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Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hi

Hot take: This seems like it's directly related to the IPO itself. I'm imagining this cause and effect: Need more users pre IPO to juice the growth story -> Hire more marketers -> Cut costs post IPO I'm not arguing it's effective, but it's certainly a reasonable outgrowth of the various goals they've had over the last year or two.

cj 7y ago
I mostly agree, except I'd probably frame it a bit differently: > Need more users pre IPO to juice the growth story Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to." > Cut costs post IPO Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more about the fundamentals of our business. Now we need to improve our fundamentals to push our market cap upward."
- whatshisface 7y ago
  If public markets care about fundamentals why can VCs exit into the public market with fake hockey stick growth?
  - ethbro 7y ago
    Because during the initial window of exit, "All companies look like this" is a plausible narrative.
- MegaButts 7y ago
  I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days. I am still somewhat young so I have a limited frame of reference - maybe it was always like this. Obviously you can find examples to support either side. Amazon and Facebook weren't the money making machines (for all the talks of Amazon not making a profit, AWS clearly does and their free cash flow is insane) they are today when they went public. But there are far more companies that didn't turn out that way. Travis Kalanick was very clear that Uber could not survive without self-driving cars. And that doesn't seem to be panning out.
  - deleted 7y ago
    [deleted]
  - scarface74 7y ago
    Facebook was already profitable pre-IPO and was forced to go public because of some security law involving the number of investors. But the number of tech startups that go public is small. Only one YC backed company has ever gone public - Dropbox. And it seems to be proving Steve Jobs right. It was never a product, it was a feature. It still doesn’t have a clear road to sustainable profitability. Even out of the few that have gone public within the last 10 years, most of the tech darlings still haven’t become profitable.
    - brandnewlow 7y ago
      PagerDuty (YC S10) is also a public company: https://www.marketwatch.com/story/pagerduty-stock-skyrockets-nearly-60-on-first-trading-day-after-ipo-2019-04-11 https://www.marketwatch.com/story/pagerduty-stock-skyrockets...
      - scarface74 7y ago
        And they lost $12 million last year so just like Dropbox. They still aren’t profitable.
    - MegaButts 7y ago
      > But the number of tech startups that go public is small. Only one YC backed company has ever gone public - Dropbox. I think the real irony is that AirBnB is their biggest darling, and it's not a tech company. The history of that company is very interesting, going back to Paul Graham making a note of them being the first founders without a technical background to get into YC (the third cofounder who is technical was added to the roster later on, or at least given the title). That said, I have high hopes for Stripe, Ginkgo Bioworks, Gusto, Docker, Gitlab, and some of their other companies (not that they'll necessarily go public, but that they'll become real companies - I'd argue this describes twitch).
kaonashi 7y ago
> Making robberies into larcenies. Making rapes disappear. You juke the stats, and majors become colonels. I've been here before.
saalweachter 7y ago
Is it normal to have layoffs a quarter after your IPO?
- adamstober 7y ago
  Layoffs are "more normal" at more tech companies at more lifecycle stages than many people realize. If you're interested in tech layoff data covering people who work in the San Francisco Bay Area, read an analysis that I published: https://medium.com/layoff-aid-blog/tech-layoffs-are-surprisingly-frequent-what-can-we-do-9f920e055cfa https://medium.com/layoff-aid-blog/tech-layoffs-are-surprisi...
tanilama 7y ago
This doesn't surprise me per say. The number is nevertheless smaller than the number of engineers they hire, and they only had a handful major services to offer.

cj 7y ago

I mostly agree, except I'd probably frame it a bit differently: > Need more users pre IPO to juice the growth story Or, "VCs tell us we need to spend their investment quickly in whatever areas will generate a hockey stick growth in valuation. We can always fix our business model when we're ready to." > Cut costs post IPO Or, "We no longer answer to our VCs. Now we answer to the public market who cares a lot more about the fundamentals of our business. Now we need to improve our fundamentals to push our market cap upward."

whatshisface 7y ago
If public markets care about fundamentals why can VCs exit into the public market with fake hockey stick growth?
- ethbro 7y ago
  Because during the initial window of exit, "All companies look like this" is a plausible narrative.
MegaButts 7y ago
I don't disagree with what you're saying, but I think there is a more cynical take that Uber exemplifies. The VCs do everything they can to drive up the valuation, except make money. They then sell their shares to the public markets for an incredible profit and let them deal with the problem of actually making money. I fear venture capital (and Silicon Valley) is much more about value extraction than value creation these days. I am still somewhat young so I have a limited frame of reference - maybe it was always like this. Obviously you can find examples to support either side. Amazon and Facebook weren't the money making machines (for all the talks of Amazon not making a profit, AWS clearly does and their free cash flow is insane) they are today when they went public. But there are far more companies that didn't turn out that way. Travis Kalanick was very clear that Uber could not survive without self-driving cars. And that doesn't seem to be panning out.
- deleted 7y ago
  [deleted]
- scarface74 7y ago
  Facebook was already profitable pre-IPO and was forced to go public because of some security law involving the number of investors. But the number of tech startups that go public is small. Only one YC backed company has ever gone public - Dropbox. And it seems to be proving Steve Jobs right. It was never a product, it was a feature. It still doesn’t have a clear road to sustainable profitability. Even out of the few that have gone public within the last 10 years, most of the tech darlings still haven’t become profitable.
  - brandnewlow 7y ago
    PagerDuty (YC S10) is also a public company: https://www.marketwatch.com/story/pagerduty-stock-skyrockets-nearly-60-on-first-trading-day-after-ipo-2019-04-11 https://www.marketwatch.com/story/pagerduty-stock-skyrockets...
    - scarface74 7y ago
      And they lost $12 million last year so just like Dropbox. They still aren’t profitable.
  - MegaButts 7y ago
    > But the number of tech startups that go public is small. Only one YC backed company has ever gone public - Dropbox. I think the real irony is that AirBnB is their biggest darling, and it's not a tech company. The history of that company is very interesting, going back to Paul Graham making a note of them being the first founders without a technical background to get into YC (the third cofounder who is technical was added to the roster later on, or at least given the title). That said, I have high hopes for Stripe, Ginkgo Bioworks, Gusto, Docker, Gitlab, and some of their other companies (not that they'll necessarily go public, but that they'll become real companies - I'd argue this describes twitch).

kaonashi 7y ago

> Making robberies into larcenies. Making rapes disappear. You juke the stats, and majors become colonels. I've been here before.

saalweachter 7y ago

Is it normal to have layoffs a quarter after your IPO?

adamstober 7y ago
Layoffs are "more normal" at more tech companies at more lifecycle stages than many people realize. If you're interested in tech layoff data covering people who work in the San Francisco Bay Area, read an analysis that I published: https://medium.com/layoff-aid-blog/tech-layoffs-are-surprisingly-frequent-what-can-we-do-9f920e055cfa https://medium.com/layoff-aid-blog/tech-layoffs-are-surprisi...

tanilama 7y ago

This doesn't surprise me per say. The number is nevertheless smaller than the number of engineers they hire, and they only had a handful major services to offer.