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The Era of Startups Is Over

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Re: The Era of Startups Is Over

#41

Post by freitzkriesler2 »

hcks wrote: post #29
freitzkriesler2 wrote: post #20

Earlier quoted context omitted.

General thesis is cream always rises to the top even in high interest rate environments. Crappy, pointless startups will struggle and wither without the easy credit spigot. So yeah, it's legit and always has been.

Are these crappy, pointless startups (“a student raising 1 million on an idea”) in the room with us right now?

That would be the peak of the cycle. We're at the point now where it's, "clever engineer who has domain knowledge in some niche goes out on his/her own to make something novel that could be leveraged inside an established organization but isn't worthy of being a full fledged business".

Re: The Era of Startups Is Over

#42

Post by gumby »

ghaff wrote: post #23
ianbutler wrote: post #6

The era of startups isn't over. The era of low quality startups certainly is though, which is basically the point this article makes at the end among the general doomery. This in my opinion, is great news. Being a startup can be conceived of as one possible path taken as an early phase in the business cycle, hard to see that changing. What is changing is now you have to be more realistic about justifying to others th…

>You now need to be more realistic about what is a lifestyle business or something that can be bootstrapped into a solid medium sized business through slow methodical growth I sort of dislike the term "lifestyle business" as to me the term implies something you can do without working too hard at it--which is not necessarily the case. That said, I agree that putting a bunch of the background tech and supporting servic…

> I sort of dislike the term "lifestyle business" as to me the term implies something you can do without working too hard at it--which is not necessarily the case.

There is nothing wrong with the term. I first encountered it in the early 80s, but I think it dates back to the 60s when people started to question the big company profile of the then social contract.

Yiu say, “which is not necessarily the case”. Well in that case it’s not a lifestyle business, as that’s 60% of the definition.

The classic lifestyle business is a surf shop or dive shop: you like the activity, you don’t need a lot of money, you can shut the business for a day (or early) when the weather is good and just go surfing/diving. Some bike shops were like this too, before that business changed.

A consulting business can be like this too. I have friends who are EEs and programmers and they live the same way. One works Jan-march and then takes the rest of the year off unless something is particularly interesting. Another won’t take jobs during ski season. One key is that they love the work (I see comments on HN from people who don’t enjoy programming; for them programming could never be a lifestyle business).

Other businesses like being an electrician can be like this too but for whatever reason don’t get swept under the same rubric.

Re: The Era of Startups Is Over

#43

Post by gumby »

I read is kind of thing in the 90s. It’s just the frothy bullshit is in abeyance (another commenter used the term “tourists”). Solid companies are still starting.

Re: The Era of Startups Is Over

#44

Post by jll29 »

ghaff wrote: post #35
ianbutler wrote: post #27

Earlier quoted context omitted.

I'm really just using it because it's a known term, I've never been a giant fan of it either. It has a sort of implication of being lesser in certain circles, and I don't really think that's the case.

Totally agree. I've also personally experienced it in the context of we can't afford to pay what Big Tech or VC-funded companies pay but that doesn't mean you can work 3 days a week.

"Lifestyle business" as I know it is a term used by VCs (in a derogatory sense) for a business that sustains with small profit, enough to keep going or even permitting the founders to live well, but not exhibiting the 40x growth that VCs would like.

VCs would rather see a startup fail, for at least in such a situation they can write down their investment as a loss and move on; whereas in a lifestyle business their capital remainds bound. The founders may be perfectly happy in that situation, but never be able to produce an exit of the kind risk capital seeks.

There is nothing wrong with desiring to set up a lifestyle business from a founder's perspective. But it is not appropriate to use risk capital to fund it, because neither the risk is high enough nor is the return; so bootstrapping or bank loans are more appropriate to finance them (some individual business angels may be okay with smaller returns that professional VCs - as long as returns are at least higher than the 16% you can typically get from investing in an index).

Re: The Era of Startups Is Over

#45

Post by ghaff »

gumby wrote: post #42
ghaff wrote: post #23

Earlier quoted context omitted.

>You now need to be more realistic about what is a lifestyle business or something that can be bootstrapped into a solid medium sized business through slow methodical growth I sort of dislike the term "lifestyle business" as to me the term implies something you can do without working too hard at it--which is not necessarily the case. That said, I agree that putting a bunch of the background tech and supporting servic…

> I sort of dislike the term "lifestyle business" as to me the term implies something you can do without working too hard at it--which is not necessarily the case. There is nothing wrong with the term. I first encountered it in the early 80s, but I think it dates back to the 60s when people started to question the big company profile of the then social contract. Yiu say, “which is not necessarily the case”. Well in t…

You are absolutely describing lifestyle businesses. But it's also used to describe businesses without outside investment that are mostly about scraping by with a lot of hard work where people actually want/need to make decent comp. Which, as you suggest, is really a different beast.

Re: The Era of Startups Is Over

#46

Post by DonHopkins »

vemv wrote: post #17

New rule of thumb: if some article's background is #000000 (absolute black), expect the content to be similarly lacking in subtlety and accuracy.

So https://black.bikeshed.com/ is unsubtle and inaccurate bullshit, but https://white.bikeshed.com/ is subtle and accurate analysis?

Re: The Era of Startups Is Over

#48

Post by GravityLab »

> the high interest rates are here to stay, and it will be years before investing in startups becomes profitable again and startups will have money to spare

I admit that I don’t want this to be true. I want my own startup. But…how can you possibly know this? Nobody knows how long the interest rates will stay high and nobody knows what new companies will emerge in the future and how profitable their economic model will be. For all we know, investing in startups will be even more profitable than it was in the past. The article was light on details…

Re: The Era of Startups Is Over

#49

Post by CalChris »

ianbutler wrote: post #6

The era of startups isn't over. The era of low quality startups certainly is though, which is basically the point this article makes at the end among the general doomery. This in my opinion, is great news. Being a startup can be conceived of as one possible path taken as an early phase in the business cycle, hard to see that changing. What is changing is now you have to be more realistic about justifying to others th…

Why is the era of low quality startups over? Have VC’s suddenly become better judges of talent, market and technology? Have founders suddenly become more serious? Last year A16Z funded Adam Neumann for $350M for a blockchain carbon credit platform.

If things change it won’t be in a Wicked Witch of the West meltdown after which the flying monkeys of Silicon Valley burst out singing Ding Dong the Witch Is Dead.

Things haven’t changed.

Re: The Era of Startups Is Over

#50

Post by pembrook »

pier25 wrote: post #25
vonnik wrote: post #11

Shallow ahistorical analysis. Apple and Microsoft were born in the oil shocks of the late 70s and survived Volcker’s high rates through the early 80s. Google barely took off before the tech crash wiped out the Valley in 2001. Many companies we use today were young and dicey affairs during the 2008-2009 financial crash. Just because the bloom is off the rose, and both VCs and financial tourists like Tiger are overfund…

Maybe but Apple, Google, and Microsoft are improbable anomalies.

Everything that becomes successful is an improbable anomaly. Any company in the S&P500 is an extreme outlier. That’s the whole point of the venture model — you know 95% of startups won’t succeed, but 5% might return multiples of your investment and 1% might return multiples of your entire fund. But often not. Hence why the average VC fund can’t beat the S&P. This is how it has always been.
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