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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#211

Post by lotsofpulp »

shortstuffsushi wrote: post #148
ordu wrote: post #106

Earlier quoted context omitted.

> 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")

The baby formula shortage is specifically related to one company’s production being shut down, supposedly due to their negligence in maintaining quality in conjunction with policies specific to baby formula that prevent supplies from abroad to come in to fill the void.

It seems like a very poor example to refer to when talking about the broad economy’s needs and completely unrelated to a tech bubble.

Re: Y Combinator's Message to Founders

#212

Post by hn_throwaway_99 »

aresant wrote: post #18

Dagnabit. 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…

The thing that's interesting to me, is that this guy's company was imeem, https://en.m.wikipedia.org/wiki/Imeem, which was sold to MySpace for reportedly less than $1 million in 2009.

I know nothing about the company, but they seemed to have a decent go at it, founded in 2003. At the end of the day, though, I just can't imagine their business model succeeding, Great Recession or not.

Sure, perhaps they could have pivoted into basically something completely different, but at that point, if they were a 5-year old company, how much value would they really have been able to salvage? Given he talks about high burn rate and one of his bullet points is "Renegotiate all of your contracts with the music industry.", my guess is that their model was just fundamentally unprofitable given how much they were paying for licenses.

You'll hear lots of stories and theories about what companies could have done to save themselves, but recessions also serve a very important function of really sussing out who was selling dollars for 90 cents, and honestly that's what it sounded like his company was doing.

Re: Y Combinator's Message to Founders

#213

Post by fzeroracer »

rufus_foreman wrote: post #175
fzeroracer wrote: post #57

Earlier quoted context omitted.

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".

I've been through multiple of these cycles, thank you. I don't need someone to try and explain what I've experienced.

There's almost always better opportunities for an experienced dev because there are plenty of industries better suited to weathering out a recession.

Re: Y Combinator's Message to Founders

#215

Post by fastball »

mcguire wrote: post #100

" 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 'kita', which is a 'we' that includes the listener (or reader in this case) and 'kami' which excludes them. So in this case YC could've used 'kita' to mean "we (including you the reader) cannot predict...".

Re: Y Combinator's Message to Founders

#216

Post by echelon »

liuliu wrote: post #147
guerrilla wrote: post #127

Earlier quoted context omitted.

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…

> China's shutdown is a Black Swan.

How bad will this be?

Is China waiting to renegotiate tariffs?

Re: Y Combinator's Message to Founders

#217

Post by amluto »

liuliu wrote: post #170
wolverine876 wrote: post #169

Earlier quoted context omitted.

> "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). Also a bad idea for climate change, which is becoming very expensive.

Agreed. But unfortunately, nobody takes climate change (and related cost) seriously. You need a strong Federal government to enforce that cost structure (and hopefully globally, if strong enough), and the United States won't have a strong Federal government for decades to come.

We are potentially quite close to the point where small modular reactors could be commercially viable. I can easily imagine $10-20bn, carefully spent, accelerating the process.

Imagine, for example, the military placing an order for a few SMRs from each of the credible startups in the space. The reactors themselves would surely be overpriced and of dubious value, but it might substantially accelerate development and production.

In a situation where energy supplies are limited, the availability of extra (carbon-free!) electricity could help considerably.

Re: Y Combinator's Message to Founders

#218

Post by schroeding »

scarface74 wrote: post #206
abirch wrote: post #196

Earlier quoted context omitted.

Were you around for the dot coms? I know of CS PhDs that were applying to Circuit City.

Most companies don’t need “PhDs”. They are usually less in demand than BS degrees even in good times and get paid less. Yes, I was around, had been working for four years abs had no trouble finding jobs at none tech, profitable companies.

... doesn't everyone who has a PhD in CS also have at least a bachelor (and probably also a master) in CS? Why should they get paid less? :D

Re: Y Combinator's Message to Founders

#219

Post by NhanH »

schroeding wrote: post #218
scarface74 wrote: post #206

Earlier quoted context omitted.

Most companies don’t need “PhDs”. They are usually less in demand than BS degrees even in good times and get paid less. Yes, I was around, had been working for four years abs had no trouble finding jobs at none tech, profitable companies.

... doesn't everyone who has a PhD in CS also have at least a bachelor (and probably also a master) in CS? Why should they get paid less? :D

At the same age, you have 4 to 8 less years of professional experience than someone with only a BS. I'm assuming the GP isn't trying to compare salary for people that are 10 years different in age.

Re: Y Combinator's Message to Founders

#220

Post by astrange »

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.

That got us an instant recovery, which is much better than 2008 when we went too small and everyone under 40 lost their chance to own a house.
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