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The Era of Startups Is Over

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Re: The Era of Startups Is Over

#51

Post by 1attice »

I actually don't buy this.

Lurking in the background is analogy to e.g. car manufacture. There was an era of fomentation, followed by an era of consolidation. Eventually, we wound up with a handful of automakers.

But the market for software is fundamentally different. For one thing, there is not the same reliance on mass labour, nor is there significant material cost; nor is there the need to maintain a sales network.

Sure, there are always network effects which replicate some of the momentum/inertia of a physical-goods market, and yes, ZIRP was one heck of an accelerant, and it's not coming back soon.

But software has not finished eating the world. It might not even be halfway through, as AI has opened up new regions of the (if you will) 'carcass' for software to ingest (much as fire and the cooking of food opened up new nutritional pathways for humans.) And even when software is finished eating the world, opportunities for disruption will remain plentiful, as incumbents will have a hard time maintaining moats.

Now, that said, I expect three things to happen in tandem: (1) the average software engineer salary will stagnate or decline; (2) credentialism, long foreign to the industry, will begin to creep back in; you'll see CS and Eng degrees rise in importance, along with more situation-specific certifications; (3) the average market cap of startups (specifically: SaaS startups) will decline, along with growth cadence.

This isn't death. It's just middle age. A touch of grey, as Jerry Garcia put it.

Re: The Era of Startups Is Over

#52

Post by vemv »

DonHopkins wrote: post #46
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?

The actual point was, opinions that lean towards the absolute extremes are often low-quality.

Re: The Era of Startups Is Over

#53

Post by apienx »

Startups that were propped up by “cheap money” are gonna fail faster now that interest rates are high(er). But there’s nothing to indicate a fundamental shift has occurred. The system, policies, and values that have led to the era of “cheap money” are here to stay. It’s really the era of fiscal responsibility (and non-dramatic titles ) that is over.

Re: The Era of Startups Is Over

#55

Post by ianbutler »

CalChris wrote: post #49
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…

Last year interest rates weren't 5.5%, they were 3% and investments were already starting to tighten up. It now costs even more to deploy capital and looks to remain that way for a while, possibly indefinitely. It's really as simple as that.

Higher scrutiny, tighter purse strings, the dynamic has been shifting for a while.

Re: The Era of Startups Is Over

#56

Post by fallingknife »

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…

It is utter insanity to think that running a small retail location like a surf or dive shop is easy or that you would be able to just shut down for a day on a whim and not need the revenue.

Re: The Era of Startups Is Over

#57

Post by pier25 »

pembrook wrote: post #50
pier25 wrote: post #25

Earlier quoted context omitted.

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.

> Everything that becomes successful is an improbable anomaly

Exactly my point. The above comment is trying to make a point with cherry picked data.

Re: The Era of Startups Is Over

#58

Post by CalChris »

ianbutler wrote: post #55
CalChris wrote: post #49

Earlier quoted context omitted.

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…

Last year interest rates weren't 5.5%, they were 3% and investments were already starting to tighten up. It now costs even more to deploy capital and looks to remain that way for a while, possibly indefinitely. It's really as simple as that. Higher scrutiny, tighter purse strings, the dynamic has been shifting for a while.

That's pretty simple but it doesn't explain how or why low quality startups will get weeded out. It explains why there will be fewer startups but it says nothing about their quality.

Re: The Era of Startups Is Over

#59

Post by pan69 »

fallingknife wrote: post #56
gumby wrote: post #42

Earlier quoted context omitted.

> 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…

It is utter insanity to think that running a small retail location like a surf or dive shop is easy or that you would be able to just shut down for a day on a whim and not need the revenue.

Obviously anecdotal, but my grandparents ran a shoe store from the 50's to the 70's and when they thought the weather was nice enough to go to the beach, they closed up shop and went to the beach. It's all about mindset I guess.

However, in general I would agree that any form of retail venture does not match a lifestyle business very well.

Re: The Era of Startups Is Over

#60

Post by blastbking »

This reads like someone who think startups are structurally dependent on infinite VC money or loose spending due to low interest rates, perhaps because the writer's business is impacted. Nothing about rising interest rates prevents the formation of new businesses. Many great internet businesses were founded in 2008 (Airbnb, Uber, Whatsapp, etc). Let's not forget that businesses are supposed to make money, and it doesn't require that much capital to start a software business.r
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