
Unicorn layoffs keep piling up - zoolander2
https://techcrunch.com/2020/04/15/unicorn-layoffs-keep-piling-up-as-the-economy-gets-worse/
======
freewilly1040
ITT is lots of failure to acknowledge the scope of this crisis. This isn't
just a pruning of companies that had weak paths to profitability anway, few
businesses have the capacity to completely halt revenue for months on end and
survive. Plenty of otherwise good companies are going to go broke.

~~~
CydeWeys
ITT also will be lots of people blaming this economic impact solely on the
social isolation measures, ignoring the fact that a pandemic ravaging
unchecked through the entire population would be having an even worse effect.
Once the pandemic started, there was no way it was gonna end well, regardless
of our actions in response to it. At least with the social isolation measures,
fewer people are dead by the end of it.

~~~
ShorsHammer
> ignoring the fact that a pandemic ravaging unchecked through the entire
> population would be having an even worse effect

Isn't that entirely hypothetical though? Find it hard to take such statements
seriously when the experience worldwide is so widely varied.

The evidence is clear that lockdowns have caused this economic impact, how can
anyone actually make accurate estimates of the alternative?

~~~
icedchai
Weeks before the official lock down, coworkers were already changing behavior.
Going out to dinner less, stocking up on food, buying extra supplies, etc. Not
everyone was doing this, but it was not uncommon. This was weeks before the
first case hit the area.

I think a lock down of sorts would've happened eventually, no matter what.
Once restrictions are relaxed, a large percentage of people are still going to
be very, very cautious. I will not board a plane or sit in a movie theater any
time soon.

------
rvz
Well no-one would have thought that this pandemic would have been the cause of
exposing these startup companies (unicorn or not) that are struggling to
generate revenue and that rely on endless VC funding rounds for hyper-growth
to start shrivelling up right now.

Perhaps it's time to focus on startups that actually generate revenue and high
profits and invest in technology that is a good for everyone, such as
healthcare rather than 'nice to haves' which have no plan for profitability.

As strangely predicted here: [0]

[0]
[https://news.ycombinator.com/item?id=21627809](https://news.ycombinator.com/item?id=21627809)

~~~
SpicyLemonZest
As Theranos amply demonstrated, being in an important industry like healthcare
is no guarantee that you'll be able to generate real revenue or achieve high
profits.

~~~
nabla9
Theranos was a scam.

~~~
isoskeles
Hindsight is 20/20\. Investors couldn't just step into the future and ask
someone whether or not Theranos was a scam and why.

~~~
lotsofpulp
They could have asked to see the proof that it worked and asked an independent
third party to verify it. That's usually what happens when people do due
diligence, and it happens every day in the business world.

~~~
ashtonkem
Also, experts raises the red flags years before the scam was finally revealed.
The fraud was trivially discoverable; investors let their goals cloud good
judgement.

~~~
lalos
You could claim the same about Tesla, it has a lot of expert criticizing their
financials but it is still up in the air if they are right or wrong. I guess
if it does fail people will claim that it was obvious all along...

~~~
astura
No, you can't say that about Tesla, nobody ever said making an electric car
was literally impossible. Quite the contrary, the technology is well
understood.

The experts raised the red flags very early that what Theranos was trying to
do didn't appear to be scientifically possible based on current knowledge.

------
cgb223
The thing about Unicorns is that at the end of they day, they’re not real

~~~
yingw787
On the bright side, maybe we can get some horses out of all this.

~~~
aledalgrande
Thouroughbreds!

------
pavlov
Time to bring back fuckedcompany.com?

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

~~~
onion2k
That was one of the best sites of the dotcom era, but not because it reported
news of failures. It was because it reported news of wreckless stupidity,
ludicrous excess, obviously bad decisions _and then_ the inevitable failure
that followed.

Without those traits of how utterly crazy startups could be back then
FuckedCompany wouldn't be so much fun.

~~~
adrr
Like Aeron chairs and catered meals. Things that were considered excessive are
quite common at tech companies.

~~~
triceratops
I've never understood why Aeron chairs are considered excessive in the US.
They cost like $600, or one month's health insurance costs to the company,
last for _years_ , and have a decent resale value. Even for a company paying
$20/hr (bare minimum for a desk job), that comes out to less than 1 week's
wages.

~~~
shagie
Its not that they were excessive... and they do last for years. Its that
immediately after getting funding the startups of the period immediately spent
a good chunk of it on high end quality of life items. The most visible was the
chair. And they weren't that cheap then either (they're _much_ less expensive
now - in 2000, the chair was $1100 - which is $1650 in today's money. I can
find a new Aeron chair for about half that and a refurbished one for a
quarter)

[https://nymag.com/news/intelligencer/21364/](https://nymag.com/news/intelligencer/21364/)

> Aerons were hailed as triumphs of industrial design and were a whole
> different beast from the overstuffed leather power chairs that dominated the
> Old Economy. “They’re not in my mind an example of hubris as much as they
> are an example of companies trying to treat their staff more generously than
> they could actually afford,” says information architect Chris Fahey.

They were the most visible symbol of the excesses of the dot com startup
office. The new pool table, the foosball table, ping pong table, espresso
machines in the break room in the office that they just moved into. The chair
is the one that people can point to being common to everything (and was also
part of the stuff that was getting sold after the 95% layoff).

These are not companies that had lasted years to get the value out of the
chair but rather in the range of months to a few years. They were spending
money like it was free in hopes to get acquired before they had to sell it all
and try again.

The chair? I love it and I would have seriously considered (gulp) another a
month or so ago instead of a different mesh chair if I had realized that the
refurbished ones were as affordable as they are.

~~~
twic
> information architect Chris Fahey

Speaking of blasts from the past - when was the last time you saw an
information architect?

~~~
pavlov
An absence sorely felt in most apps and websites one has to deal with today.

------
wtvanhest
This is the time period for OpenDoor to either be a proven business model or a
failure. If they survive the next 24 months, their value should be absolutely
huge. If they fail, it proves that the business cannot handle periodic
downturns.

One thing I don't see in these announcements are extended exercise windows.
That would be a basic thing to offer employees, and someone should keep a list
of HR/Finance/C-suite people at companies that do or don't do this during this
period.

~~~
VintageLight
Carta (from the article) posted the benefits for employees who got laid off.
They're pretty amazing relative to others.
[https://medium.com/@henrysward/cartas-covid-19-layoff-
cbb80e...](https://medium.com/@henrysward/cartas-covid-19-layoff-cbb80e3e8a5d)

~~~
adrr
3 months severance is California law and part of the CA-Warn act. Nice they
covered cobra till the end of the year.

~~~
VintageLight
The WARN Act is not severance! It requires that the company notify employees
60 days in advance of a mass layoff. They don't have to specifically notify
the individuals being laid off.

There is no requirement for severance in California!

~~~
adrr
Most companies forgo notification and pay out two months of pay. So it becomes
a defacto severance. Do you know any company that actually gave notice and
kept the employees on for two months?

------
A4ET8a8uTh0
Is it really a surprise though? Not all tech companies operate in "essential"
sector and right now people I would consider essential ( say.. dentists ) are
closing their doors until the worst is over. No one is immune now. Hmm. I
could have said yet and no pun intended.

~~~
esturk
Very little oral procedures are essential. If people have to be in a lot of
pain and otherwise not be able to function, they can get that checked at the
ER.

~~~
hashmal
Very little oral procedures are _urgent_. Most of them are essential.

~~~
nilkn
Indeed, even periodontitis has been implicated in serious health developments
like Alzheimer’s disease. Dental hygiene is very important but rarely needs to
be done on a strict deadline.

~~~
esturk
That's not true. Periodontis may cause more beta amyloids but whether beta
amyloids is the real cause of Alzheimers is not conclusive. Drugs that's
suppose to down regulate beta amyloids have shown no efficacy on Alzheimer's.
As in, it is not clear whether beta amyloid is a cause of or a symptom of the
disease.

------
meddlepal
I wonder how AWS market share will be impacted by startup's going through a
bear market. No doubt AWS has a big enterprise component that should weather
fine, but they're also generally the default 1st choice for a lot much smaller
more vulnerable shops.

~~~
banana_giraffe
I wonder myself. AWS has been pushing out more changes to their "IP Ranges"
file recently. I've been keeping count, just to make sure it's not me
inventing a thing:

    
    
        2020-01-05,   5
        2020-01-12,   6
        2020-01-19,   9
        2020-01-26,   3
        2020-02-02,   3
        2020-02-09,   4
        2020-02-16,   2
        2020-02-23,   8
        2020-03-01,   3
        2020-03-08,   9
        2020-03-15,   2
        2020-03-22,   4
        2020-03-29,  15
        2020-04-05,   7
    

Per week, there's much more activity recently, and some digging into it
suggests they are bringing in more IPs. Could mean they're busier, or could
just be longer term plans coming to fruition now.

~~~
user5994461
They're obviously busier and bringing in more resources, considering the
recent news of the clouds running out of capacity.

------
crawdog
Debt financed companies without clear path to revenue are going to be on hold
for a while.

Interesting to keep an eye on the CA EDD Warn Act page and see who else shows
up:

[https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WAR...](https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WARN.htm)

~~~
ithinkinstereo
Here's the direct link to the xlsx file:
[https://www.edd.ca.gov/Jobs_and_Training/warn/WARN_Report.xl...](https://www.edd.ca.gov/Jobs_and_Training/warn/WARN_Report.xlsx)

The data may not be too reflective of the current situation on the ground,
however. From the website:

"Note: Executive Order N-31-20 (PDF) temporarily suspends the 60-day notice
requirement in the WARN Act. Visit COVID-19: WARN FAQs for more information."

------
ansible
I'm still amazed that companies like Zume were getting funded in the first
place. Not that there was anything inherently wrong with what they were trying
to do, but just... was it even appropriate for a startup to be taking on these
tasks.

With Zume specifically, they were working on compostable packaging. Great...
though most people aren't going to be able to actually do composting. If this
packaging does perform as good or better than conventional plastic packaging,
why does _Zume_ need to do that? Is it really central to their mission?

~~~
JPKab
Some companies are using the virus as cover to do layoffs they needed to do
before, but couldn't do without hurting their reps with the VCs.

A certain Boston based data science startup comes to mind.

~~~
calvinbhai
which one specifically?

------
0x8BADF00D
As an old trading friend of mine said, this is the “shakeout”[0] of a lot of
unviable businesses in SV. He recalled similar things happening during the
dotcom bubble.

[0]
[https://en.m.wikipedia.org/wiki/Shakeout](https://en.m.wikipedia.org/wiki/Shakeout)

~~~
cultus
I've been waiting for this to happen for years. Some of the unicorn/FOMO
lunacy has faded in the last few years, but there still has been no big cull.
At least if the economy at large recovers (which is a massive, huge if), the
tech industry absolutely will be better for this. So many good ideas get
crowded out by buzzword-compliant nonsense.

------
omgwtfbyobbq
I suspect this would have happened sooner if it weren't for the 2017 tax act.
Corporate income tax receipts alone dropped by almost $100 billion the year
after it was enacted, which is almost 2 million jobs at an average $50k/year.

I'm sure a lot of that went to the corporate bottom line, but the individual
tax cuts were even larger, which also contributed positively to jobs.

The hotter the economy is, the farther it's going to fall when something like
COVID-19 hits.

------
sriram_sun
How much of this is the "SoftBank Squeeze"?

I know 2 (SoftBank funded) companies that are in trouble.

~~~
gullyfur
WeWork and OneWeb, or two other ones?

~~~
sriram_sun
One in San Diego (AI, robotics) and another in Palo Alto - self driving.

------
twomoretime
I've thought a lot of VC money was extremely suspicious. These gigantic
unicorns run at losses for what, a decade? Where's the value in any of this?
To call this high risk is an understatement. Take Uber, for example. They're
betting on self driving cars and that the populous (or politicians) allow them
to operate. Mean while they've been a money hole for 11 years?

I guess Covid will be a good time to test how much of this is all hot air. I
imagine those who provide or can pivot to vital services reliably will
survive. These are the kinds of times where capitalism thrives, _provided a
majority of actors are operating in good faith._

~~~
subsubzero
The interesting thing about Uber is before Covid-19 I thought that the ride
sharing arm of the company was the profitable path and the food delivery arm,
Uber Eats was a lost cause. Now it seems like that theory has been thrown on
its head as ride shares plummet and takeouts soar. But still I think profit
margins on food delivery are not that high so I wonder if Uber will escape
unscathed from layoffs/closures, VC funding will only last so long when a
majority of your business dries up.

~~~
aledalgrande
They're not high, especially on small orders. It will let them get some
revenue while people are on lockdown, but not massive profits I think.

------
paxys
FYI - [http://layoffs.fyi/](http://layoffs.fyi/)

Do try to help out these individuals in case your company is hiring.

------
siquick
>> In a statement provided to TechCrunch, the company’s CEO Eric Wu said that
35% of its employee base would be eliminated to “ensure that we can continue
to deliver on our mission.”

Do they really need to use such coarse language as "eliminated" \- these
aren't badies in a computer game, these are real people whose lives could be
seriously derailed by losing their income.

~~~
sytse
I totally agree. The word eliminated is surprisingly common in the US but I
think it has violent connotations. Alternatives are harder than I thought but
separating, off-boarding, and reduction in force (RIF) might help depending on
the context.

~~~
siquick
As a Brit (residing in Australia), US communication always feels so direct and
littered with unnecessary complex words.

A few of my colleagues dread speaking with US counterparts because they always
come across as condescending (when they're definitely not meaning to be).

------
slau
Archived version for Europeans:
[http://archive.vn/ycUKq](http://archive.vn/ycUKq)

------
pryelluw
A unicorn with a small moat is just a goat.

------
awinder
I’m a little surprised considering the recent legislation that should have
basically had the government loan you money which would then be forgiven if
you retain staff. Is this not working out in practice, or companies of a
certain size that are phased out are doing the firing?

~~~
ashtonkem
There are different tiers of loans based on company size. While I don’t have
the tiers memorized, I think most unicorns would be excluded from the very
generous terms.

~~~
nereye
Vox's 'The Weeds' podcast last episode [0] was about the stimulus bill (AKA
CARES Act 2020, [1]).

[0] [https://www.vox.com/the-weeds](https://www.vox.com/the-weeds) [1]
[https://www.congress.gov/bill/116th-congress/senate-
bill/354...](https://www.congress.gov/bill/116th-congress/senate-
bill/3548/text)

------
8ytecoder
The long waited startup crash is happening but with a clever camouflage. None
of the executives would ever have to admit their product sucked. They’ll
simply blame it on the market. It’s employees who’ll face the worst. I hate
the VC startup culture even more now.

~~~
devmunchies
well, most tech companies are non-essential by nature. There are lots of
companies that are only feasible in a bull market. There are lots of product
people can simply go without in most industries.

Tech just has more non-essential, nice-to-have companies than other
industries.

~~~
lowdose
Which industry is not a technology industry according to you? And which
companies would survive another century without becoming a technology company?

~~~
dredmorbius
There are lo-tech spaces, and a great many which are not, or avoid high
technology, which is what most people. mean by "tech sector", if not the even
narrower band of "high information technology".

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

Particularly the cited reference, the OECD definition:

Hatzichronoglou, Thomas: "Revision of the High-Technology Sector and Product
Classification", OECD Science, Technology and Industry Working Papers, No.
1997/02, OECD Publishing, Paris.

[https://read.oecd-ilibrary.org/science-and-
technology/revisi...](https://read.oecd-ilibrary.org/science-and-
technology/revision-of-the-high-technology-sector-and-product-
classification_134337307632)

Page 7 specifically divides industries into four technology levels, high,
medium-high, medium low, and low.

Given J.S. Mill's wonderful definition of technology, 'the study of means",
there's little in human activity which is ccompletely _atechnological_. There
remains, however, much that is quite some remove from the cutting edge.

In the technology adoption lifecycle, high tech are innovators. An early-
adopter firm is itself still not high tech itself.

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

------
thordenmark
Pinterest went down briefly yesterday and I was alarmed that its funding had
been cut off. Many of us visual designers rely on it. Pinterest is one of
those companies that may or may not be a Unicorn, it looks like it has a
viable path to profitability but who knows.

------
dzonga
none of this is unexpected. most of SV VC backed businesses are not
sustainable. so the first instance of pressure, they crack and fold. and worse
everyone is drunk and high on their own kool-aid. instead of iterating quickly
on products they focus on playing around with tech. for business instead of
getting paying customers, they focus on the next round. instead of having few
expenses as possible, they would rather have a ice sculptures

