8 ms·

The subtitle starts like this: "Even the worst-run startup can beat competitors if investors prop it up." This is clearly written by someone that has little to

The subtitle starts like this: "Even the worst-run startup can beat competitors if investors prop it up." This is clearly written by someone that has little to no startup experience. As someone that has spent 15 years as a founder I can tell you that the opposite is true: I have seen startups racking in seemingly endless funding only to be beaten by much smaller / less well funded competitors that happened to have better strategy or execution. The examples are endless, more recently we heard about Quibi ($2B funding!) failing, Yik Yak, WeWork etc There are markets that are capital intensive, and others that are really commodity spaces where winner takes all (Uber comes to mind) but for the most part, the smartest VCs in the industry will tell you that you should worry about strategy and execution, not raising a ton of cash which creates a bunch of problems on its own.

bhupy 6y ago
Chiming in, as a founding member of a venture backed startup, the idea that our success is guaranteed strictly because of the capital investment is honestly a bit insulting. If only that were true, I wouldn't have to worry about half of my compensation being worthless — a statistical likelihood.
- kordlessagain 6y ago
  > the idea that our success is guaranteed strictly because of the capital investment is honestly a bit insulting Nobody but you has that idea. The article is a story about other companies who have maybe shown indications that some can "run amok" with an influx of capital, at the expense of all other stakeholders, including the user. This article is not a story about you or the non-corporal entity you are birthing and even pretending for a minute that it is, is just silly.
- m0llusk 6y ago
  This isn't about your success, it is about the failure of others. WeWork is dying a protracted death, but it did a huge amount of damage to coworking providers before it blew up. You seem to be arguing that disrupting markets is okay as long as failure eventually happens, but that dynamic causes a lot of suffering and waste.
deleted 6y ago
[deleted]
thu2111 6y ago
Are you arguing that WeWork hasn't outcompeted any other office space leasing companies thanks to its funding? The article revolves around testimony from firms that WeWork beat. Also, even if we assume WeWork is an aberration, "beat" here is on a long timescale, after all. There are by now plenty of tech companies that have been around more than a decade having never made a profit. At some point you have to accept that the market dumping these firms are engaging in, does in fact lead to less well capitalised firms being unable to compete.
- voodootrucker 6y ago
  Precisely, and this is a form of anti-competitive "dumping". There are laws to regulate it, but they aren't enforced because Washington is both incompetent and corrupt. https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
  - stale2002 6y ago
    Ehh, of all the industries that exist in the world, I find it pretty unlikely that the office space industry is going to be monopolized by a company that is price dumping, and that this is going to put everyone else in the office space industry out of business.
    - voodootrucker 6y ago
      Fair point. Given their business model, it seems like the whole segment of co-working (renting long term leases and reselling as short term ones) never really made sense to begin with. (Despite it being to many people's advantage, including myself).
      - Jochim 6y ago
        I wonder if it has more of a place in a post Covid world? At least some companies are interested in divesting themselves of office space and going 100% remote. A flexible office space arrangement or even just a small space that can be rented to meet with clients sounds like it could be useful.
eeZah7Ux 6y ago
> I have seen startups racking in seemingly endless funding only to be beaten by much smaller / less well funded competitors that happened to have better strategy or execution The usual rags-to-riches feel-good story. Reality is more nuanced, and "worst-run startup can beat competitors if investors prop it up" is true most of the times.
- cryptica 6y ago
  Exactly, the number of startups which have failed or never even got a chance to start because they had to compete with an unprofitable VC-backed unicorn is unfathomably greater.
- davidivadavid 6y ago
  How do you know? It seems like the opposite cliché of "Endless VC funding leads to success over better alternatives" is just as much of a fantasy. After all, people with little marketing experience on Hacker News often believe a marketing budget is the only thing that separates huge success from complete failure. As you say, reality is more nuanced.
john_moscow 6y ago
This depends on the market structure. If your competitive advantage is product/market fit, it matters how you run the startup. If you are selling a commodity at a loss in order to acquire a market share, all that matters is the depth of your pockets. And, well, if your competitive advantage is access to legislators to carve out special legal exemptions for yourself [0], good luck competing with that, mom-and-pop startup. [0] https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020) https://ballotpedia.org/California_Proposition_22,_App-Based...
- edouard-harris 6y ago
  This is true, except that the "selling commodity at a loss" and "legal exemptions" examples both presuppose that you already have product-market fit for the commodity you're selling or the thing you're getting an exemption for. If people fundamentally don't want what you're selling, aggressive pricing and legal lobbying will only lead to you killing yourself that much faster. This is something we tend to take for granted with already-successful companies, but there was a time when everyone — even Uber and DoorDash — were struggling in obscurity to build something people would use.
  - jjeaff 6y ago
    Maybe? Car services and taxi services kind of already validated product market fit long before Uber, lyft, etc. While yes, they have some benefits that people like, but it's not clear that those services would have been able to compete against existing services without heavily subsidizing to undercut existing market players.
- mkolodny 6y ago
  By "legislators" do you mean members of government? You linked to a California proposition, which any citizen can create: "In a special election held on October 10, 1911, California became the 10th state to adopt the initiative process. That year, Governor Hiram Johnson began his term by promising to give citizens a tool they could use to adopt laws and constitutional amendments without the support of the Governor or the Legislature. The new Legislature put a package of constitutional amendments on the ballot that placed more control of California politics directly into the hands of the people. This package included the ability to recall elected officials, the right to repeal laws by referendum, and the ability to enact state laws by initiative."[0] [0] https://www.sos.ca.gov/elections/ballot-measures/how-qualify-initiative https://www.sos.ca.gov/elections/ballot-measures/how-qualify...
m0llusk 6y ago
The article describes in detail how the WeWork saga decimated the coworking industry, but you don't care because that doesn't match your experience and you don't depend on coworking spaces. That is really cold. I've been working with startups part or full time since 1991 and am amazed at how disruptive they are to the markets in which they participate. Getting a huge pool of money and then spending it to achieve dominance in the shortest possible time does lots of damage to markets, in particular in makes the bootstrapping path nearly impossible since customers can't compete with investors.

bhupy 6y ago

Chiming in, as a founding member of a venture backed startup, the idea that our success is guaranteed strictly because of the capital investment is honestly a bit insulting. If only that were true, I wouldn't have to worry about half of my compensation being worthless — a statistical likelihood.

kordlessagain 6y ago
> the idea that our success is guaranteed strictly because of the capital investment is honestly a bit insulting Nobody but you has that idea. The article is a story about other companies who have maybe shown indications that some can "run amok" with an influx of capital, at the expense of all other stakeholders, including the user. This article is not a story about you or the non-corporal entity you are birthing and even pretending for a minute that it is, is just silly.
m0llusk 6y ago
This isn't about your success, it is about the failure of others. WeWork is dying a protracted death, but it did a huge amount of damage to coworking providers before it blew up. You seem to be arguing that disrupting markets is okay as long as failure eventually happens, but that dynamic causes a lot of suffering and waste.

deleted 6y ago

[deleted]

thu2111 6y ago

Are you arguing that WeWork hasn't outcompeted any other office space leasing companies thanks to its funding? The article revolves around testimony from firms that WeWork beat. Also, even if we assume WeWork is an aberration, "beat" here is on a long timescale, after all. There are by now plenty of tech companies that have been around more than a decade having never made a profit. At some point you have to accept that the market dumping these firms are engaging in, does in fact lead to less well capitalised firms being unable to compete.

voodootrucker 6y ago
Precisely, and this is a form of anti-competitive "dumping". There are laws to regulate it, but they aren't enforced because Washington is both incompetent and corrupt. https://en.wikipedia.org/wiki/Dumping_(pricing_policy) https://en.wikipedia.org/wiki/Dumping_(pricing_policy)
- stale2002 6y ago
  Ehh, of all the industries that exist in the world, I find it pretty unlikely that the office space industry is going to be monopolized by a company that is price dumping, and that this is going to put everyone else in the office space industry out of business.
  - voodootrucker 6y ago
    Fair point. Given their business model, it seems like the whole segment of co-working (renting long term leases and reselling as short term ones) never really made sense to begin with. (Despite it being to many people's advantage, including myself).
    - Jochim 6y ago
      I wonder if it has more of a place in a post Covid world? At least some companies are interested in divesting themselves of office space and going 100% remote. A flexible office space arrangement or even just a small space that can be rented to meet with clients sounds like it could be useful.

eeZah7Ux 6y ago

> I have seen startups racking in seemingly endless funding only to be beaten by much smaller / less well funded competitors that happened to have better strategy or execution The usual rags-to-riches feel-good story. Reality is more nuanced, and "worst-run startup can beat competitors if investors prop it up" is true most of the times.

cryptica 6y ago
Exactly, the number of startups which have failed or never even got a chance to start because they had to compete with an unprofitable VC-backed unicorn is unfathomably greater.
davidivadavid 6y ago
How do you know? It seems like the opposite cliché of "Endless VC funding leads to success over better alternatives" is just as much of a fantasy. After all, people with little marketing experience on Hacker News often believe a marketing budget is the only thing that separates huge success from complete failure. As you say, reality is more nuanced.

john_moscow 6y ago

This depends on the market structure. If your competitive advantage is product/market fit, it matters how you run the startup. If you are selling a commodity at a loss in order to acquire a market share, all that matters is the depth of your pockets. And, well, if your competitive advantage is access to legislators to carve out special legal exemptions for yourself [0], good luck competing with that, mom-and-pop startup. [0] https://ballotpedia.org/California_Proposition_22,_App-Based_Drivers_as_Contractors_and_Labor_Policies_Initiative_(2020) https://ballotpedia.org/California_Proposition_22,_App-Based...

edouard-harris 6y ago
This is true, except that the "selling commodity at a loss" and "legal exemptions" examples both presuppose that you already have product-market fit for the commodity you're selling or the thing you're getting an exemption for. If people fundamentally don't want what you're selling, aggressive pricing and legal lobbying will only lead to you killing yourself that much faster. This is something we tend to take for granted with already-successful companies, but there was a time when everyone — even Uber and DoorDash — were struggling in obscurity to build something people would use.
- jjeaff 6y ago
  Maybe? Car services and taxi services kind of already validated product market fit long before Uber, lyft, etc. While yes, they have some benefits that people like, but it's not clear that those services would have been able to compete against existing services without heavily subsidizing to undercut existing market players.
mkolodny 6y ago
By "legislators" do you mean members of government? You linked to a California proposition, which any citizen can create: "In a special election held on October 10, 1911, California became the 10th state to adopt the initiative process. That year, Governor Hiram Johnson began his term by promising to give citizens a tool they could use to adopt laws and constitutional amendments without the support of the Governor or the Legislature. The new Legislature put a package of constitutional amendments on the ballot that placed more control of California politics directly into the hands of the people. This package included the ability to recall elected officials, the right to repeal laws by referendum, and the ability to enact state laws by initiative."[0] [0] https://www.sos.ca.gov/elections/ballot-measures/how-qualify-initiative https://www.sos.ca.gov/elections/ballot-measures/how-qualify...

m0llusk 6y ago

The article describes in detail how the WeWork saga decimated the coworking industry, but you don't care because that doesn't match your experience and you don't depend on coworking spaces. That is really cold. I've been working with startups part or full time since 1991 and am amazed at how disruptive they are to the markets in which they participate. Getting a huge pool of money and then spending it to achieve dominance in the shortest possible time does lots of damage to markets, in particular in makes the bootstrapping path nearly impossible since customers can't compete with investors.