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Unicorn layoffs keep piling up
- wtvanhest 7y agoThis is the time period for OpenDoor to either be a proven business model or a failure. If they survive the next 24 months, their value should be absolutely huge. If they fail, it proves that the business cannot handle periodic downturns. One thing I don't see in these announcements are extended exercise windows. That would be a basic thing to offer employees, and someone should keep a list of HR/Finance/C-suite people at companies that do or don't do this during this period.
- VintageLight 7y agoCarta (from the article) posted the benefits for employees who got laid off. They're pretty amazing relative to others. https://medium.com/@henrysward/cartas-covid-19-layoff-cbb80e3e8a5d https://medium.com/@henrysward/cartas-covid-19-layoff-cbb80e...
- alteria 7y agoHaving been through several rounds of layoffs, Henry's letter/statement seems incredibly humane and thoughtful given the circumstances.
- wtvanhest 7y agoI didn't see anything about stock options in the announcement. Is it in there and I missed it?
- ralph84 7y ago> Third, if you have been with us for less than one year, we have removed your cliff and extended your PTE to 1 year from today. You joined Carta to create owners and to become one. Everyone affected today will be an owner of Carta. PTE = Post-termination Exercise
- wtvanhest 7y agoI saw that, but what does that mean for an employee who has been there for 3 years and has a significant amount of equity vested? Do they have to buy it immediately? If so, they might as well not even bother since cash is going to be king for those employees and risking cash + tax liability is probably far from ideal.
- VintageLight 7y agoCarta's policy is that your PTE period is the length of your tenure. So those employees with > 3 years have > 3 years to exercise.
- wtvanhest 7y agoThat is a solid policy. Very fair.
- adrr 7y agoIf they are non-qual options, why not make them 10 years like other companies. Why the short expiration? I'd rather have ISOs and the chance to cut my tax burden in half. More importantly not having to pay taxes upfront to exercise the options. Doesn't seem employee friendly.
- VintageLight 7y agoThey are ISOs. The standard PTE for most companies is 90 days.
- adrr 7y agoBecause 90 days is the IRS rule for options to qualify as ISOs.
- adrr 7y ago3 months severance is California law and part of the CA-Warn act. Nice they covered cobra till the end of the year.
- jtrider 7y agoI didn't know this existed. However it seems California’s Governor, Gavin Newsom, has issued an Executive Order to suspend the state’s WARN Act until the end of the COVID-19 emergency.
- VintageLight 7y agoThe WARN Act is not severance! It requires that the company notify employees 60 days in advance of a mass layoff. They don't have to specifically notify the individuals being laid off. There is no requirement for severance in California!
- adrr 7y agoMost companies forgo notification and pay out two months of pay. So it becomes a defacto severance. Do you know any company that actually gave notice and kept the employees on for two months?
- adrr 7y agoNone of the ibuyers are going to survive. They need a liquid market for their business model to survive. Covid19 is the blackswan event that i am sure their risk models didn't account for. Its not like we had a nationwide downturn in whole real estate sector 10 years earlier.
- deleted 7y ago[deleted]
- 8ytecoder 7y agoThe long waited startup crash is happening but with a clever camouflage. None of the executives would ever have to admit their product sucked. They’ll simply blame it on the market. It’s employees who’ll face the worst. I hate the VC startup culture even more now.
- deleted 7y ago[deleted]
- devmunchies 7y agowell, most tech companies are non-essential by nature. There are lots of companies that are only feasible in a bull market. There are lots of product people can simply go without in most industries. Tech just has more non-essential, nice-to-have companies than other industries.
- lowdose 7y agoWhich industry is not a technology industry according to you? And which companies would survive another century without becoming a technology company?
- dredmorbius 7y agoThere are lo-tech spaces, and a great many which are not, or avoid high technology, which is what most people. mean by "tech sector", if not the even narrower band of "high information technology". https://en.wikipedia.org/wiki/High_tech https://en.wikipedia.org/wiki/High_tech Particularly the cited reference, the OECD definition: Hatzichronoglou, Thomas: "Revision of the High-Technology Sector and Product Classification", OECD Science, Technology and Industry Working Papers, No. 1997/02, OECD Publishing, Paris. https://read.oecd-ilibrary.org/science-and-technology/revision-of-the-high-technology-sector-and-product-classification_134337307632 https://read.oecd-ilibrary.org/science-and-technology/revisi... Page 7 specifically divides industries into four technology levels, high, medium-high, medium low, and low. Given J.S. Mill's wonderful definition of technology, 'the study of means", there's little in human activity which is ccompletely atechnological. There remains, however, much that is quite some remove from the cutting edge. In the technology adoption lifecycle, high tech are innovators. An early-adopter firm is itself still not high tech itself. https://en.wikipedia.org/wiki/Technology_adoption_life_cycle https://en.wikipedia.org/wiki/Technology_adoption_life_cycle
- deleted 7y ago[deleted]
- 0x8BADF00D 7y agoAs an old trading friend of mine said, this is the “shakeout”[0] of a lot of unviable businesses in SV. He recalled similar things happening during the dotcom bubble. [0] https://en.m.wikipedia.org/wiki/Shakeout https://en.m.wikipedia.org/wiki/Shakeout
- cultus 7y agoI've been waiting for this to happen for years. Some of the unicorn/FOMO lunacy has faded in the last few years, but there still has been no big cull. At least if the economy at large recovers (which is a massive, huge if), the tech industry absolutely will be better for this. So many good ideas get crowded out by buzzword-compliant nonsense.
- ska 7y agoThe thing about a big enough economic shock is that it can kill viable early stage businesses nearly as easily. Remains to be seen exactly what happens of course, but it's at least plausible this isn't going to just be a healthy shakeout.
- sriram_sun 7y agoHow much of this is the "SoftBank Squeeze"? I know 2 (SoftBank funded) companies that are in trouble.
- gullyfur 7y agoWeWork and OneWeb, or two other ones?
- sriram_sun 7y agoOne in San Diego (AI, robotics) and another in Palo Alto - self driving.
- A4ET8a8uTh0 7y agoIs it really a surprise though? Not all tech companies operate in "essential" sector and right now people I would consider essential ( say.. dentists ) are closing their doors until the worst is over. No one is immune now. Hmm. I could have said yet and no pun intended.
- esturk 7y agoVery little oral procedures are essential. If people have to be in a lot of pain and otherwise not be able to function, they can get that checked at the ER.
- A4ET8a8uTh0 7y agoI never heard of this. Could you elaborate a little bit? It kind of makes sense in my head, but I am curious what the rationale is.
- esturk 7y agoMaybe it's a first world mentality to think oral procedures at the dentist are necessary. If it truly is, ie. in a life threatening way, then it should be treatable in the ER no? I guess the other reply put it more succinctly. It is rarely urgent.
- hashmal 7y agoVery little oral procedures are urgent. Most of them are essential.
- pavlov 7y agoTime to bring back fuckedcompany.com? https://en.wikipedia.org/wiki/Fucked_Company https://en.wikipedia.org/wiki/Fucked_Company
- matwood 7y agoI loved that site!
- shaggyfrog 7y agoMaybe if we all ask @pud nicely...
- onion2k 7y agoThat was one of the best sites of the dotcom era, but not because it reported news of failures. It was because it reported news of wreckless stupidity, ludicrous excess, obviously bad decisions and then the inevitable failure that followed. Without those traits of how utterly crazy startups could be back then FuckedCompany wouldn't be so much fun.
- kitotik 7y agoAre you sure we didn’t match the craziness of the dotcom boom? I’ve been in some hilariously elaborate offices housing companies with literally no plan to ever generate revenue.
- deleted 7y ago[deleted]
- adrr 7y agoLike Aeron chairs and catered meals. Things that were considered excessive are quite common at tech companies.
- triceratops 7y agoI've never understood why Aeron chairs are considered excessive in the US. They cost like $600, or one month's health insurance costs to the company, last for years, and have a decent resale value. Even for a company paying $20/hr (bare minimum for a desk job), that comes out to less than 1 week's wages.
- deleted 7y ago[deleted]
- rvz 7y agoWell no-one would have thought that this pandemic would have been the cause of exposing these startup companies (unicorn or not) that are struggling to generate revenue and that rely on endless VC funding rounds for hyper-growth to start shrivelling up right now. Perhaps it's time to focus on startups that actually generate revenue and high profits and invest in technology that is a good for everyone, such as healthcare rather than 'nice to haves' which have no plan for profitability. As strangely predicted here: [0] [0] https://news.ycombinator.com/item?id=21627809 https://news.ycombinator.com/item?id=21627809
- SpicyLemonZest 7y agoAs Theranos amply demonstrated, being in an important industry like healthcare is no guarantee that you'll be able to generate real revenue or achieve high profits.
- nabla9 7y agoTheranos was a scam.
- deleted 7y ago[deleted]
- isoskeles 7y agoHindsight is 20/20. Investors couldn't just step into the future and ask someone whether or not Theranos was a scam and why.
- lotsofpulp 7y agoThey could have asked to see the proof that it worked and asked an independent third party to verify it. That's usually what happens when people do due diligence, and it happens every day in the business world.
- ashtonkem 7y ago
- slau 7y agoArchived version for Europeans: http://archive.vn/ycUKq http://archive.vn/ycUKq
- cgb223 7y agoThe thing about Unicorns is that at the end of they day, they’re not real
- deleted 7y ago[deleted]
- yingw787 7y agoOn the bright side, maybe we can get some horses out of all this.
- aledalgrande 7y agoThouroughbreds!
- freewilly1040 7y agoITT is lots of failure to acknowledge the scope of this crisis. This isn't just a pruning of companies that had weak paths to profitability anway, few businesses have the capacity to completely halt revenue for months on end and survive. Plenty of otherwise good companies are going to go broke.
- coliveira 7y agoI really wonder how people are so blind to the current economic situation. Things would be bad enough if the problem was just with China. I believe economies will contract by up to 20% in the next few months, and lots of companies will go bankrupt at the end of this process.
- DarthMader 7y agoguessing a lot of folks who have yet to be personally affected. once they are, it'll become much clearer.
- xienze 7y agoAnd suddenly you’ll hear a lot less talk about how it’s completely irresponsible to even think about getting the economy started again...
- d1zzy 7y agoI agree there's going to be less talk about that but that doesn't make it any less irresponsible.
- xienze 7y agoIn all honesty, how is it irresponsible? New York is really bad. The rest of the country is in considerably better shape, and hospitals aren’t even close to being stressed in many areas. You’ve got nurses and doctors getting their hours cut back to nothing because no elective procedures are being done and the expected Covid surge never happened (again, not New York). Who honestly would’ve imagined there’d be doctors and nurses sitting idle during all of this? There aren’t going to be any large gatherings or sporting events for the foreseeable future, lots of people are starting to wear masks and are doing much better as far as hygiene and social distancing are concerned. Why _can’t_ we start to think about getting things to slowly go back to normal? Keep the elderly (way easier for them to quarantine) and sick at home. If you can work from home, continue to do so. Everything else, figure out how to make it work within the framework of social distancing. There has to be more than a choice between “total lockdown” or “everyone’s gonna die.”
- awinder 7y agoI’m a little surprised considering the recent legislation that should have basically had the government loan you money which would then be forgiven if you retain staff. Is this not working out in practice, or companies of a certain size that are phased out are doing the firing?
- ashtonkem 7y agoThere are different tiers of loans based on company size. While I don’t have the tiers memorized, I think most unicorns would be excluded from the very generous terms.
- nereye 7y agoVox's 'The Weeds' podcast last episode [0] was about the stimulus bill (AKA CARES Act 2020, [1]). [0] https://www.vox.com/the-weeds https://www.vox.com/the-weeds [1] https://www.congress.gov/bill/116th-congress/senate-bill/3548/text https://www.congress.gov/bill/116th-congress/senate-bill/354...
- hkmurakami 7y agoThe most generous terms were available to companies with less than 500 employees, up to a loan of $10M
- claar 7y agoThat loan (the Paycheck Protection Program (PPP) loan) is capped at 2.5x monthly payroll, so at best it only helps companies survive 2 months or so without layoffs.
- deleted 7y ago[deleted]
- socalnate1 7y agoAlso, companies backed by Venture Capital or Private Equity can't currently access these funds in most cases. Nearly 100% of these unicorns fail the affiliation test. https://www.jdsupra.com/legalnews/cares-act-can-private-equity-or-venture-35455/ https://www.jdsupra.com/legalnews/cares-act-can-private-equi...
- meddlepal 7y agoI wonder how AWS market share will be impacted by startup's going through a bear market. No doubt AWS has a big enterprise component that should weather fine, but they're also generally the default 1st choice for a lot much smaller more vulnerable shops.
- banana_giraffe 7y agoI wonder myself. AWS has been pushing out more changes to their "IP Ranges" file recently. I've been keeping count, just to make sure it's not me inventing a thing: 2020-01-05, 5 2020-01-12, 6 2020-01-19, 9 2020-01-26, 3 2020-02-02, 3 2020-02-09, 4 2020-02-16, 2 2020-02-23, 8 2020-03-01, 3 2020-03-08, 9 2020-03-15, 2 2020-03-22, 4 2020-03-29, 15 2020-04-05, 7 Per week, there's much more activity recently, and some digging into it suggests they are bringing in more IPs. Could mean they're busier, or could just be longer term plans coming to fruition now.
- user5994461 7y agoThey're obviously busier and bringing in more resources, considering the recent news of the clouds running out of capacity.
- empath75 7y agoFAANG earnings are probably going to be a wake up call for people.
- nostrademons 7y agoI suspect that true startups (i.e. pre-Series-B companies) are rounding error in AWS earnings. They give out $100K-$1M credits like candy to accelerators as a loss-leader to get startup business. Growth companies (like unicorns) might be a hefty chunk, but I suspect that a lot of Amazon's revenue comes from Fortune-500 companies, academic research labs, and other major tech companies (like Netflix or Snapchat) that don't run their own clouds.
- crawdog 7y agoDebt financed companies without clear path to revenue are going to be on hold for a while. Interesting to keep an eye on the CA EDD Warn Act page and see who else shows up: https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WARN.htm https://www.edd.ca.gov/Jobs_and_Training/Layoff_Services_WAR...
- ithinkinstereo 7y agoHere's the direct link to the xlsx file: https://www.edd.ca.gov/Jobs_and_Training/warn/WARN_Report.xlsx https://www.edd.ca.gov/Jobs_and_Training/warn/WARN_Report.xl... The data may not be too reflective of the current situation on the ground, however. From the website: "Note: Executive Order N-31-20 (PDF) temporarily suspends the 60-day notice requirement in the WARN Act. Visit COVID-19: WARN FAQs for more information."
- twomoretime 7y agoI've thought a lot of VC money was extremely suspicious. These gigantic unicorns run at losses for what, a decade? Where's the value in any of this? To call this high risk is an understatement. Take Uber, for example. They're betting on self driving cars and that the populous (or politicians) allow them to operate. Mean while they've been a money hole for 11 years? I guess Covid will be a good time to test how much of this is all hot air. I imagine those who provide or can pivot to vital services reliably will survive. These are the kinds of times where capitalism thrives, provided a majority of actors are operating in good faith.
- subsubzero 7y agoThe interesting thing about Uber is before Covid-19 I thought that the ride sharing arm of the company was the profitable path and the food delivery arm, Uber Eats was a lost cause. Now it seems like that theory has been thrown on its head as ride shares plummet and takeouts soar. But still I think profit margins on food delivery are not that high so I wonder if Uber will escape unscathed from layoffs/closures, VC funding will only last so long when a majority of your business dries up.
- aledalgrande 7y agoThey're not high, especially on small orders. It will let them get some revenue while people are on lockdown, but not massive profits I think.
- siquick 7y ago>> In a statement provided to TechCrunch, the company’s CEO Eric Wu said that 35% of its employee base would be eliminated to “ensure that we can continue to deliver on our mission.” Do they really need to use such coarse language as "eliminated" - these aren't badies in a computer game, these are real people whose lives could be seriously derailed by losing their income.
- jameslevy 7y agoIt's worth pointing out that the word eliminated isn't in the quoted section, FWIW.
- deleted 7y ago[deleted]
- sytse 7y agoI totally agree. The word eliminated is surprisingly common in the US but I think it has violent connotations. Alternatives are harder than I thought but separating, off-boarding, and reduction in force (RIF) might help depending on the context.
- brewdad 7y agoPersonally, I would be much more offended by a company using corporate speak like "off-boarding" rather than the more direct and accurate "eliminated".
- siquick 7y agoAs a Brit (residing in Australia), US communication always feels so direct and littered with unnecessary complex words. A few of my colleagues dread speaking with US counterparts because they always come across as condescending (when they're definitely not meaning to be).
- dfsajlkjadfalk 7y agoOpen America NOW!
- paxys 7y agoFYI - http://layoffs.fyi/ http://layoffs.fyi/ Do try to help out these individuals in case your company is hiring.
- thordenmark 7y agoPinterest went down briefly yesterday and I was alarmed that its funding had been cut off. Many of us visual designers rely on it. Pinterest is one of those companies that may or may not be a Unicorn, it looks like it has a viable path to profitability but who knows.
- omgwtfbyobbq 7y agoI suspect this would have happened sooner if it weren't for the 2017 tax act. Corporate income tax receipts alone dropped by almost $100 billion the year after it was enacted, which is almost 2 million jobs at an average $50k/year. I'm sure a lot of that went to the corporate bottom line, but the individual tax cuts were even larger, which also contributed positively to jobs. The hotter the economy is, the farther it's going to fall when something like COVID-19 hits.
- claydavisss 7y agoSo wait...Carta is doing layoffs but then simultaneously nearly doubling its valuation for its next raise? The LPs are the ultimate marks.
- dzonga 7y agonone of this is unexpected. most of SV VC backed businesses are not sustainable. so the first instance of pressure, they crack and fold. and worse everyone is drunk and high on their own kool-aid. instead of iterating quickly on products they focus on playing around with tech. for business instead of getting paying customers, they focus on the next round. instead of having few expenses as possible, they would rather have a ice sculptures
- ansible 7y agoI'm still amazed that companies like Zume were getting funded in the first place. Not that there was anything inherently wrong with what they were trying to do, but just... was it even appropriate for a startup to be taking on these tasks. With Zume specifically, they were working on compostable packaging. Great... though most people aren't going to be able to actually do composting. If this packaging does perform as good or better than conventional plastic packaging, why does Zume need to do that? Is it really central to their mission?
- jes5199 7y agoOh, I met the Zume guy last year. His whole thing was to sell the idealized future without worrying about whether it was feasible in the present or even the medium term - if he could just convince people to keep funding it, he’d make it happen. If an engineer said - real example here - you can’t charge an electric delivery truck in 5 minutes without melting the charge plug, he’s say “then we’ll refrigerate the charge plug,” they say you’d need more than refrigeration you’d need to pump liquid nitrogen through it, he’s say “great, we’ll pump liquid nitrogen through it” Sort of like the Fyre Festival of startups, really Someone must have said “pizza delivery isn’t green because of all those boxes” and his response to was have someone invent a new box. And then ship the first attempt without worrying about whether it’s food safe! Well, it sounded great as a slide in a pitch deck. (exit to fix typo)
- JPKab 7y agoSome companies are using the virus as cover to do layoffs they needed to do before, but couldn't do without hurting their reps with the VCs. A certain Boston based data science startup comes to mind.
- calvinbhai 7y agowhich one specifically?
- pryelluw 7y agoA unicorn with a small moat is just a goat.
- deleted 7y ago[deleted]