3 ms·

Startups that are born in or survive a downturn, they are more tight with better survivalism. When things get better they still have an advantage over other sta

Startups that are born in or survive a downturn, they are more tight with better survivalism. When things get better they still have an advantage over other startups. Things go from tight to alright, alright and it doesn't affect them. Tightly run ships, like smart remote companies without as much office space (lower salaries outside SV) or many employees or even generating revenue run will probably not even feel a blip in most cases. It is the ones that are a while from a product and paying the higher tag for office space, salaries and more for the chance to get funding in SV. If that funding isn't there for a while it could be problematic and is the risk with boom/bust cycles.

draw_down 11y ago
Such as?
- drawkbox 11y ago
  Early 37 Signals (Basecamp now)[1] and github[2] are two examples that started out this way and the former continues this way today. StackOverflow is another[3]. [1] https://37signals.com/remote https://37signals.com/remote [2] http://techcrunch.com/2015/11/14/at-github-you-dont-need-no-stinkin-office-but-there-is-a-nice-one-if-you-do/ http://techcrunch.com/2015/11/14/at-github-you-dont-need-no-... [3] https://blog.stackoverflow.com/2013/02/why-we-still-believe-in-working-remotely/ https://blog.stackoverflow.com/2013/02/why-we-still-believe-...
  - draw_down 11y ago
    I meant the part about starting during or surviving a downturn. It sounds nice, I just wonder if it's true.
    - drawkbox 11y ago
      Microsoft is a big one but here's some more (Adobe, ARM, HP): http://www.businessinsider.com/great-tech-companies-that-started-in-terrible-economic-times-2011-8?op=1 http://www.businessinsider.com/great-tech-companies-that-sta... Salesforce, Google, Akamai also survived the dotcom bust and also killed when the market came back. The conditions that create a company under tighter bands will always have a better indicator of limits than companies that don't. They understand the cutthroat nature of the market. Apple could be considered another initially and on their second rebirth since their second rise was after the crash. They were hustling during that on R&D and exploded out the gate when the market came back, part of the reason they hoard cash and control their ecosystem so much, when they opened it up in the late 80s/90s it nearly killed them.
      - Crusoe123 11y ago
        Funny how that article you linked from 2011 starts with: "The economy may be heading into another recession."
Trundle 11y ago
PG has an essay on the topic. http://paulgraham.com/badeconomy.html http://paulgraham.com/badeconomy.html
tyingq 11y ago
I've seen a couple of comments where expensive office space or other somewhat optional expenses are cited as reasons for going bust. I'm curious, as I have no experience in this area, if that's really likely. As an outsider, it feels like salaries would be the overwhelmingly largest monthly expenditure for most tech startups. Such that things like office space, even a lavish choice, wouldn't really be relevant. If you were to break it down by "cost per employee" is there really a case where office space, perks, etc, really becomes the driver for failure? Where it is statistically meaningful versus the base salary cost?
- mdorazio 11y ago
  I think this depends on the size of the startup. If you've only got ~10 employees, decent office space, furtniture, catering, etc. in SF or SV could be a meaningful fraction of your overall expenditure. The more employees you have, though, the smaller that fraction is likely to be. Even so, I think you're right - downgrading your office space would get you maybe a couple months of extra runway, vs. reducing salaries or staff, which would get you a lot more.
- nopzor 11y ago
  I think your instinct is correct. If you're in SF paying market rate, with say a dozen employees, presumably your expenses BEFORE office space are in the range of 200K/mo+. Unless they're gold plated, your "lavish" offices would represent <~10% of expenses. Space and perks itself doesn't drive failure I don't think, but they can point to aspects that do. There are plenty of disciplined companies that appear to be "lavish" with space and perks. There are plenty of highly profitable tech startups that really scrimp on space and perks. It's tough to generalize.

draw_down 11y ago

Such as?

drawkbox 11y ago
Early 37 Signals (Basecamp now)[1] and github[2] are two examples that started out this way and the former continues this way today. StackOverflow is another[3]. [1] https://37signals.com/remote https://37signals.com/remote [2] http://techcrunch.com/2015/11/14/at-github-you-dont-need-no-stinkin-office-but-there-is-a-nice-one-if-you-do/ http://techcrunch.com/2015/11/14/at-github-you-dont-need-no-... [3] https://blog.stackoverflow.com/2013/02/why-we-still-believe-in-working-remotely/ https://blog.stackoverflow.com/2013/02/why-we-still-believe-...
- draw_down 11y ago
  I meant the part about starting during or surviving a downturn. It sounds nice, I just wonder if it's true.
  - drawkbox 11y ago
    Microsoft is a big one but here's some more (Adobe, ARM, HP): http://www.businessinsider.com/great-tech-companies-that-started-in-terrible-economic-times-2011-8?op=1 http://www.businessinsider.com/great-tech-companies-that-sta... Salesforce, Google, Akamai also survived the dotcom bust and also killed when the market came back. The conditions that create a company under tighter bands will always have a better indicator of limits than companies that don't. They understand the cutthroat nature of the market. Apple could be considered another initially and on their second rebirth since their second rise was after the crash. They were hustling during that on R&D and exploded out the gate when the market came back, part of the reason they hoard cash and control their ecosystem so much, when they opened it up in the late 80s/90s it nearly killed them.
    - Crusoe123 11y ago
      Funny how that article you linked from 2011 starts with: "The economy may be heading into another recession."

Trundle 11y ago

PG has an essay on the topic. http://paulgraham.com/badeconomy.html http://paulgraham.com/badeconomy.html

tyingq 11y ago

I've seen a couple of comments where expensive office space or other somewhat optional expenses are cited as reasons for going bust. I'm curious, as I have no experience in this area, if that's really likely. As an outsider, it feels like salaries would be the overwhelmingly largest monthly expenditure for most tech startups. Such that things like office space, even a lavish choice, wouldn't really be relevant. If you were to break it down by "cost per employee" is there really a case where office space, perks, etc, really becomes the driver for failure? Where it is statistically meaningful versus the base salary cost?

mdorazio 11y ago
I think this depends on the size of the startup. If you've only got ~10 employees, decent office space, furtniture, catering, etc. in SF or SV could be a meaningful fraction of your overall expenditure. The more employees you have, though, the smaller that fraction is likely to be. Even so, I think you're right - downgrading your office space would get you maybe a couple months of extra runway, vs. reducing salaries or staff, which would get you a lot more.
nopzor 11y ago
I think your instinct is correct. If you're in SF paying market rate, with say a dozen employees, presumably your expenses BEFORE office space are in the range of 200K/mo+. Unless they're gold plated, your "lavish" offices would represent <~10% of expenses. Space and perks itself doesn't drive failure I don't think, but they can point to aspects that do. There are plenty of disciplined companies that appear to be "lavish" with space and perks. There are plenty of highly profitable tech startups that really scrimp on space and perks. It's tough to generalize.