
The ‘Terminator’ of startups says he’s seeing two to four wind-downs a week - kjhughes
https://techcrunch.com/2017/03/20/the-terminator-of-startups-says-hes-seeing-two-to-four-wind-downs-a-week/?ncid=rss
======
iron0012
Here's him making the same exact kinds of claims in 2011. He called himself
(or claimed that people called him) the 'undertaker' back then:
[https://www.pehub.com/2011/08/silicon-
valley%E2%80%99s-under...](https://www.pehub.com/2011/08/silicon-
valley%E2%80%99s-undertaker-%E2%80%98we%E2%80%99re-anticipating-a-major-
fallout%E2%80%99/#)

~~~
mrbgty
"We are busy as beavers. We’re doing two to four deals a week."

You weren't exaggerating.

~~~
tdumitrescu
"MP: We’re seeing two to four companies wind-down a week, which we’ve never
seen before."

...except for the last time we saw it.

------
nsxwolf
Looks like I'm getting a new chair soon. The best thing about the Dot Com
bubble bursting was my cheap Aeron. I'm ready to upgrade.

~~~
italicbold
There is an upgrade from an Aeron?

~~~
rfrank
Embody, also by Herman Miller.

~~~
CalChris
At $1500 for a chair, no wonder these startups are failing.

~~~
rfrank
Something something it's literally impossible to hire engineers who aren't
showered in toys and treats.

But yeah, I generally agree with you. I like my fancy chair because I spend an
awful lot of time in it every day, and I'm tall (6'6"), so most chairs are
pretty uncomfortable for me and my lower back already sucks.

~~~
itchyouch
there was an article a while back about how any type of exercise movement,
weight lifting to running to walking would ease up lower back pain.

Ultimately comes down to strengthening those muscles. Sitting all day
atrophies the muscles. I had lower back pain for the first 30 years of my
life, then started deadlifting and the back pain is gone. g'luck

~~~
scott_s
Of course, the most common injury when deadlifting form slips is probably
lowerback related.

I still think everyone would benefit from some strength training! Any
strenuous physical activity has risk from injury, but I think that risk is
better to accept than the risk from doing nothing. But it's worth looking up
some powerlifting videos on YouTube for good form and cues. (I've seen
deadlifting videos from non-powerlifters, and I have not been impressed.) This
is a good one:
[https://www.youtube.com/watch?v=d5eGGZXb0Is](https://www.youtube.com/watch?v=d5eGGZXb0Is)
Layne Norton is a smart, thoughtful guy and an elite powerlifter.

~~~
CalChris
Layne Norton is smart and thoughtful. There are others as well. Basically I
learned a million time more from these guys than I ever learned in all the
yoga classes I ever took.

------
hkmurakami
Key passage for me

>MP: We sell a lot of patents, maybe more than anyone else. Usually, the only
way to pay back [lenders’] loans is to sell the patents. So people aren’t
paying what the company would have been worth but usually enough to pay back
that secured debt.

So many companies saying they'll only use their patents defensively... may
find that their patents will fall into the hands of someone who doesn't share
their perspective.

~~~
jessaustin
Companies seldom care what happens after they're dead. Since we do care, we
take their promises with a grain of salt.

------
throwanem
If there isn't yet a _Silicon Valley_ episode featuring a thinly veiled expy
of this gentleman, I can't imagine why not.

~~~
strictnein
Yeah, one can imagine him coming into the house uninvited and starting to
examine their equipment and various other assets.

~~~
bluetwo
Vampires can't enter a house uninvited.

~~~
CalChris
Really, this guy is not a vampire. He's the grim reaper.

I worked for a startup that got shutdown. Don't like failure? Don't work in
Silicon Valley. Anyways, Cisco (our probable exit strategy) leaned ever so
slightly in the other direction and the VCs pulled our funding. But they also
sent in a turnaround guy to reposition us for either the direction Cisco ever
so slightly leaned in (soon to lean back) or something else.

Guy was the biggest asshole in the world. Moving the company to Microsoft
Exchange is not a worthy accomplishment for a turnaround executive. Two weeks
later, he shut us down for good but not before putting his 8 months pregnant
wife on the insurance plan. This was a strange detail given that he was worth
about $20M.

This guy had taken the job to shut us down. He then brought in a squadron of
his buddies who shut us down properly and put a bow tie on it only after
laying off everyone else. Basically, he sucked a lot of money out of the VCs.
I occasionally Google'd him to figure out if he'd ever done anything
afterwards of any merit. Nope.

 _That_ guy was a vampire.

~~~
dmix
This is why the word "suit" exists. There's smart people who contribute value
and build companies, clever guys who make money skimming off the top off smart
people via finance, and then there are suits who leach off the other two, with
no redeeming value.

------
mathattack
Activity of restructuring firms is a good leading indicator of what's
happening in private markets. These types of guys get involved well before
public announcements of companies like Quixey. [0] It's also a very valuable
service. Silicon Valley does well when people and assets from failing
companies are freed up to join hyper-growth companies. Lenders are also more
willing to take on startups as customers when they are confident that
liquidators can get their money back.

[0] [http://www.bizjournals.com/sanjose/news/2017/03/09/quixey-
al...](http://www.bizjournals.com/sanjose/news/2017/03/09/quixey-alibaba-
funding-mountain-view-shutting-down.html)

~~~
ajamesm
All this needs is a "This is good for Bitcoin." and we've reached full
success-fail.

~~~
JBReefer
It's actually a core and well supported part of capitalism - people hire more
when firing is easy, lenders are more willing to lend in industries with repo
men, etc. It's kind of morbid, but rich ecosystems like the Amazon mostly
exist because dead stuff is rapidly recycled. The economy is no different:
slowing down the cycle is incredibly distortionary.

~~~
ajamesm
Yeah, private equity is a natural response to business failing in the wake of
a bubble, but bubbles themselves are market distortions caused by insane
valuations.

Highlighting the value of reclamation just draws the heat off of the
irrationality of the tech bubble. Amazon isn't a rich ecosystem, it's
oligarchic.

And, indeed, any systemic failure in a capitalist economy gets explained away
by saying that some cadre of vultures will exploit arbitrage until the gap
closes. No one really questions the systemic failures per se. The economy
happily creates this surplus in full anticipation of it being scrapped and fed
to vultures. Banks repossess cars and capitalists think "working as intended"
instead of "there's so many delinquent car loans that there's an industry of
repo men and maybe that's significant." This criticism extends similarly to
the tech bubble.

~~~
ch4s3
>Amazon isn't a rich ecosystem, it's oligarchic.

I think the gp meant
[https://en.wikipedia.org/wiki/Amazon_rainforest](https://en.wikipedia.org/wiki/Amazon_rainforest)

~~~
ajamesm
_facepalm_ Thanks.

~~~
ch4s3
The context mixes the metaphor and the pun(intentional or not).

------
rexreed
I've been saying that since mid-2015 we've been seeing a slow down in the
startup sector overall. Last year it was clear that new startup creations
isn't keeping pace with previous years and shutdowns are more common. I think
2017 will be a disastrous year for startup formation and venture investment.
SXSW this year was diminished from what it was in past years and it's clear
that there's a pullback across the board.

~~~
brandnewlow
I was at SXSW but didn't have as much time for Interactive sessions as in past
years. Can you expound on your SXSW observation?

I did notice the trade show seemed dominated by the country pavillions like I
don't remember before. It made me wonder if they were basically bussing in
international startups to cover up for the general lack of startups that
wanted to buy a booth.

~~~
rexreed
First, from what I am hearing, there was overall lower number of badge sales
for SXSWi. The sometimes large attendance at sessions was masked by the fact
that SXSW now allows any ticket type entrance to various events, but only
prioritizes certain badge holders.

Second, overall attendance at unofficial events was significantly lower from
previous years. Previously you faced huge lines for most parties, but many
such lines, if any, cleared quickly this year.

Third, investment by startups in their own official events was significantly
lower this year. Startups either attended without running their own events or
participated in other party's events instead of running their own events.

Fourth, many large brands decided not to participate this year. Microsoft and
Samsung were both absent for the first time in a long time. And many other
companies scaled back their events.

Fifth, as you mentioned, the exhibition hall was dominated by non-startup
parties moreso than in years past. This indicates that startups are not
investing in SXSW as much as they had before.

In general, attendance felt lighter this year vs. 2016, and definitely vs.
2015 and 2014, which felt like a peak year for SXSWi.

While these are SXSW-specific numbers, I would wager that you are seeing
similar slowdown with other startup-focused events and conferences. Meetups
are more lightly attended, and certainly less sponsored.

It feels like the burst in activity is slowing. Not gone. Just slowing.

~~~
ghaff
At the same time, it's also reasonable to ask how much of it is just SXSW
getting past its Sell By date. I don't really have an opinion one way or the
other but a lot of events seem to go through a certain natural cycle even when
the environment they're operating in remains basically healthy.

~~~
rexreed
While I agree that perhaps SXSW has "jumped the shark", at least the
interactive part, you'll find that enrollment and participation at many other
startup-focused events is declined in 2017 year over year versus 2016. I would
bet that Web Summit, CollisionConf, TechCrunch Disrupt, and others are not as
full as they used to be or are facing similar challenges with startup numbers,
and sponsorships especially.

~~~
ghaff
The events I attend which tend to be in the cloud-native infrastructure and
agile development spaces (DevOpsDays, kubecon, OpenStack Summit, OpenShift
Commons, a lot of the Linux Foundation events) have been really well-attended
over the past year or two. Selling out, doubling venue size and then still
selling out next time. But, although a lot of startups are at these events (as
are a lot of bigger companies), they're not really oriented toward the classic
SV social/mobile/web startup crowd.

------
spitfire
Here's an idea. Go talk to these guys when you're starting your company. These
guys are seeing all the failures, so they should have a decent grasp of what
NOT to do.

Discounting for the fact that they're only seeing failures.

~~~
jksmith
There's some innocence in your comment which I wish I still appreciated. I
think the grittier reality is that a lot of these startups were based on
generally mediocre ideas, but were funded anyway because of relationships and
contacts.

I cringe every time I see another "Come help us change the world at..." or
"Come help us reinvent blah blah" here on HN. Instant red flag to me, but I'll
be damned if they didn't get funded anyway.

~~~
komali2
I really wish I remember where I had heard it or maybe read it, but it was an
investor's advice to new investors: "If the (startup) company comes in to the
(investor) meeting with lots of color and excitement, turn him down. The guy
that comes in and nearly bores you to sleep with his spreadsheets, he's the
one to invest in."

~~~
jksmith
Imagine how many good ideas may have been lost because those pitching them
didn't have any connections? They don't even get the chance to be boring.

------
_sentient
While this is certainly a click-worthy title, I'm much more interested in
seeing whether the relative number of startup failures is increasing, rather
than looking at this in absolute terms.

2015 was a banner year for startup funding, and you would expect many of those
war-chests to be running low right around now.

------
trimbo
So where is the ping-pong index at?

[https://www.wsj.com/articles/is-the-tech-bubble-popping-
ping...](https://www.wsj.com/articles/is-the-tech-bubble-popping-ping-pong-
offers-an-answer-1462286089)

------
KeepTalking
Isn't this a very healthy statistic? In theory, not all companies are meant to
last forever. Heck, no company should last forever.

Infact, I would argue that he should be doing 7-8 a week. Clearing out the
deck and making way for the new is a good way we can maintain a long term
healthy eco system.

Frankly, many iffy biz models that escape startup death aren't survivors but
are just long term zombies that are propped up by investor stupidity with no
clear path to sustainable growth.

------
pdog
Alternative title: The _Chicken Little_ of startups sees a downturn coming
every year for the last 25 years.

~~~
crpatino
A broken clock says the right time twice a day. The whole point is _when_.

------
inthewoods
"Shut down 3 or 4 unicorns" \- wonder who they were - and I find it a bit
funny that he doesn't seem to know the exact number. Or maybe he's just trying
to be less specific on purpose.

~~~
philip1209
Valuation is very much a vanity. You can inflate it in a variety of ways. By
the time the companies get to him, I think the joke is that you can't tell
whether it was actually a unicorn or not. If common stock is worth 0, nobody
cares anyways.

------
RichardHeart
The number of wind-downs a week is presented as interesting, but there's no
indication how this represents the health of startups in general instead of
his businesses ability to get customers.

~~~
pricechild
In the title, no.

The indication (more than normal) is given in the response to the first
question, from which the article's title is taken:

> MP: We’re seeing two to four companies wind-down a week, which we’ve never
> seen before. I think more [investors] are taking the Sequoia Capital
> approach, meaning if something isn’t working, they’re moving on

edit: I think the parent was slightly edited but apologies if I simply
misread.

~~~
startupdiscuss
The question should be is the rate of churn of startups going up.

One might interpret the facts as presented to indicate that startups are
fashionable, and more people are starting them. A certain percentage are
likely to fail.

~~~
speeder
This can happen BECAUSE economy is shit.

I am in Brazil, right now completely unemployed (technically I never was
employed in first place, so I don't count as unemployed in statistics), and
out of work.

So I am thinking of what business to start, this time... (I legally own 3
business, and I think I am heir of more 3 or 4) Because the ones I have none
are profitable at all, and I can't find any work (not even supermarket
cashier).

And I noticed, that on social sites (Facebook for example) that shows
employment, lots of people are becoming business-people too, for example I
noticed scores of 18 year olds that own some business selling cakes, or making
clothes, or other stuff like that.

It is basically desperation, people can't find jobs, so they start their own
business out of desperation, and of course most of these will fail anyway,
from the smallest one (someone selling cupcakes from their garage) to the
biggest ones (venture-backed stuff post-IPO...)

~~~
noxToken
> _And I noticed, that on social sites (Facebook for example) that shows
> employment, lots of people are becoming business-people too, for example I
> noticed scores of 18 year olds that own some business selling cakes, or
> making clothes, or other stuff like that._

I'm not sure how it is in Brazil, but in some parts of the US, there are many
young adults 18-22 who start businesses like this. They either start right out
of high school or drop out of college, create an LLC, then start a business.
Once every so often, someone does well. They make it 5+ years before calling
it quits for various reasons. Most of them fail right out of the gate.

The reality of, "Oh crap. This is my business. I can do whatever I want, but I
am literally responsible for everything - including generating income" hits.
They see that it's not so easy bootstrapping a photography business or cake
business from scratch when there is no formal training in the area. No one
wants photos that are washed out when a professional can do it for a few
dollars more. No one wants a cake that can be replicated by spending 1/3 the
price for a store bought cake mix.

Then they stop actually participating in the business, but their social media
profile still says "Owner of Pop Flash Photography" or "Sole Proprietor of
Wake n Bake Cakes".

One thing that some CS students in my area have done is to start an LLC once
they've written something demoable. It doesn't have to be new or innovative
(could be a simple calculator app that's on the app store), but if they can
distribute it for use, they license it and publish it under the LLC. They make
business cards for the LLC. Then they say things like, "I'm the Founder/Owner
of Living Room Launched Software. We have a small app on the app store. Here's
my card. Contact me if you need something."

This isn't to knock young people who have the entrepreneurial spirit! I think
it's great for people to explore what they want to do in life, and it's better
to fail fast straight out of HS than to blow their life savings in their
mid-40s. Some kid fresh out of high school looking to get rich quick off of
something easy is markedly different from the churn discussed in this article.

------
trjordan
"The price of consolidating the companies is too high."

I find this fascinating, as it really speaks to my experience in small
companies. The thing you actually create -- code, docs, self-serve product,
sales and marketing collateral -- isn't particularly valuable. Most of the
knowledge is tribal knowledge, and you're all just spending time trying to
expand that. It's amazing how far you can go, and have to go, with the
informational equivalent of duct tape and string.

------
good_vibes
This is a natural byproduct of the evolution of tech sector becoming THE world
leader. We are no longer a small mammal outrunning giant reptiles, we are now
the dominant force shaping the future of LIFE. This is a smart corrective
measure to prevent a bubble. The best firms have learned that only scientific
innovation, technical genius, and world-class leaders deserve capital for
their ideas.

------
justboxing
> It’s across the spectrum really, B-, C-, D-, E-stage companies. We’ve shut
> down three or four unicorns.

Anyone know what these 3 / 4 "Unicorns" are?

Also, isn't the term "unicorn" use to refer to wildly successful startups that
have very low chance of failing? This sounds like an oxymoron...

~~~
kevan
Unicorn typically refers to a startup that at one time had a valuation of over
$1 billion.

------
cuca_de_chumbo
I would much rather Mr Joyboy ("The Loved One", 1965) be my undertaker.
[https://www.youtube.com/watch?v=-edybFkBiO4](https://www.youtube.com/watch?v=-edybFkBiO4)
... what class!

------
seizethecheese
This may be a good thing for new start-ups. If investors are not "throwing
good money after bad" they may have more fuel in the tank for new bets. Each
massive round in a unicorn can fuel ten series A rounds.

------
JoeAltmaier
tl;dr: watch your runway, pivot earlier, capture customers aggressively.

------
brilliantcode
where can I find a complete list of unicorns trading on the exchange? seems
like a great year to short them all.

------
songzme
What does it mean to be the terminator of startups? Do you find the Sean
Connor of startups and try to kill him? ...Or save him?

~~~
scrumper
They're definitionally private companies. So you can't. Would that one
could...

~~~
scrumper
Sorry, this belongs on brilliantcode's comment above. Mobile client and poor
connection and fat fingers.

