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What software engineers can learn from the rapid collapse of Fast
- eweise 4y agoI don't understand why $600K in revenue wasn't a giant red flag. Maybe they don't tell the employees the revenue numbers? If so, that is a giant red flag.
- tschellenbach 4y agoI tend to tell potential new hires about our revenue, funding raised, valuation etc. You wonder if there needs to be more education on equity or if these people just went for the high base salary.
- yen223 4y agoHow many engineers reading this comment know (or even care) how much revenue their company is making?
- tehlike 4y agoGood engineers look into the core metrics that matter to their company. I am in ads. I know quite a lot about the revenue, split, seasonality, etc. It's something i optimize, so it's something i must know.
- deleted 4y ago[deleted]
- lbrito 4y ago"Inside Fast’s Rapid Collapse" Can't believe they missed the chance to headline a pun with the company's name "That was one Fast collapse"
- hidelooktropic 4y agoI'd assume it was on purpose, given the obviousness of the pun.
- Liron 4y ago“The $100M Startup That Checked Out Fast”
- edent 4y agoCan someone explain what Fast's USP was? Every ecommerce platform I've used has a PayPal / Google Pay / Klarna button. I click it and my payment & shipping details are there. Seamless. So what problem was Fast trying to solve?
- k__ 4y agoI first heard of it today.
- Apocryphon 4y agoIt's in the same category as whatever Bolt is doing.
- tough 4y agoNew klarna virtual cards for not needing ecommerce implementing financing directly is genius. I guess with nowadays infra as code for financing that makes sense in 2022
- toomuchtodo 4y agoAffirm is doing the same [1]. Debit rails are just easier versus the integration schlep. If you're a fintech, you can do all sorts of cool presentation and product offerings using a virtual account attached to a deposit account (BNPL is one, as is a hybrid credit/deposit account). Debit/virtual card also empowers the consumer, as you're not beholden to the merchant or their gateway provider to support a specific fintech integration. [1] https://www.affirm.com/debit https://www.affirm.com/debit
- tough 4y agoOops Affirm is getting burned in the frontpage, what a funny timing. https://news.ycombinator.com/item?id=30959322 https://news.ycombinator.com/item?id=30959322
- miketery 4y agoUSP? Edit: found it, unique selling proposition. And totally agreed, how do you compete with google pay, Apple Pay, Instagram, etc. it’s a losing game when you don’t have network effect.
- PragmaticPulp 4y ago> Tiny daily sales numbers which all employees received was the first such warning sign. Internally, Fast was transparent on sales. Every day, every employee would receive a sales summary email that listed the number of sales completed with Fast checkout, and the total sales amount. > Fast did less than $300K worth of sales and below $6K in revenue on most days from January 2022 to April 2022. There were days with around $2,000 in revenue for Fast. I'm actually surprised that everyone was receiving daily updates of company revenue. If you're surrounded by 100s of people at a company known to give high base pay but you're seeing daily revenue numbers in the range of $1K to $6K (they had $600K total revenue in 2021, supposedly) then you have to know that your time is very limited. I assume they were led to believe that more investment money was just around the corner to keep the business going? With a $10 million monthly burn rate they would have needed a staggering amount of capital to just continue to exist, let alone execute any plans to turn the ship around.
- meetups323 4y agoThe entire culture of b2b startups IME is "yes we're burning money now, but just you wait till Moby Dick comes along... just implement XYZ features marketing/sales says are important and we'll have him in no time!" Of course, this is somewhat tautological: if they weren't burning money, they'd just be a company. Startup phase complete.
- ceeplusplus 4y agoThe difference being that in successful B2B startups you don't have 600k ARR at 500 employees.
- gregdoesit 4y agoAuthor here. I was wrong on this information and updated the article - got a correction since. L6 and above employees would receive this: staff+ engineers, eng leadership, sales etc. There are companies where this information does go out to all employees in the spirit of radical transparency. Skyscanner is an example where every day, every employee gets the full revenue breakdown. These numbers are also shown on monitors across the company.
- adamsmith143 4y agoThat Startups are fundamentally risky and despite all the talk on HN you are highly likely to spend years working in a high pace high stress environment for equity that will ultimately be worthless or at best match comp at FAANGs all while having questionable WLB.
- AYBABTME 4y agoBut working at FAANG is not much fun. I think a mix of both startups and Big Tech leads to a happy life.
- adamsmith143 4y agoWell that's definitely subjective but in terms of Pay and WLB I think big tech beats startups generally
- ChasingEchoes 4y agoi guess its up to what everyone is looking for. I personally avoid start-ups like the plague. To the point where i dont even bother accepting linkedin requests from startup people Im not that big of a fan of "Big Tech" either, i wouldnt go for something like FAANG, even if maybe the pay would be good What gave me a happy life was "industry" firms. In my case those were either consultancy/strategy firms (MBB/Big4 ) at first, which was stressful, but had good advancement chances (jumping steps based on performance) and very good networking opportunities. Now i've retreated in "an industry". In my case a forbes 100 company in the automotive sector (they have cloud systems and develop software too). And life is bliss.
- lupire 4y agoWhat's fun about working at startup that is just cloning a bad old Amazon feature? Besides getting to call yourself a "staff+" on Twitter, I mean.
- adamsmith143 4y agoThe meteoric title inflation is definitely interesting. I consistently see people who were Analyst level at Fortune 500s getting up to Director of X in a year or two at startups. Seriously makes me question the quality of people at these places if any random analyst is qualified to be a manager of managers.
- buf 4y agoWow, I make the same revenue as Fast as a one-man entrepreneur. It really amazes me sometimes the strategies of these heavily funded companies. Why pile on so much burn so quickly?
- kache_ 4y agoTime to ring up some VCs, buf xD
- sydthrowaway 4y agoWhat do you do?
- me_me_mu_mu 4y agoi guess everything was fast
- mwcampbell 4y agoI think the most applicable warning for engineers when it comes to the actual work, as opposed to whether one should join a particular startup, is this: > Engineers calculated the load Fast had in needing to serve their traffic. The Fast button was rendered less than 500,000 times per day - rarely needed to ever serve more than a few requests per second. > One of the few warning signs engineers noticed is how Fast spent far more on infrastructure than the scale of the operation would have called for. Engineers sometimes brought up suggestions to scale infra down, and save costs - given there was not much revenue generated. Sounds like the whole thing could have run on a single cheap VM, perhaps with a second one for redundancy.
- lolsoftware 4y agoThe TailScale folks caught a bunch of flak for their "do things that don't scale" approach to databases. But, honestly, most startups would be better off following that approach than what Fast did. Sounds like the engineers were just entertaining themselves with shiny toys rather than solving the problems they actually had.
- deleted 4y ago[deleted]
- randmeerkat 4y ago> Sounds like the engineers were just entertaining themselves with shiny toys rather than solving the problems they actually had. More like, sounds like management was trying to get as much money as quickly as they could from their VCs before it all imploded. The engineers aren’t at fault that management didn’t have a real product or vision.
- mrkurt 4y agoWe all know plenty of engineers who want to build things for inappropriate scale. The company was a disaster, but part of building a disastrous company is hiring the engineers who want to make everything webscale and have no sense of pragmatism.
- gowld 4y ago> one-click checkout scaleup Fast a what now?
- gowld 4y ago> The mock-up of the spreadsheet people who received offers at Fast had access to. The numbers represent what a senior engineers with $220K in base salary, and 30,000 options saw as numbers on their potential compensation value. The spreadsheet didn't even have a row for "might not be a huge success". This company was red flags from the start. I can't imagine someone walking away from a $300+K FAANG job for $240K + obvious BS equity.
- why-el 4y agoThis connects nicely with Dan's article from yesterday [1], if only tangentially. I think a good habit is to instill a mindset whereby there is a single metric for cost, possibly associated with your main product, and keep track of that cost as it relates to your infrastructure spending. I've seen it before work well. For instance, if you sell computers, the cost could be, we spend $100 on infrastructure per computer sold, and engineers can then argue for spending more effectively. [1] https://news.ycombinator.com/item?id=30936189 https://news.ycombinator.com/item?id=30936189
- lmeyerov 4y agoOof, just one of our customers pays about the same as their full revenue, and we're a cockroach team. The real thing here is they're not that surprising. A lot of companies with their kind of funding use enterprise sales to force say $5-10M ARR, but there's only so much VC money can force for a leaky funnel, broken product, and overall incorrect market + fit. I didn't appreciate this until maybe a year or two ago. Valuation multiples in 50-100X range are super common (and even wackier numbers in seed/a). Think make believe stories like "well with another 12-18mo of growth this really just a bit over a 30X on some future forward revenue multiple...". The cash almost always leads to overspending, and it's highly unlikely the next 2-3 raises won't blow up and everyone goes home. I'm actually super impressed by the Docker team because they've been one of those rare cases of crawling out of that trap, even if with a lot less of the team. We get job candidates with high competing offers for companies I know to be rotten inside, yet there's only so much I can say. "Our new hires are getting paid from customer revenue and with equity that doesn't have $50M-$500M of investor thumbs on the scales already cutting you out in 95% of the likely scenarios" generally doesn't punch through the kool aid.
- mwcampbell 4y agoI'm not familiar with the phrase "cockroach team" in this context, and the obvious web search didn't help. Can you please elaborate?
- jollybean 4y agosmall, surviving on crumbs.
- diehunde 4y agoMaybe they work at Cockroach Labs
- alex_c 4y agoI'm not the op and this is the first time I've seen someone else use the term, but I've used it too. Aspirationally - small and impossible to kill. While a unicorn's goal might be growth at all costs (with associated high chance of failure), our goal is to survive anything that might get thrown our way.
- betaby 4y agoI've never heard about Fast before I read the article. I don't know whether I live in a bubble or SV lives in a bubble.
- xxpor 4y agoI thought Netflix had spun off https://fast.com https://fast.com
- Sebguer 4y agoThey've been notable recently mainly for controversies, especially on Tech twitter, due to discrimination lawsuits and just general toxicity: https://www.businessinsider.com/fast-gender-discrimination-lawsuit-former-employee-2022-2 https://www.businessinsider.com/fast-gender-discrimination-l... They were also notable on twitter / reddit occasionally for giving away very cheap / subsidized swag like $1 hoodies.
- lappet 4y agoMe neither. I read the article and cannot figure out what their domain is (or was?) EDIT: It is fast.co
- zomglings 4y agoI'm in SV and hadn't heard of Fast.
- karmasimida 4y ago> the company only generated $600K in revenue in 2021 Ain't none of the investors catch this ... ? Losing money is one thing, but this seems to me as really low growth
- louthy 4y agoThis is what surprised me. It seems the board was asleep at the wheel, failing in their fiduciary responsibilities
- photochemsyn 4y agoWow, these numbers are like those from pets.com: > "During its first fiscal year (February to September 1999) Pets.com earned $619,000 in revenue, and spent $11.8 million on advertising." (Wikipedia) > "The company raised $82.5 million in a February 2000 IPO but filed for bankruptcy nine months later." (Investopedia) Fast rasied $102 million in capital and had $600k in revenue that year... Is Big Finance about to hit the panic button again?
- nly 4y ago$100M is a lot less money today than it was in 2000 after factoring in inflation and low rates.
- pphysch 4y agoSo is 600k
- tomrod 4y agoYes, but also no. Per the CPI, for every $1 in 2000, you need $1.68 today. 1.68^1/22 - 1 is about 2.39%/year inflation. https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001&year2=202202 https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001...
- propter_hoc 4y agoFor the purposes of engineering salaries, CPI is not an accurate representation of the change in what $100M can buy.
- davidkuennen 4y agoHoly shit. How do you even spend 10M/Month?
- danesparza 4y agoIt can be done. It's expensive. But it can be done.
- waqf 4y agoYou have 500 people and you spend 20k/month to employ each of them.
- 0xJRS 4y agoIt seems very hard to do but I worked at a startup in the early 2010s and we were spending >500k/m. We had ~25 employees, 7 of them execs, all buying new homes and cars, meanwhile we had 1 single paying customer bringing in 10k/m. I told some of my close colleagues that we probably had 6-12 months left when I put in my resignation. 12 months later they laid off 10 of the 12 remaining engineers.
- shagie 4y ago> For senior software engineers, Fast offered $200-240K/year in base salaries Lets put everyone there. $20k/month. > On Monday, 4th April, Fast laid off all of its workforce of about 450 employees, of which about 150 were software engineers. That 150 at $20k/month is $3M by itself. The other 300... if they were paid half of that would easily be another $3M. I'm certain there are other costs - but its easy to point to a "if they were paying that much, this many employees represents this much per month" that is a sizable fraction of that $10M/month.
- deleted 4y ago[deleted]
- lordnacho 4y agoMakes no sense at all. Presumably whoever is allowing people to be hired knows what the revenue figures are? I suppose it's possible they thought there was some sort of dam holding back business, which was about to burst, thus requiring loads of staff to deal with. But most people would just say "we'll cross that bridge when we get there" and allow a bit of queuing up of customers, rather than somehow hiring and training a bunch of people in anticipation.
- taylodl 4y agoAn important lesson I learned while working for a startup - pay attention to the revenue stream and pay attention to expenses. The two will not stay out of alignment for long. I've talked to start-ups not paying any attention whatsoever to their revenue stream, they seem to think the bonds are the revenue stream. Many of those startups are quickly gone. When looking at a start-up make sure they have a good grasp of their revenue, their expenses, their revenue forecasts, etc. If they start hand-waving or show numbers that are out of whack then you're better off passing on their "opportunity."
- lifeisstillgood 4y agoIncentives matter. Aligning everyone's correctly matters. So much of the story sounded "yeah but you can survive that" right up to the point here: >>> Sales, however, wanted the opposite: close many deals and hit their targets of signups If your salespeople are focused on selling to the wrong people nothing matters. You are either Shopify taking years to build or you are a rocket ship taking shortcuts - decide
- Animats 4y ago"Most engineers joining didn't know much about why the one-click checkout industry has the potential of billions." So why isn't this a standard feature of every shopping cart program, including the cheap ones? The complicated part is that you need "undo", valid for a while after ordering. That's what makes one-click buy feel safe for customers. This complicates inventory management. But you really need "undo" for an hour or so after ordering.
- odonnellryan 4y agoLots of sites do not have a good undo for orders. I ordered from remarkable and their solution was to deny the package...
- cush 4y agoI ordered a piece of furniture from Wayfair, and they had the same response - deny the package. Well the package arrived while I was at work. After calling them 3 times to come pick it up, due to shipping delays they were never able to, and eventually told me to keep it for free.
- odonnellryan 4y agoThat is nice! What happened with remarkable is I never got it and they refunded me. Which was also nice. Good guys, just a weird policy!
- jollybean 4y agoThat's the magic question. 1) Carts are slow to evolve but they will. 2) Bolt/Fast contain user based information, consumed from their use on other sites. So there's a 'network effect'. If they've shopped at ABC.com before your store, then you already have their CC data ready to go in their car. Sort of like Single Sign On but for carts.
- Animats 4y agoBolt/Fast contain user based information, consumed from their use on other sites. So there's a 'network effect'. If they've shopped at ABC.com before your store, then you already have their CC data ready to go in their car. Sort of like Single Sign On but for carts. Uh oh. That has so much scam potential.
- steve76 4y ago
- diiaann 4y agoNot having a big company signed is not inherently bad. Going after small business can be a valid strategy (i.e. Salesforce) but it sounds like there wasn't healthy growth or the right relationships to support this path.
- everybodyknows 4y agoConsider this: > ... engineering directly raising concerns to the CEO, and suggesting to focus on larger customers, fewer customizations, and bring in more revenue. Sales, however, wanted the opposite: close many deals and hit their targets of signups. In the end, sales got their way, ... If the product is customized for nearly every customer, they've degenerated to a de facto consulting shop.
- lupire 4y ago> degenerated to a de facto consulting shop. Which is fine, as long it's priced right. Palantir is a consulting shop.
- d3ntb3ev1l 4y agocon man as CEO is usually a good indicator
- jthrowsitaway 4y agoSo Elon Musk then? Any day now a car will fully self drive across the country, as was promised to happen 4+ years ago.
- kortilla 4y agoNot quite, both spacex and Tesla generate significant revenue. Not lies about the business.
- karmasimida 4y ago> the company only generated $600K in revenue in 2021 Ain't none of the investors catch this ... ? Losing money is one thing, but this seems to me as really low growth right?
- eatonphil 4y agoPresumably they did catch this because they weren't able to raise a new round.
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- mxuribe 4y agoOh, did you mean for that to rhyme? Shorten it a bit, and folks would remember it more easily. ;-)
- tschellenbach 4y agoCompare revenue to funding raise/valuation. If those numbers are out of whack just be aware that your equity is probably not going to have a good outcome.
- willsi 4y agoThat was fast...
- coldcode 4y agoI worked at a consulting firm in the late 90's (right before Dotcom collapse) and we got a new CFO who bragged we were all going to millionaires shortly. Most of us engineers thought he was nuts as consulting firms are not exactly money engines. We survived past the March cliff in 2001 but in mid summer we died at 4:30PM with 20 minutes notice to leave the office before the locks were changed. I never trusted a CFO new hire again...
- manesioz 4y ago> I found some unsettling information about the founder of Fast, Dominic Holland. This thread [1] touches on what some of that stuff probably was. Sounds like the CEO was a charismatic scammer. [1]: https://nitter.net/jack_raines/status/1511737489190494208 https://nitter.net/jack_raines/status/1511737489190494208
- cush 4y agoI have Fast recruiter emails in my inbox from literally last week...
- trollski 4y ago
- paxys 4y agoIs there anything actually new to learn here? Yes all equity is hypothetical. Yes there is no guaranteed road to an IPO. Yes you are taking a risk. People who take jobs at these kinds of companies for the upside do (or at least should) know this.
- lupire 4y agoDon't work for a con artist with a long rap sheet.
- throwawayboise 4y agoThis sounds very much like my experience with a dot-com flameout in 1999. Massive spending of VC investment money on offices, a sales team, engineers, and a data center and servers to meet their expected (hoped-for) scale (there was no cloud then). No large clients on the platform. Not a lot of small clients either, TBH. One day out of the blue over half the company was let go. Some effort to downsize and retool, but it seemed perfunctory. All the rest of the staff was let go after another couple of months. If you have no customers, you have no business.
- deleted 4y ago[deleted]
- IMTDb 4y agoThe key informations are here : > Fast offered $200-240K/year in base salaries with full remote work > Sign-on bonuses were common and large. Those who asked for almost always received sign-on bonuses of $20-50K as a one-off payment > Equity issued was lavish and presented as potentially life-changing > A good part of people are echoing how working at Fast was an amazing experience. People liked the culture, and how employee happiness was a priority. What's not to like here ? Working for huge amount of money, in a company whose culture puts employees happiness first, and provides an amazing working experience. Management did "all the right things" : remote ? check ! competitive salaries ? check ! amazing experience working there ? check ! employees-first culture ? check !. Why would you even need to look elsewhere. And when it all crashed and burned, the feeling is : > There are people who are frustrated and disappointed with company leadership, and how the bust came out of nowhere. Trick is that it did not come out of nowhere, people just chose to look away. It's easier to blame management (which is definitely at fault as well !) than to say "I was paid way too much compared to the actual value I was providing". When you are paid $200k / year, you should easily be able to justify that your work generates more than several thousands of USD alone, if you are unable to do that, you need to have a conversation with your mirror as well - or just accept the fact that you are benefitting from a system, which may crash and burn if too many people are in this situation, or keep on living if you are an exception.
- deltarholamda 4y ago>When you are paid $200k / year, you should easily be able to justify that your work generates more than several thousands of USD alone Revenue per Employee used to be a real metric that people used. Of course, P/E ratios used to be sane as well.
- dymk 4y ago> What's not to like here ? I think as a serious counter to that, look at the offers that a FAANG will give you - similar base salary, similar sign-on bonuses. Generally WLB is fine. The real differentiator - they're offering you equity which is liquid right now. If one is risk averse, one wouldn't touch Fast with a ten foot pole.
- tlogan 4y agoI never heard about Fast - till now. So my opinion is that they failed in advertising. Maybe they spent too much on engineering but definitely not enough on advertising.
- moffkalast 4y agoThey died like they lived - Fast.
- bogwog 4y agoWhen I read the title, I thought this article was about Netflix's speed test website fast.com, and thought they were having some catastrophic outage or something.
- JonChesterfield 4y agoDoes Netflix have outages? Searching found me suspicious sounding websites for querying whether it's currently down and a story from 2017 about AWS falling over creating a transient slowdown without loss of service.
- bombcar 4y agoIirc Netflix is actually pretty well distributed because they now have edge devices in CDNs throughout the world.
- kleinsch 4y agoDo you own a major e-commerce site? If no, why should they have spent on advertising to you? They’re a sales company, not direct to consumer.
- twic 4y agoInformative but depressing looking at the salaries given in the job listings at the end.
- sydthrowaway 4y agoIf I was a FAANG hiring manager, I’d tear up any resume from these get rich quick dollar chaser wannabes
- asda_ 4y agoSo employees choosing the best offer for themselves is somehow wrong? I'm glad you aren't a FAANG manager with that attitude.
- eterm 4y ago> every small business needed custom engineering work to be done, making integration slow This is the killer for SMEs. If you're not selling to enterprise, find a solution you can whitebox and quickly ship with minimum customisation.
- emgeee 4y agoI was an engineer at Fast for over a year and wanted to clarify a few points-- - engineers did have access to data and could write their own queries to check revenue (but few people did until the article came out). - the strategy leadership decided on was to go after massive enterprise sellers which would, in theory, result in step-change functions in revenue. Many people knew about the low numbers but were willing to let the strategy play out for a while. There was a lot of excitement internally around closing the first $1B+ seller - Internally, the culture was something akin to "toxic positivity" which meant that we weren't willing to discuss failures or misses in a productive way - The company spent a lot of money on marketing events including sponsorship deals with the Tampa Bay Lightning and the rumored million dollar concert by the Chain Smokers. People are talking a lot about high engineer salaries but IMO those were far from the biggest problem (possible biased view) The story is a lot more complicated and nuanced than the headlines you read in publications but I will say that Fast was full of really talented folks who I'd be happy to work with again. For me, a big lesson I took away from this experience is the perils of an overly positive fully remote culture. It's very easy for leadership to hide things from people when information doesn't easily spread across different organizations
- ushakov 4y ago> The company spent a lot of money on marketing events including sponsorship deals with the Tampa Bay Lightning and the rumored million dollar concert by the Chain Smokers here we go, this is late 90s all over again
- throwmeariver1 4y agoYou think we get parties with Kid Rock again?
- relaxing 4y agoThese days? Sure, an appearance by Kid Rock is much more affordable.
- RC_ITR 4y ago
- 1231232222q 4y agohow did they even raise any funding with that low of revenue?
- insaider 4y agoWhy are there no articles answering this question? Please link if you find one!
- robot 4y agoThe article has good points but misses the actual answer in my view to "what software engineers can learn" or in fact anyone can learn from this. Don't join a company only because there is more money. If you don't know what one click checkout is or have any intellectual interest in it, but jump on it just because you can make more, you will be disappointed. This works the same way in everything in life. One must have genuine interest in what they do, before compensation.
- HideousKojima 4y agoI have very little interest in tax software, but my current and previous jobs are writing tax software (though I guess my previous job was technically tax software plus other internal tools for a local government). But for me the interest isn't in what the software I'm writing is for, it's in the interesting and unique problems I get to solve, even for something as boring as tax software.
- aidaman 4y agothere are literally no interesting and unique problems in tax software. literal oxymoron
- psyklic 4y agoI'm glad that a warning was given about graphs of "potential [equity] compensation value." I've seen this abused where co-founders were only paid in equity. Instead of being told their percentage ownership, they were shown a similar extremely hypothetical graph. Unfortunately, in reality their equity only was worth ~$600/year (when computed using their percentage ownership and current valuation, which takes into consideration future risk).
- kringo 4y agoIt is not your fault!
- l2silver 4y agoAm I crazy, or is the answer "Nothing"? The product was built, they just couldn't sell it fast enough. Engineering culture had nothing to do with this failure. And if they had landed one of those big clients, they would be kicking ass. You never know how it is going to go. Sometimes you go after the small sales and die. Sometimes you go after the big ones and live.
- digianarchist 4y ago>And if they had landed one of those big clients, they would be kicking ass. I think there lies the problem. You need to work up to acquiring those customers.
- zild3d 4y ago> Engineering culture had nothing to do with this failure. Why keep hiring so many engineers when they aren't needed yet? Sounds like a cultural issue to continue hiring so aggressively when it's only resulting in way higher burn than you can support
- ben7799 4y agoHow big is big? If they landed a "big client" and it was a $5-10M/yr account that doesn't sound like it would have enabled them to survive. Even if they had landed Amazon that one client would not have paid enough to make this business work when you look at their numbers.
- pavlov 4y agoReads exactly like the stories I remember from the dot-com bust of 2000. Back then, it created a chain reaction. Even relatively established companies like Yahoo turned out to be dependent on startups for much of their revenue. As public companies they had to announce large misses from revenue targets. And that scared investors, which chilled the capital flows to startups, which led to even more startup deaths. Personally I wouldn't invest in recent software IPOs that sell to startups. Nasty revenue surprises may be on the way.
- redlion 4y ago"in February I predicted trouble is heading for some late-stage startups" ... meanwhile back in 2021 https://www.nytimes.com/2021/12/08/business/better-zoom-layoffs-vishal-garg.html https://www.nytimes.com/2021/12/08/business/better-zoom-layo...
- insaider 4y agoWhat I want to know is how he got all that funding? And from Stripe!? This damages their reputation too I would think.
- GianFabien 4y agoBack of torn envelope calculation: 450 staff, 150 engineers = 300 managers? $600k revenue in 2021 => barely paid for their salaries at $200k each. What were they really doing? Going on junkets to Florida - yeah, that'll generate more revenue.
- jthrowsitaway 4y ago> 300 managers Uhm... Sales, marketing, finance, HR, legal, designers, QA, etc. Companies aren't just made up of engineers and people to manage those engineers.
- sitkack 4y agoI thought this was about Fast, the hardware based search company. https://en.wikipedia.org/wiki/Microsoft_Development_Center_Norway https://en.wikipedia.org/wiki/Microsoft_Development_Center_N...
- briandear 4y agoAm I the only one that still has no idea what this company sold?
- ec109685 4y agoWow, the fact that the “rocket ship” Fast and its ceo were talking about was really the number of employees hired( graph from the article) just takes the cake: https://mobile.twitter.com/January_Capital/status/1354070050160865281 https://mobile.twitter.com/January_Capital/status/1354070050...
- paradite 4y agoHaving spent the past 3 years building online checkout and mobile payment solutions at a top fintech company, it hurts to read articles like this where some of red flags are so "obvious". During my time there, I would regularly check our monitoring dashboards and analytics tools to understand how business is doing. We also had frequent all-hands during which business metrics are communicated transparently. Through digesting and understanding the data from various sources, I was able to have a good sense of how well the business is doing, and that helped me grow in the confidence of the company. Online checkout, as simple as it looks, has tons of complexities, nuances and interplay of various factors hidden behind it. But that's another long long story.
- LeonB 4y agoJust astounded that they’d think “hockey stick growth” of costs is a good thing. Very dot-com collapse attitude. They took funding from Stripe and I guess they misinterpreted the point of “do things that don’t scale”.
- darthrupert 4y agoWhat did they do? I saw the company name several times over the years but never got an idea of what they were about.
- dmje 4y agoSorry, I read it all the time, but still - how the fuck is it suddenly normal for a fairly standard salary amongst any non exec layer in a company to be ~$250k? I know engineers and developers have to be skilled, but this is insane. No-one needs that kind of money. People in Nepal live for $10 a week. What an insanity.
- jthrowsitaway 4y agoWhat point are you suggesting with your Nepal example? It's a third world country. Fast presumably employed people in San Francisco. That weekly wage from Nepal might buy you a bag of apples from Costco here. An entire year's worth of wages in Nepal might pay for one month's rent of basic housing. Sure, nobody needs $250k per year to survive. CEOs also don't need to have an obscene compensation ratio compared to their workers. Health care companies don't need to rake in billions in profits every quarter. Sitting congress people don't need to conduct stock trades worth hundreds of millions every year. But here we are. Companies paying everyday employees competitive wages in a free market is way down on my list of things to lose sleep over. We have a few other systemic issues I'd like to see solved first.
- dmje 4y ago> We have a few other systemic issues I’d like to see solved first Insane levels of inequality is what’s on my list
- panick21_ 4y agoActually helping poverty seems like more important then any relative measure.
- kortilla 4y agoDo you know what the average salary is in the Bay Area? You’re completely out of touch if you think $250k is “insane inequality”. Take a look through the salaries paid for working at public transit there (BART): https://www.bart.gov/sites/default/files/docs/Salary%20Schedule%201.1.2020%20%28FINAL%29.pdf https://www.bart.gov/sites/default/files/docs/Salary%20Sched...
- retrocryptid 4y agoWhy is low (or falling) revenue grounds for a low (or falling) valuation? The fundamental feature of modern Intarweb companies is VC's just shovel money into startups indefinitely. The goal isn't for the company to make money, but to serve as a vehicle for selling their stake in the next round to a greater fool. Something fishy is going on here
- MangoCoffee 4y agoafter reading the npr article on Fast's CEO. why do i get the feeling that guy is a sleazy bag.
- netfortius 4y agoThe hockey stick may be odd in the case of startups, and maybe in regards to strict specialization (of software engineering), which may be the intended audience of HN. There is nothing wrong (in fact normal, and considered healthy if the slope of growth matches the needs) for expansion of a product in diff countries, upon acquisition of new manufacturing or distribution points, for example, or after divestiture events, or even some M&As directed towards short term expansion of product reachability, when a large, global company leverages a small acquired one for a niche product gaining large distribution capabilities, etc., etc. All in all - hockey stick shape is not always bad - quite to the contrary.
- jillesvangurp 4y agoSounds like a great deal while it lasted for the engineers working there. They were over paid by a company that was bending over backwards to please them with money, benefits, and pretty much everything they could want. The stock turned out to be worthless of course, which is a bit of a bummer. But that's why salaries were presumably that high. So, the money ran out and people got fired. So what? If they were any good, they no doubt found other companies to get a good deal with pretty soon after. I see no problem here. There's a shortage of competent engineers. That's the reason companies like this pay so well. The only issue I see is dumb investors putting money in a company that clearly had no product market fit, a big spending problem, and nowhere near the ARR you would normally associate with a 100M+ C round. I mean, we're a struggling bootstrapped startup and we are getting close to that revenue this year. The investors we talk about (for a seed round) seem to be a lot more picky than was apparently the case for this company. You'd hope investors would do some due diligence. That clearly did not happen, at all. What the hell were they thinking? Probably a juicy story there of incompetence, greed, stupidity, and various individuals benefiting when they arguably shouldn't have. I imagine the e.g. CEO of this company funneled away plenty for himself before bailing out in a hurry. If he paid his engineers a quarter million per year, I bet his own salary was probably a bit higher.
- inferense 4y agowhat's interesting to me is how the hell did Fast get to series B with such revenue? I wonder what kind of kool-aid got their investors in
- nicksiscoe 4y agoI don't think it's fair to assign blame to "positivity" and "optimism" as others in the comments have. It takes an incredible amount of positivity to start or join a small startup. You have to believe that you/your coworkers will accomplish something that very few people have done successfully, and that requires a lot of confidence when things look gloomy. As a total outsider here, it sounds like most ex-Fast employees are very talented and positive people. Perhaps the problem was not overall "company positivity" so much as it was executive leadership being naive and unwilling to A) identify when serious pivots/changes needed to be made and B) actually make those pivots. Positivity is good, but not when it translates to unchecked naiveté. If you believe too strongly in your ability to succeed, you might start rejecting any signs of failure as they crop up. When something goes wrong or a mistake is made, you might find a scapegoat or otherwise discount the severity of the problem. The other "reason for failure" might simply be that... well... startups are hard. Sometimes it just doesn't work. There might not be anyone to blame.
- p0nce 4y agoWhy investors take on bad deals like that?
- Majestic121 4y agoIf you have a way to surely differentiate bad deals from good deals, while keeping a low false negative rate (i.e. still being able to notice the next Airbnb/Google/etc...), I'm sure a lot of investors will want to talk to you. Do you have a good track record on this ?
- p0nce 4y agoNo absolutely not I'm not an investor. I guess with hindsight it is easier to see how bad it would be. In the microISV space, having expenses below revenue is the only way to go, so it all feels really remote.
- lbriner 4y agoIsn't this a really common danger for those who want astronomical growth? Most of us would love $100M to spend on stuff but the expectation behind those investments practically begs you to employ far too many of everybody and just assume it will all go good in the end. I partly understand the over-engineered system because almost by definition, any measure of success will need to support high volumes of transactions but there are plenty of other lessons here, most of them seem quite obvious!
- bikamonki 4y ago. And yet, every small business needed custom engineering work to be done, making integration slow. Several engineers mentioned how they did not understand how spending lots of engineering effort for each small client resulting in little revenue would result in building a company that could be worth $12B one day. In other words: fast was not itself a one-click checkout product. Two of my products failed for the same reason. These are high-touch sales in terms of the custom work that needs be done for every new client. I have also seen a product fail due to the high cost of providing tech support vs account revenue. What seems odd in this case is that Stripe knows very well how a low-touch saas should work and yet they invested in Fast. Maybe they assumed client customization will eventually be solved with a handful of options that would fit most needs?
- throwawaygal7 4y agoOK, great discussion in here about hype and toxic positivity. Does anyone beleive this would have worked if they went with a Leander team and decreased spend? Made a simple MVP and tried to slowly grow? Just wondering. I feel their idea is pretty mediocre and some very similar solutions already exist. The basic pitch 'one click buying for grandma' is not something I would enable for my parents or my grandmother - they'd just buy too much crap on qvc like sites.
- nazka 4y agoI invested in Fast and removed all my position when it looked fishy. But the main problem of all that was all their hype about a « massive customer » they will have at the time. And close partner ship with them. And everybody speculating it was Amazon. Don’t do that. Don’t hype to the moon or it’s going to fall sooner or later to the ground.
- bigtimethrow 4y ago“North Bondi” is code in Australia for an extremely, extremely wealthy set of suburbs when they don’t wish to be directly identified (such as Vaucluse, Dover Heights, Rose Bay). This is undisputedly the wealthiest part of Australia. How did the founder raise $100M with no revenue? “Charisma”? No, this is high-net worth connections and is an overlooked aspect of this whole saga.
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