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Also don't forget the effect of competitive position within an industry. I have a friend who owns a factory in a very unsexy niche industry (packaging). They'

Also don't forget the effect of competitive position within an industry. I have a friend who owns a factory in a very unsexy niche industry (packaging). They're relishing this crisis, because they manage the business very conservatively in terms of cash flow and leverage, and are expecting many of their competitors to go bankrupt in the near future. When the dust settles, they'll be one of the few left over, which means they can charge much higher rates. This'll likely be the story in many industries. Rich monopolies like Google and Facebook are going to do fine. (And note that both of them are still hiring, meaning they can potentially clean out the supply of engineers while many of the newer growth unicorns have instituted hiring freezes.) Marginal players in competitive industries are going to get killed.

ThrowawayR2 7y ago
> "Rich monopolies like Google and Facebook are going to do fine." Both of those are primarily dependent on ads for revenue and ad spending is already dropping precipitously, as far as I've heard?
- nostrademons 7y ago
  Yeah, but look at their cash positions. I posted an analysis [1] based on their published financials in another thread; basically their revenue could go to zero and they'd be fine for a year and a half. With a more realistic 75% drop in revenues they'd be fine for about 5 years; with a 50% drop in revenues they'd still be profitable. [1] https://news.ycombinator.com/item?id=22884042 https://news.ycombinator.com/item?id=22884042
  - amylene 7y ago
    Isn’t this a result of good governance, ie no stock buybacks?
    - nostrademons 7y ago
      That's one factor. Also great margins, a disciplined acquisition strategy, monopoly position, an inherently labor-efficient business model, and a shrewd prop-trading desk.
    - tr33house 7y ago
      FYI they've been heavily buying back stock
- coliveira 7y ago
  Their revenue will suffer, but they have lots of cash. They are prepared to weather the storm.
PowerfulWizard 7y ago
I'm thinking about supply side and demand side differently right now. The supply side business outcomes are going to be based on the customer profile, the financial strength, and some localized effects of the pandemic situation. I'm not sure that we'll see an '08 style credit crunch. I think governments want to stimulate and credit is one of the main levers they can try to push. I don't know if it will work to keep failures down, but I certainly think they'll try. But I think the supply side will collectively adapt as necessary to supply the demands for products and services as they exist. I think consumer demand is going to be the constraint for the next 2 years.

ThrowawayR2 7y ago

> "Rich monopolies like Google and Facebook are going to do fine." Both of those are primarily dependent on ads for revenue and ad spending is already dropping precipitously, as far as I've heard?

nostrademons 7y ago
Yeah, but look at their cash positions. I posted an analysis [1] based on their published financials in another thread; basically their revenue could go to zero and they'd be fine for a year and a half. With a more realistic 75% drop in revenues they'd be fine for about 5 years; with a 50% drop in revenues they'd still be profitable. [1] https://news.ycombinator.com/item?id=22884042 https://news.ycombinator.com/item?id=22884042
- amylene 7y ago
  Isn’t this a result of good governance, ie no stock buybacks?
  - nostrademons 7y ago
    That's one factor. Also great margins, a disciplined acquisition strategy, monopoly position, an inherently labor-efficient business model, and a shrewd prop-trading desk.
  - tr33house 7y ago
    FYI they've been heavily buying back stock
coliveira 7y ago
Their revenue will suffer, but they have lots of cash. They are prepared to weather the storm.

PowerfulWizard 7y ago

I'm thinking about supply side and demand side differently right now. The supply side business outcomes are going to be based on the customer profile, the financial strength, and some localized effects of the pandemic situation. I'm not sure that we'll see an '08 style credit crunch. I think governments want to stimulate and credit is one of the main levers they can try to push. I don't know if it will work to keep failures down, but I certainly think they'll try. But I think the supply side will collectively adapt as necessary to supply the demands for products and services as they exist. I think consumer demand is going to be the constraint for the next 2 years.