14 ms·

The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to

• mbesto 10y ago
  > is so destructive in this town Destructive to whom?
  • ryoshu 10y ago
    The people who get hired then laid off.
    • deleted 10y ago
      [deleted]
  • Analemma_ 10y ago
    One answer: destructive to other businesses that can't compete with VC-backed price dumping. A good recent example was wash.io: they undercut and drove out a bunch of laundromats in San Francisco, and then, just to put the cherry on the stupidity cake, they went out of business themselves, so now there are a whole bunch of people in SF that can't do laundry. There was an extensive Twitter debate about this that I would link to, but it appears to have all been deleted.
    • pliny 10y ago
      Where did all the washing machines go? Did they destroy them? If all those places sold their washing machines when they went out of business then the capacity for doing laundry was conserved.
      • untog 10y ago
        Come on. You can't just conjour up a laundrette like you spin up an AWS instance. You need to find real estate, employees, equipment. All of those will have been redistributed when the business shut down and any new proprietor will have to start all over from scratch.
        • djrogers 10y ago
          I think the GPs point was that presumably the equipment and real estate still existed at some point after wash.io shut down. They could have been sold off as businesses rather than simply being dumped through an auction house, but it sounds like that's not what happened.
      • dragonwriter 10y ago
        > Where did all the washing machines go? Presumably, to places where a VC backed startup hadn't destroyed the laundromat industry. San Francisco is not a closed economy.
      • karthikb 10y ago
        Knowing how high-cycle industrial equipment goes, probably scrapped.
      • vkou 10y ago
        > Where did all the washing machines go? Probably to community theaters (Or hotels, or the equivalents thereof) in Pittsburgh, who picked them up for a discount at a liquidation auction. Great news for out-of-state community theater, bad news if you need your laundry done in California. Either that, or they went straight to the junkyard. Move fast and break things.
    • GVIrish 10y ago
      That sounds like a good subject for a long blog post or article in the SF Chronicle.
  • staticautomatic 10y ago
    To the companies at issue and their employees, obviously.
• idiot_stick 10y ago
  >The artificial need for ever increasing growth and valuations is so destructive in this town, need to start rethinking some of those attitudes. We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Silicon Valley is the only town I know where a thing like "profitability" is seen as a weird number. Maybe I'm missing your point, but these jobs wouldn't exist if it wasn't for endless VC capital and ridiculous valuations, so I'm not sure the net effect is leaving these former employees "worse off". >but maybe it's time for a different model. Be self-sustaining or go under; why should it be any other way?
  • staticautomatic 10y ago
    An angel investor recently responded to my pitch materials by scolding me for saying that our unit economics were strong enough to make most of our revenue profit (which is true). He said it "wasn't smart" and that other investors would question whether I'd thought through our business model. Months later, I am still at a loss for words.
    • pault 10y ago
      Maybe he was implying that it should be reinvested in growth?
      • staticautomatic 10y ago
        He claimed that costs would outstrip our margins as we grew. I have to assume he just thinks this is how startups work, because most of the costs he specifically brought up don't actually exist in our market/business model. In any event, if you have an instinctively negative and suspicious reaction to profitability, then as a business person, I want nothing to do with you.
        • rhizome 10y ago
          "Nobody ever lost a funding round for using Heroku."
• ryanSrich 10y ago
  The fetishization of startups and venture capital is to blame. There's no concept of creating a sustainable business when you take someone else's money. Investors need 1000x + returns on investments because that's how it works. 1000 startups they invest in fail so 1 has to pull the weight of the others. This model is broken for sure, but I don't know what they cure is.
  • tabeth 10y ago
    The cure is simple. Stop being greedy?
    • pfarnsworth 10y ago
      Silicon Valley is the greediest place on Earth. That's why we're all so "successful". If making more money, either because we want all the nicest things, or because we just want to keep our heads above water, weren't on the top of our minds, no one would be working as hard as we do.
      • user5994461 10y ago
        It's not a valid explanation when you see the usual equities and salaries people get at startup nowadays.
      • phil21 10y ago
        The funny thing is - this wasn't the case even 20 years ago. Silicon Valley was still a place you went primarily to work on cool stuff, secondarily to hopefully get lucky and build a company worth a shitload of money. You went there to change the world and work with the best, money was a decent side benefit but not required. Most took a pay cut (after cola) to move there and work on these awesome computer things everyone was talking about. Now it's 100% about the money - just look at what is being funded. Almost no real "tech" companies - just a bunch of folks writing slightly different variations on how to sell ads. I have to try to keep a straight face when I have some obviously-way-more-talented-than-me engineer telling me about some silly worthless app they are working on. It obviously does not move humanity forward or progress the art of their profession in any way - it's just a lottery ticket people have deluded themselves into thinking they are "making the world a better place". The change in tech startups has been extremely sad for me to watch. What used to be inspiring is essentially now one step removed from fraudulent. This take is not completely fair - there are a lot of startups also doing interesting things - but it's closer to reality than not - and nothing like what you envisioned as a "startup" even just before the dot com era.
• jrs235 10y ago
  Software developers are hopefully socking away a lot of their income while the days of great pay are here rather than spending it. When the housing bubble burst around 2008 many real estate agents found themselves in trouble because rather than saving while the going was good they were spending it on new cars, new larger house, nice vacations. Edit: this isn't to say we are in a bubble that will burst, its to say that eventually developer pay will come down (as supply catches up)
  • throwawaydbfif 10y ago
    Eh, developer pay and engineering in general has been a high paying field for eons. It takes a lot of specialized knowledge to do and that's only becoming more of the case as the industry further specializes and expands. It's like how there used to be one kind of doctor and now there's hundreds of specialties. The only ones hurt will be generalists. It's not like you can pull a guy off the street and have him do 90% of dev jobs. The number of people capable of doing the job well will mean it always pays fairly well. Real estate on the other hand can be done by anyone with some charisma and decent reading/writing ability which is probably about 50% of the population. These are the niches where high paying jobs don't last. Look what happened with Uber recently, once the job seekers catch on to an easy source of high income it's a few years or less before that income dwindles from excess supply
• brilliantcode 10y ago
  People also declared profits were sooo yesterday... in 1999.
• hkmurakami 10y ago
  Fund sizes raised basically dictate the exit outcomes needed to satisfy LPs. Raising from small funds ameleriorates this somewhat, but that isn't the sexy thing to do so people seem to rarely do it.
• gnopgnip 10y ago
  If you have a sustainable business you can get a loan instead of giving away equity. The problem is that you have to consider what your competition is doing. If you can take out a loan for $200k and grow by 15% a year your lunch will get eaten by the startup that gets $10m in funding. But generally a startup will only get funding if there is potential for the investor to get a great return on their large investment, so many ideas are not competing with startups.
• alistproducer2 10y ago
  This may seem off topic but bare with me for a sec. I've been shopping for a house and have started to learn about how real estate transactions work. One of the things I was surprised to discover was the amount of selling costs produced by middlemen (9-12%). Given the pricing of homes, this is far from an insignificant cost. From my calc considering current interest rates, the breakeven time for reselling a home at the price you bought it, is ~ 7 years. Sell before that and you have to jack up the sale price to try not to lose a sizable chunk of change. As I buyer I'm constantly reminded that they are free to me, but as they say "there's no such thing as a free lunch." These costs are just passed on to the buy via a higher price; hence the [now] fallacious "home prices always rise." If the cost of housing rises with each transaction, then it seems logical that the economy must grow to support higher wages to support higher costs of living, right? This got me wondering how much of the necessity for growth is a by-product of unnecessary middlemen taking cuts of various commodities?
  • alaskamiller 10y ago
    All the time on everything. That's how a sustaining economy works. Every one gets a piece by inserting themselves in the pie. But the same time the idea is that everyone in the chain is delivering value or else they wouldn't be there because someone else will provide something better by ruthlessly removing said intermediary out when it is no longer efficient. If you have a better way of selling houses between people without the need for that 9-12% you would be doing it now or you would have done it by now. Literally the definition of a founder. You find opportunities to exploit.
    • alistproducer2 10y ago
      From the sellers side, the agent makes sense. Although I would argue a flat or time based fee is more appropriate than a percentage of sale price. The buying agent delivers relatively little value once the purchase agreement has been signed so I would argue they are essentially rent seekers.
  • nradov 10y ago
    That's not how markets work. Clearing prices are set by supply and demand, not by the seller's costs.
• Florin_Andrei 10y ago
  > We just have to hit this weird fake number with no basis in reality, or people's lives get ruined. Why? Because money is god round these parts.
• harryh 10y ago
  They don't think it be like it is, but it do.
• jonathanmarcus 10y ago
  Bryce Roberts from OATV is trying to offer an alternative path via his http://indie.vc http://indie.vc program.