of startups that are "successful" follow this pattern You shoot for the moon, if you don't take massive risks, then you won't be rewarded. It sounded like they were about to be bought out or…

> they required 200 people to get there.

We really need to be casting more doubt on these assessments.

Re: Weaveworks is shutting down

#200

Post by pdntspa »

girvo wrote: post #128
ssharp wrote: post #119

Earlier quoted context omitted.

"Shoot for the moon" seems like a reasonable strategy when you're making the investment. However, certainly at some point while they were burning through that $36 million it became evident that "moon" was no longer a viable destination. Why wouldn't everyone be aligned with making the adjustments needed to get back to default alive? Something is clearly better than nothing. Now if it got to the stage where the CEO no…

> Something is clearly better than nothing. To you and I, this is patently obvious. This is not true however for VCs. In a lot of them, they'd prefer you fail entirely rather than limp along making 1x, 1.5x their investment. Zeroing out is preferable sometimes, weirdly.

Yet another aspect of how this model is super hostile to actual customers or users.
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