
Startups are pummeled in the ‘great unwinding’ - haasted
https://www.nytimes.com/2020/04/01/technology/virus-start-ups-pummeled-layoffs-unwinding.html
======
qppo
Startups are in way better shape than traditional small businesses.

By our very nature, we need months of runway just to keep running. We're
designed to weather this kind of storm because "zero revenue" is the default
state.

Hearing about Bird cutting 30% of their workforce is awful. But it's nothing
compared to the thin-margin Mom & Pop, or medium sized private enterprise that
had 1 week of cash on hand and ceased operations overnight.

My friends and family in startups are doing fine, for the moment. It's those
that chose to work at the more stable, traditional work environments that are
getting wiped out, and much less likely to return when the economy starts
back. Because when it does, there will be money ready for investment -
extending your runway to get there for a startup is more straightforward. But
when you're a bigger business with little cash and no-one is buying assets
right now, you literally are unable to make any decision to help.

I've got friends in manufacturing, hospitality, services, and so on that will
not return to work because their businesses are going to or have already
failed, for good. That's the fucking terrifying thing happening right now and
it's more deserving of attention than us tech bros.

~~~
scarface74
You weren’t around in 2000 or 2008 were you? Your startup is only in “better
shape” as long as VCs are willing to keep funding you. VCs are only willing to
keep funding you if they have confidence that you will have a profitable exit.

~~~
0x0001
Not all startups require VC capital, some of us are just running without
venture funding just clients money, some startups are in better shape because
are on right market on the right time. You just need to be in the right time.

~~~
scarface74
And you’re probably not looking for a large exit. You are trying that unheard
of concept of spending less than you make. What you are doing is running a
“lifestyle business”.

That’s not a negative despite what the tech bro’s think. I hate the idea of
success for a company seems to be “we got another round of funding while
losing money”.

~~~
hodgesrm
The term "lifestyle business" really annoys me. It's Silicon Valley
propaganda. There are better ways to build companies than taking hundreds of
millions or billions in funding. Pre-crisis startup funding was largely
decadence enabled by cheap money.

By contrast early generation SV companies took relatively small amounts of
funding if at all. Intel for example took the equivalent of $18.4M US in 2019
dollars prior to IPO. [1]

[1]
[https://en.wikipedia.org/wiki/Intel#Origins](https://en.wikipedia.org/wiki/Intel#Origins)

~~~
ghaff
The thing that annoys me about "lifestyle business" is that it also suggests
this idea of short days, tons of vacation, etc. Which is usually not the case.

~~~
brianwawok
Honestly I think it’s a way for those that owe million to VCs to feel like
they have one over us businesses that grew at a healthy pace, have money in
the bank, and money in the bank goes up not down every month.

At least that is how lifestyle business is slung here. No one in my local
business association would scoff at businesses growing at a healthy pace and
no debt. Also nice if no VC gives me another round, I don’t have to shut down
tomorrow.

~~~
ghaff
Yes. However it can also be pitched as there's no big upside and the salary is
so-so but it's a "lifestyle business" even though the hours and other time-off
are nothing to write home about.

~~~
qes
I'm the CTO of a "lifestyle" business, though we don't really call ourselves
that. Salaries here are excellent for our area (MN). Time-off is better than
average, and we have free worldwide flights for vacations as a perk. Highly
flexible work hours and location - we have some FTE's 100% remote, living in
other states; I'm 90% remote. No overtime culture, no death marches. Maybe
every 2-3 years we have a couple weeks of a good crunch but it's with buy-in
from everyone doing the crunch.

We're lucky to have a customer base that spans many industries. We've lost
some chunks of income.. chains of malls closing, restaurants, lobbies, DMV
offices, customers getting live sports info.. but it's all temporary and we're
well in the black. Instead of worrying if we'll make it we're looking for
opportunities and how we can best take advantage of our strong position.

~~~
ghaff
That sounds great. A lot of the time "lifestyle" businesses for the owners (in
the sense of control, no outside investors, etc.) doesn't trickle down to the
employees in any meaningful way though.

------
hn_throwaway_99
> For start-up workers, the past few weeks have been sobering. Many had bought
> into the tech industry’s change-the-world ideals, had few boundaries between
> their work and personal lives and hoped for big payouts if their start-ups
> went public.

This saddened me, because it's a refrain that we hear over and over and over.
Same exact thing happened during the .com bust (which scares me to believe
that was _20_ years ago already).

You can work really hard at a startup, put in a ton of energy, but at the end
of the day, never forget it's just a business. It's a team, not a family, and
in a team sometimes team members get cut. I've also found that the best folks
in business tend to have rich, fulfilling lives outside of business as well.

~~~
save_ferris
> I’ve also found that the best folks in business tend to have rich,
> fulfilling lives outside of business as well.

Totally agree, but I’ve been burned multiple times by startups that see any
kind of multifaceted lifestyle as “not fully committed” to the team or
company, which is ridiculous. I’ve been so disappointed how frequently this
happens in tech.

~~~
conception
It’s because the owners are trying to squeeze as much value as they can out of
you in as short a time as possible. This might be obvious but owners want as
much they can show an investor as soon as possible to make their ownership of
the company more valuable in the shortest amount of time, and also often
trying to make the amount of money they lose to you as small as possible.

I think you probably already know this but for those that need to read this -
the chances of you becoming a millionaire at a start up are zero. Better to go
buy a lotto ticket. That said, much like owning a home in Southern California
there are many good reasons to join a startup- money is not one of them.

There is of course the caveat that of course some people win the lotto but
planning your financial life around winning the lotto is idiotic.

~~~
closeparen
Owners of every kind of company want to extract as much value as they can at
the lowest possible cost. Even nonprofits want to serve their missions (which
are usually distinct from staff welfare) as best they can at a given budget.
Greed doesn't seem to have much explanatory power for why startups in
particular would be worse.

~~~
goatinaboat
_Owners of every kind of company want to extract as much value as they can at
the lowest possible cost_

Other than sports, what other industry than VC-backed startups lures in
talented-but-naive young people, promises them riches, then chews up and spits
most of them out, having burned them out? OK maybe music and fashion as well.

Meanwhile the owners get richer and richer.

~~~
mrep
Pretty much any career that has an up or out policy with the promise of riches
if you don't get pushed out of which there are plenty. For example, many
consulting companies work this way where they will pay you a fraction of your
billing rate and have you work a ton of hours in the hope that you will
eventually make partner which is where you make the real money.

------
rexreed
I'm sorry for some of my schadenfreude here, but really, so many of these
startups are overfunded with way too many employees to begin with. They've
often paid top dollar for expensive technical talent in locations with very
high cost of living.

I can't wait to see a pull back to solid fundamentals. I don't see why a daily
vacation rental company honestly needs 240 highly paid employees. One company
cited in the article (WanderJaunt) laid off 56 out of its 240 total employees,
but honestly I bet they could do just well with 20 total employees.

Let's put the Lean back in Lean Startup and provide real value instead of
playing the magical, mysterious game of VC musical chairs.

~~~
closeparen
Why is it so offensive to people in this industry that our skills are valued?

Sometimes it seems a little crazy to me too, but I'm not, like, _excited_ to
need to live with 5 roommates 90 minutes away from work again like you seem to
be.

~~~
marcosdumay
The GP is not complaining that our skills are valued, it's complaining that
those companies have an awful low productivity.

You know, people filling low productivity jobs means that our skills aren't
valued enough.

~~~
sumedh
> it's complaining that those companies have an awful low productivity.

That is just human nature, once the company starts going big and has the
funds, the managers start empire building.

------
irrational
I work for a Fortune 150 company as a programmer. I've had lots of people ask
me why I don't move to California and work for a startup. The main reason is
because I'm risk adverse and I really don't like the Bay Area (I spent many
years living in San Ramon, Alameda, Newark, etc. in my youth and have no
desire to ever return). Now I have a new reason to be grateful I work for a
Fortune 150 company. I've been able to work from home no problem. Nobody has
been laid off. The company has already announced that they are going to go
ahead and pay 100% of our year end bonus regardless of what happens in the 4th
quarter (the current quarter). Frankly the quarantine has been very very non-
stressful for me and my family so far. I don't think that would be the case if
I had been working for a startup.

~~~
axiom92
>I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and
have no desire to ever return

I understand that this is not center to the point you're making but I am
curious! What makes you hate the Bay area? I lived there for ~4 years and
recently moved to Pittsburgh. I can't wait to move back. In fact, the mere
mention of these places evokes a strong sense of homesickness in me for some
reason.

~~~
sethammons
Not OP. I've only visited the Bay Area a few times. Human filth, needles, and
just so many people packed into the space. I can't imagine raising a family in
that situation. Contrast that with where I am now: I have a very large house
on 10+ acres of land on the edge of a lake. Each of my kids has their own room
and there are lots of rooms and corners to "get away from each other". We have
room for food storage, a home gym, and are not dependent on the city for water
or gas (though we do have to fill our propane tank a couple times a year). If
I walk to the edges of my property, I can see a couple other houses. We have
bon fires, ride ATVs, go fishing, shoot guns and bows in the back yard. We
have full on seasons (granted that winter is the largest, but we like cold and
snow). Not to even begin talking about the political differences.

The few things I liked about the Bay Area: lots of economic opportunity (esp.
as a software dev), nearby greenery, and lots of food options. Oh, and the
ability to find others who would like to play board games. I can't find anyone
to play board games with out in the middle of nowhere (my family is not
interested in any).

~~~
pj_mukh
Live in San Francisco for 3 years now. Haven't seen a single needle yet or
"human filth". AMA.

~~~
danielscrubs
How? I was in the city for a week and saw more needles on the street than the
slums of China.

Even the townsfolk would complain about some mental hospital closing down
forcing mentally ill people to live on the streets and you could see them
everywhere.

That said, I didn't have a guide, I'd just walk with friends for an hour or
two aimlessly starting from the pier. On the other hand, this is how I'm used
to do it and I've been to 20+ countries.

~~~
mepiethree
All cities have bad parts. San Francisco is somewhat unique amongst places
that I've visited, in that most of the tourist traps are either in or are
immediately next to the absolute worst parts of town.

~~~
danielscrubs
Human suffering (homelessness, needles and mental issues) is not something I'd
call bad parts. Whatever that was goes beyond that.

I don't even want to know how it would affect a person to see that every day
and think it's normal.

------
yingw787
I've heard numerous times startups have had a hard time getting a _smaller_
amount of funding from angels and VCs. As in, "I want $500k" and "no, we only
do deals with $1M+", or something like that. I thought that was crazy. This is
probably the pendulum swinging back, as pendulums do.

I am interested in how this situation affects larger companies. My guess is
since they're so much larger this time around than back in 08-09, and since
tech didn't really change all that much in the past ten years or so, there
might be greater structural pressure for startups in terms of hiring talent
and market direction, because the big guys have so much liquidity and are
entrenched in many different verticals. It'll be interesting to see how it all
plays out.

~~~
Spartan-S63
I think they get bullied into larger deals that inflate their valuation beyond
what they think they're worth. It works in a growing market to fundraise
beyond your valuation and then grow into it. It doesn't work when the market
turns down. If your runway is sufficiently short, you'll be fundraising a down
round in a down economy which will slash your valuation and make it harder to
get good terms.

~~~
edoceo
Yea, I had this c2015 when I was seeking 250k to grow a revenue generator. I
was told to make a story that compels a 15M future valuation so I could ask
for 750k now. But I didn't even believe the revenue projection need to
justify! I said no, these are my numbers. I couldn't fake a 10x story and my
6x story wasnt compelling enough.

------
ilikehurdles
It's hardly unique to startups, and has more to do with the industries they're
in than the company size. Mine is still hiring very aggressively but we are in
the health research industry which didn't face the same sort of "unwinding",
and have always been remote so there's no empty office we're obligated to pay
rent for. Meanwhile I have friends in very established publicly traded
companies who have been laid off or had their benefits cut already. One lost
all company matching on 401ks this year.

VCs remember that there are some very successful companies that came out of
the 2008 recession, and many are doing a lot more than usual to help the more
promising parts of their portfolio weather this storm.

This article fails to highlight how any of these startups (on that note, how
is AirBnB a startup) are worse positioned than their larger competitors. Not
one of the ways that workers are impacted that are mentioned in the article is
unique to any size of public or private company.

~~~
danielmunro
I was laid off last week (yes, it was a startup), do you have a link to a
careers page?

~~~
ilikehurdles
I sent you a message on your LinkedIn

------
julius_set
So I’m curious will property and rental prices drop in San Francisco now that
funding is drying up? Can’t seem to find much information about that. For
example a friend of mine who was laid off still has to pay $3300 / month for
his studio. Curious how long this will last for?

~~~
dominotw
I think its unlikely because everyone knows its going to right back up once
this blows over. So demand should hold constant.

~~~
sheeshkebab
Perhaps, but the way it’s moving there will be another 20m+ people without
jobs in a month or two (prime working age folks), and with a bunch of
industries contracting at the same time it’s likely that recovery will take a
while before it all resumes. Hope I’m wrong but it could be a few years before
it will bounce back.

------
rexreed
The news just keeps getting worse for SoftBank. "OneWeb, a satellite start-up
that had raised $3 billion in venture funding from investors including
SoftBank, the Japanese conglomerate, filed for bankruptcy on Friday and plans
to sell itself."

Can we finally admit that SoftBank's model of so-called VC funding success is
really just a colossal failure? The throw-everything-into-it approach of
making Unicorns a reality just doesn't work.

~~~
joelbluminator
Normally I would agree, but in this current shit-show of a market even
investments in Delta can evaporate. Looks like everyone's suffering. Imagine
even healthcare ETFs saw a 15% loss so far.

------
0x202020
I’ve got an esports side project that was starting to get some interest within
the community and generate non-trivial MRR (~4k mo). I have a closed alpha
that a few teams in the league were using, and I was talking at some level to
basically everyone that could be in the market for the current version of the
problem. I was looking into getting a business/sales partner in order to have
more success on the business side of getting the other organizations I was in
talks with, as I am normally just a lead dev with no business interaction.
Then the league, along with everything else, got delayed and quarantines
started. Within 3ish days all of the professional teams, academy teams and two
other organizations are interested in my “alpha” software. So now my “side
project” as of April 1st has ~10x’d its MRR (~40k).

As of now I am getting some business stuff ironed out and only making bug
fixes/small updates while I get a better feeling of what type of workload
difference the growth is making

~~~
boojing
Interesting. If you don't mind me asking; how did you make contact with the
first few teams? Was the early exposure from sharing parts of the project
through social platforms or directly reaching out to the teams?

~~~
0x202020
I have existing contact with some people in a few of the organizations which
has come following the game over the last few years on a personal level. I’ve
travelled to some events, have conversations with some players but mostly
coaches, analysts and production team members, and have been around the scene
on a hardcore fan basis for a long time. Last season I created a fantasy
league app and some advance stats collection. This season I didn’t feel like
doing the fantasy app again because there were good enough options out there
but got some requests for stats/rankings from some of the people I know. So I
started that then pivoted it into a platform instead of creating a bunch of
spreadsheets (even though I still end up doing that for them sometimes)

------
ttul
What I’m seeing:

\- Forget funding. The window is closed.

\- Big customers are battening down the hatches. Cash is king. Lots of asks
for payment terms.

\- Little customers are failing.

If you run a startup or work at one, implement Plan B now. Cut.

~~~
rhizome
Frankly, as a solo I'm thinking of just looking into SBA help (USA).

------
Cymen
I've been contracting lately and I'm on two active contracts. One of the two
is winding down. I've been billing at $155/hour via an agency (to be clear,
their fee added on top of that $155). They offered me $90,000 salary to go
employee. They upped that to $100,000 when I said no (I thought we were done
but I said no again). Their thinking is they can take advantage of the
situation to get cheap engineering staff.

If you're running a startup and thinking that now you can get cheap senior
engineers, you might want to consider that it might be true for those who
aren't careful with their finances. However, the talent you attract with this
method is going to leave as soon as they find a better offer.

I don't think most management teams are like this one but I'm amazed by the
short term thinking. Professionally, I can't really call them on this behavior
but I'm glad to have been saving for financial independence (now is the time
to go back to working on my own things and yes, I do have a multi-year
runway).

~~~
battery_cowboy
Get an engineer for a year or two at the cut-rate price and once they've
gotten ingrained into your org and code base they'll head off when (if?) the
economy recovers. Not very forward-thinking.

~~~
tonyedgecombe
There is no guarantee those high salaries will come back quickly or at all.
This event might well usher in a more cost-conscious era.

~~~
battery_cowboy
Maybe, but right now it's too early to tell and a move like that, to take
advantage of developers during this time, will hurt them nonetheless. I
personally have been keeping track of companies I've applied for to see how
they treat people during the worst times, right now, and I won't work for a
company like that. I'm sure there are other developers who would do the same.

------
vinayan3
Article's premise is right but they primarily used start-ups in the travel and
transportation space for examples of insane revenue drop. If people are
sheltering no one is gonna be using these services. So, it's really not
surprising.

The longer term impact is going to be the lack of funding in the coming couple
of years and lack of customers for the services/products coming out of
startups.

How will VC funds fair in this? Are there enough LPs out there willing to put
their money into this risk pool?

~~~
dehrmann
> How will VC funds fair in this?

Probably not well.
[https://news.ycombinator.com/item?id=20985687](https://news.ycombinator.com/item?id=20985687)

------
llsf
Talking about startups in difficulties, any idea how wework is doing these
days ? I would expect the work spaces being near empty, and for the companies
renting spaces they might be even pulling the plug. I am worried that if
wework goes under because of the pandemic (and SoftBank realizing that it is
not worth being salvaged), then it would trigger a domino effect in the whole
US commercial real estate market.

------
cowsandmilk
Classpass was founded in 2013. Wonderschool was founded in 2012. Can we stop
calling companies that age a startup? Or at least stop using them as examples?
I mean, the article then goes on to call Airbnb a "home rental start-up". It
isn't a start-up, it is over a decade old and has over 10,000 employees.

~~~
benatkin
Another thing that's more than half a decade old is your objection. The term
"startup" has come to have a broad meaning. The meaning of words changes over
time. Fortunately, new terms often come along to fill gaps. In this case there
is the term _early-stage startup_.

~~~
StavrosK
So "startup" now means "company" and "early-stage startup" means "startup". I
look forward to having to call them "incipient early-stage startup".

~~~
yborg
I guess startup is generally understood now to mean a VC-backed company that
doesn't make any money.

~~~
skissane
Often, a "startup" just means a private company that plans to go public but
hasn't done so yet (as opposed to already public companies, and private
companies that don't plan on going public)

~~~
Klinky
No, that sounds like a private company trying to sound trendy.

A startup has a small number of employees to start with and a 2 - 3 year
window to go big, fizzle out, or pivot into a small - medium sized business.
You're not a "startup" forever, nor does eventually marketing yourself as one,
actually make you one.

------
pixelmonkey
One of my good friends is a restaurant owner in NYC and my spouse is a
doctor/surgeon in NYC. Startups aren't pummeled -- they're insulated.
Restaurant owners and doctors are pummeled. And all of you who thought
incompetent federal government leadership was OK in this modern world -- you
were bamboozled. You can start apologizing now.

~~~
seibelj
But I genuinely believe all federal government leadership is incompetent -
it’s not a matter of it being “OK”, that’s just the default for every
administration. Which country on earth is responding to this well without
resorting to authoritarian practices?

~~~
numair
Denmark. Norway. Singapore. New Zealand. Taiwan.

The fact of the matter is, there’s too many people in America invested in a
cynical notion that we should expect the government to “fail,” which makes it
easier to keep everything underfunded, which almost guarantees failure (random
acts of heroism not withstanding). THAT, more than any single person, is
what’s killing America. And that’s a bipartisan cancer.

~~~
not2b
No, in the US there's only one party that is explicitly anti-government, anti-
expert, expecting government to fail. The other party has its own problems
(its progressive and centrist factions are are war with each other, for
example), but they are different problems.

------
bluedino
Isn't this just accelerating the inevitable for many of these companies?

~~~
hn_throwaway_99
Yes and no. Certainly the unit economics for some start ups always looked
problematic. But for others, it's not hard to see how they would have solid
businesses in normal times, but have no resources to weather this downturn.

I mean, it's not like people are never going to travel again or eat out at
restaurants. But I certainly wouldn't want to be a travel startup or
restaurant startup (at least of the dine-in variety) today.

~~~
vhvjkyhkogvv
It may be that travel never has big enough margins to support a 10k employee
middleman.

~~~
hn_throwaway_99
Expedia and Booking have been around nearly 25 years and both have well over
20k employees. Seems like travel has more than enough margins to support
multiple companies that size.

~~~
lotsofpulp
There’s never been an extended global shutdown of travel like now though.

~~~
hn_throwaway_99
Yes, everyone fully understands with travel at a complete standstill, _none_
of these companies are viable if the current situation were the norm.

But the current situation is not the norm, people will eventually get back to
travelling a lot, and when they do there will be plenty of economic activity
to support large companies in the travel business.

~~~
lumost
An extended shutdown with shut borders may have long-term effects on
consumer's willingness and desire to travel. If the travel industry remains
shut down for the next 12 months it's not unreasonable to think that the
travel industry wouldn't fully recover for 10 years.

~~~
learc83
Or maybe pent up demand will have the opposite effect. There's no way to know.

I've had the same thoughts about the restaurant industry. Will lockdowns
create a generation of home cooks, or will be so tired of staying in that the
restaurant industry booms after this is over?

------
tedd4u
Startups have had years to prepare, work on their plan, strengthen their
fundamentals, and raise capital if necessary. I think the shock is that
probably this is a faster onset and deeper drop scenario than most had
modeled.

Every [1] startup has been thinking for the past couple years about their plan
for when the recession would come. Probably hundreds of articles written in
mainstream and economic/financial press over the last 2-3 years about "the
coming recession" [1]. Trade war? Debt bubble popping? Auto loan credit
crisis? Nope, turns out it's pandemic. Nobody saw that coming until January
[3].

[1] No evidence but my guess. If they haven't it seems negligent.

[2] here's an example from 2018 from the NYT contemplating what will be the
cause of the next recession (note, not whether or if it will happen, just what
will cause it) [https://www.nytimes.com/2018/08/02/upshot/next-recession-
thr...](https://www.nytimes.com/2018/08/02/upshot/next-recession-three-most-
likely-causes.html)

[3] I mean the specific timing of this pandemic. As we've all learned now many
in and out of government had warned the public.

~~~
JMTQp8lwXL
People always write about coming recessions. I could "recession year 20NN" and
find someone proclaiming a recession would happen that year. Given someone in
the peanut gallery is always claiming recession is near imminent, when are
businesses supposed to prepare? Leaving piles of purposeless cash is poor
business acumen: it could be put into R&D, expanding operations, or returned
to shareholders.

~~~
yellowapple
> Leaving piles of purposeless cash is poor business acumen: it could be put
> into R&D, expanding operations, or returned to shareholders.

Or put into making the company profitable, or at least not losing money. That
might very well include R&D (to develop new products or more efficient ways to
produce and distribute those products) or expanding operations (to leverage
better economies of scale and have a better bargaining position with vendors).

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

------
gcc_programmer
I hope this is the final nail in the coffin of Silicon Valley: this place has
been, very well deservedly until 2010-2015 but completely undeservedly after
that, at the top of VC's investment list. But nothing innovative is coming out
of that place anymore: the magical days of Facebook, Instagram, Twitter are
over. What was my 'aman' (enough) moment? That startup with the juices and the
juice squeezers (I forgot their name): to me that was the sign that the place
is running out of steam. Hopefully this economic crisis will do enough damage
and the investment focus will shift to more promising industries and
locations. Awaiting the downvotes : I btw realise the irony of the fact that I
write this comment on a website owned by ycombinator, but I am here because
sometimes interesting things are shared :)

------
wgyn
Is the narrative that big companies are safe havens for job seekers actually
true? Isn't Airbnb a "big" company?

~~~
SpicyLemonZest
Airbnb is working on pulling out all the stops to try and prevent layoffs.
They might not succeed, but if they were a smaller company they wouldn't even
have anything to try.

~~~
tonyedgecombe
Is there anything inherent in their size which means they can weather the
storm?

------
mark_l_watson
Excuse me for getting a little bit off topic: I think these crazy times will
cause startups, medium size companies, and especially individuals to, in the
future, keep much larger cash reserves and generally exist more frugally.

It is true that at least in the USA that democrats and republicans in Congress
and the president are working overtime to shore-up their constituents (i.e.,
large corporations) so they will be fine. I think the help given to the mega
corporations will be at least an order of magnitude greater than what is given
to help individuals and regular businesses - I base this on what has been just
been given to the financial industry in the last month.

Frugal small businesses that we own ourselves are probably the most stable
unless you are in the billionaire class.

------
ur-whale
[https://archive.is/EbF9b](https://archive.is/EbF9b)

------
Akaahn
Startups are having their great reckoning. No longer can they just come up
with fancy catch lines, and get bought by a billion dollar company. Now they
actually have to provide something unique, something useful, something worthy
of them actually being acquired.

~~~
vikramkr
Or just going on to become market leaders. Out of the tech bubble pop emerged
google, apple, amazon, microsoft, etc standing strong

------
yalogin
To me the most pertinent question is how long is the impact going to last. Are
we ever going to get this under control? If it takes 6 months can any of the
service businesses survive that long? What about startups?

~~~
SpicyLemonZest
I'm extremely optimistic about the coronavirus, something like the 90th
percentile among positions I've read, and even I think we'll still be facing
impacts in 6 months. Even if the lockdowns end this month and the public
health problem is considered resolved in June, that won't be enough time to
shake off all the effects.

Most businesses will certainly be allowed to open long before then, though.

------
old_tech
Prediction: The great unwinding is going to be felt much more severely by Big
Tech employees, but many months out from today.

Source: I don't work at Big Tech, but personally know many folks who do. For
the most part, they are not really thinking very far into the future, because
they think (with some justification) that their jobs are much safer than
startups and smallish companies.

1 The usual reasons of less people spending money on stuff holds, of course.
If your customer is now unemployed, they will _eventually_ cancel your
software subscription too.

2 Most employees working at these companies have stock options which will
plummet once people start pulling money out of the stock market because they
actually need the cash to survive.

3 There will be the usual letting go of people because the manager doesn't
like them. In a big company, ironically, this is much easier because no single
employee is indispensable.

4 The actual problems are not going to start at Big Tech till about a year
from today. This is one of the main problems. Most predictions of economic
recovery are way too optimistic. Unless something extraordinary happens (e.g.
a combination of off-the-shelf medicines, all in large supply, which
miraculously just negates the virus, and we learn about it tomorrow). There is
an excellent chance that the layoffs will hit Big Tech precisely when most of
their employees think they are safe.

5 The biggest problem, in my view, is how much these employees are used to the
cash cushion. There will always be a few prudent folks who save a large chunk,
but generally the lifestyles have already been elevated to match the income.
The folks who never raised their lifestyle to that level will not really have
much to worry about, but that is a small minority.

One can imagine these folks - who are basically going to be the last to be
laid off, having to compete with much more hungrier folks while simultaneously
having to significantly downsize their lifestyle. And suppose they also bring
an "attitude" with them (not that everyone does, but some do), who will want
to hire them?

Some folks will point out the large cash holdings of these companies and easy
access to credit. But how far can that runway last, realistically, under these
types of circumstances?

------
samstave
During the dot com bust - they began building Santana Row, on the site of a
very old shopping center called Towne and Country.

The developers wanted to revamp the site to take advantage of all the tech
money and provide upgraded experiences etc...

While they were in the middle of building it - the bust happened.

Then, one of the largest buildings that was ~65% complete or so caught fire.
It was HUGE - I think it was an 11 alarm fire....

There was a crap ton of speculation as to how this happened - and the
prevailing theory among many I knew at the time (I lived right down the street
and actually stood across the street watching the thing burn down for a few
hours) - was that it was insurance fraud to recoup some of the investment in
the multi million dollar development due to the fact that its demographic was
now largely out of work.

Obviously they did fine eventually, but lots thought it was an opportunistic
attempt to take advantage of the situation.

As an aside, not too long after that, I had a pool aprtty at my place for all
the tech people in our circle. 65 people showed up and out of that, only 2
were still employed.

The tech industry is a hell of a lot more resiliant this time - as actually
many of the service provided are actually of great value to those stuck at
home or unemployed. So this collapse will be nothing like the dot com bust.

However - the wealth transfer this time will be far greater than the 2008
collapse.

The next Black Swan [0]:

[0] - [https://youtu.be/NEnuWv38urI](https://youtu.be/NEnuWv38urI)

------
JackPoach
It really ticks me off when people think that 'startup' is different from
'business'. Startup is a new business. The fact that it is most frequently in
the IT sector doesn't change it's nature. It's still a business that fall
under all business rules.

------
unnouinceput
Quote: "We purposefully and intentionally did not have any video on to protect
privacy as we delivered the news live to individuals"

Translation: We are SoB's and we DGaF about you to the full extent to not even
look you in the face when giving you the finger.

------
twomoretime
There might be something wrong with an economic model which is predicated on
infinite growth.

------
baby
I know many people who have been fired around me, throughout the world, this
is really scary.

------
sjg007
I dunno.. online businesses will probably do well in this "new" economy.
There's a ton of opportunity to remote work tooling as well. Right now people
are hunkered down trying to get the basics in order. Restaurants and grocery
stores have had to reconfigure themselves for delivery and curbside pickup.
Cloud kitchens will do well here, Instacart is probably doing well too. AirBnB
will not do well since they are a function of in person travel. Airlines
though have moved to cargo delivery type function. Amazon is obviously
cleaning up. If you can make masks or ventilators you are probably going to do
really well. Every local community has an instacart like opportunity and some
of these are grass roots organized.

------
Ice_cream_suit
The WeWork saga is especially instructive.

------
invertY
Ctrl+F "Ecology"

Ctrl+F "CMBS"

Ctrl+F "Reits"

Ctrl+F "Repo"

Oh, wow.

You guys are totes not ready for the next stuff.

~~~
sfj
I know the others, but what does ecology have to do with it?

