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The ‘Terminator’ of startups says he’s seeing two to four wind-downs a week
- throwanem 10y agoIf there isn't yet a Silicon Valley episode featuring a thinly veiled expy of this gentleman, I can't imagine why not.
- strictnein 10y agoYeah, one can imagine him coming into the house uninvited and starting to examine their equipment and various other assets.
- startupdiscuss 10y agoI am smiling just thinking about it: "How much is that server worth?" "[Some funny techie answer that is literal, irrelevant, and absurd]" Nods and takes notes.
- dsr_ 10y ago"Well, if it and the mirrors in New York and London go down at once, it's worth the whole company. So, I guess, one-third the company?"
- finiter 10y agoGilfoyle would point out that it's $6 of copper and rare-Earth metals. (I have no idea what the actual number is.)
- jasonlbaptiste 10y agoi literally LOL'd at this :)
- bluetwo 10y agoVampires can't enter a house uninvited.
- throwanem 10y agoNot really a parallel. But perhaps it'd be easier for founders of doomed companies to accept the state of affairs if he provided them a Beetlejuice-style document - a "Handbook for the Recently Delisted", perhaps? The title needs some work, but I'm sure you can see where I'm going with this.
- CalChris 10y agoReally, this guy is not a vampire. He's the grim reaper. I worked for a startup that got shutdown. Don't like failure? Don't work in Silicon Valley. Anyways, Cisco (our probable exit strategy) leaned ever so slightly in the other direction and the VCs pulled our funding. But they also sent in a turnaround guy to reposition us for either the direction Cisco ever so slightly leaned in (soon to lean back) or something else. Guy was the biggest asshole in the world. Moving the company to Microsoft Exchange is not a worthy accomplishment for a turnaround executive. Two weeks later, he shut us down for good but not before putting his 8 months pregnant wife on the insurance plan. This was a strange detail given that he was worth about $20M. This guy had taken the job to shut us down. He then brought in a squadron of his buddies who shut us down properly and put a bow tie on it only after laying off everyone else. Basically, he sucked a lot of money out of the VCs. I occasionally Google'd him to figure out if he'd ever done anything afterwards of any merit. Nope. That guy was a vampire.
- dmix 10y agoThis is why the word "suit" exists. There's smart people who contribute value and build companies, clever guys who make money skimming off the top off smart people via finance, and then there are suits who leach off the other two, with no redeeming value.
- kayge 10y agoThe headline actually made me think of a similar character they've already introduced: The Carver. https://www.youtube.com/watch?v=kdXKdRoB9Wk https://www.youtube.com/watch?v=kdXKdRoB9Wk [potentially NSFW for language]
- RichardHeart 10y agoThe number of wind-downs a week is presented as interesting, but there's no indication how this represents the health of startups in general instead of his businesses ability to get customers.
- pricechild 10y agoIn the title, no. The indication (more than normal) is given in the response to the first question, from which the article's title is taken: > MP: We’re seeing two to four companies wind-down a week, which we’ve never seen before. I think more [investors] are taking the Sequoia Capital approach, meaning if something isn’t working, they’re moving on edit: I think the parent was slightly edited but apologies if I simply misread.
- maym86 10y agoWould be interesting to compare this to the number of start-ups being funded and whether that has increased.
- startupdiscuss 10y agoThe question should be is the rate of churn of startups going up. One might interpret the facts as presented to indicate that startups are fashionable, and more people are starting them. A certain percentage are likely to fail.
- speeder 10y agoThis can happen BECAUSE economy is shit. I am in Brazil, right now completely unemployed (technically I never was employed in first place, so I don't count as unemployed in statistics), and out of work. So I am thinking of what business to start, this time... (I legally own 3 business, and I think I am heir of more 3 or 4) Because the ones I have none are profitable at all, and I can't find any work (not even supermarket cashier). And I noticed, that on social sites (Facebook for example) that shows employment, lots of people are becoming business-people too, for example I noticed scores of 18 year olds that own some business selling cakes, or making clothes, or other stuff like that. It is basically desperation, people can't find jobs, so they start their own business out of desperation, and of course most of these will fail anyway, from the smallest one (someone selling cupcakes from their garage) to the biggest ones (venture-backed stuff post-IPO...)
- rexreed 10y agoI've been saying that since mid-2015 we've been seeing a slow down in the startup sector overall. Last year it was clear that new startup creations isn't keeping pace with previous years and shutdowns are more common. I think 2017 will be a disastrous year for startup formation and venture investment. SXSW this year was diminished from what it was in past years and it's clear that there's a pullback across the board.
- brandnewlow 10y agoI was at SXSW but didn't have as much time for Interactive sessions as in past years. Can you expound on your SXSW observation? I did notice the trade show seemed dominated by the country pavillions like I don't remember before. It made me wonder if they were basically bussing in international startups to cover up for the general lack of startups that wanted to buy a booth.
- rexreed 10y agoFirst, from what I am hearing, there was overall lower number of badge sales for SXSWi. The sometimes large attendance at sessions was masked by the fact that SXSW now allows any ticket type entrance to various events, but only prioritizes certain badge holders. Second, overall attendance at unofficial events was significantly lower from previous years. Previously you faced huge lines for most parties, but many such lines, if any, cleared quickly this year. Third, investment by startups in their own official events was significantly lower this year. Startups either attended without running their own events or participated in other party's events instead of running their own events. Fourth, many large brands decided not to participate this year. Microsoft and Samsung were both absent for the first time in a long time. And many other companies scaled back their events. Fifth, as you mentioned, the exhibition hall was dominated by non-startup parties moreso than in years past. This indicates that startups are not investing in SXSW as much as they had before. In general, attendance felt lighter this year vs. 2016, and definitely vs. 2015 and 2014, which felt like a peak year for SXSWi. While these are SXSW-specific numbers, I would wager that you are seeing similar slowdown with other startup-focused events and conferences. Meetups are more lightly attended, and certainly less sponsored. It feels like the burst in activity is slowing. Not gone. Just slowing.
- _sentient 10y agoWhile this is certainly a click-worthy title, I'm much more interested in seeing whether the relative number of startup failures is increasing, rather than looking at this in absolute terms. 2015 was a banner year for startup funding, and you would expect many of those war-chests to be running low right around now.
- mathattack 10y agoActivity of restructuring firms is a good leading indicator of what's happening in private markets. These types of guys get involved well before public announcements of companies like Quixey. [0] It's also a very valuable service. Silicon Valley does well when people and assets from failing companies are freed up to join hyper-growth companies. Lenders are also more willing to take on startups as customers when they are confident that liquidators can get their money back. [0] http://www.bizjournals.com/sanjose/news/2017/03/09/quixey-alibaba-funding-mountain-view-shutting-down.html http://www.bizjournals.com/sanjose/news/2017/03/09/quixey-al...
- ajamesm 10y agoAll this needs is a "This is good for Bitcoin." and we've reached full success-fail.
- JBReefer 10y agoIt's actually a core and well supported part of capitalism - people hire more when firing is easy, lenders are more willing to lend in industries with repo men, etc. It's kind of morbid, but rich ecosystems like the Amazon mostly exist because dead stuff is rapidly recycled. The economy is no different: slowing down the cycle is incredibly distortionary.
- ajamesm 10y agoYeah, private equity is a natural response to business failing in the wake of a bubble, but bubbles themselves are market distortions caused by insane valuations. Highlighting the value of reclamation just draws the heat off of the irrationality of the tech bubble. Amazon isn't a rich ecosystem, it's oligarchic. And, indeed, any systemic failure in a capitalist economy gets explained away by saying that some cadre of vultures will exploit arbitrage until the gap closes. No one really questions the systemic failures per se. The economy happily creates this surplus in full anticipation of it being scrapped and fed to vultures. Banks repossess cars and capitalists think "working as intended" instead of "there's so many delinquent car loans that there's an industry of repo men and maybe that's significant." This criticism extends similarly to the tech bubble.
- brooklynmarket 10y agoVC cash in NYC is crumbling. Just invest in Apple. Why even take a chance? Makes no logical sense $$$ wise. AAPL up 40% in the last few months, is it worth even taking a chance anymore? And how much is Amazon up today?
- justinzollars 10y agoAMZN is getting crushed at the moment. (Posted at 10:30am PST 3/21). Down $10/share
- ericd 10y agoAt >$800/share, that doesn't count as getting crushed.
- justinzollars 10y agoGood point. Toggling to pct change.
- trimbo 10y agoSo where is the ping-pong index at? https://www.wsj.com/articles/is-the-tech-bubble-popping-ping-pong-offers-an-answer-1462286089 https://www.wsj.com/articles/is-the-tech-bubble-popping-ping...
- nsxwolf 10y agoLooks like I'm getting a new chair soon. The best thing about the Dot Com bubble bursting was my cheap Aeron. I'm ready to upgrade.
- scandox 10y agoYeah the 2008 financial meltdown saved my lumbar region. Paid 250 for a 1,600 euro chair. Very happy. On the other hand a lot of people lost everything. So that was the flipside.
- akoster 10y agoIn my area, there were tons of mortgage companies going under left and right back then. Definately lots of people lost their jobs but the glut of cheap office furniture allowed my dad's cost-conscious company consistently upgrade for a while. Since they were a descent-sized firm, buying a lot of chairs or monitors was easy but I wonder how often for someone like myself interested in just a single desk or chair could compete with someone interested in buying a lot.
- wavefunction 10y agoOverstock.com built their business largely on the assets left from the dotCom bubble bursting around the millennium. For some, a crisis is an opportunity.
- inchoa 10y agoOr as Rahm Emanuel states: "You never want a serious crisis to go to waste"[0]. [0]https://www.youtube.com/watch?v=Pb-YuhFWCr4 https://www.youtube.com/watch?v=Pb-YuhFWCr4
- serg_chernata 10y agoDo you get yours from eBay? Any tips or particular sellers you can recommend?
- inthewoods 10y ago"Shut down 3 or 4 unicorns" - wonder who they were - and I find it a bit funny that he doesn't seem to know the exact number. Or maybe he's just trying to be less specific on purpose.
- KevinEldon 10y agoUnicorns do not exist, but there are a billion suckers out there ready to trade something for less than that something might really be worth.
- philip1209 10y agoValuation is very much a vanity. You can inflate it in a variety of ways. By the time the companies get to him, I think the joke is that you can't tell whether it was actually a unicorn or not. If common stock is worth 0, nobody cares anyways.
- spitfire 10y agoHere's an idea. Go talk to these guys when you're starting your company. These guys are seeing all the failures, so they should have a decent grasp of what NOT to do. Discounting for the fact that they're only seeing failures.
- jksmith 10y agoThere's some innocence in your comment which I wish I still appreciated. I think the grittier reality is that a lot of these startups were based on generally mediocre ideas, but were funded anyway because of relationships and contacts. I cringe every time I see another "Come help us change the world at..." or "Come help us reinvent blah blah" here on HN. Instant red flag to me, but I'll be damned if they didn't get funded anyway.
- komali2 10y agoI really wish I remember where I had heard it or maybe read it, but it was an investor's advice to new investors: "If the (startup) company comes in to the (investor) meeting with lots of color and excitement, turn him down. The guy that comes in and nearly bores you to sleep with his spreadsheets, he's the one to invest in."
- jksmith 10y agoImagine how many good ideas may have been lost because those pitching them didn't have any connections? They don't even get the chance to be boring.
- mikekchar 10y agoI admit I'm jaded, but I'm still convinced this is the correct way to look at things: being an entrepreneur is about moving investor's money into your own pocket. The whole idea of creating a large valuation so that you can have a successful exit is literally just that. You are creating demand for the company so that you can sell it to somebody and keep part of the money. The idea of starting a company so that you share in part of the profit generated by the company is ludicrous in today's world. But always keep in mind that being "successful" is not the only way to move money from an investor's pocket into your own. You can merely hype the hell out of the company. If successful, you can engineer an exit with no viable product. You can also create the "killer demo" which encourages a large company to buy you just so that they can suppress the technology (not so common in this decade, but was standard practice in the 2000's). And here's the best part. If you "fail" utterly, you can still pocket a fair amount of cash. Most successful entrepreneurs that I worked with do not have the attitude that "this company must succeed". Not by a long shot. They throw spaghetti up against the wall over and over and over again, with the belief that eventually something will stick. They view the "failures" as the salary they get paid (from investors) while waiting for the money train to roll in to town. What's even more awesome (as in, it strikes me with awe) is that if you manage to hype your way into the second round (or higher) consistently, then you are a high flyer and people will flock to stuff money into your pockets, even though you have never actually produced a "successful" venture. I am absolutely convinced that your job as a founder is not to make the company "successful". Your job is to raise money, make connections and sell the company. Sure success is a "nice to have", but leave that to your CTO/COO/unwitting co-founder. I often see founders on HN complaining of burnout, trying to keep it all together. Meanwhile all of the successful founders I've worked with don't get bogged down with that stuff. Their the ones going home at 4:30 while the hired help stays until 2 in the morning propping up the server with popsicle sticks and devising various sacrifices to appease whatever god seems to be angry at the time. Typed partially in jest... only partially...
- seizethecheese 10y agoThis may be a good thing for new start-ups. If investors are not "throwing good money after bad" they may have more fuel in the tank for new bets. Each massive round in a unicorn can fuel ten series A rounds.
- JoeAltmaier 10y agotl;dr: watch your runway, pivot earlier, capture customers aggressively.
- hkmurakami 10y agoKey passage for me >MP: We sell a lot of patents, maybe more than anyone else. Usually, the only way to pay back [lenders’] loans is to sell the patents. So people aren’t paying what the company would have been worth but usually enough to pay back that secured debt. So many companies saying they'll only use their patents defensively... may find that their patents will fall into the hands of someone who doesn't share their perspective.
- jessaustin 10y agoCompanies seldom care what happens after they're dead. Since we do care, we take their promises with a grain of salt.
- brilliantcode 10y agowhere can I find a complete list of unicorns trading on the exchange? seems like a great year to short them all.
- songzme 10y agoWhat does it mean to be the terminator of startups? Do you find the Sean Connor of startups and try to kill him? ...Or save him?
- thebigspacefuck 10y agoUgh, it's John Connor...
- songzme 10y agoBahaha. Oops, sorry
- songzme 10y agoI think it's the terminator in the literal sense. Person who terminates things. But if referring to the literal word, why put it in quotes? Why capitalize it?
- scrumper 10y agoThey're definitionally private companies. So you can't. Would that one could...
- scrumper 10y agoSorry, this belongs on brilliantcode's comment above. Mobile client and poor connection and fat fingers.
- pdog 10y agoAlternative title: The Chicken Little of startups sees a downturn coming every year for the last 25 years.
- crpatino 10y agoA broken clock says the right time twice a day. The whole point is when.
- good_vibes 10y agoThis is a natural byproduct of the evolution of tech sector becoming THE world leader. We are no longer a small mammal outrunning giant reptiles, we are now the dominant force shaping the future of LIFE. This is a smart corrective measure to prevent a bubble. The best firms have learned that only scientific innovation, technical genius, and world-class leaders deserve capital for their ideas.
- iron0012 10y agoHere's him making the same exact kinds of claims in 2011. He called himself (or claimed that people called him) the 'undertaker' back then: https://www.pehub.com/2011/08/silicon-valley%E2%80%99s-undertaker-%E2%80%98we%E2%80%99re-anticipating-a-major-fallout%E2%80%99/# https://www.pehub.com/2011/08/silicon-valley%E2%80%99s-under...
- mrbgty 10y ago"We are busy as beavers. We’re doing two to four deals a week." You weren't exaggerating.
- tdumitrescu 10y ago"MP: We’re seeing two to four companies wind-down a week, which we’ve never seen before." ...except for the last time we saw it.
- deleted 10y ago[deleted]
- cavisne 10y agoWow busted, I guess he seeds out this press release every couple of years/weeks to drum up some publicity
- dmix 10y agoHe literally gets asked about this directly in the article and admits as much: > TC: Almost every time we’ve talked over the years, you’ve said that work is busy. Certainly, it slows down sometimes. > MP: Sherwood has mostly been on an upward run since we started [in 1992], but we did slow down in 2014, and we couldn’t figure it out. Well, VCs were running their companies further to the edge to [improve their internal rates of returns before they hit the fundraising trail]. Turns out we had our best quarter ever in 2015 [as soon as they stopped funding those companies]. Blame the news industry for running with the same lead every couple of years. It works. Much like the predictably news industry, people her predictably don't read the article before dismissing it.
- deleted 10y ago[deleted]
- cuca_de_chumbo 10y agoI would much rather Mr Joyboy ("The Loved One", 1965) be my undertaker. https://www.youtube.com/watch?v=-edybFkBiO4 https://www.youtube.com/watch?v=-edybFkBiO4 ... what class!
- justboxing 10y ago> It’s across the spectrum really, B-, C-, D-, E-stage companies. We’ve shut down three or four unicorns. Anyone know what these 3 / 4 "Unicorns" are? Also, isn't the term "unicorn" use to refer to wildly successful startups that have very low chance of failing? This sounds like an oxymoron...
- KeepTalking 10y agoIsn't this a very healthy statistic? In theory, not all companies are meant to last forever. Heck, no company should last forever. Infact, I would argue that he should be doing 7-8 a week. Clearing out the deck and making way for the new is a good way we can maintain a long term healthy eco system. Frankly, many iffy biz models that escape startup death aren't survivors but are just long term zombies that are propped up by investor stupidity with no clear path to sustainable growth.
- trjordan 10y ago"The price of consolidating the companies is too high." I find this fascinating, as it really speaks to my experience in small companies. The thing you actually create -- code, docs, self-serve product, sales and marketing collateral -- isn't particularly valuable. Most of the knowledge is tribal knowledge, and you're all just spending time trying to expand that. It's amazing how far you can go, and have to go, with the informational equivalent of duct tape and string.