
As the Startup Boom Deflates, Tech Is Humbled - jpm_sd
https://www.nytimes.com/2020/02/24/technology/tech-start-up-boom-deflate.html
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nnq
So some of the fake-innovators are finally failing (long overdue). Startups
are no longer a "fashion", so hopefully there will be less posers and less
people who brand as startups businesses that are more fit for slow organic
growth. Like really, WTF did Uber or Airbnb really _innovate_ or _invent?!_
Grateful to them that _they finally raised the bar in areas of the service
industry where everything sucked for the consumers..._ but there should be
other stuff to focus on if you want 100x ROI. What they did was pretty much
mundane and incredibly boring, they succeeded by incredibly-smart-business-
sense and uberhuman bubble-surfing-skills!

Finally more breathing room. And hopefully less competition for capital, so
that the people _actually really innovating and inventing new stuff_ have more
chances of getting it.

 _Overall there 's only reason for optimism!_

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simonebrunozzi
It's easy to criticize AirBnB and Uber. Try to do something with a similar
impact. If that's not an innovative company, I don't know what is it.

I don't particularly like Uber and AirBnB, to be clear. But it's hard to deny
they're rare and valuable.

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roenxi
Every single word you use is defensible, but in the context of Uber presently
losing billions of dollars a year. There is a huge surplus of people who can
create something rare, valuable and innovative if they are allowed to lose
billions of dollars a year of other people's money.

It is critically important that all this business activity happens at a
profit, otherwise it is unsustainable and a bad use of resources. Profitless
activity will stop fairly quickly and won't come back.

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cafard
You need to consider it a form of warfare, a tremendous cost absorbed in the
hope of conquest. Once the adversaries, i.e. cabbies and taxi companies, are
defeated, Uber expects to be in a strong position in an oligopoly.

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iamcasen
I welcome the reckoning honestly, I think there was a whole decade or more of
this myth that tech startups just print money and that young, hip, techie
folks were at the forefront of innovation. The reality was just that many,
many idiots were flush with VC money, and that there was very little
intelligent business going on.

Most startups I worked at seemed to care more about their slick office space
and their culture than the bottom line, equating a successful round of funding
with actual business success.

That being said, I won't deny that the well known tech companies did change
culture dramatically (Netflix, Google, Amazon, AirBnb, Uber, Facebook, etc).

These days I really prefer the "bootstrapped" business scene. Companies that
start small, and are forced to make revenues early on to stay afloat. Why the
need to build 100 billion dollar businesses? What's wrong with 50 million
dollar businesses? Rather than starting with some grand vision, why not start
with the basics: I can create value in x way, and meet the needs of y market.
From there it's all just managing finances, spending time wisely, and making
tough trade-offs, the hallmarks of any business.

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rossdavidh
I have the feeling that, unlike in 2001 and 2008, we haven't had a recession
in a while so there wasn't a filtering process for unprofitable startups. Due
to the quantity of $$ looking for an investment target, the unprofitable ideas
kept getting investment $$ far longer than would normally be the case. But,
eventually, it becomes apparent that some of these ideas aren't going to ever
be profitable, because not every problem is solved by growth.

So, really, it's just as well to have a shakeout of unprofitable ideas now,
rather than accumulate ever-more bogus ideas sucking up resources. The only
unusual thing is that it's been so long since the last recession that this
shakeout is happening without one.

Of course, we could have one soon, but I've been thinking that for a while
now, so who knows.

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Fordec
I foresee a post-crash wave. Yes there will be a shakeout of unprofitable
ideas. But "VC unprofitable" is not directly comparable to real world
unprofitable. Growth at all costs mantras take down good ideas with 8-9 figure
market caps too. If you don't take investment (maybe through debt +
bootstrapping) and can deal with the slower growth rate $50M "lifestyle"
businesses with full founder ownership isn't something to sneeze at.

~~~
rossdavidh
There are definitely cases of a potentially profitable X-size startup being
killed by taking 100*X in VC money, and then trying to find some way of
justifying that pricetag.

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laughingbovine
Our entire sector is overvalued. This could just be the beginning of investors
realizing their investment isn't really worth what they paid. If there is a
reckoning on the big companies, that could lead to a recession.

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readhn
IMO We reached a peak of start up enthusiasm: so many entrepreneur wannabes
around.

The reality is that Mr Market is going to make lots of egos very humble very
soon.

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sorenn111
Doesn't this seem similar to other downturns the tech industry has seen? I
think it is quite likely that in the next 5 years there's a good chance of a
recession and that tech and startups will feel it as they have in other
downturns (this may be a cycle of that). Why would it be incorrect to assume
that startups will roar back as they did post dotcom bubble and post great
recession?

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roseway4
We’ll likely see many more tech-enabled consumer (and some B2B) startups fail.
Meanwhile, B2B tech companies with good unit economics will continue to grow,
hire, raise more capital and IPO/exit.

They may not be as sexy as the PR-laden BS that we’ve seen in the last few
years, but there are many more solid companies with real businesses than there
are Caspers, WeWorks, scooter companies etc

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tjchear
My suspicion is with the low hanging fruits gone, investors will soon turn
their eyes away from growth-at-all-cost unicorn potentials to profitable
companies that target tiny specific niches.

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blaser-waffle
> to profitable companies that target tiny specific niches

I agree with this, and will take it a step further: it'll mostly be B2B and
niche business and service applications.

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jatsign
So, is this rationality prevailing (play stupid games, win stupid prizes), or
a canary in the coal mine for the US/world economy as a whole?

~~~
nnq
Bet on the first. The US economy is probably getting healthier,
dropping/burning the dead wood.

Now, US politics... that circus looks weird from the outside, but whatever
works for them ¯\\_(ツ)_/¯

~~~
frockington1
The next presidential election, despite being an absolute circus, should keep
things split no matter who wins. This makes political stagnation a reliable
bet for the next 2.5 years, possibly even longer. Normally a good sign for
markets as little new regulations/change will be occurring.

