I don't get how sites like Meetup can be "struggling". Shouldn't a company that runs a site like Meetup be pretty lean, only needing a handful of people to work on it? Seems like it would cost very little to maintain, but what do I know.
I worry there are a lot of 'VCed' ideas that given a lean system and time to grow / adjust could be productive but otherwise are shutdown for not being Facebook.
It would be interesting if there was sort of a VC Failed Exit Market where folks could pickup the crumbs and see what they could do... granted there's a lot of variables in that (first comes to mind is the lost knowledge base of the original team / staff).
Not intending to denigrate this in any way because it is cool, but that video wasn't the board meeting (notwithstanding the title), that was the founder/CEO giving a recap of the board meeting.
Interesting watch thanks. Makes me think it would be good for transparency if all board meetings of publicly traded companies should also be recorded and available online.
Transparency can be a double-edged sword. For a healthy board in a healthy company this would be fine, for one which is already in difficulty it could make the situation worse as the frank conversation that could previously take place at board meetings would be driven underground.
Take for example a company that's at a critical point. Board needs to decide to a)cut costs by laying off some staff b)seek a buyer c)tough it out as some big clients are close to signing next quarter and will pull it through to profitability.
If the board conversation around this topic was public the big clients will probably pull out as they will doubt the supplier's long-term viability, key staff may leave rather than wait to see if they get cut and any buyer will be looking for a firesale.
So basically all the options (in this example) turn bad if the conversation is public.
It didn't completely happen. Only some of the investors sold their shares back for $1. But in general, quite a few investors seem to be willing to get rid of their shares (cheaply), once it turns out that the business won't scale, and the founders want to continue running it as a lifestyle business.
From the article:
> I am following up our conversation a few months ago. KP would like to sell our ownership back to Gumroad for $1. Can we discuss this week?
> Mike had left KPCB to start a new company, and KPCB didn’t want the operational headache of appointing a new board member. Plus, it helped their taxes.
> One investor joined them. We’ve bought back a couple more, since then. I keep the rest of the investors up-to-date with a brief email every few months.
VC's don't mind losing money if they can control when they lose it. They can use losses (selling shares back for $1) during the same year that they have big gains (maybe they won big on Uber that year) and they can offset capital gains taxes which will sometimes justify a loss they took on another investment.
In the case of the Gumroad guy, this is exactly what he did/ He basically let VCs choose when they took their losses once they realized Gumroad wasn't going to be the next Facebook. They used the losses to offset some huge wins they got on other investments. The VC walks away happy because he exchanged otherwise useless stock to increase his returns on something else he sold that he did really good on. The owner of Gumroad walks away happy because he gets his company back. Win-win for everyone.
Mind, for a VC. A VC needs at least 100x on their investment. You don't realistically get that unless you invest very very early or you exit to a strategic acquirer, and most acquisitions aren't by strategic acquirers.
That stake was likely worth hundreds of thousands if not millions of dollars, but to KPCB it wasn't worth the hassle to find someone willing to pay that. They know they make a loss on most of their investments.
There's a small cottage industry of purchasers who will buy heavily depressed for chump change. It can be strategic to help offset other gains in a tax year.
The purchaser collects a service fee and a lottery ticket for the random "XYZ Inc sold patent to IBM for $10 million during company liquidation."
Can you explain more please? I dont understand. If I buy a thing that was once worth 100 million dollars for 10 million dollars, I havent lost anything yet because it would need to go down even further from 10, right?
The seller's main utility in selling is to realize the losses for tax purposes.
The buyer isn't buying for tax offsets. They're buying at deep discounts because they're often the only bidder and the hope that they occasionally find themselves taking on some asset for which the sellers have vastly underestimated the value (such as some obscure patent).
- Medium pops up a "please log in" if you've visited multiple articles in a month, but that's not a paywall, that's just an annoyance. You can dismiss it.
- For a few specific publications, the authors can choose to paywall their content after a few views. OneZero, which is published by Medium themselves, does it. This is from Marker, which also appears to be published by Medium themselves.
Yes, it's confusing for a blog platform to also run publications that accept contributions from outside writers and host those publications on their own blog platform, and have that be different from outside writers just setting up a blog. (I suppose the difference is their own publications have an editor, hopefully they pay contributors, etc.)
There are a lot of companies that should probably be 5 people in a basement somewhere run in the cloud... but everyone wants the VC money, big offices, huge teams and such. Maybe the whole current situation will change attitudes back toward lean and mean which always seems to be when tech does it’s best work.
The idea that a company on the scale of Meetup could be effectively run by 5 people in a basement strikes me as completely absurd.
I've seen similar comments about companies like Twitter, YouTube, Spotify, and even Facebook and I'm really in awe of how completely out of touch with the reality of what it takes to run a global business with millions of users and customers people have to be to suggest these things.
Do people imagine you can just take the UI, have a few people wire it up to scale in "the cloud" and basically call it a day?
When Whatsapp was acquired for 20 billion and was already one of the largest messaging services on the planet it had 50 employees total, 30 of them engineers.
Now granted that's more than five people, but that was a planet sized service. Say you're a company that's worth 10 million or 50 million with a proportionate amount of complexity, you ought to be able to built that with a team of 10 people if you chose your software stack wisely.
Paul Graham has an older piece about Lisp and beating large companies by having a technological edge. Picking your software and understanding architecture can be very important. I have seen Clojure teams of smart engineers in particular in distributed / concurrent systems (the sort of thing that can produce a lot of value) who do as much work in a team of 5 as a big corporate Java behemoth does with a 100 people.
I've also seen small teams of smart engineers using decidedly "boring" stack like Django/Rails + MPA on EBS do as much as much work as a larger teams going hard on more cutting edge stuff (React + Redux + Scala on k8s).
I wonder what the deciding factor is. I used to be part of a Haskell team and it was actually net negative vs. just using something really batteries included.
I feel like the deciding factor might to do with team size, skill, and cohesion as team. Having a smallish team makes it possible (although not easy) to have a team that are all high performers. And that team can easily outperform one 2x-5x as large if not more, because there is a large communication overhead to scaling to more people. If you have competent people who "just get" each other, then communication flows and doesn't actually take up much time.
The technology choices follow on from this. If you have a smart team, then you can pick technologies that solve the problem most efficiently, rather than the lowest common denominator that everyone will be able to use, or what's most fashionable (you see this in every field: the "good" people are often following trends or best practices (and doing it well), but the very best tend to have a much more nuanced judgement. They know about the latest thing, they'll use it sometimes, but they keep their own council, and they're not afraid to go off and do something unorthodox if it makes sense for the situation they're in.
---
Side point: Incidentally, React is actually on my list of go-to productive boring technologies. It's definitely overused (despite building React apps in my day job, my personal website is built with Hugo, and a lot of sites would be better off with server-rendered Django/Rails/Laravel), but where you need that complex client-side interactivity I think it's the generally best tool for the job.
> Having a smallish team makes it possible (although not easy) to have a team that are all high performers. And that team can easily outperform one 2x-5x as large if not more, because there is a large communication overhead to scaling to more people.
^ This. As the project gets larger you can't find enough "star programmers" in a timely manner and have to fall back to mediocracy. Read "The Mythical Man-Month" and the associated Brooks' Law for context.
The deciding factor is how complex the code is. You can add a ludicrous amount of complexity into a React app before you've even implemented your first actual feature. People do it all the time. Those people will always get smashed in the marketplace if they have no other advantages and a competitor that's developing PG style with a lean team of actual experts.
I similarly agree 5 is an absurdly low figure. Forget everything else and just consider securing the site, collecting payments globally, tax, and you've got 15 FTEs right there.
BUT - i'm at a VC funded startup and can see how bloated these companies become whilst achieving not much. Our company got VC cash, then the VCs installed a CFO. First thing the CFO did was demote most of the engineering staff down to entry-ish level titles.
Then came product managers, program managers, directors of product management, senior directors of program management, VPs of product, and C-suite.
The Product:SWE ratio is 1:2 to 1:5 depending on the team. That is right, since we're falling behind on coding and quality, the obvious solution to hire senior people to go talk at conferences.
Meanwhile engineering headcount and QA headcount barely moved. When product timelines and quality suffered, instead of considering why SWEs were demotivated, they hired more Directors and more Product Managers to micromanage and oversee the efforts. Except the Product Managers are remote and we barely ever hear from them. We think they are product managing their own careers mostly, we see more activity on their Twitter and LinkedIn accounts than we see on Slack.
So what have people done? SWEs jet out of the office at 5, many are running startups on the side, some are consulting on the side.
Next thing you have a several-hundred-person-startup producing about what you produced with 50 people
I've worked in a startup which processed 10,000s of different transactions from various countries around the world, we dedicated a whole 0.01 person to handling it. I think they were up to around 7 o 8 countries when I left. Had one full time dev and me a few days a week.
As in it was checked now and then, and we had the occasional query once a month.
YAGNI for a business like meetup. I don't think you realize just how much off the shelf, fire and almost forget stuff there is out there now.
I wanted to jump on this bandwagon with my own experience. I worked for a software company about 4 years ago that had 6 people (including myself). Our company did $40M - $50M a year in revenue. No VC funding. We took thousands of transactions a month on Stripe and we basically never thought about payments. The software auto-handled collections or cut people off if they weren't paying (which in turn got them to pay-up). It automatically re-charged delinquent accounts, it automatically let people know that their card was about to expire, it automatically updated credit cards issued from banks (yes, really), and much more. We really never thought about payments at all. 90% of our transactions were USA, about 8% were Canada. And the other 2% was from Singapore. Never ran into any problem with these.
6 person crew generating $40M a year with no VC funding. It was all operated off the money that came in the door. It can be done.
>> 90% of our transactions were USA, about 8% were Canada. And the other 2% was from Singapore. Never ran into any problem with these.
And I once ran a python script on my local computer and had no scaling issues. I dont know what all these people are talking about nginx, load-blanancers, blah! heck, I just used python -m simpleserver and Viola! it worked! See -- everyone can run a global business right from their macbook with 0 FTEs! I did it! (Please dont mind I picked the easiest script and conveniently based my business in places where Stripe works!)
Its really not about scale. I can process 1 or 1million JSON messages with the same effort. Now also support 25 other message formats? Doesnt scale the same way.
I can support a trillion of US/Canadian/European transactions with mostly the same effort.
I can also do payments myself in "7 or 8 countries". If you can do payments in 100 countries by yourself, please please let me know how!
I think a lot of technologists confuse deploying code with actually handling transactions, charge-backs, local tax rates, etc. Also, just because you are small enough to ignore local tax laws does not mean everyone is.
Move fast and break things is all fun and games until you get charged for tax avoidance.
Five years ago, it was difficult to comply with tax laws in every US state, county, and jurisdiction (now there are services) -- can you imagine doing this globally?
Yes, and if it doesn't need even close to one FTE to do this for 5-10 countries, why the hell would you suddenly need 15 to do it for 100? The other question becomes, that if you're not going to become the next Facebook, why even try?
I think you've never actually done this, have you?
>> Yes, and if it doesn't need even close to one FTE to do this for 5-10 countries, why the hell would you suddenly need 15 to do it for 100?
Because things dont scale linearly? I mean I can support JSON messages in 5min. Another five minutes and I can support XML. So I should be able to support all the historical mainframe message formats in 5 minutes each right? No...
People expect the same level of support whether they're paying $1, $10, or $100 per month.
You can throw bodies at the front end by having support staff, bodies at the middle end by writing extensive help articles/documentation, or bodies at the back end to ensure you have robust data and reporting for pre-empting issues.
In any case, you need to think about it, and it'll take bodies.
> Forget everything else and just consider securing the site, collecting payments globally, tax, and you've got 15 FTEs right there.
I think you're over-estimating that by a factor of at least 15. If you're happy to say "let's just use Stripe, we'll support the countries they do, their payment forms are good enough" then that's like...1 FTE for a couple months to build your payments system, and then basically well under 1 FTE there-after to maintain it.
You can absolutely find work for 15 FTEs working on payments (and more!), and you'll probably end up with a better solution too, but there's plenty of startups accepting payments globally with, effectively, 0 FTEs working on payments.
Can all the US mom-and-pop websites collecting payments from US consumers please explain how they would proceed to effortlessly collect payments in Africa? The Middle East? Pakistan?
This is an honest question, because I'm starting to seriously question my beliefs (I honestly though it was difficult.)
If you're in the US, it just works; it's been a solved problem for, I dunno, decades? It just works with Stripe, and it just works with all their competitors. Check out their docs, it's interesting reading: https://stripe.com/docs/currencies
What's a bit newer is that it's a solved problem for people in other countries too; 10 years ago or so I really wanted to process payments, but none of the easy payment processors supported my country (mostly Braintree and Stripe back then), so I had to go with eWay (awful) and a merchant account from my bank (double awful). The company I'm with now (same country) uses Stripe, and it's a massively better experience. (Not being a Stripe fanboy; they have some very strong competitors, I just happen to be familiar with Stripe.)
Keep in mind: It matters where you (the merchant) are. Accepting payments from someone in Africa when you're in the US is trivial; accepting payment from someone in the US when you're in Africa is much harder. You can see where Stripe is supported here: https://stripe.com/global (and most of their competitors are in the same or fewer markets).
Also, there's still a lot of pretty bad legacy payment processors around, and they're often a fair bit cheaper. So if your company has been accepting payments online for twenty years, it may still be a pain for you, I wouldn't know. :)
But yes, the mom-and-pop website in Topeka should be using Shopify or have paid a web shop to throw together something equivalent using off-the-shelf packages, and it should be using Stripe (or Braintree, Square, Adyen, whatever), and then yes, they can accept payments globally, and the experience will be really nice. It's not even any extra work; it just comes out of the box for "free".
If people in those places have Visa/Mastercard credit cards, I'd expect to be able to charge them in Stripe just like any other card. Sure, https://stripe.com/global doesn't list Pakistan, but that's the list of countries your company is allowed to be based in -- your customers can be anywhere in the world.
If people in those places don't have credit cards, I'd wait for Stripe to add whatever payment method they do use. (They've already added systems like Alipay and Klarna that are mainly used outside the US.) In the meantime, they can email me and we'll work out if they can mail me a check or use Western Union, or maybe I'll just give them an extended free trial or something. There are probably not so many people in the world who (a) don't have credit cards and (b) are interested in my software-as-a-service that I wouldn't be able to manually help them on a case-by-case basis.
(Disclaimer: I have worked on a mom-and-pop e-commerce website, but it shipped physical products and didn't operate internationally.)
Stripe accepts a huge number of payment methods, and for the ones it doesn't (e.g. M-Pesa in Africa) there's a good chance you can pay via Google Pay, which it does support and which supports even more methods.
I don’t know anything about the payments software, but most mom and pop websites in America aren’t hurt by not selling to people in those places, or at least not hurt enough to be worth a FTE.
This sort of "corporate bloat" was incredibly common in the "dot-com" era. I'm not surprised to hear it's still happening. You gotta hire a ton of people to justify that VC money.
... especially with the VC's requirement to "grow".
The small company focussed on their core service. The VC corp has to reach out to new markets, increase sign ups, please advertisers and produce shiny growth figured for investors.
For users of the Meetup site it should be slim and I want to spend as little time there as possible (i.e. get invitation mail, ideally respond by mail, done) Meetup however wants me to "engage" trying to convince me to go to more meetups, rate them, comment, ... do as many clicks as possible while not driving users away ... all these deceptions take time to do, to try out, to A/B test. A committed founder who uses the site themselves notices where users got trouble and works on that. Maybe not in a team of five but also not hundreds.
Just based on your off the cuff description I'd be seriously thinking about jumping ship. At least update your resume so you don't have to when the day finally comes (either by your initiative or theirs).
>> So what have people done? SWEs jet out of the office at 5, many are running startups on the side, some are consulting on the side.
I'm not the GP poster but that sounds like a good deal. So collect a paycheck, nod during the corporate circle-jerk of design meetings for weeks while working on your own startup and side consulting?
They are probably hired because of their contact network. As an engineer it might appear that new customers just magically show up. Depending on the sales model you probably can't just spend it all on ads.
I'm working for a company (hesitant to call it a startup) that has ~15 people on engineering, and it's pretty successful in it's space. It's been around for a decade and I think we have a lot more features than what I would assume Meetup has (we have to, because we're dealing with customers who have individual workflows).
I'm not saying 5 people can run Meetup, but I wouldn't expect it to require the 270 employees that Google lists.
5 people can run meetup, but that's not the business or your product with better features would be bigger than meetup.
Most money goes to sales, business, strategy. Growing your company into meetup would take hundreds of employees endless sales calls, conferences, golfing dates, money raising, competitor spying, timing/luck and most importantly closers. Then you need people to manage, organize them, spy of them, babysit them and clean up after them. Nevermind the interns.. if they are paided.
It didn't, it didn't have those numbers when it got big.
It, like so many other companies in the networking space, were in the right place at the right time. And seem to many of us to have grown in proportion to the money thrown at them, rather than the actual operational need.
There are examples of companies that needed to do that, Groupon, etc., but that's because they had to actually do sales.
Depends on whether you want to exist on ads revenue.
You could run Meetup with 5 people in a basement if you had simple subscription revenue, but effectively maximizing an advertising opportunity requires at least ~1000 people.
I can’t upvote your comment enough. Most people questioning why Twitter needs have 2k staff is because of advertising.
I’ve advertised on Instagram, Facebook, Twitter, Google - there is a tremendous amount of work that goes into the “money making” bit of these companies.
Remove ad-revenue and all these companies would collapse. They have no other model.
The question isn't about effectively maximizing something. It's about whether they can turn a healthy profit. And in my experience you can, if you build the company and product correctly. But if you have VC money you won't because you can't be happy with tens of millions of profit with VC funding.
VC money can win a market and make everyone rich. You just need to be aligned with the goals. Making a little bit of money isn't the goal. It's all of nothing if you stumble there might be a pivot. You agree not to stop until it dies, you die or you hit 2 years and growth doesn't look like a hockey stick and they take it away.
That's quite a lot considering that nature of the platform. It explain why most of the stuff I see these days seem to be more small commercial classes rather than just the meetups that it started as.
Also moderation: Meetup isn't gMail, so I get unwanted, sometimes explicit messages delivered directly to the Meetup inbox (and forwarded to my email).
That doesn't even take into account the number of fake groups that aren't really meetups so much as "here's a webinar in which I pitch stuff to you 1-on-1 or 1-on-2, if I can find a second sucker".
Those are problems that can be left alone until they actually become issues, which would probably be the case once the hypothetical service has become successful; in that case, there should be enough cash flow and minimal overhead needed to implement/hire moderation. But if you're spending all your money on building rent, fancy office equipment, lots of bureaucracy, etc., then of course moderation is going to become difficult.
These problems can be mitigated early on by charging meetup organizers. If a $20 a month is too much, then it probably doesn't belong on a meetup site. It's enough that anyone willing to abuse the system will take the path of least resistance and use Eventbrite to host webinars.
Any other meetup communication should be made unappealing enough that moderation rarely becomes an issue. It should be possible for people on meetup to communicate, but it should be a second class citizen to however the organizers communicate with group members. Any forums that are part of meetups should suck just enough that nobody wants to use them unless they are serious about communicating something.
There are creative ways to handle moderation that don't require obscene amounts of money or employees.
If you're bringing in subscription revenue from millions of people you're gonna need some more customer support. And at some point you're gonna need some more HR then...
Contrary to popular belief, having an overseas callcentre run by a third party to answer phones doesn't eliminate the need to have other staff capable of actually making decisions and fixing things.
If you go the "minimize the official headcount" approach... now you need to make your software systems and business processs operable by $random users potentially with different first languages, with little context or history with the company. That's gonna require some significant tooling investments compared to the typical 5-person-in-a-basement operation.
Those are massive companies with little competition and millions of global customers so they can have crap-tier support that works most of the time and get away with it.
Meetup as a website and app is a pretty small engineering footprint. The fact that you think is absurd shows how much we have been accustomed to this "Grow at all cost" mentality.
If I had to take a guess and break down the 200+ employees at Meetup, more than two thirds must be in BizDev, community relations, and artificial management layers.
Out of the 70+ Engineering, a core of 20+ are probably really needed to keep the core app up to date and up and running. The other engineers are working on bets and new products that the company needs in order to justify its valuation and future returns.
Essentially I would say you get 90% of the product with 15% of the engineers. Everything else is small bets to justify the valuation.
My thoughts is that to do exactly what meetup does they probably need the huge team they have, but they could deliver a perfectly adequate service for much less. We don't need all of the bells and whistles and new redesigns as long as the site works and has content.
Users are more likely to leave due to monetization efforts than a dated UI.
When Facebook brought Instagram for a billion dollars, they only had 13 employees.
Of course, that's the pinnacle of an extremely small and simple feature set, and avoiding anything labour-intensive like moderation, or support, or sales. Indeed, they were iOS-only until 6 days before the acquisition was announced.
I agree you could not take Meetup in its current form and operate it with so few employees.
It’s not absurd at all, Instagram was only what, 13 people when it sold right? If meetup is in maintenance mode, which it sounds like it might be, then I would have expected it to be very lean too. It might be wrong but it isn’t absurd.
Sure, if you ignore monetization completely then that is reasonable. But that Instagram is not the Instagram of today, which actually makes money from an advertising platform.
I'm not ignoring it, I'm saying it's plausible they went into maintenance mode and stuck to very basic monetization techniques to support a skeleton crew to keep the lights on until they sold it.
I've worked at Twitter, Facebook, Uber and Amazon. Of them, Twitter and Uber were wildly over provisioned in engineering headcount. Amazon was under provisioned in most of AWS. Guess which ones had massive in-fighting over projects and ownership, and which one just got things done?
Compared to Twitter/YouTube/Spotify/Facebook, Meetup is a pretty simple app. Most activity is localized to a single group, it's 100% user generated content, and it's pure digital. "230,000 organizers who create an average of 15,000 in-person events per day" isn't in the same ballpark as those other services.
Maybe they have Hard Tech problems like dealing with griefers, but the basic group system looks pretty straightforward to scale with something like Google App Engine.
That said, I'm sure most of Meetup's employees are not engineering.
I don't know if this is still case, but a good friend of mine used to be a designer at Meetup. They had a decent size team on design/brand, from the way he talks about it.
Even as someone working on a really big global app with hundreds of engineers, people also underestimate that although the core of something might not be all that complex, all the auxiliary parts and necessary edge cases add tons of complexity that you have to handle if you want a complete product. You can only get away dodging that for so long.
You're right, it can't be that small. But it doesn't need be that large either.
This is HN so commenters are focusing on the technical aspects where Meetup is clearly bloated for what the site delivers. However there's plenty of work to occupy several FT positions, just in customer support alone, when you're selling something to consumers online. Sales, HR, finance, legal and general admin are all necessary to operate at their scale.
Plenty of Fish was being run by one guy out of his condo but still was giving the large players like match.com a run for their money. Of course match's parent company bought up most of the dating market, including Plenty of Fish, so the headcount probably went up since then.
Translations, international money handling, local market research / contacts, SEO, marketing/ads/visibility, ...
I don't think any of those teams will be huge, but I expect it adds up. Just those listed ones are probably 20+ people, so add some management layer as well.
Everything you said + content moderation, dealing with policy/harassment etc. Anytime you’re allowing end users to create content on your platform or use your service to interact with other people, you have to deal with all the policy and icky people stuff.
Well part of it is having the right five people. They’d need massive experience with scaling websites. But if you know how to wire things up, there’s no reason AWS couldn’t handle it.
If you want to run your own server farm or offer lots of live customer service then the equation changes.
Meetup is not Twitter, YouTube, Spotify or Facebook. A single Digital Ocean $5 droplet should easily be able to handle 15 000 created events a day with all their RSVPs.
How much work you have to do scales with the number of people you employ. That is, if you keep hiring, people will continue to find more work to do and do it less efficiently.
Five people in a basement could absolutely remake the core functionality of Meetup and scale it to millions of users.
The hundreds or thousands of extra people are chasing long tail revenue, niche features, change for the sake of change, and supporting each other.
Give me a million dollars and a year and I'll have a ready competitor for Meetup.
Give me $10k and I'll have a working crappy clone.
Give me a weekend and an espresso machine and I'll have an mvp.
Well said. to add to that list, real companies often have to handle taxes, international payments, regulations, laws. Also, enterprise companies (not retail app gimmicks) also have sales forces, contract people, and account execs. Those scale with the growth of the business (hopefully sub-linearly, but still scale.)
The difference you will see on the examples being cited here are those companies existing on ad revenue (or in growth-cash burn mode making no $) -- if you can ignore realities of business then yes you can run lean.
Show me an Instagram or WhatsApp that had global payments, regulations, taxes, etc and managed to do it with 5 or 10 or 13 people -- it does not exisit.
A lot of the best startup advice is packaged coupled with VC fundraising advice, and if unless you think to question it then it seems like the natural thing to do. This very site was founded by the community that formed around a bunch of startup advice essays Paul Graham wrote to advertise his venture capital business.
And in the very low-capital-requirement world of pure tech, VC funding is actually kind of as strange choice. A lot of startups would be much better off as coops.
I was just thinking about this recently. SAAS tools have gotten so expensive. For any given tool you use, inevitably the team building it is VC backed and wants to continually expand into more and more tangential areas and be able to afford a higher and higher CAC to grow into a 10 billion dollar business. There's often really no need for it, either the expanded use cases are irrelevant to many customers or it starts to overlap-but-not-quite-fully-replace another tool customers are already using and happy with.
Pagerduty is a prime example I have followed for a long time. It used to be so simple and just let you set up recurring rotations and used twilio to alert the current on-call person. You might even be able to set the original product up today with zapier for just a few cents per alert. I don't remember their early pricing, but my memory is it used to be very cheap. Now they're a public company with a huge enterprise sales team and their lowest tier is $29 per user, and there are all kinds of extra features they want to up-sell you on from there that most people don't need. Sure that's not so expensive in the scheme of things, but if there are 20 different little utilities like this you want to use it adds up.
(While I'm at it, that reminds me of another of the terrible patterns I see from all of these kinds of companies now, the per-seat pricing model even when the resource you're using doesn't scale that way. Want to set up CI builds in CircleCI? Surely they'll charge us for machine capacity. Well guess what, they also charge $15 per month per seat. You want folks on other teams who use different tools to ever be able to check in on the status of a build? Too bad, buy every one of them their own seat. If someone new ever even accidentally tries to sign in with github and you haven't provisioned a seat for them, CircleCI will actually stop running your builds until an admin goes in to upgrade your plan).
Anyway, it feels that there's a massive opportunity for a self-funded team of 5 or 10 people or in some cases maybe even 1 person to build a great lifestyle business that takes on the original focused use case of some of these ubiquitous SAAS platforms, but undercuts the big bloated business they are today on price by a huge amount.
What are some examples of consumer companies of this size that run super lean? Meetup had 35M users two years ago, so lets say something in the range of 3M-5M monthly actives for the sake of simplicity.
I actually don't think so - to me it seems that the market still has strong demand for software engineers.
What I do think however is that we might start to see a shift of talent towards more "mundane, boring" jobs. Less over-engineering apps for fancy startups on VC-lifesupport, more CRUD-apps for SME, big corps, government and whoever else seemingly less attractive than some cash-burning unicorn.
And for society, it might be for the better. Too many startups these days seem to be focused on value extraction instead of creation (meetup might be one of the few exceptions).
Sure you could run meetup with a handful of people, but VC funded companies tend to have loads of cash to rapidly expand and hire hundreds of people, who do everything possible to grow the company 100% per year until usually all the users are disillusioned, growth can't be maintained, and the service dies.
If we can have "Security Theatre," perhaps we can also have, "Growth Theatre," growth that is accompanied by lots of young go-getters that "look the part," who meet in glass-walled offices so everyone can see how much busy-ness is going on.
Meanwhile, the actual growth is being driven by investors burning cash to offer the product/service at an unsustainable price plus spending money like water on advertising.
Which continues until the company is unloaded onto the public markets.
I have a question for you, and the peanut gallery. If you hold this opinion - how many venture-backed startups have you personally been employed by?
Because I see this attitude a lot, but as someone who has worked primarily at these enterprises (good and bad) I don't think you can think that way without being completely divorced from reality. Not all of us are working with Saudi money from Softbank.
Startups that can't stay cash flow positive might as well be enriched uranium right now. Could be worth a lot of money to the right people, but you're not keeping it around the house.
I've been earning an actual paycheque in this industry since the mid- 1980s.
I have worked for a number of VC startups, my very first full-time programming contract was with a startup. I have seen the above Growth Theatre pattern many times. It's one of the things I have tried to avoid when interviewing employers in my career.
In my anecdotal experience, the above pattern definitely exists, although having the kind of money to do that at the scale of a WeWork is extremely rare.
Is it the majority of startups? No.
Is it a significant proportion of startups? Probably not, although those who were around during the first dot com boom will remember the "burger patties," companies everyone knows were "built to be flipped."
My claim is that there are a few companies in the Growth Theatre business all the time. That claim is not equivalent to claiming that this is the only business model for companies that take VC money.
Disagree. Good chairs are one of the best investments you can make in a tech co (Want people at their desks working? Give them nice desks...it’s peanuts in the grand scheme) And beer, Red Bull, etc are rounding errors. A good engineer costs $150+ and another $50+ in overhead. Let’s presume perks like beer and red bull costs at the super high end $1k/year/FTE. You’re increasing costs by 0.5% or less but building an atmosphere people want to work in.
They are even cheaper when you buy them from failed startups. Used chairs are like used cars; they work great, but they lose 80% of their value when you drive them off the furniture delivery truck.
eBay is filled with these. I bought one (not an Aeron, but a Teknion Contessa which I like better) for $300 from eBay and the proprietor brought it to my apartment at 9am the next day. If I ever start a company with an office, I will just get a mishmash of those. Essential to the creation of software, and costs less than a couple hours of engineering time.
(Aerons are great chairs and are about the same price on eBay. Plus these people with listings on eBay usually have a stash in a warehouse somewhere and will let you go look at them and buy them in bulk. Yes, I do sometimes wonder where they all come from, but in New York, you don't ask questions you don't want to know the answer to ;)
Yeah. I quite like the company I work for, and they do a lot of things right on this front, and cut no corners on developer machines, extra monitors, etc, but...
...they went for really crap chairs. I don't really understand the logic. They're uncomfortable, and they're falling apart after a couple of years. The amount of time the engineering team has spent talking about them, complaining about them, and stealing still-working ones from other desks when theirs breaks has probably cost them 5 times what actual good chairs would have in lost productivity.
I think it's just sticker shock from the chair manufacturer's website. The 30" monitor is the same price everywhere. The chair is $3000 and has a 19 week lead time on the website... or it's $300 from some random eBay seller.
A company doesn't lose control of their spending the first time they incur expense that's 1% of an employee's salary.
It happens the fortieth time they do it - but the logic is the same as the first time they do it.
Then all of a sudden it's a $$$$ chair at a $$$$ desk with a $$$$ computer and a $$$$ screen and a $$$$ company phone and $$$ in snacks and $$$ in soft drinks and $$$ in beer and $$$$ in lunches and $$$$ in dinners and $$$$ in training and $$$$ in conferences and $$$ in free laundry and $$$$ in parking and $$$$ in the annual corporate ski retreat and $$$$$ in premium office space, and of course we extend the same benefits to the janitors and receptionists, they're employees too, and of course we drink beer and play foosball on company time that's team-building....
If you have a decent CFO, all that would probably be single-digit percentage of salary costs, and you'd know what digit it is. It's not rocket surgery to know all these costs. If you don't, get a decent CFO :)
Premium office space OTOH can really hurt. I am still wondering why so many companies suffer SF office space prices only for their workers to commute into SF because they can't afford SF living costs either. Maybe stop hurting each other and just relocate within 20-30 miles where it's less insane (though still quite insane by non-SV standards...)?
Furniture isn't a big deal because it's not a reoccurring expense. The problem is hiring more people than you need and then having to order even more expensive furniture that you don't need. If you have a small business that only needs 20 people then buying 20 chairs just doesn't matter. But if VCs steer you into hiring 70 more people for the sake of growth then of course all that furniture is going to bog you down.
Just because the finance team has an eating disorder, doesn't mean I should have to go on a diet. Investing top dollar in a chair, monitor, work machine, light snacks and drinks is plenty. I'm not the one asking for new offices and sponsored ski retreats, give me a break.
Nice chairs and free snacks are a trivial expense, and are very helpful for generating a specific type of company culture (eg, if important people have nice chairs, and everyone has nice chairs, then we're all, on some level, important. Trivial, but these things matter).
Cutting them either means:
1. The company is going bust as we speak. They've either already made meaningful cuts (ie, firing people) or they're about to start, and they're now now doing the metaphorical equivalent of stealing pennies from fountains to try and make rent. You should leave for somewhere not imploding.
2. The company culture is changing, and it has been deemed important to remind engineering that they aren't that important. Making sure important people have nicer chairs than uninmportant people is an easy way to demonstrate this. Again, you should leave before the company finishes turning into a Dilbert-esque hell.
Either way, cutting snacks will not, under any circumstances, fix whatever is wrong (again, they're too cheap) and it's usually a leading indicator of bigger problems.
So when you say:
> It says a lot about a company's command of their expenses.
I sort of agree - it tells you they have no command of their expenses. :)
Not really. If you pay a person six-figures for (hopefully) multiple years as a developer, spending $1K one-time for a decent chair (that also can be reused if that person leaves) and how much? let's be really generous, $50 per week on beer? - which would be less than 1% of the cost of the salary by the most generous calculation - doesn't seem like something you should cut corners on. And I don't think anybody spends nearly close to $50 per week per person on beer. These things are pocket change compared to salary costs. Cutting costs on them is like buying a Mazerati but asking that the windshield cleaning liquid would be of the cheapest brand because you're cutting costs.
> I mostly agree, but it says a lot about a company's command of their expenses.
To me it says they either a) value their employees, or b) want to look like a.
Either one makes for a better workplace than 'justify every time you used the copier in the last 2 weeks, and have the spreadsheet updated with that info by COB'.
One of the places I worked, I remember talking with the admin. She was responsible for ordering food to keep the kitchen stocked. It was a few coffee machines, and a rack full of snacks. No beer, no drinks. IIRC she said it cost something on the order of $50-75k/year, and this was for an office of maybe 150 people or so.
I guess that amount of money is small compared to some engineers' salaries but I was surprised by how expensive it was for coffee & snacks.
$50k/year looks like a lot, but imagine you lose an equivalent of just one person out of 150 for not having it - e.g. in people leaving and not being immediately replaced, training costs, time costs of going into a corner coffee-shop to get some joe and returning 1.5 hours later, costs of not being able to hire top people because they like to be provided coffee, etc., etc. You'll see very quickly how it is not a wasted money at all.
Servers? I don't know how many total members there are but they are running 140k groups? That doesn't sound like you need a to pay Amazon millions of dollars to run it.
You're not seeing a slight difference between a search engine indexing the whole web and a calendar with signups and comments? Yes, I know they do a bit more than that, but let's keep it in perspective.
What at meetup requires hundreds or thousands of servers?
A sibling comment explained it better than I did, but it's not the comfortable chair or the beer or the lunches or the foosball table. It's the slippery slope of unchecked spending. Plus while an Aeron is a great chair, you can find a lot of great chairs for at least half the price (including used Aerons)
Why you assume it's necessarily unchecked? What you are complaining about are very basic things. Nobody is talking about giving employees daily foot massages, hiring celebrity chefs from Michelin-starred restaurants and having an olympic pool in the middle of the office. Such things could happen, but that's not what we're talking about here. A comfy chair and a fridge with some beers is pretty basic - and not really that expensive. Sure, everything should be in moderation - but what is described it perfectly moderate picture and not some excess luxury. If anything, if I see the company is starting to try to save money on chairs and buy cheap-and-crappy ones, I'd probably look for another job, because there's trimming fat and there's cutting the bone, and proper office setup is definitely the bone.
These benefits are available to all employees at all levels though. Why are people so set on trying to eliminate one of the few benefits even the interns can get to enjoy?
Why on earth would I ever want to work at a company that doesn't value my posture, reduced risk of RSI or the possible ideas/innovation that can come from me chatting/bonding with my coworkers over a beer.
It's a drop in the bucket compared to executive ubers, flights and hotels.
Build full clones of sites like meetup.com which appear to be overstaffed, but which are more-or-less functionally complete. Also handle customer service, billing, fraud/spam detection, etc.
You then lease the clone sites to the actual companies. CaaS: Clones as a Service.
The company can then cut costs by laying off like 80% of its workforce.
Isn't that just consulting? Every project is unique. You don't benefit from having multiple customers for each project. I do understand that betting against overfunded startups can pay off but then it is not CaaS anymore.
You're basically doing the opposite strategy of VC investing. Instead of killing competition by picking a winner and giving that winner more cash than everyone else, you try to build a range of very resilient viable products that can survive until the VC backed startup runs out of funding.
It's quite interesting that one of my personal projects is basically doing just that (except it's non commercial). It is meant to be a replacement for a product whose startup has run out of funding.
Craigslist is actually the perfect example. No need to grow 1000% a year and no external VCs to push you to do so. They handle probably a factor of thousands more requests than Meetup and I think they are still less than 50 people?
Yes, but 999 of those 1000X requests are scammers and spambots.
Craigslist has failed. They are not a good example of anything except the staying power of network effects... and how even that fades with time if you let your community turn into a cesspool.
I agree with you about the scams but as of today it still seems to be almost non challenged for the housing rental market for example. I would not call that failed.
I don't know about rentals, but Facebook Marketplace has taken over the "buy and sell stuff" market. I tried listing something on both services a few weeks ago - CL gave me a dozen scams, maybe one real reply. Facebook gave me a half dozen real inquiries.
Meetup is a bit of a funny business in that regard (though they're not the only ones). Their pricing isn't even in the noise for most companies using them but it's non-trivial for an individual or volunteer organization that's not getting compensated in any way.
You are paying $90/6 months for marketing my friend. Without it, unless you are well connected, you will have to spend a lot of hours hustling to get people to attend your meetup.
A Google Search ad is a glorified <p> tag, but they make a lot of money from it!
The notion of a 'meme' as originally stated is a contagious idea. Some people have a way of explaining things that sounds like a really good idea until you are by yourself or talking to a neutral third party and you realize you've been duped, intentionally or otherwise.
To stay small you have to fight bureaucracy. Your management has to have the confidence that the small team you have is 'enough' and you don't need a bunch of overhead people to answer some concern.
Take the sales team for instance. A bunch of people you hired to sell things. Some of them are very, very good at selling people things they don't need. You might end up being one of those people.
> The notion of a 'meme' as originally stated is a contagious idea. Some people have a way of explaining things that sounds like a really good idea until you are by yourself
Yes, but the notion of a 'meme' as originally stated relates to attributes of the idea itself, not the person spreading it. What you're talking about is the original notion of "charisma", that the same speech will get a better or worse response from the audience based on the personal qualities of the orator.
Sure, but it's not always down to charisma in these cases. Sometimes it's just an idea that sounds like it should be true but contains a logical or emotional trap.
It was a great website and very usable back in the day. However then you have to have "growth". Which means folks are forced to find every possible way to "monetize" it. You take big money from investors and now investors want even bigger money back. That destroyed the experience and I think community has largely gone. The website could have and should have been run as lifestyle business by small team while exploiting only reasonable growth opportunities that doesn't hurt the community trust as opposed to "go big or go home" mindset.
A few years back I sensed an opportunity to create a meetup competitor that would solve many of the biggest pain points for users and organizers. While putting together our business plan, we realized that politics had seeped into general culture too deeply to be able to run a lean ship. Everything would have to be moderated.
What do you do when the KKK wants a meetup? Ok, that seems easy but what about the League of the South? The Sons of the Confederacy? The Nation of Islam? Or what do you do when the Tidewater Democrats declare the Coastal Republicans to be a hate group and want them banned? Or the local Libertarians wanting Citizens for Gun Control kicked off the site? Or how do you handle stalkers who think meetups are their personal hunting grounds? What about trolls who leave inappropriate comments everywhere? There are so many situations that require the owners to step in that are difficult to impossible to automate. Even if you're making good and consistent decisions, that's still lots of manual work and dealing with constant PR issues. Meetup no doubt has a team that takes care of these issues but those salaries add up quickly and there's not much room for efficiency of scale.
You could try being hands off but you'd get slaughtered in the press for allowing anything outside of the current narrow definition of socially acceptable humans. Any service open to the public ultimately has to have a group who polices the service, not only to the wishes of the owners, but also to those of the loudest voices in the greater social context.
Are you sure those 22K employees run the website/app/IT? This: https://eng.uber.com/core-infra-2018/ says Uber Core Infrastructure has 350 people. Which for a multinational corporation doesn't sound like an overwhelming number.
A negative side effect of modern development is having to manage and endless string of dependencies, whether they are software related or service related. The bigger you are the more things you likely depend on and the more staff you need simply to maintain things.
It doesn’t surprise me at all that these kinds of sites require a lot of staff. Most startups are powered by short term decisions and short term thinking. We don’t design things to last more than a few years at best.
Sooner or later some people in a company want to work on "large-scale distributed systems", so they invent many problems that didn't exist to solve, like needing to support a chat app that allows the entire company of more than 5000 people in a single chat room. And the management just loves that kind of "ambition", because they can definitely ask for more people. Remember in a big company, it is more important to manage relation of production than production for you to advance your career? You would be golden if you manage to make your project too bloated to fail. When everyone does that for their own career, you get, well, many start-ups currently struggling in the valley. By the way, Uber sends its regards,
Things like Meetup actually probably have a lot of underlying feature evolution which might be expensive. Also, it might require a lot of manual labour marketing reach-out and hand-holding. Especially when the revenue model is not crystal clear.
Meetup may, therefore, have more strategic value than cash-flow value to a lot of companies.
I can definitely see how a 'big cash-flush WeWork' would want to glob onto Meetup.
But a cash-strapped meetup?
And now, if there's no 'big hit upside' and no big win future, they probably don't have a lot of momentum, and not a lot of hot devs who really care a lot.
It becomes in a way a lifestyle company for someone else's lifestyle vision. Which requires the right kind of team and mindset, comfortable with that situation.
For a Linux user, you can already build such a system yourself quite trivially by getting an FTP account, mounting it locally with curlftpfs, and then using SVN or CVS on the mounted filesystem. From Windows or Mac, this FTP account could be accessed through built-in software.
I can't remember the name now, but long time ago there was a photo sharing site competing with Flickr. It was run by a 19 year old kid, mostly by himself. He used to fix bugs almost real time! He had a large user base (and fanbase) too!
