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"Startups are laying people off!" Examples: Publicly traded companies Uber and Lyft. Sorry, they're not startups. And yes, most will have less than 6 months

"Startups are laying people off!" Examples: Publicly traded companies Uber and Lyft. Sorry, they're not startups. And yes, most will have less than 6 months in the bank. Most rounds of funding are planned to last 18-24 months. If they raised at the tail end of 2019, they're already 4+ months into that. More likely, the bulk of the 65% are companies who raised late 2018 through mid 2019. They're in the middle of figuring out their new round and who will/won't be involved. The good news is that the VC funds have to put their money somewhere so investment can't stop. LPs don't invest for good luck. The bad news is that VCs are likely going to slow down for a quarter or two and valuations will grow more slowly than before. Companies that have good metrics may be in good shape as VCs become more available and their pipeline dries up. Companies with mediocre to bad metrics may be gone by the end of the year.

Justsignedup 6y ago
Irony, strong companies I been part of have ~2 years of banked cash. Even non-profits. These hyper-growth companies are showing their weakness. They only work during hyper economic growth. The fact that Uber and Lyft don't have like 2 years of runway in the bank is a strong indication of exactly how much these companies are gambling like drunken sailors. This is exactly why we must bail out the people and let the companies that did not heed the warnings die out. Ideally with the owners losing all those mega billions they managed to grab.
- Apocryphon 6y ago
  Not just the companies themselves, but the VCs that feed into their behavior. Will VC firms ever feel the repercussions for fueling this tech boom's irrational exuberance?
  - rvz 6y ago
    And what happens when you chase hyper-growth over profitability when either the markets crash or a global catastrophe happens or perhaps more accurately both events happening? [0] This plea for halp is left as an exercise to the reader. [0] https://techcrunch.com/2020/04/08/deliveroo-graphcore-and-other-big-uk-startups-say-theyre-being-cut-out-of-covid-19-lending-relief/ https://techcrunch.com/2020/04/08/deliveroo-graphcore-and-ot...
  - pjc50 6y ago
    What is a "repercussion"? Most of the individuals involved are in a position where the worst that can happen is a slower rate of wealth acumulation. https://www.bloomberg.com/news/articles/2019-11-05/wework-mess-leaves-softbank-s-masayoshi-son-6-billion-poorer https://www.bloomberg.com/news/articles/2019-11-05/wework-me...
    - Apocryphon 6y ago
      Son is an extreme outlier- remember he lost $70 billion during the dot com bust, and SoftBank lost 99% of its market cap, and in the subsequent decade was able to gain it back. I'm talking about the average Silicon Valley VC firm.
kevindong 6y ago
> "Startups are laying people off!" > Examples: Publicly traded companies Uber and Lyft. > Sorry, they're not startups. As an aside, I don't like how the tech industry/news sites call any non-behemoth tech company a "startup". For example, these companies are not startups; they are large (and in some cases, deeply unprofitable) enterprises: SpaceX, Stripe, Airbnb, JUUL, Palantir, Epic Games, Wish, Coinbase, Robinhood, Instacart, DoorDash, WeWork, etc. [0] Furthermore, 89% of American businesses have fewer than 20 employees [1]. [0]: These are the largest US-based "unicorn startups" per Wikipedia: https://en.wikipedia.org/wiki/List_of_unicorn_startup_companies https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan... [1]: https://www2.census.gov/programs-surveys/susb/tables/2016/us_state_totals_2016.xlsx?# https://www2.census.gov/programs-surveys/susb/tables/2016/us...
- seisvelas 6y ago
  Startup has been consumed by its use as a marketing buzzword and as far as I can tell just means 'company' at this point. People just say they 'founded a startup' instead of 'started a company'. I suspect most air conditioning contractors and electricians would be called 'startups' if they worked in software.
  - elgenie 6y ago
    “Founded a startup” is absolutely but trivially correct because every company is a startup by any definition in the immediate aftermath of its founding. The question is just about what criteria make sense for declaring that a company has graduated from a startup to an established company. Criteria like “founded in the last Y years”, “has fewer than N employees”, “has market cap under $X”, “is in a fresh/hot industry” alone or in combination end up including dramatically different sets of companies.
    - lolcopterpilot 6y ago
      I don't agree. Startup has a fairly specific task or operating style that is irrelevant to its size and age and number of employees. A startup is a company that is experimenting with ideas and its main goal is to validate a business model. If those business models can't be validated in a certain amount of time, the company should shut down. If a business model is validated it needs to be implemented and the company is no longer a startup. You can be a 0-day 1-person company but if you have a business model and an operating structure, you're not a startup. Most companies are started on a specific business idea and planned to run for long term on that idea. Those are not startups.
collyw 6y ago
>Sorry, they're not startups. They are still living off of venture capital though, no?

Justsignedup 6y ago

Irony, strong companies I been part of have ~2 years of banked cash. Even non-profits. These hyper-growth companies are showing their weakness. They only work during hyper economic growth. The fact that Uber and Lyft don't have like 2 years of runway in the bank is a strong indication of exactly how much these companies are gambling like drunken sailors. This is exactly why we must bail out the people and let the companies that did not heed the warnings die out. Ideally with the owners losing all those mega billions they managed to grab.

Apocryphon 6y ago
Not just the companies themselves, but the VCs that feed into their behavior. Will VC firms ever feel the repercussions for fueling this tech boom's irrational exuberance?
- rvz 6y ago
  And what happens when you chase hyper-growth over profitability when either the markets crash or a global catastrophe happens or perhaps more accurately both events happening? [0] This plea for halp is left as an exercise to the reader. [0] https://techcrunch.com/2020/04/08/deliveroo-graphcore-and-other-big-uk-startups-say-theyre-being-cut-out-of-covid-19-lending-relief/ https://techcrunch.com/2020/04/08/deliveroo-graphcore-and-ot...
- pjc50 6y ago
  What is a "repercussion"? Most of the individuals involved are in a position where the worst that can happen is a slower rate of wealth acumulation. https://www.bloomberg.com/news/articles/2019-11-05/wework-mess-leaves-softbank-s-masayoshi-son-6-billion-poorer https://www.bloomberg.com/news/articles/2019-11-05/wework-me...
  - Apocryphon 6y ago
    Son is an extreme outlier- remember he lost $70 billion during the dot com bust, and SoftBank lost 99% of its market cap, and in the subsequent decade was able to gain it back. I'm talking about the average Silicon Valley VC firm.

kevindong 6y ago

> "Startups are laying people off!" > Examples: Publicly traded companies Uber and Lyft. > Sorry, they're not startups. As an aside, I don't like how the tech industry/news sites call any non-behemoth tech company a "startup". For example, these companies are not startups; they are large (and in some cases, deeply unprofitable) enterprises: SpaceX, Stripe, Airbnb, JUUL, Palantir, Epic Games, Wish, Coinbase, Robinhood, Instacart, DoorDash, WeWork, etc. [0] Furthermore, 89% of American businesses have fewer than 20 employees [1]. [0]: These are the largest US-based "unicorn startups" per Wikipedia: https://en.wikipedia.org/wiki/List_of_unicorn_startup_companies https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan... [1]: https://www2.census.gov/programs-surveys/susb/tables/2016/us_state_totals_2016.xlsx?# https://www2.census.gov/programs-surveys/susb/tables/2016/us...

seisvelas 6y ago
Startup has been consumed by its use as a marketing buzzword and as far as I can tell just means 'company' at this point. People just say they 'founded a startup' instead of 'started a company'. I suspect most air conditioning contractors and electricians would be called 'startups' if they worked in software.
- elgenie 6y ago
  “Founded a startup” is absolutely but trivially correct because every company is a startup by any definition in the immediate aftermath of its founding. The question is just about what criteria make sense for declaring that a company has graduated from a startup to an established company. Criteria like “founded in the last Y years”, “has fewer than N employees”, “has market cap under $X”, “is in a fresh/hot industry” alone or in combination end up including dramatically different sets of companies.
  - lolcopterpilot 6y ago
    I don't agree. Startup has a fairly specific task or operating style that is irrelevant to its size and age and number of employees. A startup is a company that is experimenting with ideas and its main goal is to validate a business model. If those business models can't be validated in a certain amount of time, the company should shut down. If a business model is validated it needs to be implemented and the company is no longer a startup. You can be a 0-day 1-person company but if you have a business model and an operating structure, you're not a startup. Most companies are started on a specific business idea and planned to run for long term on that idea. Those are not startups.

collyw 6y ago

>Sorry, they're not startups. They are still living off of venture capital though, no?