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Startups are pummeled in the ‘great unwinding’

nytimes.com

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Re: Startups are pummeled in the ‘great unwinding’

#271

Post by SpicyLemonZest »

xiaolingxiao wrote: post #112
BillinghamJ wrote: post #75

Earlier quoted context omitted.

Our board and investors have made it clear they think it's highly unlikely any meaningful funding will be able to progress until early 2022 at this point. Recently-funded or reasonably conservative startups should be able to do okay with that, but ones without a lot of runway are going to be in a really difficult position.

Did your investors give some justification for the 2 year time span? For example, did they account for the possibility that many business won't open until September, or a second wave of infection that will hit late fall, followed by say, recession in full swing all of 2021.

It's known that some businesses won't open until September - that's the current target for sports stadiums, for example.

Even after September, there will be a lot of unknowns with massive economic implications. Will cruising recover in 1 year, or in 10 years? How much more friction will there be on international travel, and for how long? What's the risk of a coronavirus resurgence, both globally and locally? How different will the new crop of small businesses be from the ones that got eliminated in the shutdown? If you're going to give a startup huge chunks of cash, you need a high degree of confidence in the mid-term future, and in most areas that won't be available for a while.

Re: Startups are pummeled in the ‘great unwinding’

#272

Post by fzeroracer »

rexreed wrote: post #210
tjr225 wrote: post #185

Earlier quoted context omitted.

Schadenfreude is an absolute awful response to this. A lot of us are just trying to put food on the table and pay off student loans.

You know the numbers. 90%+ of startups fail. In an economic downturn, it's more like 99%+. If you're trying to put food on your table, startups are probably the wrong place to turn.

Can you explain how your argument doesn't apply to local businesses as well?

And I would hope you would see the problem with telling people not to work at local businesses. Ultimately the only companies built to weather something like this is the larger multinational corporations and in times like these, it kills both startups and local businesses alike.

Re: Startups are pummeled in the ‘great unwinding’

#273

Post by EthanHeilman »

shoo wrote: post #213
filmgirlcw wrote: post #138

Earlier quoted context omitted.

This strikes me as wishful thinking and also incredibly myopic about the realities facing many startups. A startup that recently closed a big round (and the need to close the round wasn’t necessitated by massive debt or existing expenses — so think almost all of the money can be used as future runway) might be in a better short-term position than a business that is relying on net-30 or net-90 payments from clients th…

> Plus, they get the additional disadvantage of trying to figure out an actual business model during a recession. this has a bit of a silver lining: it'll help filter out bullshit business models that appear to work in the times of plenty.

It will also filter out sound business models that actually do work in times of plenty, but don't under the conditions of a pandemic.

Re: Startups are pummeled in the ‘great unwinding’

#274

Post by JimTheMan »

Spooky23 wrote: post #255
scarface74 wrote: post #84

Earlier quoted context omitted.

You weren’t around in 2000 or 2008 were you? Your startup is only in “better shape” as long as VCs are willing to keep funding you. VCs are only willing to keep funding you if they have confidence that you will have a profitable exit.

“Better” in that you still exist. A friend’s medical practice will implode April 30... their business is down 90% and they won’t be able to pay rent or the employees. They are only staying open in hope for some sort of aid or debt jubilee. The partners will lose pretty much everything. People with cash aren’t going to keep plowing money into startups, they are going to buy depressed assets. Every leveraged real estat…

Out of curiosity, would you be able to elaborate on the type of practice?

I wouldn't imagine they are a GP? This crisis would increase their traffic. Cosmetic surgery?

Re: Startups are pummeled in the ‘great unwinding’

#275

Post by nakedshorts »

rexreed wrote: post #79

I'm sorry for some of my schadenfreude here, but really, so many of these startups are overfunded with way too many employees to begin with. They've often paid top dollar for expensive technical talent in locations with very high cost of living. I can't wait to see a pull back to solid fundamentals. I don't see why a daily vacation rental company honestly needs 240 highly paid employees. One company cited in the arti…

I agree. At the end of the day, the startup ecosystem is much healthier when the market is sane. On the one end you have newbie angel investors and VCs throwing money at pre-revenue startups that will go nowhere. On the other end of the spectrum you have Softbank pumping in billions and ruining what could've been great businesses. Honestly, WeWork had (and still has) such a great value proposition. It could've been a very stably profitable company with a valuation in the hundreds of millions, but here we are.

Re: Startups are pummeled in the ‘great unwinding’

#276

Post by SpicyLemonZest »

invertY wrote: post #223
qppo wrote: post #54

Startups are in way better shape than traditional small businesses. By our very nature, we need months of runway just to keep running. We're designed to weather this kind of storm because "zero revenue" is the default state. Hearing about Bird cutting 30% of their workforce is awful. But it's nothing compared to the thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased o…

You cannot disrupt a market if the market itself ceases to exist. This is basic stuff. A whole load of VC stuff relies upon the larger market to predate, has stupidly vapid IPO targets (which the actual big boys, Central Banks, are now culling off, since their actual liquidity stuff like Reits etc are crashing) and basically 100% worthless business models. "Juicer" or whatever it was? Go look up what Glencore is doin…

> No-one in this thread seems to note this: try finding some ex-Soviet citizens who lived through 89-96 and ask them some serious questions.

If there's one thing the dissolution of the Soviet Union proved, it's that a complete economic and political collapse does not prevent people from disrupting markets. Many Western companies got their first foothold in the region during that time.

Re: Startups are pummeled in the ‘great unwinding’

#277

Post by bbarn »

irrational wrote: post #184

I work for a Fortune 150 company as a programmer. I've had lots of people ask me why I don't move to California and work for a startup. The main reason is because I'm risk adverse and I really don't like the Bay Area (I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return). Now I have a new reason to be grateful I work for a Fortune 150 company. I've been able to w…

It’s not the format of the business or the size or the location. It’s the business model itself that defines the resiliency. Bottom line.

Re: Startups are pummeled in the ‘great unwinding’

#278

Post by axiom92 »

sershe wrote: post #267
axiom92 wrote: post #209

Earlier quoted context omitted.

>I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return I understand that this is not center to the point you're making but I am curious! What makes you hate the Bay area? I lived there for ~4 years and recently moved to Pittsburgh. I can't wait to move back. In fact, the mere mention of these places evokes a strong sense of homesickness in me for some reason.

Never been to Pittsburgh, but what do you miss, other than the weather? I lived there for 3 years (Mountain View, SoMa, Inner Richmond), and outside of work it's basically a giant cluster of generic burbs and gridlock, with a filthy medium-quality city in the middle, priced 3-4 times the amount of an average burby gridlock (e.g. San Antonio) or a medium-quality city (e.g. Denver then). There's awesome nature but it's…

Interestingly, in addition to the weather, I do miss nature. I think nature is always next door depending on where you are in the Bay area. For example, you can be in Foster City at 5 pm, get on 92W and reach crystal springs water reservoir on Canãda road by 5:10 (you already feel like you're far away from the city); 15 more minutes and you could be on Skyline (this was also one of my favorite "amaze the tourist" route whenever I was playing the tour guide for people visiting). There's plenty of nature around Pittsburgh, but I none of the hikes that are close to the city give you the feeling of being really deep in the woods. I also miss the Redwoods, the coast, and the seafood.

I've collected some pictures from my hikes in the Bay area here: https://madaan.github.io/hiking

Re: Startups are pummeled in the ‘great unwinding’

#279

Post by meritt »

derekdahmer wrote: post #266
meritt wrote: post #225

Earlier quoted context omitted.

> big leagues and land that $300k FAANG job that allows you to buy a home and raise a family in the bay is infinitesimal. $300k/yr is nowhere near big leagues to buy a home and raise a family in the Bay area, just fyi. It's more like a comfortable single income where you aren't worried about paying rent or going out to dinner. You try and raise a family on a mere $300k in SF/SV, you're one layoff or recession away fr…

You can absolutely raise a family in the SFBA on less than $300k of household income. (Source: me). You think everyone with kids in this region of 3.6m people is pulling down that kind of money? There’s plenty of 3BR houses in the east bay for less than a million, which puts your mortgage+property taxes at around $60k, which is totally doable at even half the salary you’re talking about.

> which is totally doable at even half the salary you’re talking about.

Half that salary? That's $150k, or after taxes, about ~$8k/mo. or $3k/mo for everything else after your alloted $5k/mo. Yes, people can survive on a lot less, but why in the world would you want to live in the Bay area just to eek by on such a paltry net outcome without nearly enough to set aside for the rainy day that's coming soon.

And more importantly, that I think the vast majority of SF/SV kids seem to forget is, what happens when your cushy job disappears? How long can you survive dropping $5k/mo for a house that you could be paying $700/mo in a small town.

Re: Startups are pummeled in the ‘great unwinding’

#280

Post by Andrex »

shoo wrote: post #213
filmgirlcw wrote: post #138

Earlier quoted context omitted.

This strikes me as wishful thinking and also incredibly myopic about the realities facing many startups. A startup that recently closed a big round (and the need to close the round wasn’t necessitated by massive debt or existing expenses — so think almost all of the money can be used as future runway) might be in a better short-term position than a business that is relying on net-30 or net-90 payments from clients th…

> Plus, they get the additional disadvantage of trying to figure out an actual business model during a recession. this has a bit of a silver lining: it'll help filter out bullshit business models that appear to work in the times of plenty.

If a business model works based on current conditions, how is that "bullshit"?
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