48 ms·

Startups are pummeled in the ‘great unwinding’

496 points by haasted 7y ago

bluedino 7y ago
Isn't this just accelerating the inevitable for many of these companies?
- hn_throwaway_99 7y ago
  Yes and no. Certainly the unit economics for some start ups always looked problematic. But for others, it's not hard to see how they would have solid businesses in normal times, but have no resources to weather this downturn. I mean, it's not like people are never going to travel again or eat out at restaurants. But I certainly wouldn't want to be a travel startup or restaurant startup (at least of the dine-in variety) today.
  - vhvjkyhkogvv 7y ago
    It may be that travel never has big enough margins to support a 10k employee middleman.
    - hn_throwaway_99 7y ago
      Expedia and Booking have been around nearly 25 years and both have well over 20k employees. Seems like travel has more than enough margins to support multiple companies that size.
      - lotsofpulp 7y ago
        There’s never been an extended global shutdown of travel like now though.
        hn_throwaway_99 7y ago
        Yes, everyone fully understands with travel at a complete standstill, none of these companies are viable if the current situation were the norm. But the current situation is not the norm, people will eventually get back to travelling a lot, and when they do there will be plenty of economic activity to support large companies in the travel business.
        lumost 7y ago
        An extended shutdown with shut borders may have long-term effects on consumer's willingness and desire to travel. If the travel industry remains shut down for the next 12 months it's not unreasonable to think that the travel industry wouldn't fully recover for 10 years.
        learc83 7y ago
        Or maybe pent up demand will have the opposite effect. There's no way to know. I've had the same thoughts about the restaurant industry. Will lockdowns create a generation of home cooks, or will be so tired of staying in that the restaurant industry booms after this is over?
        vikramkr 7y ago
        9/11 had a similarly chilling impact that shook the airline industry to it's core. Covid is likely going to be worse for the industry than that, but it's not without precedent
- rudolph9 7y ago
  Yes and no. Yes; lots of startups fail and now just fail sooner. No; many who would have otherwise found a foothold now have to re-examine their path forward. The startup I worked for until last Thursday is going through this. Despite most other startups in the space folding and the sales team finally getting traction with lots of buyers giving a path to becoming a viable business, those companies that were eager to sign contracts a month ago are having to rethink their cashflow and deciding if changing anything in their existing business is worth the risk.
yingw787 7y ago
I've heard numerous times startups have had a hard time getting a smaller amount of funding from angels and VCs. As in, "I want $500k" and "no, we only do deals with $1M+", or something like that. I thought that was crazy. This is probably the pendulum swinging back, as pendulums do. I am interested in how this situation affects larger companies. My guess is since they're so much larger this time around than back in 08-09, and since tech didn't really change all that much in the past ten years or so, there might be greater structural pressure for startups in terms of hiring talent and market direction, because the big guys have so much liquidity and are entrenched in many different verticals. It'll be interesting to see how it all plays out.
- Spartan-S63 7y ago
  I think they get bullied into larger deals that inflate their valuation beyond what they think they're worth. It works in a growing market to fundraise beyond your valuation and then grow into it. It doesn't work when the market turns down. If your runway is sufficiently short, you'll be fundraising a down round in a down economy which will slash your valuation and make it harder to get good terms.
  - edoceo 7y ago
    Yea, I had this c2015 when I was seeking 250k to grow a revenue generator. I was told to make a story that compels a 15M future valuation so I could ask for 750k now. But I didn't even believe the revenue projection need to justify! I said no, these are my numbers. I couldn't fake a 10x story and my 6x story wasnt compelling enough.
- tedivm 7y ago
  From what I've been hearing VCs are worried this is going to last awhile, and so they don't want to give small amounts of money to a company knowing it isn't enough to ride through this. If you only ask for enough funding for a year and the VCs believe the economy won't improve for another two then they aren't going to put money in.
  - 7y ago
cowsandmilk 7y ago
Classpass was founded in 2013. Wonderschool was founded in 2012. Can we stop calling companies that age a startup? Or at least stop using them as examples? I mean, the article then goes on to call Airbnb a "home rental start-up". It isn't a start-up, it is over a decade old and has over 10,000 employees.
- _bxg1 7y ago
  And yet we all know what they mean when they call those companies "startups". The term has drifted pretty far from its original meaning, but it does carry a new meaning even though it's almost completely different
  - TazeTSchnitzel 7y ago
    It means they're VC-backed webapps from San Francisco?
    - _bxg1 7y ago
      Roughly. I would broaden the colloquial meaning to "new-wave tech companies". Ones from the past decade that aren't FAANG and maintain an agile culture (or at least purport to), and have a certain San Francisco sheen to them even if they aren't actually from there
      - maxerickson 7y ago
        I feel like you are now vigorously explaining that the other poster was right, that we should use some other name.
        _bxg1 7y ago
        I'm not arguing one way or the other, I'm just observing that "startup" is an overloaded term in 2020, and maybe the new definition is a bit silly, but it's also really hard to get everyone in a society to change the vocabulary they've become accustomed to.
ilikehurdles 7y ago
It's hardly unique to startups, and has more to do with the industries they're in than the company size. Mine is still hiring very aggressively but we are in the health research industry which didn't face the same sort of "unwinding", and have always been remote so there's no empty office we're obligated to pay rent for. Meanwhile I have friends in very established publicly traded companies who have been laid off or had their benefits cut already. One lost all company matching on 401ks this year. VCs remember that there are some very successful companies that came out of the 2008 recession, and many are doing a lot more than usual to help the more promising parts of their portfolio weather this storm. This article fails to highlight how any of these startups (on that note, how is AirBnB a startup) are worse positioned than their larger competitors. Not one of the ways that workers are impacted that are mentioned in the article is unique to any size of public or private company.
- AznHisoka 7y ago
  Yep it is strange the author chose to focus on startups here. Almost every single company will be negatively impacted in the next few months to years (save for a handful of companies like Amazon/Walmart).
- danielmunro 7y ago
  I was laid off last week (yes, it was a startup), do you have a link to a careers page?
  - deleted 7y ago
    [deleted]
  - ilikehurdles 7y ago
    I sent you a message on your LinkedIn
ur-whale 7y ago
https://archive.is/EbF9b https://archive.is/EbF9b
hn_throwaway_99 7y ago
> For start-up workers, the past few weeks have been sobering. Many had bought into the tech industry’s change-the-world ideals, had few boundaries between their work and personal lives and hoped for big payouts if their start-ups went public. This saddened me, because it's a refrain that we hear over and over and over. Same exact thing happened during the .com bust (which scares me to believe that was 20 years ago already). You can work really hard at a startup, put in a ton of energy, but at the end of the day, never forget it's just a business. It's a team, not a family, and in a team sometimes team members get cut. I've also found that the best folks in business tend to have rich, fulfilling lives outside of business as well.
- Igelau 7y ago
  I had a recent stretch of unemployment that was made a bit more difficult than it had to be by the number of potential hirers who were under the impression that developers go home and just do more development. My GitHub repo? Uhh, yeah sure, here are some dotfiles I backed up a couple years ago...
- save_ferris 7y ago
  > I’ve also found that the best folks in business tend to have rich, fulfilling lives outside of business as well. Totally agree, but I’ve been burned multiple times by startups that see any kind of multifaceted lifestyle as “not fully committed” to the team or company, which is ridiculous. I’ve been so disappointed how frequently this happens in tech.
  - harumph 7y ago
    Rule of Acquisition 211: "Employees are rungs on the ladder of success. Don't hesitate to step on them." When you're a "human resource", you will be exploited. The term is dehumanizing. The C-suite requires this abstraction lest they are caught treating their resources like humans.
  - DEADBEEFC0FFEE 7y ago
    How does the response manifest? Is it overt?
neonate 7y ago
https://archive.md/Xnbvv https://archive.md/Xnbvv
baby 7y ago
I know many people who have been fired around me, throughout the world, this is really scary.
tedd4u 7y ago
Startups have had years to prepare, work on their plan, strengthen their fundamentals, and raise capital if necessary. I think the shock is that probably this is a faster onset and deeper drop scenario than most had modeled. Every [1] startup has been thinking for the past couple years about their plan for when the recession would come. Probably hundreds of articles written in mainstream and economic/financial press over the last 2-3 years about "the coming recession" [1]. Trade war? Debt bubble popping? Auto loan credit crisis? Nope, turns out it's pandemic. Nobody saw that coming until January [3]. [1] No evidence but my guess. If they haven't it seems negligent. [2] here's an example from 2018 from the NYT contemplating what will be the cause of the next recession (note, not whether or if it will happen, just what will cause it) https://www.nytimes.com/2018/08/02/upshot/next-recession-three-most-likely-causes.html https://www.nytimes.com/2018/08/02/upshot/next-recession-thr... [3] I mean the specific timing of this pandemic. As we've all learned now many in and out of government had warned the public.
- JMTQp8lwXL 7y ago
  People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. Given someone in the peanut gallery is always claiming recession is near imminent, when are businesses supposed to prepare? Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders.
  - yellowapple 7y ago
    > Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders. Or put into making the company profitable, or at least not losing money. That might very well include R&D (to develop new products or more efficient ways to produce and distribute those products) or expanding operations (to leverage better economies of scale and have a better bargaining position with vendors).
  - darkwizard42 7y ago
    I think what you can do is diversify and start thinking about business investments that would be good regardless of continued high growth or recession. So continuing to invest in improved infra might be a good area to put your cash/resources since that will pay off really well in high growth and probably still have savings in a slower period.
wgyn 7y ago
Is the narrative that big companies are safe havens for job seekers actually true? Isn't Airbnb a "big" company?
- mandelbrotwurst 7y ago
  Company size is positively but not perfectly correlated with stability.
- deleted 7y ago
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- SpicyLemonZest 7y ago
  Airbnb is working on pulling out all the stops to try and prevent layoffs. They might not succeed, but if they were a smaller company they wouldn't even have anything to try.
  - deleted 7y ago
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  - tonyedgecombe 7y ago
    Is there anything inherent in their size which means they can weather the storm?
- dominotw 7y ago
  I think big isn't just pure size. Groupon was a 'big' company in chicago with ~10k employees here.
ttul 7y ago
What I’m seeing: - Forget funding. The window is closed. - Big customers are battening down the hatches. Cash is king. Lots of asks for payment terms. - Little customers are failing. If you run a startup or work at one, implement Plan B now. Cut.
- rhizome 7y ago
  Frankly, as a solo I'm thinking of just looking into SBA help (USA).
qppo 7y ago
Startups are in way better shape than traditional small businesses. By our very nature, we need months of runway just to keep running. We're designed to weather this kind of storm because "zero revenue" is the default state. Hearing about Bird cutting 30% of their workforce is awful. But it's nothing compared to the thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased operations overnight. My friends and family in startups are doing fine, for the moment. It's those that chose to work at the more stable, traditional work environments that are getting wiped out, and much less likely to return when the economy starts back. Because when it does, there will be money ready for investment - extending your runway to get there for a startup is more straightforward. But when you're a bigger business with little cash and no-one is buying assets right now, you literally are unable to make any decision to help. I've got friends in manufacturing, hospitality, services, and so on that will not return to work because their businesses are going to or have already failed, for good. That's the fucking terrifying thing happening right now and it's more deserving of attention than us tech bros.
- BillinghamJ 7y ago
  Our board and investors have made it clear they think it's highly unlikely any meaningful funding will be able to progress until early 2022 at this point. Recently-funded or reasonably conservative startups should be able to do okay with that, but ones without a lot of runway are going to be in a really difficult position.
  - CPLX 7y ago
    Your board and investors clearly have an exceedingly high regard for their own predictive abilities if they can anticipate the reaction of a specific financial sector two years hence, based on the effects of a crisis that's realistically about 3-4 weeks old. I'm not saying they are wrong. But the premise that anyone has a fucking clue what's going to happen on what timeline is ludicrous.
    - treyfitty 7y ago
      It doesn’t matter if they’re wrong. That’s what they think. And if they think that, money doesn’t flow in. It becomes a self fulfilling prophecy.
julius_set 7y ago
So I’m curious will property and rental prices drop in San Francisco now that funding is drying up? Can’t seem to find much information about that. For example a friend of mine who was laid off still has to pay $3300 / month for his studio. Curious how long this will last for?
- dominotw 7y ago
  I think its unlikely because everyone knows its going to right back up once this blows over. So demand should hold constant.
  - deleted 7y ago
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  - oiasdjfoiasd 7y ago
    that sounds like pretty wishful thinking.
  - sheeshkebab 7y ago
    Perhaps, but the way it’s moving there will be another 20m+ people without jobs in a month or two (prime working age folks), and with a bunch of industries contracting at the same time it’s likely that recovery will take a while before it all resumes. Hope I’m wrong but it could be a few years before it will bounce back.
- peter303 7y ago
  In 2002 after dot.bomb, prices held flat for a while. A fair of vacancies in SoMa. The 2008 recession sort of bypassed tech.
  - not2b 7y ago
    Are you kidding? The 2008 recession killed a ton of tech. The core of traditional Silicon Valley (Mountain View, Sunnyvale, Santa Clara) had so much vacant office space that large areas zoned industrial felt like ghost towns. Sure, the companies that later became dominant survived. The electronic design automation sector held on because chipmakers couldn't stop doing design work. But it was very tough.
samstave 7y ago
During the dot com bust - they began building Santana Row, on the site of a very old shopping center called Towne and Country. The developers wanted to revamp the site to take advantage of all the tech money and provide upgraded experiences etc... While they were in the middle of building it - the bust happened. Then, one of the largest buildings that was ~65% complete or so caught fire. It was HUGE - I think it was an 11 alarm fire.... There was a crap ton of speculation as to how this happened - and the prevailing theory among many I knew at the time (I lived right down the street and actually stood across the street watching the thing burn down for a few hours) - was that it was insurance fraud to recoup some of the investment in the multi million dollar development due to the fact that its demographic was now largely out of work. Obviously they did fine eventually, but lots thought it was an opportunistic attempt to take advantage of the situation. As an aside, not too long after that, I had a pool aprtty at my place for all the tech people in our circle. 65 people showed up and out of that, only 2 were still employed. The tech industry is a hell of a lot more resiliant this time - as actually many of the service provided are actually of great value to those stuck at home or unemployed. So this collapse will be nothing like the dot com bust. However - the wealth transfer this time will be far greater than the 2008 collapse. The next Black Swan [0]: [0] - https://youtu.be/NEnuWv38urI https://youtu.be/NEnuWv38urI
- deleted 7y ago
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rexreed 7y ago
I'm sorry for some of my schadenfreude here, but really, so many of these startups are overfunded with way too many employees to begin with. They've often paid top dollar for expensive technical talent in locations with very high cost of living. I can't wait to see a pull back to solid fundamentals. I don't see why a daily vacation rental company honestly needs 240 highly paid employees. One company cited in the article (WanderJaunt) laid off 56 out of its 240 total employees, but honestly I bet they could do just well with 20 total employees. Let's put the Lean back in Lean Startup and provide real value instead of playing the magical, mysterious game of VC musical chairs.
- anthony_r 7y ago
  See also the "Austrian business cycle theory". But the bust, while clearing the economy of a lot of mal-investment, goes on for quite a painful while before the previous level of output/employment/prosperity is matched. https://en.wikipedia.org/wiki/Austrian_business_cycle_theory https://en.wikipedia.org/wiki/Austrian_business_cycle_theory
  - rexreed 7y ago
    Are you implying that venture funding at previous levels is a function of low interest rates (that's the theory in ABCT linked above). I don't think that specifically applies here. While it's possible venture funding is accelerated by low rates, this was not the case in the late 1990s prior to the 2000s dot-com crash. Rather we're seeing a Black Swan event causing macroeconomic pull back, and it's pulling back the covers on companies that really had no fundamental underlying value or support. The only real exit for these companies was acquisition or public markets. But with both exits now drying up, there's nothing but overvalued, overfunded companies with revenue streams (if they have any) drying up faster than the glaciers are melting. The fundamentals were never there, and it was only the fat-times of VC investment keeping them afloat. There might be a role to play with ABCT with regards to VC investment as a whole, but this downturn is more than just a normal business cycle.
  - Marazan 7y ago
    Ah yes, ABCT. First, assume the market is made up of rational actors. Second, assume that sustained irrational investment choices have been made by the rational actors.
rexreed 7y ago
The news just keeps getting worse for SoftBank. "OneWeb, a satellite start-up that had raised $3 billion in venture funding from investors including SoftBank, the Japanese conglomerate, filed for bankruptcy on Friday and plans to sell itself." Can we finally admit that SoftBank's model of so-called VC funding success is really just a colossal failure? The throw-everything-into-it approach of making Unicorns a reality just doesn't work.
- thendrill 7y ago
  Yes we should finally admit that a large part of the capitalist model is a complete and total failure. USA became a 3rd world country overnight.
- joelbluminator 7y ago
  Normally I would agree, but in this current shit-show of a market even investments in Delta can evaporate. Looks like everyone's suffering. Imagine even healthcare ETFs saw a 15% loss so far.
pixelmonkey 7y ago
One of my good friends is a restaurant owner in NYC and my spouse is a doctor/surgeon in NYC. Startups aren't pummeled -- they're insulated. Restaurant owners and doctors are pummeled. And all of you who thought incompetent federal government leadership was OK in this modern world -- you were bamboozled. You can start apologizing now.
- seibelj 7y ago
  But I genuinely believe all federal government leadership is incompetent - it’s not a matter of it being “OK”, that’s just the default for every administration. Which country on earth is responding to this well without resorting to authoritarian practices?
  - numair 7y ago
    Denmark. Norway. Singapore. New Zealand. Taiwan. The fact of the matter is, there’s too many people in America invested in a cynical notion that we should expect the government to “fail,” which makes it easier to keep everything underfunded, which almost guarantees failure (random acts of heroism not withstanding). THAT, more than any single person, is what’s killing America. And that’s a bipartisan cancer.
    - not2b 7y ago
      No, in the US there's only one party that is explicitly anti-government, anti-expert, expecting government to fail. The other party has its own problems (its progressive and centrist factions are are war with each other, for example), but they are different problems.
    - ikeyany 7y ago
      The American people want public services to be funded, but that is not where money comes from. American politicians are far more influenced by big money than they are by their constituents.
    - makomk 7y ago
      The Singapore model for tackling the coronavirus that all the American press were blaming the American government for being too incompetent to manage doesn't even work in Singapore, as it turns out - they're going full-on lockdown now, with all non-essential businesses forced to either work from home or close down.
twomoretime 7y ago
There might be something wrong with an economic model which is predicated on infinite growth.
llsf 7y ago
Talking about startups in difficulties, any idea how wework is doing these days ? I would expect the work spaces being near empty, and for the companies renting spaces they might be even pulling the plug. I am worried that if wework goes under because of the pandemic (and SoftBank realizing that it is not worth being salvaged), then it would trigger a domino effect in the whole US commercial real estate market.
Akaahn 7y ago
Startups are having their great reckoning. No longer can they just come up with fancy catch lines, and get bought by a billion dollar company. Now they actually have to provide something unique, something useful, something worthy of them actually being acquired.
- vikramkr 7y ago
  Or just going on to become market leaders. Out of the tech bubble pop emerged google, apple, amazon, microsoft, etc standing strong
irrational 7y ago
I work for a Fortune 150 company as a programmer. I've had lots of people ask me why I don't move to California and work for a startup. The main reason is because I'm risk adverse and I really don't like the Bay Area (I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return). Now I have a new reason to be grateful I work for a Fortune 150 company. I've been able to work from home no problem. Nobody has been laid off. The company has already announced that they are going to go ahead and pay 100% of our year end bonus regardless of what happens in the 4th quarter (the current quarter). Frankly the quarantine has been very very non-stressful for me and my family so far. I don't think that would be the case if I had been working for a startup.
- dopamean 7y ago
  it's averse not adverse
- axiom92 7y ago
  >I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return I understand that this is not center to the point you're making but I am curious! What makes you hate the Bay area? I lived there for ~4 years and recently moved to Pittsburgh. I can't wait to move back. In fact, the mere mention of these places evokes a strong sense of homesickness in me for some reason.
  - sethammons 7y ago
    Not OP. I've only visited the Bay Area a few times. Human filth, needles, and just so many people packed into the space. I can't imagine raising a family in that situation. Contrast that with where I am now: I have a very large house on 10+ acres of land on the edge of a lake. Each of my kids has their own room and there are lots of rooms and corners to "get away from each other". We have room for food storage, a home gym, and are not dependent on the city for water or gas (though we do have to fill our propane tank a couple times a year). If I walk to the edges of my property, I can see a couple other houses. We have bon fires, ride ATVs, go fishing, shoot guns and bows in the back yard. We have full on seasons (granted that winter is the largest, but we like cold and snow). Not to even begin talking about the political differences. The few things I liked about the Bay Area: lots of economic opportunity (esp. as a software dev), nearby greenery, and lots of food options. Oh, and the ability to find others who would like to play board games. I can't find anyone to play board games with out in the middle of nowhere (my family is not interested in any).
invertY 7y ago
Ctrl+F "Ecology" Ctrl+F "CMBS" Ctrl+F "Reits" Ctrl+F "Repo" Oh, wow. You guys are totes not ready for the next stuff.
- sfj 7y ago
  I know the others, but what does ecology have to do with it?
yalogin 7y ago
To me the most pertinent question is how long is the impact going to last. Are we ever going to get this under control? If it takes 6 months can any of the service businesses survive that long? What about startups?
- SpicyLemonZest 7y ago
  I'm extremely optimistic about the coronavirus, something like the 90th percentile among positions I've read, and even I think we'll still be facing impacts in 6 months. Even if the lockdowns end this month and the public health problem is considered resolved in June, that won't be enough time to shake off all the effects. Most businesses will certainly be allowed to open long before then, though.
vinayan3 7y ago
Article's premise is right but they primarily used start-ups in the travel and transportation space for examples of insane revenue drop. If people are sheltering no one is gonna be using these services. So, it's really not surprising. The longer term impact is going to be the lack of funding in the coming couple of years and lack of customers for the services/products coming out of startups. How will VC funds fair in this? Are there enough LPs out there willing to put their money into this risk pool?
- dehrmann 7y ago
  > How will VC funds fair in this? Probably not well. https://news.ycombinator.com/item?id=20985687 https://news.ycombinator.com/item?id=20985687
deleted 7y ago
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sjg007 7y ago
I dunno.. online businesses will probably do well in this "new" economy. There's a ton of opportunity to remote work tooling as well. Right now people are hunkered down trying to get the basics in order. Restaurants and grocery stores have had to reconfigure themselves for delivery and curbside pickup. Cloud kitchens will do well here, Instacart is probably doing well too. AirBnB will not do well since they are a function of in person travel. Airlines though have moved to cargo delivery type function. Amazon is obviously cleaning up. If you can make masks or ventilators you are probably going to do really well. Every local community has an instacart like opportunity and some of these are grass roots organized.
0x202020 7y ago
I’ve got an esports side project that was starting to get some interest within the community and generate non-trivial MRR (~4k mo). I have a closed alpha that a few teams in the league were using, and I was talking at some level to basically everyone that could be in the market for the current version of the problem. I was looking into getting a business/sales partner in order to have more success on the business side of getting the other organizations I was in talks with, as I am normally just a lead dev with no business interaction. Then the league, along with everything else, got delayed and quarantines started. Within 3ish days all of the professional teams, academy teams and two other organizations are interested in my “alpha” software. So now my “side project” as of April 1st has ~10x’d its MRR (~40k). As of now I am getting some business stuff ironed out and only making bug fixes/small updates while I get a better feeling of what type of workload difference the growth is making
- exolymph 7y ago
  Congrats, that's awesome. Good job and good luck seizing the opportunity!
  - 0x202020 7y ago
    Thank! It’s exciting and scary at the same time. I’ve had some small projects that have also made small amounts of money, but never anything to possibly turn into a business
    - nnntom 7y ago
      Hi! I know someone who could help with the business side of things. If you’re interested my email is in my about page. Best of luck either way!
- boojing 7y ago
  Interesting. If you don't mind me asking; how did you make contact with the first few teams? Was the early exposure from sharing parts of the project through social platforms or directly reaching out to the teams?
deleted 7y ago
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Cymen 7y ago
I've been contracting lately and I'm on two active contracts. One of the two is winding down. I've been billing at $155/hour via an agency (to be clear, their fee added on top of that $155). They offered me $90,000 salary to go employee. They upped that to $100,000 when I said no (I thought we were done but I said no again). Their thinking is they can take advantage of the situation to get cheap engineering staff. If you're running a startup and thinking that now you can get cheap senior engineers, you might want to consider that it might be true for those who aren't careful with their finances. However, the talent you attract with this method is going to leave as soon as they find a better offer. I don't think most management teams are like this one but I'm amazed by the short term thinking. Professionally, I can't really call them on this behavior but I'm glad to have been saving for financial independence (now is the time to go back to working on my own things and yes, I do have a multi-year runway).
- battery_cowboy 7y ago
  Get an engineer for a year or two at the cut-rate price and once they've gotten ingrained into your org and code base they'll head off when (if?) the economy recovers. Not very forward-thinking.
  - tonyedgecombe 7y ago
    There is no guarantee those high salaries will come back quickly or at all. This event might well usher in a more cost-conscious era.
    - deleted 7y ago
      [deleted]
    - battery_cowboy 7y ago
      Maybe, but right now it's too early to tell and a move like that, to take advantage of developers during this time, will hurt them nonetheless. I personally have been keeping track of companies I've applied for to see how they treat people during the worst times, right now, and I won't work for a company like that. I'm sure there are other developers who would do the same.
old_tech 7y ago
Prediction: The great unwinding is going to be felt much more severely by Big Tech employees, but many months out from today. Source: I don't work at Big Tech, but personally know many folks who do. For the most part, they are not really thinking very far into the future, because they think (with some justification) that their jobs are much safer than startups and smallish companies. 1 The usual reasons of less people spending money on stuff holds, of course. If your customer is now unemployed, they will eventually cancel your software subscription too. 2 Most employees working at these companies have stock options which will plummet once people start pulling money out of the stock market because they actually need the cash to survive. 3 There will be the usual letting go of people because the manager doesn't like them. In a big company, ironically, this is much easier because no single employee is indispensable. 4 The actual problems are not going to start at Big Tech till about a year from today. This is one of the main problems. Most predictions of economic recovery are way too optimistic. Unless something extraordinary happens (e.g. a combination of off-the-shelf medicines, all in large supply, which miraculously just negates the virus, and we learn about it tomorrow). There is an excellent chance that the layoffs will hit Big Tech precisely when most of their employees think they are safe. 5 The biggest problem, in my view, is how much these employees are used to the cash cushion. There will always be a few prudent folks who save a large chunk, but generally the lifestyles have already been elevated to match the income. The folks who never raised their lifestyle to that level will not really have much to worry about, but that is a small minority. One can imagine these folks - who are basically going to be the last to be laid off, having to compete with much more hungrier folks while simultaneously having to significantly downsize their lifestyle. And suppose they also bring an "attitude" with them (not that everyone does, but some do), who will want to hire them? Some folks will point out the large cash holdings of these companies and easy access to credit. But how far can that runway last, realistically, under these types of circumstances?
gcc_programmer 7y ago
I hope this is the final nail in the coffin of Silicon Valley: this place has been, very well deservedly until 2010-2015 but completely undeservedly after that, at the top of VC's investment list. But nothing innovative is coming out of that place anymore: the magical days of Facebook, Instagram, Twitter are over. What was my 'aman' (enough) moment? That startup with the juices and the juice squeezers (I forgot their name): to me that was the sign that the place is running out of steam. Hopefully this economic crisis will do enough damage and the investment focus will shift to more promising industries and locations. Awaiting the downvotes : I btw realise the irony of the fact that I write this comment on a website owned by ycombinator, but I am here because sometimes interesting things are shared :)
JackPoach 7y ago
It really ticks me off when people think that 'startup' is different from 'business'. Startup is a new business. The fact that it is most frequently in the IT sector doesn't change it's nature. It's still a business that fall under all business rules.
Ice_cream_suit 7y ago
The WeWork saga is especially instructive.
unnouinceput 7y ago
Quote: "We purposefully and intentionally did not have any video on to protect privacy as we delivered the news live to individuals" Translation: We are SoB's and we DGaF about you to the full extent to not even look you in the face when giving you the finger.
mark_l_watson 7y ago
Excuse me for getting a little bit off topic: I think these crazy times will cause startups, medium size companies, and especially individuals to, in the future, keep much larger cash reserves and generally exist more frugally. It is true that at least in the USA that democrats and republicans in Congress and the president are working overtime to shore-up their constituents (i.e., large corporations) so they will be fine. I think the help given to the mega corporations will be at least an order of magnitude greater than what is given to help individuals and regular businesses - I base this on what has been just been given to the financial industry in the last month. Frugal small businesses that we own ourselves are probably the most stable unless you are in the billionaire class.

496 points by haasted 7y ago

bluedino 7y ago

Isn't this just accelerating the inevitable for many of these companies?

hn_throwaway_99 7y ago
Yes and no. Certainly the unit economics for some start ups always looked problematic. But for others, it's not hard to see how they would have solid businesses in normal times, but have no resources to weather this downturn. I mean, it's not like people are never going to travel again or eat out at restaurants. But I certainly wouldn't want to be a travel startup or restaurant startup (at least of the dine-in variety) today.
- vhvjkyhkogvv 7y ago
  It may be that travel never has big enough margins to support a 10k employee middleman.
  - hn_throwaway_99 7y ago
    Expedia and Booking have been around nearly 25 years and both have well over 20k employees. Seems like travel has more than enough margins to support multiple companies that size.
    - lotsofpulp 7y ago
      There’s never been an extended global shutdown of travel like now though.
      - hn_throwaway_99 7y ago
        Yes, everyone fully understands with travel at a complete standstill, none of these companies are viable if the current situation were the norm. But the current situation is not the norm, people will eventually get back to travelling a lot, and when they do there will be plenty of economic activity to support large companies in the travel business.
        lumost 7y ago
        An extended shutdown with shut borders may have long-term effects on consumer's willingness and desire to travel. If the travel industry remains shut down for the next 12 months it's not unreasonable to think that the travel industry wouldn't fully recover for 10 years.
        learc83 7y ago
        Or maybe pent up demand will have the opposite effect. There's no way to know. I've had the same thoughts about the restaurant industry. Will lockdowns create a generation of home cooks, or will be so tired of staying in that the restaurant industry booms after this is over?
      - vikramkr 7y ago
        9/11 had a similarly chilling impact that shook the airline industry to it's core. Covid is likely going to be worse for the industry than that, but it's not without precedent
rudolph9 7y ago
Yes and no. Yes; lots of startups fail and now just fail sooner. No; many who would have otherwise found a foothold now have to re-examine their path forward. The startup I worked for until last Thursday is going through this. Despite most other startups in the space folding and the sales team finally getting traction with lots of buyers giving a path to becoming a viable business, those companies that were eager to sign contracts a month ago are having to rethink their cashflow and deciding if changing anything in their existing business is worth the risk.

yingw787 7y ago

I've heard numerous times startups have had a hard time getting a smaller amount of funding from angels and VCs. As in, "I want $500k" and "no, we only do deals with $1M+", or something like that. I thought that was crazy. This is probably the pendulum swinging back, as pendulums do. I am interested in how this situation affects larger companies. My guess is since they're so much larger this time around than back in 08-09, and since tech didn't really change all that much in the past ten years or so, there might be greater structural pressure for startups in terms of hiring talent and market direction, because the big guys have so much liquidity and are entrenched in many different verticals. It'll be interesting to see how it all plays out.

Spartan-S63 7y ago
I think they get bullied into larger deals that inflate their valuation beyond what they think they're worth. It works in a growing market to fundraise beyond your valuation and then grow into it. It doesn't work when the market turns down. If your runway is sufficiently short, you'll be fundraising a down round in a down economy which will slash your valuation and make it harder to get good terms.
- edoceo 7y ago
  Yea, I had this c2015 when I was seeking 250k to grow a revenue generator. I was told to make a story that compels a 15M future valuation so I could ask for 750k now. But I didn't even believe the revenue projection need to justify! I said no, these are my numbers. I couldn't fake a 10x story and my 6x story wasnt compelling enough.
tedivm 7y ago
From what I've been hearing VCs are worried this is going to last awhile, and so they don't want to give small amounts of money to a company knowing it isn't enough to ride through this. If you only ask for enough funding for a year and the VCs believe the economy won't improve for another two then they aren't going to put money in.
- 7y ago

cowsandmilk 7y ago

Classpass was founded in 2013. Wonderschool was founded in 2012. Can we stop calling companies that age a startup? Or at least stop using them as examples? I mean, the article then goes on to call Airbnb a "home rental start-up". It isn't a start-up, it is over a decade old and has over 10,000 employees.

_bxg1 7y ago
And yet we all know what they mean when they call those companies "startups". The term has drifted pretty far from its original meaning, but it does carry a new meaning even though it's almost completely different
- TazeTSchnitzel 7y ago
  It means they're VC-backed webapps from San Francisco?
  - _bxg1 7y ago
    Roughly. I would broaden the colloquial meaning to "new-wave tech companies". Ones from the past decade that aren't FAANG and maintain an agile culture (or at least purport to), and have a certain San Francisco sheen to them even if they aren't actually from there
    - maxerickson 7y ago
      I feel like you are now vigorously explaining that the other poster was right, that we should use some other name.
      - _bxg1 7y ago
        I'm not arguing one way or the other, I'm just observing that "startup" is an overloaded term in 2020, and maybe the new definition is a bit silly, but it's also really hard to get everyone in a society to change the vocabulary they've become accustomed to.

ilikehurdles 7y ago

It's hardly unique to startups, and has more to do with the industries they're in than the company size. Mine is still hiring very aggressively but we are in the health research industry which didn't face the same sort of "unwinding", and have always been remote so there's no empty office we're obligated to pay rent for. Meanwhile I have friends in very established publicly traded companies who have been laid off or had their benefits cut already. One lost all company matching on 401ks this year. VCs remember that there are some very successful companies that came out of the 2008 recession, and many are doing a lot more than usual to help the more promising parts of their portfolio weather this storm. This article fails to highlight how any of these startups (on that note, how is AirBnB a startup) are worse positioned than their larger competitors. Not one of the ways that workers are impacted that are mentioned in the article is unique to any size of public or private company.

AznHisoka 7y ago
Yep it is strange the author chose to focus on startups here. Almost every single company will be negatively impacted in the next few months to years (save for a handful of companies like Amazon/Walmart).
danielmunro 7y ago
I was laid off last week (yes, it was a startup), do you have a link to a careers page?
- deleted 7y ago
  [deleted]
- ilikehurdles 7y ago
  I sent you a message on your LinkedIn

ur-whale 7y ago

https://archive.is/EbF9b https://archive.is/EbF9b

hn_throwaway_99 7y ago

> For start-up workers, the past few weeks have been sobering. Many had bought into the tech industry’s change-the-world ideals, had few boundaries between their work and personal lives and hoped for big payouts if their start-ups went public. This saddened me, because it's a refrain that we hear over and over and over. Same exact thing happened during the .com bust (which scares me to believe that was 20 years ago already). You can work really hard at a startup, put in a ton of energy, but at the end of the day, never forget it's just a business. It's a team, not a family, and in a team sometimes team members get cut. I've also found that the best folks in business tend to have rich, fulfilling lives outside of business as well.

Igelau 7y ago
I had a recent stretch of unemployment that was made a bit more difficult than it had to be by the number of potential hirers who were under the impression that developers go home and just do more development. My GitHub repo? Uhh, yeah sure, here are some dotfiles I backed up a couple years ago...
save_ferris 7y ago
> I’ve also found that the best folks in business tend to have rich, fulfilling lives outside of business as well. Totally agree, but I’ve been burned multiple times by startups that see any kind of multifaceted lifestyle as “not fully committed” to the team or company, which is ridiculous. I’ve been so disappointed how frequently this happens in tech.
- harumph 7y ago
  Rule of Acquisition 211: "Employees are rungs on the ladder of success. Don't hesitate to step on them." When you're a "human resource", you will be exploited. The term is dehumanizing. The C-suite requires this abstraction lest they are caught treating their resources like humans.
- DEADBEEFC0FFEE 7y ago
  How does the response manifest? Is it overt?

neonate 7y ago

https://archive.md/Xnbvv https://archive.md/Xnbvv

baby 7y ago

I know many people who have been fired around me, throughout the world, this is really scary.

tedd4u 7y ago

Startups have had years to prepare, work on their plan, strengthen their fundamentals, and raise capital if necessary. I think the shock is that probably this is a faster onset and deeper drop scenario than most had modeled. Every [1] startup has been thinking for the past couple years about their plan for when the recession would come. Probably hundreds of articles written in mainstream and economic/financial press over the last 2-3 years about "the coming recession" [1]. Trade war? Debt bubble popping? Auto loan credit crisis? Nope, turns out it's pandemic. Nobody saw that coming until January [3]. [1] No evidence but my guess. If they haven't it seems negligent. [2] here's an example from 2018 from the NYT contemplating what will be the cause of the next recession (note, not whether or if it will happen, just what will cause it) https://www.nytimes.com/2018/08/02/upshot/next-recession-three-most-likely-causes.html https://www.nytimes.com/2018/08/02/upshot/next-recession-thr... [3] I mean the specific timing of this pandemic. As we've all learned now many in and out of government had warned the public.

JMTQp8lwXL 7y ago
People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. Given someone in the peanut gallery is always claiming recession is near imminent, when are businesses supposed to prepare? Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders.
- yellowapple 7y ago
  > Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders. Or put into making the company profitable, or at least not losing money. That might very well include R&D (to develop new products or more efficient ways to produce and distribute those products) or expanding operations (to leverage better economies of scale and have a better bargaining position with vendors).
- darkwizard42 7y ago
  I think what you can do is diversify and start thinking about business investments that would be good regardless of continued high growth or recession. So continuing to invest in improved infra might be a good area to put your cash/resources since that will pay off really well in high growth and probably still have savings in a slower period.

wgyn 7y ago

Is the narrative that big companies are safe havens for job seekers actually true? Isn't Airbnb a "big" company?

mandelbrotwurst 7y ago
Company size is positively but not perfectly correlated with stability.
deleted 7y ago
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SpicyLemonZest 7y ago
Airbnb is working on pulling out all the stops to try and prevent layoffs. They might not succeed, but if they were a smaller company they wouldn't even have anything to try.
- deleted 7y ago
  [deleted]
- tonyedgecombe 7y ago
  Is there anything inherent in their size which means they can weather the storm?
dominotw 7y ago
I think big isn't just pure size. Groupon was a 'big' company in chicago with ~10k employees here.

ttul 7y ago

What I’m seeing: - Forget funding. The window is closed. - Big customers are battening down the hatches. Cash is king. Lots of asks for payment terms. - Little customers are failing. If you run a startup or work at one, implement Plan B now. Cut.

rhizome 7y ago
Frankly, as a solo I'm thinking of just looking into SBA help (USA).

qppo 7y ago

Startups are in way better shape than traditional small businesses. By our very nature, we need months of runway just to keep running. We're designed to weather this kind of storm because "zero revenue" is the default state. Hearing about Bird cutting 30% of their workforce is awful. But it's nothing compared to the thin-margin Mom & Pop, or medium sized private enterprise that had 1 week of cash on hand and ceased operations overnight. My friends and family in startups are doing fine, for the moment. It's those that chose to work at the more stable, traditional work environments that are getting wiped out, and much less likely to return when the economy starts back. Because when it does, there will be money ready for investment - extending your runway to get there for a startup is more straightforward. But when you're a bigger business with little cash and no-one is buying assets right now, you literally are unable to make any decision to help. I've got friends in manufacturing, hospitality, services, and so on that will not return to work because their businesses are going to or have already failed, for good. That's the fucking terrifying thing happening right now and it's more deserving of attention than us tech bros.

BillinghamJ 7y ago
Our board and investors have made it clear they think it's highly unlikely any meaningful funding will be able to progress until early 2022 at this point. Recently-funded or reasonably conservative startups should be able to do okay with that, but ones without a lot of runway are going to be in a really difficult position.
- CPLX 7y ago
  Your board and investors clearly have an exceedingly high regard for their own predictive abilities if they can anticipate the reaction of a specific financial sector two years hence, based on the effects of a crisis that's realistically about 3-4 weeks old. I'm not saying they are wrong. But the premise that anyone has a fucking clue what's going to happen on what timeline is ludicrous.
  - treyfitty 7y ago
    It doesn’t matter if they’re wrong. That’s what they think. And if they think that, money doesn’t flow in. It becomes a self fulfilling prophecy.

julius_set 7y ago

So I’m curious will property and rental prices drop in San Francisco now that funding is drying up? Can’t seem to find much information about that. For example a friend of mine who was laid off still has to pay $3300 / month for his studio. Curious how long this will last for?

dominotw 7y ago
I think its unlikely because everyone knows its going to right back up once this blows over. So demand should hold constant.
- deleted 7y ago
  [deleted]
- oiasdjfoiasd 7y ago
  that sounds like pretty wishful thinking.
- sheeshkebab 7y ago
  Perhaps, but the way it’s moving there will be another 20m+ people without jobs in a month or two (prime working age folks), and with a bunch of industries contracting at the same time it’s likely that recovery will take a while before it all resumes. Hope I’m wrong but it could be a few years before it will bounce back.
peter303 7y ago
In 2002 after dot.bomb, prices held flat for a while. A fair of vacancies in SoMa. The 2008 recession sort of bypassed tech.
- not2b 7y ago
  Are you kidding? The 2008 recession killed a ton of tech. The core of traditional Silicon Valley (Mountain View, Sunnyvale, Santa Clara) had so much vacant office space that large areas zoned industrial felt like ghost towns. Sure, the companies that later became dominant survived. The electronic design automation sector held on because chipmakers couldn't stop doing design work. But it was very tough.

samstave 7y ago

During the dot com bust - they began building Santana Row, on the site of a very old shopping center called Towne and Country. The developers wanted to revamp the site to take advantage of all the tech money and provide upgraded experiences etc... While they were in the middle of building it - the bust happened. Then, one of the largest buildings that was ~65% complete or so caught fire. It was HUGE - I think it was an 11 alarm fire.... There was a crap ton of speculation as to how this happened - and the prevailing theory among many I knew at the time (I lived right down the street and actually stood across the street watching the thing burn down for a few hours) - was that it was insurance fraud to recoup some of the investment in the multi million dollar development due to the fact that its demographic was now largely out of work. Obviously they did fine eventually, but lots thought it was an opportunistic attempt to take advantage of the situation. As an aside, not too long after that, I had a pool aprtty at my place for all the tech people in our circle. 65 people showed up and out of that, only 2 were still employed. The tech industry is a hell of a lot more resiliant this time - as actually many of the service provided are actually of great value to those stuck at home or unemployed. So this collapse will be nothing like the dot com bust. However - the wealth transfer this time will be far greater than the 2008 collapse. The next Black Swan [0]: [0] - https://youtu.be/NEnuWv38urI https://youtu.be/NEnuWv38urI

deleted 7y ago
[deleted]

rexreed 7y ago

I'm sorry for some of my schadenfreude here, but really, so many of these startups are overfunded with way too many employees to begin with. They've often paid top dollar for expensive technical talent in locations with very high cost of living. I can't wait to see a pull back to solid fundamentals. I don't see why a daily vacation rental company honestly needs 240 highly paid employees. One company cited in the article (WanderJaunt) laid off 56 out of its 240 total employees, but honestly I bet they could do just well with 20 total employees. Let's put the Lean back in Lean Startup and provide real value instead of playing the magical, mysterious game of VC musical chairs.

anthony_r 7y ago
See also the "Austrian business cycle theory". But the bust, while clearing the economy of a lot of mal-investment, goes on for quite a painful while before the previous level of output/employment/prosperity is matched. https://en.wikipedia.org/wiki/Austrian_business_cycle_theory https://en.wikipedia.org/wiki/Austrian_business_cycle_theory
- rexreed 7y ago
  Are you implying that venture funding at previous levels is a function of low interest rates (that's the theory in ABCT linked above). I don't think that specifically applies here. While it's possible venture funding is accelerated by low rates, this was not the case in the late 1990s prior to the 2000s dot-com crash. Rather we're seeing a Black Swan event causing macroeconomic pull back, and it's pulling back the covers on companies that really had no fundamental underlying value or support. The only real exit for these companies was acquisition or public markets. But with both exits now drying up, there's nothing but overvalued, overfunded companies with revenue streams (if they have any) drying up faster than the glaciers are melting. The fundamentals were never there, and it was only the fat-times of VC investment keeping them afloat. There might be a role to play with ABCT with regards to VC investment as a whole, but this downturn is more than just a normal business cycle.
- Marazan 7y ago
  Ah yes, ABCT. First, assume the market is made up of rational actors. Second, assume that sustained irrational investment choices have been made by the rational actors.

rexreed 7y ago

The news just keeps getting worse for SoftBank. "OneWeb, a satellite start-up that had raised $3 billion in venture funding from investors including SoftBank, the Japanese conglomerate, filed for bankruptcy on Friday and plans to sell itself." Can we finally admit that SoftBank's model of so-called VC funding success is really just a colossal failure? The throw-everything-into-it approach of making Unicorns a reality just doesn't work.

thendrill 7y ago
Yes we should finally admit that a large part of the capitalist model is a complete and total failure. USA became a 3rd world country overnight.
joelbluminator 7y ago
Normally I would agree, but in this current shit-show of a market even investments in Delta can evaporate. Looks like everyone's suffering. Imagine even healthcare ETFs saw a 15% loss so far.

pixelmonkey 7y ago

One of my good friends is a restaurant owner in NYC and my spouse is a doctor/surgeon in NYC. Startups aren't pummeled -- they're insulated. Restaurant owners and doctors are pummeled. And all of you who thought incompetent federal government leadership was OK in this modern world -- you were bamboozled. You can start apologizing now.

seibelj 7y ago
But I genuinely believe all federal government leadership is incompetent - it’s not a matter of it being “OK”, that’s just the default for every administration. Which country on earth is responding to this well without resorting to authoritarian practices?
- numair 7y ago
  Denmark. Norway. Singapore. New Zealand. Taiwan. The fact of the matter is, there’s too many people in America invested in a cynical notion that we should expect the government to “fail,” which makes it easier to keep everything underfunded, which almost guarantees failure (random acts of heroism not withstanding). THAT, more than any single person, is what’s killing America. And that’s a bipartisan cancer.
  - not2b 7y ago
    No, in the US there's only one party that is explicitly anti-government, anti-expert, expecting government to fail. The other party has its own problems (its progressive and centrist factions are are war with each other, for example), but they are different problems.
  - ikeyany 7y ago
    The American people want public services to be funded, but that is not where money comes from. American politicians are far more influenced by big money than they are by their constituents.
  - makomk 7y ago
    The Singapore model for tackling the coronavirus that all the American press were blaming the American government for being too incompetent to manage doesn't even work in Singapore, as it turns out - they're going full-on lockdown now, with all non-essential businesses forced to either work from home or close down.

twomoretime 7y ago

There might be something wrong with an economic model which is predicated on infinite growth.

llsf 7y ago

Talking about startups in difficulties, any idea how wework is doing these days ? I would expect the work spaces being near empty, and for the companies renting spaces they might be even pulling the plug. I am worried that if wework goes under because of the pandemic (and SoftBank realizing that it is not worth being salvaged), then it would trigger a domino effect in the whole US commercial real estate market.

Akaahn 7y ago

Startups are having their great reckoning. No longer can they just come up with fancy catch lines, and get bought by a billion dollar company. Now they actually have to provide something unique, something useful, something worthy of them actually being acquired.

vikramkr 7y ago
Or just going on to become market leaders. Out of the tech bubble pop emerged google, apple, amazon, microsoft, etc standing strong

irrational 7y ago

I work for a Fortune 150 company as a programmer. I've had lots of people ask me why I don't move to California and work for a startup. The main reason is because I'm risk adverse and I really don't like the Bay Area (I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return). Now I have a new reason to be grateful I work for a Fortune 150 company. I've been able to work from home no problem. Nobody has been laid off. The company has already announced that they are going to go ahead and pay 100% of our year end bonus regardless of what happens in the 4th quarter (the current quarter). Frankly the quarantine has been very very non-stressful for me and my family so far. I don't think that would be the case if I had been working for a startup.

dopamean 7y ago
it's averse not adverse
axiom92 7y ago
>I spent many years living in San Ramon, Alameda, Newark, etc. in my youth and have no desire to ever return I understand that this is not center to the point you're making but I am curious! What makes you hate the Bay area? I lived there for ~4 years and recently moved to Pittsburgh. I can't wait to move back. In fact, the mere mention of these places evokes a strong sense of homesickness in me for some reason.
- sethammons 7y ago
  Not OP. I've only visited the Bay Area a few times. Human filth, needles, and just so many people packed into the space. I can't imagine raising a family in that situation. Contrast that with where I am now: I have a very large house on 10+ acres of land on the edge of a lake. Each of my kids has their own room and there are lots of rooms and corners to "get away from each other". We have room for food storage, a home gym, and are not dependent on the city for water or gas (though we do have to fill our propane tank a couple times a year). If I walk to the edges of my property, I can see a couple other houses. We have bon fires, ride ATVs, go fishing, shoot guns and bows in the back yard. We have full on seasons (granted that winter is the largest, but we like cold and snow). Not to even begin talking about the political differences. The few things I liked about the Bay Area: lots of economic opportunity (esp. as a software dev), nearby greenery, and lots of food options. Oh, and the ability to find others who would like to play board games. I can't find anyone to play board games with out in the middle of nowhere (my family is not interested in any).

invertY 7y ago

Ctrl+F "Ecology" Ctrl+F "CMBS" Ctrl+F "Reits" Ctrl+F "Repo" Oh, wow. You guys are totes not ready for the next stuff.

sfj 7y ago
I know the others, but what does ecology have to do with it?

yalogin 7y ago

To me the most pertinent question is how long is the impact going to last. Are we ever going to get this under control? If it takes 6 months can any of the service businesses survive that long? What about startups?

SpicyLemonZest 7y ago
I'm extremely optimistic about the coronavirus, something like the 90th percentile among positions I've read, and even I think we'll still be facing impacts in 6 months. Even if the lockdowns end this month and the public health problem is considered resolved in June, that won't be enough time to shake off all the effects. Most businesses will certainly be allowed to open long before then, though.

vinayan3 7y ago

Article's premise is right but they primarily used start-ups in the travel and transportation space for examples of insane revenue drop. If people are sheltering no one is gonna be using these services. So, it's really not surprising. The longer term impact is going to be the lack of funding in the coming couple of years and lack of customers for the services/products coming out of startups. How will VC funds fair in this? Are there enough LPs out there willing to put their money into this risk pool?

dehrmann 7y ago
> How will VC funds fair in this? Probably not well. https://news.ycombinator.com/item?id=20985687 https://news.ycombinator.com/item?id=20985687

deleted 7y ago

[deleted]

sjg007 7y ago

I dunno.. online businesses will probably do well in this "new" economy. There's a ton of opportunity to remote work tooling as well. Right now people are hunkered down trying to get the basics in order. Restaurants and grocery stores have had to reconfigure themselves for delivery and curbside pickup. Cloud kitchens will do well here, Instacart is probably doing well too. AirBnB will not do well since they are a function of in person travel. Airlines though have moved to cargo delivery type function. Amazon is obviously cleaning up. If you can make masks or ventilators you are probably going to do really well. Every local community has an instacart like opportunity and some of these are grass roots organized.

0x202020 7y ago

I’ve got an esports side project that was starting to get some interest within the community and generate non-trivial MRR (~4k mo). I have a closed alpha that a few teams in the league were using, and I was talking at some level to basically everyone that could be in the market for the current version of the problem. I was looking into getting a business/sales partner in order to have more success on the business side of getting the other organizations I was in talks with, as I am normally just a lead dev with no business interaction. Then the league, along with everything else, got delayed and quarantines started. Within 3ish days all of the professional teams, academy teams and two other organizations are interested in my “alpha” software. So now my “side project” as of April 1st has ~10x’d its MRR (~40k). As of now I am getting some business stuff ironed out and only making bug fixes/small updates while I get a better feeling of what type of workload difference the growth is making

exolymph 7y ago
Congrats, that's awesome. Good job and good luck seizing the opportunity!
- 0x202020 7y ago
  Thank! It’s exciting and scary at the same time. I’ve had some small projects that have also made small amounts of money, but never anything to possibly turn into a business
  - nnntom 7y ago
    Hi! I know someone who could help with the business side of things. If you’re interested my email is in my about page. Best of luck either way!
boojing 7y ago
Interesting. If you don't mind me asking; how did you make contact with the first few teams? Was the early exposure from sharing parts of the project through social platforms or directly reaching out to the teams?

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Cymen 7y ago

I've been contracting lately and I'm on two active contracts. One of the two is winding down. I've been billing at $155/hour via an agency (to be clear, their fee added on top of that $155). They offered me $90,000 salary to go employee. They upped that to $100,000 when I said no (I thought we were done but I said no again). Their thinking is they can take advantage of the situation to get cheap engineering staff. If you're running a startup and thinking that now you can get cheap senior engineers, you might want to consider that it might be true for those who aren't careful with their finances. However, the talent you attract with this method is going to leave as soon as they find a better offer. I don't think most management teams are like this one but I'm amazed by the short term thinking. Professionally, I can't really call them on this behavior but I'm glad to have been saving for financial independence (now is the time to go back to working on my own things and yes, I do have a multi-year runway).

battery_cowboy 7y ago
Get an engineer for a year or two at the cut-rate price and once they've gotten ingrained into your org and code base they'll head off when (if?) the economy recovers. Not very forward-thinking.
- tonyedgecombe 7y ago
  There is no guarantee those high salaries will come back quickly or at all. This event might well usher in a more cost-conscious era.
  - deleted 7y ago
    [deleted]
  - battery_cowboy 7y ago
    Maybe, but right now it's too early to tell and a move like that, to take advantage of developers during this time, will hurt them nonetheless. I personally have been keeping track of companies I've applied for to see how they treat people during the worst times, right now, and I won't work for a company like that. I'm sure there are other developers who would do the same.

old_tech 7y ago

Prediction: The great unwinding is going to be felt much more severely by Big Tech employees, but many months out from today. Source: I don't work at Big Tech, but personally know many folks who do. For the most part, they are not really thinking very far into the future, because they think (with some justification) that their jobs are much safer than startups and smallish companies. 1 The usual reasons of less people spending money on stuff holds, of course. If your customer is now unemployed, they will eventually cancel your software subscription too. 2 Most employees working at these companies have stock options which will plummet once people start pulling money out of the stock market because they actually need the cash to survive. 3 There will be the usual letting go of people because the manager doesn't like them. In a big company, ironically, this is much easier because no single employee is indispensable. 4 The actual problems are not going to start at Big Tech till about a year from today. This is one of the main problems. Most predictions of economic recovery are way too optimistic. Unless something extraordinary happens (e.g. a combination of off-the-shelf medicines, all in large supply, which miraculously just negates the virus, and we learn about it tomorrow). There is an excellent chance that the layoffs will hit Big Tech precisely when most of their employees think they are safe. 5 The biggest problem, in my view, is how much these employees are used to the cash cushion. There will always be a few prudent folks who save a large chunk, but generally the lifestyles have already been elevated to match the income. The folks who never raised their lifestyle to that level will not really have much to worry about, but that is a small minority. One can imagine these folks - who are basically going to be the last to be laid off, having to compete with much more hungrier folks while simultaneously having to significantly downsize their lifestyle. And suppose they also bring an "attitude" with them (not that everyone does, but some do), who will want to hire them? Some folks will point out the large cash holdings of these companies and easy access to credit. But how far can that runway last, realistically, under these types of circumstances?

gcc_programmer 7y ago

I hope this is the final nail in the coffin of Silicon Valley: this place has been, very well deservedly until 2010-2015 but completely undeservedly after that, at the top of VC's investment list. But nothing innovative is coming out of that place anymore: the magical days of Facebook, Instagram, Twitter are over. What was my 'aman' (enough) moment? That startup with the juices and the juice squeezers (I forgot their name): to me that was the sign that the place is running out of steam. Hopefully this economic crisis will do enough damage and the investment focus will shift to more promising industries and locations. Awaiting the downvotes : I btw realise the irony of the fact that I write this comment on a website owned by ycombinator, but I am here because sometimes interesting things are shared :)

JackPoach 7y ago

It really ticks me off when people think that 'startup' is different from 'business'. Startup is a new business. The fact that it is most frequently in the IT sector doesn't change it's nature. It's still a business that fall under all business rules.

Ice_cream_suit 7y ago

The WeWork saga is especially instructive.

unnouinceput 7y ago

Quote: "We purposefully and intentionally did not have any video on to protect privacy as we delivered the news live to individuals" Translation: We are SoB's and we DGaF about you to the full extent to not even look you in the face when giving you the finger.

mark_l_watson 7y ago

Excuse me for getting a little bit off topic: I think these crazy times will cause startups, medium size companies, and especially individuals to, in the future, keep much larger cash reserves and generally exist more frugally. It is true that at least in the USA that democrats and republicans in Congress and the president are working overtime to shore-up their constituents (i.e., large corporations) so they will be fine. I think the help given to the mega corporations will be at least an order of magnitude greater than what is given to help individuals and regular businesses - I base this on what has been just been given to the financial industry in the last month. Frugal small businesses that we own ourselves are probably the most stable unless you are in the billionaire class.