
Exit unicorns, pursued by bears - Jerry2
https://www.economist.com/briefing/2020/04/04/technology-startups-are-headed-for-a-fall
======
Apocryphon
The article carefully points out VC funding receding even before the pandemic,
which is simply accelerating what was already trending. Reminiscent of how
9/11 and its aftershocks sped up the dot-com bubble popping, which had already
been in motion.

The examples of "fake tech", startups assuming easy entry into markets due to
mass adoption of internet computing (via smartphones) and then running into
fundamental problems with their business models, and the valuations based on
creative accounting also sound familiar.

This really is the dot-com bubble 2.0, isn't it.

~~~
K0SM0S
What little I know of history has indeed convinced me that major ordeals are
quite often the logical conclusion of small or past things unaddressed, gone
out of proportion. "Bubbles" are such a thing. Real "black swans" are
incredibly rare; and this (CODID-19 pandemic) isn't one.

Indeed, the current dotcom situation is a bubble, and it was long due.
Meanwhile, let's hope investors become better at identifying real value, real
innovation, real game changers. It's often the boring stuff.

~~~
sanedigital
You don’t think having almost every major metropolitan area in the world under
some degree of reduced economic activity for 1-3 months qualifies as a Black
Swan event? What does, then?

~~~
mettamage
Is it a Black Swann? This event was in the possibility space of
epidimiologists. I don't have a source unfortunately, but it's findable.

~~~
jariel
That it was in the realm of possibility doesn't make it not a 'black swan'.
Black swans by definition are possible.

COVID-19 is unequivocally a Black Swan.

Hopefully, we get a CDC 'mini Army' like Korea/Taiwan have so this doesn't
happen again.

~~~
kelnos
That's a bit of a contradiction. If something is not in the realm of
possibility, then it is impossible, and thus cannot (in a strict, logical
sense) happen. If we were to define a black swan event as something "not in
the realm of possibility" then there would literally never be a black swan
event, ever... because things that are not in the realm of possibility do not
happen, full stop.

So yes, as you say, a black swan event is allowed to be something that is in
the realm of possibility. But it has to be improbable. And it has to be
something unforeseeable by people knowledgeable in the field. COVID-19 does
not pass either of those tests; it definitely is not a black swan event.

~~~
OrangeMango
Exactly.

A pandemic scenario was modeled/tested just last year [1]. Some participating
states appear to have learned from it, other not so much.

[1]
[https://en.wikipedia.org/wiki/Crimson_Contagion](https://en.wikipedia.org/wiki/Crimson_Contagion)

~~~
jariel
This is ultra cherry-picking.

'Some guy, somewhere predicted the 2008 crash, therefore, it should have been
obvious'

People have been running 'pandemic' simulations forever, this is not a new
idea.

There are multitudes of catastrophic scenarios we could face.

Pandemics that break out at this level are probably 'once in several
generations' (at least pre-full globalization) which implies effective 'Black
Swan'.

The next pandemic may be in 20 or 200 years, nobody knows, hence 'Black Swan'.

~~~
blaser-waffle
Ultra cherry picking? Did you even read the wiki article?

It was a study that lasted for months and involved the US Fed Gov plus 12
states. This isn't one talking head spouting their pet theories on their blog,
then later turned out to be correct.

~~~
jariel
Every major calamity was predicted by someone (or group) on some level, with
relevant credentials.

The US military runs China-US engagement scenarios all the time, of a variety
of flavours i.e. S. China sea flare-up, Tawian invasions etc. You know we are
running Europe/WW3/Russian nuclear standoff drills and simulations - all the
time, right? Any one of those scenarios is very unlikely to happen, but
somewhere in the world, something similar will happen.

The Fed and large banks constantly 'stress testing' and producing models for
relatively unpredictable things?

Insurance companies are constantly doing fairly complex modelling built with
really good data?

And academia is rife with all of those activities.

After the 2008 crises, there would have been an easy handful of individuals of
credibility who were predicting much of what happened. Dot-com crash. 9/11\.
Saddam's Invasion of Iraq. If there's any likelihood at all of something
happening, someone is talking about it in a meaningful way.

------
grey-area
What a wonderful headline; I almost don't need to read the story. The
economist has always been very clever with their copywriting.

~~~
Amorymeltzer
It's derived from one of Shakespeare's less popular plays, Winter's Tale,
which contains the amusing stage direction "Exit, pursued by a bear."[1]
(Apologies if you knew this, sincerity via text is hard)

Their actual headline/url seems to be "Technology startups are headed for a
fall," which is less fun.

1:
[https://en.wikipedia.org/wiki/The_Winter%27s_Tale#The_Bear](https://en.wikipedia.org/wiki/The_Winter%27s_Tale#The_Bear)

~~~
taneq
As one of today's lucky 10,000, thanks for posting this. :)

------
code4tee
Coronavirus is just accelerating the market correction in startups that was
already underway. In the end it may actually do some good to just pull the
bandaid off fast.

This is just the next wave in the cycle and those of us that have been around
a few years know what to expect. Those that haven’t been though this before or
are in denial will learn the hard way.

Nobody cares about your pumped up valuation anymore. If anything pumped up
valuations only hurt you in times like these. Options become worthless and
early investors don’t want to take a hit at the benefit of others that come in
on a severe (down 50+%) down round. What people do care about is how much cash
you have and what your burn rate is. Cash is king.

Getting new cash will mean making it with old fashioned revenue and profit. If
you can’t do that your days are likely numbered.

~~~
charwalker
Right now is an excellent time for fully online services to make their mark
like a few products I've seen promoted on this forum (specifically the IPTV
centralization site in the last month or two).

I think once we get through the pandemic and begin returning to normal life we
may, at least short term, see companies drop the whole develop product, get VC
buy in and cash to burn, then explode staff count and product depth without
the user base or revenue streams to maintain them. Companies will be more
conservative short term and consider their liquidity and ability to reshuffle
and adapt vs a titan of their segment buying up all the smart engineers. Some
may still go for that (true unicorns, perhaps?). Maybe I'm being optimistic.

------
ornornor
[https://outline.com/DavUGk](https://outline.com/DavUGk)

~~~
ZephyrOhm
Much gratitude for making me aware of Outline.com Will use this often

~~~
ornornor
Glad to know! Not sure how long it’s going to keep working though because I
think all the staff was laid off recently.

~~~
aspenmayer
The site that had recent layoffs is The Outline, not this one. I got them
mixed up myself at first.

[https://news.ycombinator.com/item?id=22769301](https://news.ycombinator.com/item?id=22769301)

------
neonate
[https://archive.md/5d7Kx](https://archive.md/5d7Kx)

~~~
edoceo
This is giving a 403 error from CloudFlare? Am I the only one?

~~~
austhrow743
Archive blocks CloudFlare.

[https://news.ycombinator.com/item?id=19828702](https://news.ycombinator.com/item?id=19828702)

------
onetimemanytime
losing money since day one, overvalued, on life support from investors...so
Covid is killing those that would have died anyway, just in a week's time.

------
itronitron
Now would be a good time for every business to take an inventory of all the
software services they use and define their contingency plan for each one.

------
smoyer
The title used for this HN submission isn't the title chosen by The Economist
- but it's so much better! (And really sums up the article's content in a
terse manner)

~~~
dang
Well, it was one of their titles. Actually the submitter posted "Exit
unicorns, pursued by bears - Technology startups are headed for a fall", which
was perfectly legitimate. But the first part is so good, we truncated to that.

------
guiriduro
Unicorns are just symptomatic of the decadence of late capitalism. Companies
that can only exist because of an overabundance of greater fools who create a
short-term "success" from purely trading the inflated capital of a popular but
failing startup - totally divorced from its actual business. The enormous
prevalence of fraud and reward for failure, of front-runners, bent sell-side
analysts, the wretched hive of scum and villany that is Wall St.

A better world is possible.

------
chipotle_coyote
I hadn't known Lime had effectively shut down in most markets, although upon
reflection it's fairly obvious that would happen.

(Incidentally, while I couldn't get the archive.md link that neonate published
to work, either, I could read the full article simply by disabling JavaScript
and reloading the page. It's remarkable how many paywalled magazines this
works with now. It's almost as if rewriting an essentially all-text web site
to be a snazzy web app that pushes all the smarts to the client side has some
drawbacks! Who could have predicted.)

~~~
eythian
> It's almost as if rewriting an essentially all-text web site to be a snazzy
> web app that pushes all the smarts to the client side has some drawbacks!
> Who could have predicted.

That's not their threat model. 99.9% of people don't think to disable
javascript. However at the same time search engines get the full text making
the story more discoverable. I wouldn't be surprised if you'd get the full
story if your referer said you came from Google too, that at least used to be
a thing.

~~~
chipotle_coyote
You're right, of course, and the search engine full text is a good point. I'm
not sure how many sites still give you a break if you come from Google, though
-- I remember a fair number used to, but it seems the industry has gotten a
lot less generous in that regard.

