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21 year SF resident here. I was here for the dot com bubble, and the smaller "multimedia" boom in the early/mid 90s. I think what is unfolding is a shift away

21 year SF resident here. I was here for the dot com bubble, and the smaller "multimedia" boom in the early/mid 90s. I think what is unfolding is a shift away from consumer businesses and back to boring business to business services. The latter tend to have more predictable cash flow (which ironically is a handicap when VC money is flowing to "viral" consumer businesses that can paper up their growth). B2B services whose customers are not linked to the local tech economy should do just fine. It might be harder to raise money for a while, but that's good too, it'll weed out the weaker companies. OTOH, consumer companies that already have ten years of rapid growth priced into their valuation are pretty screwed. Hard to see where they avoid some really painful and damaging adjustments. And a word of advice for workers. If you are at all unhappy with your job, or suspect that your company is vulnerable to a downturn, now is a good time to start looking around for something you'll be ok with for a couple years. Once companies start laying people off in larger numbers, it will get ugly (maybe not 2000 ugly, but it won't be fun).

w1ntermute 11y ago
This is exactly right - the two categories of businesses that will face hardships are: - Consumer tech startups that have only produced revenue-free growth (ex: Dropbox and Evernote) - Startups selling to startups (ex: Mixpanel and Stripe, maybe Zenefits) On the other hand, a company like Airbnb may benefit from a downturn, as people look to save money on travel.
- elevensies 11y ago
  As a subset of the 2nd category, I think ad-supported mobile apps are going to suffer, i.e. games, since most of them seem to be advertising for each other.
  - interesting_att 11y ago
    I would actually disagree. eCPMs on mobile have steadily been going up, but not because game companies have been spending unsustainably. eCPMs have increased because brands have slowly been moving in, there is better adtech/targeting, and because game companies have a higher LTV, hence can spend more. Many US-based mobile game companies have basically given up fundraising from VCs as a significant part of their strategy, because it became too difficult to do so post-Zynga's crash. Point is: If you're a ad-supported mobile app, can purchase users at an ROI+ rate, and know how to iterate productively, it sounds like you have weathered the storm. Mobile ad-supported companies will stay around (though they may trim workforces to ensure long-term viability).
- digbyloftus 11y ago
  Is Dropbox really consumer tech? I would have thought businesses would make up the vast majority of their revenue.
  - wyclif 11y ago
    Dropbox is a hybrid, both B2B and B2C.
  - w1ntermute 11y ago
    Yes, that's exactly their problem - they're consumer tech, yet businesses make up the vast majority of their (supposedly meager given their insanely high valuation) revenue.
DenisM 11y ago
It's rather hard to make a B2B business without the target industry exposure and goodwill. And those are hard to get because many of us, high-tech developers, are not good at listening to the low-tech user, or even each other. That includes me, of course.
aagha 11y ago
Lets just hope real estate and rent prices become more reasonable as people lose their jobs and move out of the Bay Area.

w1ntermute 11y ago

This is exactly right - the two categories of businesses that will face hardships are: - Consumer tech startups that have only produced revenue-free growth (ex: Dropbox and Evernote) - Startups selling to startups (ex: Mixpanel and Stripe, maybe Zenefits) On the other hand, a company like Airbnb may benefit from a downturn, as people look to save money on travel.

elevensies 11y ago
As a subset of the 2nd category, I think ad-supported mobile apps are going to suffer, i.e. games, since most of them seem to be advertising for each other.
- interesting_att 11y ago
  I would actually disagree. eCPMs on mobile have steadily been going up, but not because game companies have been spending unsustainably. eCPMs have increased because brands have slowly been moving in, there is better adtech/targeting, and because game companies have a higher LTV, hence can spend more. Many US-based mobile game companies have basically given up fundraising from VCs as a significant part of their strategy, because it became too difficult to do so post-Zynga's crash. Point is: If you're a ad-supported mobile app, can purchase users at an ROI+ rate, and know how to iterate productively, it sounds like you have weathered the storm. Mobile ad-supported companies will stay around (though they may trim workforces to ensure long-term viability).
digbyloftus 11y ago
Is Dropbox really consumer tech? I would have thought businesses would make up the vast majority of their revenue.
- wyclif 11y ago
  Dropbox is a hybrid, both B2B and B2C.
- w1ntermute 11y ago
  Yes, that's exactly their problem - they're consumer tech, yet businesses make up the vast majority of their (supposedly meager given their insanely high valuation) revenue.

DenisM 11y ago

It's rather hard to make a B2B business without the target industry exposure and goodwill. And those are hard to get because many of us, high-tech developers, are not good at listening to the low-tech user, or even each other. That includes me, of course.

aagha 11y ago

Lets just hope real estate and rent prices become more reasonable as people lose their jobs and move out of the Bay Area.