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Y Combinator's Message to Founders

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Re: Y Combinator's Message to Founders

#81

Post by endymi0n »

imperialdrive wrote: post #72
bachmeier wrote: post #54

Earlier quoted context omitted.

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

I mean, if there is some transparency and the numbers add up, and 70% cut appears to do the trick, then it would be pretty awesome being in the 30% with a real chance to shine. I imagine there would be a big increase in stock and pay to put things in motion too. Sounds great! Now if the plan is going to end in flames anyway, it still seems like a great reason to stick around and absorb the knowledge and experience. I…

Here‘s the deal: The mere mortal „stock package“ got pretty much worthless the day the „bridge financing“ (which actually was a down-round) got announced.

Recovering from a 70% layoff only happens once in a blue moon, and usually only when a founder led company that has already reached revenue and product-market fit makes a well executed hard cut that does an exceptional job at keeping and supporting the core team amd managing emotions.

In any other more chaotic situation, the product/emotion/revenue death spiral ensuing is usually impossible to stop.

Re: Y Combinator's Message to Founders

#82

Post by wolverine876 »

Like inflation, it's self-fulfilling. Perception is reality. Some people who strongly influence public perception - to whom we seem to have ceded our power to think critically and independently - who look for social disruption, want it.

If businesses pull in their horns, stop supporting innovation, the economic result is easy to predict.

Re: Y Combinator's Message to Founders

#83

Post by slg »

sirius87 wrote: post #67
bachmeier wrote: post #54

Earlier quoted context omitted.

> a 70% cut...Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable If your employees are dumb enough that they interpret a 70% cut of the workforce as a sign that your company is stable, you're doomed. It's hard to imagine the dumbest person in the world interpreting that as a sign of stability.

As someone who has witnessed such a deep layoff and was left in the 30%, I began job hunting and moved on soon after. When I eventually quit, senior management then explained how I was part of their grand comeback plans and offered a salary bump, and in my mind, all I could think of was how they were trying to balance a cost equation. People far more talented than me had landed pink slips, presumably because of how "…

>As someone who has witnessed such a deep layoff and was left in the 30%, I began job hunting and moved on soon after.

As someone who has witnessed repeated smaller rounds of layoffs, I also began job hunting after the pattern was evident. A layoff is an inherit signal that management made mistakes. Sure, there are probably better ways to handle it than others. However there is no getting over the fact that prior mismanagement now necessitates drastic measures to recover from it. That is going to be enough to get some people looking for an escape regardless of your approach.

Re: Y Combinator's Message to Founders

#85

Post by micromacrofoot »

S_A_P wrote: post #79
micromacrofoot wrote: post #75

Earlier quoted context omitted.

I was young and poor, if you're young and poor don't take the long shot bets. You need to build stability. Long shot bets will burn you out if you don't have a safety net (and living with your parents is a completely reasonable safety net, just unfortunately one I didn't have!). I wasted my 20s thinking if I worked 60+ hours a week for a startup I would be one of the lucky ones, and it was foolish. As usual, there's…

But if you are working in a startup you will hardly be poor esp with a comp sci degree.

I'm not talking about SV startups really, more like every rich dipshit in a podunk town that wants to abuse someone for some "big" idea (or advertising companies). I guess times have changed a bit though, and just about any developer can more easily get big paychecks from reputable companies these days.

Re: Y Combinator's Message to Founders

#86

Post by wolverine876 »

nopenopenopeno wrote: post #20

I am currently graduating with a CS degree and interpreting this as a warning to not accept the offer from the exciting startup and instead accept the offer from the big corporate fintech company. Is there any reason I could be wrong?

> I am currently graduating with a CS degree and interpreting this as a warning to not accept the offer from the exciting startup and instead accept the offer from the big corporate fintech company.

You will be the first to be laid off. When everyone is competing to keep their jobs, you will have no influence. Also, fintech can be cutting edge, which is not what people spend on during downturns.

Re: Y Combinator's Message to Founders

#87

Post by itsoktocry »

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…

>Cutting once and cutting hard allows you to reassure the people that are still here that you are truly profitable and won’t need to do it again.

Famous last words. I'm pretty sure that companies always believe this (or at least tell their staff such), whether cutting 5%, 25% or 75%.

Re: Y Combinator's Message to Founders

#88

Post by jollybean »

eqmvii wrote: post #48

Hard to believe there isn't a storm coming at this point.

It will be harder for startups than other companies.

The 'storm' will be focused heavily on capital and so all that liquidity will tighten up.

Big waves up, big waves down.

Healthcare won't miss a beat.

Re: Y Combinator's Message to Founders

#89

Post by dredmorbius »

ilamont wrote: post #77
dredmorbius wrote: post #59

https://nitter.kavin.rocks/refsrc/status/1527238287471292417 OCR'd text: 4:11 Greetings YC Founders, During this week we've done office hours with a large number of YC companies. They reached out to ask whether they should change their plans around spending, runway, hiring, and funding rounds based on the current state of public markets. What we've told them is that economic downturns often become huge opportunities…

> This slow down will have a disproportionate impact on international companies, asset heavy companies, low margin companies, hardtech, and other companies with high burn long time to revenue. Wonder how things will shake out for biotech. I know biotech investors have long timeline, but surely they are feeling pressure too ("LPs will expect more investment discipline")

Much of that depends on how long and deep the recession goes on, and the extent to which investors are forced to sell even high-quality assets to meet cash obligations.

Bad investments driving down good is one of the perverse dynamics of panics that J.K. Galbraith notes in The Great Crash: 1929:

The great investment trust boom had ended in a unique manifestation of Gresham's Law in which the bad stocks were driving out the good.

(Chapter VI)

Re: Y Combinator's Message to Founders

#90

Post by corrral »

drcongo wrote: post #28

> No one cannot predict how bad the economy will get Make an effort YC.

Maybe it's a "don't think about a pink elephant" kind of thing? Once one considers the possibility that one might predict how bad the economy will get, one naturally thinks up such a prediction?
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