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I work for non-tech generating 100million+ in revenue. Cushy job, fully remote, good pay and full autonomy with flexible hours working as an IC. I recently tal

by avgDev 4y ago

I work for non-tech generating 100million+ in revenue. Cushy job, fully remote, good pay and full autonomy with flexible hours working as an IC. I recently talked to a startup, similar pay, culture would be a better fit since it was mostly techies and I'm a nerd by nature.....but things just got awkward as soon as I asked about their revenue....they were bleeding money and I was told they were being acquired by a big corp. Also, the tone worried me, the confidence the CEO presented early in the call disappeared. I also tried digging deeper into their business and what they were selling, as I have interest in that space due to my hobbies. I literally didn't see a need for their startup to exist. But I'm just an average developer what do I know.

lumost 4y ago
Across every investment class there has been a trend of buyers needing to become more financially irresponsible in order to participate in the market. Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Need to build a ride-hailing app? prepare to pay people to ride indefinitely. Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. All around, there have been too many dollars chasing too few assets. I suspect the pendulum is swinging now that housing got to the price point where employees demanded equivalent pay increases to housing cost increases.
- winter_blue 4y ago
  > where employees demanded equivalent pay increases to housing cost increases How can employees realistically speaking even do this?
  - DragonStrength 4y ago
    Well, if you're in California and don't own a house, you move. It's not a great option if you were raised here, but a whole bunch of people can take a small pay cut (especially thinking about down equity and inflation) to move back to their hometowns right now. For me, a home (3/2, 1500sqft) in the neighborhood I'd move to in my hometown (US city; 1 mil metro area) is less than my household income, which we'll realistically keep 80+% of when we move. I'd wager a healthy segment of Bay Area mid-level, domestic-born engineers fit this profile. I'd wager that holds true in many metro areas, even those we don't consider tech hubs because it is all relative. I wouldn't want to be a mid-level Bay Area manager in my 40's with a mortgage on the peninsula right now. Who is coming to buy that house? Who is going to train all the 22 year olds moving here? EDIT: And I didn't even think about all the early retirees the major changes to the workplace will obviously prompt. Who wants to spend the last couple years of their career re-learning how to do a job you've done for decades and have been well-compensated for? I'd be at the beach.
    - nostrademons 4y ago
      Mid-level Bay Area manager in my 40s with a mortgage on the peninsula here. Why would I want to sell my house? We bought it because we have kids that we want to raise in the Bay Area.
      - DragonStrength 4y ago
        There are plenty who would have chosen the Bay Area anyway, but for me who is younger and aware of how similar those suburbs are to any others in the country, I was dreading having to commit to the jobs a Bay Area mortgage require. I’m glad you’re already in your location of choice, but I’m sure you know most people move here for the jobs and would be elsewhere if the jobs moved.
    - winter_blue 4y ago
      I moved from the US to Canada, and got a new offer at a publicly-traded US company recently. In the US, pay is around $215k total comp ($175k base, $40k RSUs). Because, I'm in the Toronto (which is more expensive than most of the US), they said my pay would get a circa $111k USD base ($145k CAD base). Adjusted for inflation, I'm earning less than what I was making when I was 25 years old. Now, at age 32, I'm struggling to pay significant debts on this salary. What am I to do?
      - wing-_-nuts 4y ago
        >What am I to do? Yes, you're getting paid less, but you've moved from a broken democracy to a functioning one. You also happen to be in one of the few nations on earth that will net benefit from climate change. Actionable advice? Get a remote position and get the heck out of Toronto to a more LCOL Canadian location with decent internet
  - bityard 4y ago
    The old fashioned way: ask for a raise and go somewhere else if they don't pay?
- metadat 4y ago
  You nailed it! It's the same "excessive dumb money" phenomenon as with the dotcom bubble back in 2000.
- vkou 4y ago
  It's not irresponsible to bid 20% over asking. Asking is deliberately underpriced, because it is excellent advertising in a hot RE market. It's irresponsible to bid 20% over what the house is worth (which has nothing to do with asking price), just because you got emotionally attached to the house, and started a bidding war with another person emotionally attached to the house.
  - bombcar 4y ago
    Which is exactly what the "ask below" is trying to get you to do; you act differently (emotionally) in a bidding war than in a price negotiation.
    - s1artibartfast 4y ago
      I don't think it has to be emotional at all. There is what the house is worth to the seller, and what it is worth to the buyer, and the sale price is always somewhere in between. It is just taking advantage of an information asymmetry to get the sale price closer to what it is worth to the buyer.
  - corrral 4y ago
    It's not "emotionally attached", it's that it's been impossible to buy a house for a while if you're not willing to pay more than it will appraise for. You'll repeatedly lose to buyers who will do that, with cash offers to boot. This has been true even in many cities that aren't trendy, and have been building housing like crazy for a decade.
    - s1artibartfast 4y ago
      In what market? In the SF bay area 99% of houses appraise, even if they go 50% or $0.5m over asking
      - corrral 4y ago
        Boring Midwestern City that's not even a 3rd-tier tech hub. Other boring Southern city that's also not even a 3rd-tier tech hub. Buyers are having to take on the risk of having to cover any extra over appraisal in cash, consistently, while that used to be rare (and, yes, usually for "I am super invested, emotionally, in getting this particular house" reasons). My unremarkable suburban house in a boring city that's been building housing constantly and extensively for the last 10 years, is up like 25% in value over the last 2 years. We thought, based on extensive experience in this market, that we were already paying a bubble-induced premium of 15-20% when we bought it (possibly no longer true—thanks inflation). WTF.
- bushbaba 4y ago
  ...or housing will drop as interest rates go up. And a non insignificant number of folks were over extended in leverage. I know too many folks who did 7/1 ARMs cash out refi to purchase another home in a 7/1 ARM loan, banking not on cashflow but appreciation. I know of folks who bought homes using margin loans in their stock portfolio. If housing stagnates, there will be margin calls, leading to supply shock, and price declines. Especially now that mortgage interest rates have nearly doubled year to date.
  - simulate-me 4y ago
    The price may also decline just because borrowing is more expensive. The difference between 2 and 6 percent interest is huge.
  - bombcar 4y ago
    Margin loans for house purchases isn't as insane as it might sound - assuming your financials are there. Margin interest is deductible against investment gains, house interest may not be for many earners. But not refinancing afterwards into a low fixed rate may come back to bite them, and soon.
    - lostmsu 4y ago
      Margin rates are also lower, and you don't have to pay the principal.
    - georgeecollins 4y ago
      >> Margin loans for house purchases isn't as insane as it might sound I understand the tax logic you are speaking about, but I think tax benefits are sometimes oversold to convince people to buy things (like homes and investments). You aren't a corporation, your liability isn't limited. Trying to shave a bit off taxes may have less benefit to you than the peace of mind of not having to juggle debt. You seem like you understand that when you talk about refinancing asap, so I think you know what you are talking about as well.
      - 4y ago
- gonzo41 4y ago
  This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.
  - api 4y ago
    Central banks have one hammer really: interest rates. Everything is a nail.
    - gonzo41 4y ago
      QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
      - mym1990 4y ago
        Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
        WaxProlix 4y ago
        This entire conversation is about how those entities don't seem to be doing a particularly good job.
        mym1990 4y ago
        And that is a very valid concern, but the Fed is not the one to address that problem.
- BbzzbB 4y ago
  Yes, you need some level of financial creativity to justify buying into one of the many bubbles. But that's where the timeless Buffett quote[0] on Ted Williams and batting comes in, there's no called strikes in securities markets. Mr. Market doesn't force you to do anything at all, we're all free to ignore the speculation and focus on proper cash flowing businesses at reasonable valuations. The more boring the better (tho there are opportunities even with exciting companies these days), but just wait for the right pitch, no need to force it. You'd need a gun to my head if you wanted me to hold a portfolio of cash burning (even generating for that matter) businesses with valuations based on 5-10 year outlooks. 0: https://www.youtube.com/watch?v=l0Mw8hCzQ1I https://www.youtube.com/watch?v=l0Mw8hCzQ1I >The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.
  - throw8383833jj 4y ago
    Sitting in cash is not a defensive position, it's offensive and a highly risky one at that. When fiat, is losing 5-6% on average every single year, you can't afford to wait for the right moment to jump into equities. You have to be in it now, whether the valuation suits you or not. This of course exacerbates risk for everyone and forces everyone into risky positions because cash is now more risky than nearly all the other risky bubbles out there.
    - BbzzbB 4y ago
      I'm not sure where you bringing "sitting in cash" from.
- colechristensen 4y ago
  This was driven by extended 0-ish% interest for an entire recession cycle. Unable to get "safe" returns, money chased more dangerous classes of assets and inflated prices. Inflation and a return to nonzero interest means capital gets to retreat to safer ground, pulling the rug out of stupid unprofitable startups that can only make money with head-in-the-clouds IPO valuation or FAANG acquisition.
  - MomoXenosaga 4y ago
    Is it really a bad thing? Unemployment is pretty low.
    - colechristensen 4y ago
      Long term, poor allocation of resources into junk work and business that doesn’t make money leads to crashes and periods of high unemployment. In other words you can’t keep the party going forever and how things are now isn’t an excuse for irresponsibility.
      - imtringued 4y ago
        That is illogical. Money-less economic models are unable to predict structural unemployment. In fact Say's law predicts that a theoretical barter economy is always at full employment. Of course the modeling flaw is that money is saved as a goal in itself so it will cease to circulate at some point which is the real source of unemployment.
    - throw_nbvc1234 4y ago
      Labor Force participation is also low. Job openings are around an all time high. https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/JTSJOL https://fred.stlouisfed.org/series/JTSJOL As these two converge, wages are probably going to go down while inflation may still be high.
    - deleted 4y ago
      [deleted]
- amelius 4y ago
  Housing cost is part of how inflation is computed.
  - tremon 4y ago
    That depends. Here in NL, housing costs are explicitly excluded from the official inflation numbers, presumably because housing is still seen as an investment rather than a short.
  - mym1990 4y ago
    This depends. Housing cost if you're considering the price of owning a home is not part of CPI for the same reason that stocks are not a part of CPI, that being they are considered assets. If you talking about specifically renting housing, then correct(in US).
  - lumost 4y ago
    The owner equivalent rent measure that the Fed uses in the US has been decoupled from Housing prices for a long time. House price increases or rent increases don't necessarily have an impact on inflation if few are paying the marginal rate, and they choose to eat the higher cost rather than asking for more money. When a critical mass of individuals pay the marginal rate for housing, and they choose to demand more for their services to compensate - then it will show up in the inflation reports. I'd argue that it was a miss for the Fed to focus on owner equivalent rent rather than a broader measure of what consumers are paying for housing as the overall mix of housing has also been changing as the number of investment properties increases.
    - imtringued 4y ago
      If your monthly payment stays the same and the interest rate is lowered you pay less interest to the bank which means the seller gets your money instead. The price increase literally doesn't matter to you.
- jeffreyrogers 4y ago
  > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. If you expect inflation to stay high for a while this is actually rational... as long as you still have a job.
- thomasahle 4y ago
  > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Who buys a house in cash? You mean literal suitcases of dollar bills? Or do you just mean something like a bank transfer? What other ways are there to buy something?
  - deleted 4y ago
    [deleted]
  - noufalibrahim 4y ago
    In cash as opposed to getting the transaction financed.
  - afavour 4y ago
    They mean paying in full themselves, not backed by mortgage.
    - Clubber 4y ago
      Even if you get the mortgage, it's the same as cash to the seller. The bank just cut's them a check right away. The mortgage is between the bank and the buyer.
      - smabie 4y ago
        I just bought a house in cash, the seller wasn't willing to accept any non-cash offers. With a cash offer the seller and buyer can close in a significantly shorter amount of time than with a mortgage.
      - ejb999 4y ago
        >>Even if you get the mortgage, it's the same as cash to the seller. Not really, pay in 'cash' and you can close in days, pay with a mortgage and it might take weeks to months. Sellers always prefer cash buyers if they are in a hurry to sell.
      - seattle_spring 4y ago
        Sure if everything works out then the seller gets the same, but there are many more reasons a financed offer will fall through versus an all-cash offer.
- tomrod 4y ago
  Part of this is because bonds have been out of the picture. Bring bonds back as valid investment vehicles, which impacts many other parts of the economy, and we'll see more assets going to "useful" investment like roads, power lines, and so on.
- garren 4y ago
  Rising interest rates are starting to slow the housing craziness, at least where I’m at. I was regularly seeing 20-27% over asking with limited to no inspections, new listings going in hours. Nuts. All-cash is basically the new norm. Two years ago that was an issue for regular buyers, but it’s workable now since lenders have jumped into the mix, more and more offer an all-cash option - they make the purchase and transfer it to you under a traditional mortgage. You still have an appraisal gap to contend with, sine they’ll only pay what the place appraises for, but anyone who qualifies for a loan can probably qualify for the all-cash option.
  - sydd 4y ago
    Where I'm from (EU) experts say that prices will stagnate amd the market will slow down. On one hand the high inflation pushes out lots of buyers -- they can't or don't want to pay the high interest rates. This lowers demand and prices. On the other hand global supply chain issues (which got much worse with the war) lead to material shortages and rising material costs. This pushes up housing prices. The net result is likely stagnation -- few houses are built and few exchange owners. But prices stay high. Except if there will be a large recession causing people to loose their jobs and unable to pay their mortgages. This will crash the housing market, but looks unlikely now.
    - chaircher 4y ago
      Definitely looks that way in the UK - I've been watching my local housing market like a hawk because I'm looking to buy soon. Houses are staying listed a lot longer, a fair few getting reduced, and newer listings are coming in at more reasonable prices (as much as over £100k is reasonable for a 1 bed flat miles into poverty stricken suburbia). I think people are feeling more risk adverse cost of living etc and want to hold onto money and stay put where they are.
  - shrimpx 4y ago
    > All-cash is basically the new norm. It’s paradoxical that all-cash became the norm in a period where mortgage rates were at all time lows…
- stjohnswarts 4y ago
  I don't think it's housing. It's just that the market had a boom during the bored pandemic times and now that that is over (except in china) the market is readjusting. The market is highly leveraged by psychology over the short term, but in the end even the most exuberant people have to face reality and tighten their belt. Housing will flat line or decrease now as well, since people realize the cost of mortgages is too damn high. Also with lumber and other prices falling that will help new home builds. If Russia ever stops the attempted genocide of Ukraine then markets will probably soar as gas prices come back down instead of increasing.
- asta123 4y ago
  And for these reasons I question the whole concept of money, working for it, and saving for whatever dream. Flood of money can be so easily created but you have to work for it? Then you have to max out on debt, speculate and risk your hard earned funds, otherwise you are falling behind. Central banks have stuffed this one up and I it is a much bigger problem than inflation.
- david927 4y ago
  > Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Buying in cash is being done to skirt the tightened up lending standards that followed the 2008 Crisis: https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022_real_estate_collapse_is_going_to_be/ https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022...
  - seattle_spring 4y ago
    It's being done to win bidding wars, because it's much less risky for a seller to choose a cash offer over financing.
  - gruez 4y ago
    >superstonk I'm baffled why people would get their economic analysis from a subreddit predicated on a short sequeeze that has failed to materialize.
    - david927 4y ago
      What gave you the idea that it would materialize in your time frame?
- zitterbewegung 4y ago
  The markets are efficient but they aren’t perfect. In any situation the markets will do the best to optimize but will always fall short of perfection . Since markets aren’t perfect that’s why you can make money by speculation.
  - worik 4y ago
    > In any situation the markets will do the best to optimize but will always fall short of perfection The problem with markets is a "market efficient" outcome can be catastrophic for social welfare. During the Irish potato famine the markets allocated food away from Ireland because there were not many there who could afford it. They starved. The market functioned perfectly. Markets find equilibriums. Total collapse is an equilibrium. Starvation can happen at equilibrium. You can have 100_000 homeless people at market equalibrium
    - zitterbewegung 4y ago
      I'm actually saying the reverse and agreeing with you that there are market efficient outcomes that should have been considered or done . In the Irish Potato famine around 1-2 million people left the country. Instead of preserving the workforce they opted for a short term market equilibrium of selling the food to people that could pay and not performing some kind of tax that would feed the needy. The previous Tory government tried to do some charity but then the incoming government did a more of a hands off approach which is an incorrect response. So yes the Irish Potato famine was the result of a market efficient equilibrium that shouldn't have been allowed to occur.
    - thoms_a 4y ago
      Indeed. The "Free Market" can elevate a ruthless plutocracy of robber barons with private armies far longer than the little people can stay alive. As the Bezos Battalion, the Zuckerberg Zealots and the Musk Machines close in around your hometown's lithium supply, you can of course die with pride knowing that you believed in the Constitution and lived as the Founders intended. (plz no ban, I love Free Markets, I'm just working on my creative writing)
- chiefalchemist 4y ago
  > All around, there have been too many dollars chasing too few assets. You can thank the central banks for this. They seem to be too focused on propping up the wrong metrics. Meanwhile the real economy - and the real people in it - are limping like a three-legged dog. Yet the top layer ignores the messages (e.g., in the USA, Trump being elected, and perhaps re-elected) and persists with the insanity. This cycle - and the associated level of denial - is not sustainable. Not economically. Not socially. And not ecologically either for that matter. We can't consume our way out of this madness.
- QuarterReptile 4y ago
  Best explanation I've seen of this phenomenon, why it's bad for all involved parties, and knock him effects. It's focused on place making/urban development, but it lines up completely. https://podcast.strongtowns.org/e/strip-mall/ https://podcast.strongtowns.org/e/strip-mall/
  - cantrevealname 4y ago
    It would be very useful to have a one or two paragraph summary here. I think that very few people are going to listen to an hour long podcast without knowing something more about the ideas.
    - QuarterReptile 4y ago
      That's fair. Unfortunately I missed the edit window. It talks about the phenomenon (relevant to places that don't seem to be thriving more than to hot cities) of a new strip mall bring built next to a mostly vacant strip mall that's fairly new itself. It explains that this is a developer cashing in on the glut of money chasing returns. He talks about how any business that pretends to be legitimate gets funded, and the competition to loan money to actual functioning enterprises becomes so intense that the eventual owners/lenders/etc. end up having something that looks like a malinvestment because they were the people who predicted the lowest risk and highest returns (in the context of all the other insane things being funded.) I listen to between 300 and 500 podcasts annually and, despite having a backlog of 175 episodes of various things right now, this one was worth the re-listen (at 1.5x speed, of course.)
- optimiz3 4y ago
  > Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. Depending on the growth rate, a 100x P/E may be cheap.
  - fortuna86 4y ago
    This sentence made my head explode. Growth is the means, not the end.
- chrisseaton 4y ago
  Saying that paying 20% more than asking is irresponsible depends on whether asking was a fair price. If someone was always willing to pay 20% more then it wasn’t a fair price in the first place, and really people are just under listing for some reason.
MisterBastahrd 4y ago
Same thing happened to me. There's a company in Dallas that had a website that basically presented users who were searching for a product type with a list of products along with their ratings. Apparently they were supposed to make money off of affiliate links. The website was buggy and slow, and also... Google does that already. So they pivoted, and now they've aimed their engine at CBD reviews or something. I still don't see the point.
- me_me_mu_mu 4y ago
  I wish people would just build solutions to actual problems they have that other people also confirm to have. Not everyone is a visionary like Steve Jobs or whatever, and that’s okay. Just build something that solves your problem and helps others who also deal with it.
  - acuozzo 4y ago
    The issue is that many people have my problem (click below), but no scruples. https://news.ycombinator.com/item?id=31217221 https://news.ycombinator.com/item?id=31217221 The desire is there, but the idea(s) aren't and it's not for lack of trying. I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money.
    - NateEag 4y ago
      > I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money. Ideas are cheap. Good ideas are darned hard to find and even harder to recognize.
    - me_me_mu_mu 4y ago
      Idk either and I’m in the same situation trying to find something that will stick (I think they call it product market fit?) and people/businesses will pay for. I’m sure I’ll figure something out eventually. One thing you can try is just talk to everyone. Literally everyone. I’m a super introvert and socially awkward, but if I’m standing at the bus stop or in a Starbucks I’ll talk to people and 9/10 times they will talk. Sometimes they’re people who run or work at companies in industries unfamiliar to me (construction materials, biologist, textile) and they complain about what sucks. Just keep an open ear and hopefully you can find something interesting and compelling that you can build for. Good luck!
MAGZine 4y ago
the fact that you stopped to ask those questions makes me think that you're at minimum, an above average developer. caring about the business and its fundamentals is important beyond just slinging code.
- danielvaughn 4y ago
  I agree. I've had a couple of stints as a manager, now as a CTO for a small startup, and it's giving me so much insight into thinking about engineering from a business perspective. As an IC it's hard to get that birds eye view, but it's possible.
  - BurningFrog 4y ago
    Can you mention one or two such insights about thinking about engineering from a business perspective?
    - ben30 4y ago
      I've got this bookmarked: https://github.com/kuchin/awesome-cto https://github.com/kuchin/awesome-cto
    - danielvaughn 4y ago
      1. A developers job is not to write code. You happen to write code as part of your job, but your core responsibility is to implement solutions to business problems. Sounds simple, but it's harder to realize in practice. Case in point was a recent freelance job I took on. This client had paid some devs for months of work on a Stripe integration. They had built all this custom code on the front-end and back-end. I came in, read the docs since I was new to Stripe, and quickly learned that a custom solution puts the company on the hook for 300+ security requirements for PCI compliance. I scrapped all the code and directed users to Stripe's own checkout page. Not as nice of a UX, but that company's customers are now much more secure, there is less code to maintain, and the client is happy. 2. Your managers aren't perfect people, but their livelihood is in your hands. It's incredibly stressful to be a manager, so try to have compassion and empathy for the position they're in. They have to explain to the executive team the progress you're making, and if no progress is being made, they take the blame. 3. If you can't connect the dots between what you're doing on a daily basis, and the overall trajectory of the company, then something's wrong. There's a broken connection somewhere, and no one other than you is going to realize it. Speak up if you don't think what you're doing is useful.
prepend 4y ago
It’s funny as that was my experience interviewing with companies between 1998-2000. Just insane business models but brazen confidence in themselves. I remember interviewing with a company in 2000 that had burned through like $40 in two years. This was New York and they hired IBM. I don’t remember their product but it was stupid. They had paid IBM to build their own custom app server for Java because their requirements were too specific for WebSphere that IBM made. They built their own internal Java app server from scratch. So that was stupid. Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. It was such a surreal experience that a whole organization could be so crazy.
- maxlamb 4y ago
  $40? Did you mean $40 million?
  - SauciestGNU 4y ago
    No, it's just IBM for once billing accurately to reflect the value they delivered.
  - prepend 4y ago
    Yes, thanks. I swear autocorrect is going multiple words back to change things. They burned $40M. $40 on their own app server in IBM fees would be pretty cool and interesting in a different way.
- kenrik 4y ago
  > Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. > They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. Is is straight out of a comedy sketch, I feel like you could take that to an open mic night and kill with it.
- hodgesrm 4y ago
conductr 4y ago
Tangential. But I work in corporate finance. I'm generally privy to a large amount of information about the companies I work for. If there's something I don't know, I ask for it and people share because of my role. If I'm interviewing, we discuss a lot more than most people would about the health of the company that I would be joining. It's normal. That said. I'm obviously heavily biased but I have realized MOST non-finance employees know very little about the financial health of their employer or even how the business model operates, or even what is the current/future strategy of the company. When something MAJOR is announced, M&A/leadership changes/etc, the questions the room typically ask are: 1) will we still get 401k match 2) will we get fired 3) will the office relocate. People don't really care too much about the company, they care about how it's volatility impacts them. I don't think it's such a bad thing, but just pointing it out. In startup land, volatility is huge and the highs and lows can occur with rapid frequency. You have to be an assessor of risk when changing any jobs and this is part of it.
- PeterCorless 4y ago
  I may be unusual but I've always found it prudent to ask my CEO about things like rate of corporate growth, funding and customer revenue generation, M&A, etc. Because if I am a vesting or fully-vested employee, then that's my own future at stake. The 401(k) can be dwarfed by many times by a successful stock worth millions, or, in a badly run or positioned company, the stock could be worthless underwater paper shares and I become dependent exclusively on the 401(k) for my sunset days. The financial literacy of many workers is low though. They don't understand what options are or what it means to really be a shareholder. When I was at Cisco — I'm talking in the 1990s — we used to describe what we called "stockholder angry." This was when a fully-vested employee heard a VP or above talking about some idea so stupid it would literally cost the company a penny per share or more. That's when the old dogs would get "stockholder angry" and propose alternatives, or ask people to stop ideas that were retrograde for the sake of the company's valuation. Because we knew what a penny per share meant to each of us. I believe it is valuable for employees at all levels to be able to know the state of their company's health, and then, with an informed mind, be able to voice their opinion on the fate of their organizations.
  - 4y ago
zeruch 4y ago
"But I'm just an average developer what do I know. " Usually more than the 'above average' founder or VC.
chinchilla2020 4y ago
Management people have built careers and fortunes in tech running sinking companies. Even within FAANG, many people build careers while working on sinking products (Most products in Google are revenue negative...)
- photochemsyn 4y ago
  According to the article, FAANG is an obsolete acronym, it's now MAMAA...
  - ildon 4y ago
    Just killed a man...
  - belkarx 4y ago
    I feel like people are going to keep using FAANG for a good while just because 1) MAMAA is not as recognizable yet, and 2) FAANG has the generalized meaning of "big tech company" and most people get that
  - wing-_-nuts 4y ago
    I prefer the term FLAMINGASS. It's catchy
ilrwbwrkhv 4y ago
Yes I am sure a lot of companies are building things that aren't required. But there are so many things were indeed better solutions are required, and if they exist would be worth investing in.
aoms 4y ago
I often wonder how many of these startups even exist. How they ever get any funds to keep a run rate.. very puzzling but interesting non the less
Johnny555 4y ago
Is there any growing startup that's not bleeding money? Isn't what the seed and Series A and maybe B funding is about? After series A funding I'd expect some revenue stream, but not enough to pay expenses, after B series, they should have a plan to profitability and some proven customers that show that they can actually get that revenue, and after C I'd expect them to be executing to that plan. If bleeding money scares you, then a startup is probably not the right fit, a huge number of startups fail.
- enra 4y ago
  There are. It happens when you hit high level of product market fit with a lean team and don’t go on a massive hiring spree after but keep growing the team at a measured pace. I think Github, Notion, Retool, Slack, probably Figma, hit revenues quite quickly as they launched and became profitable or at least close to breakeven.
  - Johnny555 4y ago
    You mention Slack, but they had losses of $140M/year prior to IPO: Slack says it may not turn profitable; IPO filing reveals $139 million in losses, Microsoft primary competitor The Slack IPO filing shows annual revenue of $400.5 million, up 60% from the prior year, with a net loss of $138.9 million, for the 12-month period that ended Jan. 31. Slack's actual fiscal year-end date has yet to be determined.
    - kenrik 4y ago
      Slack grew their workforce too quickly. Actually the Slack I remember from when it first came out is more or less the same product they have now. I'm not really sure what all of those people were doing for all of those years.
      - worik 4y ago
        Why slack? I never understood. I never liked IRC. But to not like it and pay for it? I do not understand. Am I a fossil?
scarface74 4y ago
There are a lot of companies with “100 million in revenue” and no profit… Mentioning revenue and not profit is not informative.
- scruple 4y ago
  Yes. It's astounding (to me, anyway) how many companies aren't even close to profitability.
Animats 4y ago
but things just got awkward as soon as I asked about their revenue I've had that conversation. Anyone remember Cuil, the search startup? No revenue. No revenue model. Then no business.
kolbe 4y ago
What profit does your company generate? I wouldn't call anything 'cushy' or stable until there's a reliable way to cover all expenses and investor expectations--especially given how badly company have exploited Goodhart's Law with respect to revenue.
turtlebits 4y ago
I was in the same boat as you. I was about to accept an offer, then I had a chat with their CTO and I asked some hard questions about their strategy (compelling product - but their vision was becoming a "platform" as a lot of startups do). Think I threw them for a loop and didn't get a great answer. Ultimately changed my mind on joining.
deleted 4y ago
[deleted]
la6472 4y ago
Bubbles are absolutely necessary in an innovative marketplace. There has to be thousands of fail fast companies before a titan emerges.
ramoz 4y ago
Similar story. Knew someone at a Startup with a product & storyline that would make for a comedy fiction show. Their CTO called me, enjoyed a convo, and offered me some untitled job - no interviews, no game plans. But full on salary match, equity, whatever… (I make mid 6 figures) But I’ve been so entrenched in real business that the whole thing just seemed completely off to me.
Throwawayaerlei 4y ago
Replies so far are responding to the startup path to profitability question, but just how good are the usual IT jobs in companies where that's a cost center?? In all the ones I've experienced or looked at, not hardly as good as tech companies pre-FAANG, your "cushy job, fully remote, good pay and full autonomy with flexible hours" strikes me as an uncommon situation.

by avgDev 4y ago

lumost 4y ago

Across every investment class there has been a trend of buyers needing to become more financially irresponsible in order to participate in the market. Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Need to build a ride-hailing app? prepare to pay people to ride indefinitely. Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. All around, there have been too many dollars chasing too few assets. I suspect the pendulum is swinging now that housing got to the price point where employees demanded equivalent pay increases to housing cost increases.

winter_blue 4y ago
> where employees demanded equivalent pay increases to housing cost increases How can employees realistically speaking even do this?
- DragonStrength 4y ago
  Well, if you're in California and don't own a house, you move. It's not a great option if you were raised here, but a whole bunch of people can take a small pay cut (especially thinking about down equity and inflation) to move back to their hometowns right now. For me, a home (3/2, 1500sqft) in the neighborhood I'd move to in my hometown (US city; 1 mil metro area) is less than my household income, which we'll realistically keep 80+% of when we move. I'd wager a healthy segment of Bay Area mid-level, domestic-born engineers fit this profile. I'd wager that holds true in many metro areas, even those we don't consider tech hubs because it is all relative. I wouldn't want to be a mid-level Bay Area manager in my 40's with a mortgage on the peninsula right now. Who is coming to buy that house? Who is going to train all the 22 year olds moving here? EDIT: And I didn't even think about all the early retirees the major changes to the workplace will obviously prompt. Who wants to spend the last couple years of their career re-learning how to do a job you've done for decades and have been well-compensated for? I'd be at the beach.
  - nostrademons 4y ago
    Mid-level Bay Area manager in my 40s with a mortgage on the peninsula here. Why would I want to sell my house? We bought it because we have kids that we want to raise in the Bay Area.
    - DragonStrength 4y ago
      There are plenty who would have chosen the Bay Area anyway, but for me who is younger and aware of how similar those suburbs are to any others in the country, I was dreading having to commit to the jobs a Bay Area mortgage require. I’m glad you’re already in your location of choice, but I’m sure you know most people move here for the jobs and would be elsewhere if the jobs moved.
  - winter_blue 4y ago
    I moved from the US to Canada, and got a new offer at a publicly-traded US company recently. In the US, pay is around $215k total comp ($175k base, $40k RSUs). Because, I'm in the Toronto (which is more expensive than most of the US), they said my pay would get a circa $111k USD base ($145k CAD base). Adjusted for inflation, I'm earning less than what I was making when I was 25 years old. Now, at age 32, I'm struggling to pay significant debts on this salary. What am I to do?
    - wing-_-nuts 4y ago
      >What am I to do? Yes, you're getting paid less, but you've moved from a broken democracy to a functioning one. You also happen to be in one of the few nations on earth that will net benefit from climate change. Actionable advice? Get a remote position and get the heck out of Toronto to a more LCOL Canadian location with decent internet
- bityard 4y ago
  The old fashioned way: ask for a raise and go somewhere else if they don't pay?
metadat 4y ago
You nailed it! It's the same "excessive dumb money" phenomenon as with the dotcom bubble back in 2000.
vkou 4y ago
It's not irresponsible to bid 20% over asking. Asking is deliberately underpriced, because it is excellent advertising in a hot RE market. It's irresponsible to bid 20% over what the house is worth (which has nothing to do with asking price), just because you got emotionally attached to the house, and started a bidding war with another person emotionally attached to the house.
- bombcar 4y ago
  Which is exactly what the "ask below" is trying to get you to do; you act differently (emotionally) in a bidding war than in a price negotiation.
  - s1artibartfast 4y ago
    I don't think it has to be emotional at all. There is what the house is worth to the seller, and what it is worth to the buyer, and the sale price is always somewhere in between. It is just taking advantage of an information asymmetry to get the sale price closer to what it is worth to the buyer.
- corrral 4y ago
  It's not "emotionally attached", it's that it's been impossible to buy a house for a while if you're not willing to pay more than it will appraise for. You'll repeatedly lose to buyers who will do that, with cash offers to boot. This has been true even in many cities that aren't trendy, and have been building housing like crazy for a decade.
  - s1artibartfast 4y ago
    In what market? In the SF bay area 99% of houses appraise, even if they go 50% or $0.5m over asking
    - corrral 4y ago
      Boring Midwestern City that's not even a 3rd-tier tech hub. Other boring Southern city that's also not even a 3rd-tier tech hub. Buyers are having to take on the risk of having to cover any extra over appraisal in cash, consistently, while that used to be rare (and, yes, usually for "I am super invested, emotionally, in getting this particular house" reasons). My unremarkable suburban house in a boring city that's been building housing constantly and extensively for the last 10 years, is up like 25% in value over the last 2 years. We thought, based on extensive experience in this market, that we were already paying a bubble-induced premium of 15-20% when we bought it (possibly no longer true—thanks inflation). WTF.
bushbaba 4y ago
...or housing will drop as interest rates go up. And a non insignificant number of folks were over extended in leverage. I know too many folks who did 7/1 ARMs cash out refi to purchase another home in a 7/1 ARM loan, banking not on cashflow but appreciation. I know of folks who bought homes using margin loans in their stock portfolio. If housing stagnates, there will be margin calls, leading to supply shock, and price declines. Especially now that mortgage interest rates have nearly doubled year to date.
- simulate-me 4y ago
  The price may also decline just because borrowing is more expensive. The difference between 2 and 6 percent interest is huge.
- bombcar 4y ago
  Margin loans for house purchases isn't as insane as it might sound - assuming your financials are there. Margin interest is deductible against investment gains, house interest may not be for many earners. But not refinancing afterwards into a low fixed rate may come back to bite them, and soon.
  - lostmsu 4y ago
    Margin rates are also lower, and you don't have to pay the principal.
  - georgeecollins 4y ago
    >> Margin loans for house purchases isn't as insane as it might sound I understand the tax logic you are speaking about, but I think tax benefits are sometimes oversold to convince people to buy things (like homes and investments). You aren't a corporation, your liability isn't limited. Trying to shave a bit off taxes may have less benefit to you than the peace of mind of not having to juggle debt. You seem like you understand that when you talk about refinancing asap, so I think you know what you are talking about as well.
    - 4y ago
gonzo41 4y ago
This is also a central banking fail in so far that there's that much liquidity in the market that can't find a productive outlet. There's a lot of money, but also not enough concentrated in one spot to do really useful ventures like large infrastructure projects. So instead the money is distorting everything. Imagine if lending was less cheap for home owners but it was still cheap for governments or really large companies to be able to build train lines or advanced manufacturing or affordable medium density housing. I see the problem as too much credit is able to be spent with too little focus. So silly stuff is being funded because the money is becoming meaningless.
- api 4y ago
  Central banks have one hammer really: interest rates. Everything is a nail.
  - gonzo41 4y ago
    QE as well. I just don't see why they can't put conditions on some of their lending to focus the intent of the money.
    - mym1990 4y ago
      Simple: It is not the responsibility of the Fed to evaluate and empower or degrade certain markets according to what "smart investments" should be. This is ultimately up to the banks that receive the money and the people who come up with investment ideas.
      - WaxProlix 4y ago
        This entire conversation is about how those entities don't seem to be doing a particularly good job.
        mym1990 4y ago
        And that is a very valid concern, but the Fed is not the one to address that problem.
BbzzbB 4y ago
Yes, you need some level of financial creativity to justify buying into one of the many bubbles. But that's where the timeless Buffett quote[0] on Ted Williams and batting comes in, there's no called strikes in securities markets. Mr. Market doesn't force you to do anything at all, we're all free to ignore the speculation and focus on proper cash flowing businesses at reasonable valuations. The more boring the better (tho there are opportunities even with exciting companies these days), but just wait for the right pitch, no need to force it. You'd need a gun to my head if you wanted me to hold a portfolio of cash burning (even generating for that matter) businesses with valuations based on 5-10 year outlooks. 0: https://www.youtube.com/watch?v=l0Mw8hCzQ1I https://www.youtube.com/watch?v=l0Mw8hCzQ1I >The trick in investing is just to sit there and watch pitch after pitch go by and wait for the one right in your sweet spot. And if people are yelling, ‘Swing, you bum!,’ ignore them.
- throw8383833jj 4y ago
  Sitting in cash is not a defensive position, it's offensive and a highly risky one at that. When fiat, is losing 5-6% on average every single year, you can't afford to wait for the right moment to jump into equities. You have to be in it now, whether the valuation suits you or not. This of course exacerbates risk for everyone and forces everyone into risky positions because cash is now more risky than nearly all the other risky bubbles out there.
  - BbzzbB 4y ago
    I'm not sure where you bringing "sitting in cash" from.
colechristensen 4y ago
This was driven by extended 0-ish% interest for an entire recession cycle. Unable to get "safe" returns, money chased more dangerous classes of assets and inflated prices. Inflation and a return to nonzero interest means capital gets to retreat to safer ground, pulling the rug out of stupid unprofitable startups that can only make money with head-in-the-clouds IPO valuation or FAANG acquisition.
- MomoXenosaga 4y ago
  Is it really a bad thing? Unemployment is pretty low.
  - colechristensen 4y ago
    Long term, poor allocation of resources into junk work and business that doesn’t make money leads to crashes and periods of high unemployment. In other words you can’t keep the party going forever and how things are now isn’t an excuse for irresponsibility.
    - imtringued 4y ago
      That is illogical. Money-less economic models are unable to predict structural unemployment. In fact Say's law predicts that a theoretical barter economy is always at full employment. Of course the modeling flaw is that money is saved as a goal in itself so it will cease to circulate at some point which is the real source of unemployment.
  - throw_nbvc1234 4y ago
    Labor Force participation is also low. Job openings are around an all time high. https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/CIVPART https://fred.stlouisfed.org/series/JTSJOL https://fred.stlouisfed.org/series/JTSJOL As these two converge, wages are probably going to go down while inflation may still be high.
  - deleted 4y ago
    [deleted]
amelius 4y ago
Housing cost is part of how inflation is computed.
- tremon 4y ago
  That depends. Here in NL, housing costs are explicitly excluded from the official inflation numbers, presumably because housing is still seen as an investment rather than a short.
- mym1990 4y ago
  This depends. Housing cost if you're considering the price of owning a home is not part of CPI for the same reason that stocks are not a part of CPI, that being they are considered assets. If you talking about specifically renting housing, then correct(in US).
- lumost 4y ago
  The owner equivalent rent measure that the Fed uses in the US has been decoupled from Housing prices for a long time. House price increases or rent increases don't necessarily have an impact on inflation if few are paying the marginal rate, and they choose to eat the higher cost rather than asking for more money. When a critical mass of individuals pay the marginal rate for housing, and they choose to demand more for their services to compensate - then it will show up in the inflation reports. I'd argue that it was a miss for the Fed to focus on owner equivalent rent rather than a broader measure of what consumers are paying for housing as the overall mix of housing has also been changing as the number of investment properties increases.
  - imtringued 4y ago
    If your monthly payment stays the same and the interest rate is lowered you pay less interest to the bank which means the seller gets your money instead. The price increase literally doesn't matter to you.
jeffreyrogers 4y ago
> Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. If you expect inflation to stay high for a while this is actually rational... as long as you still have a job.
thomasahle 4y ago
> Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Who buys a house in cash? You mean literal suitcases of dollar bills? Or do you just mean something like a bank transfer? What other ways are there to buy something?
- deleted 4y ago
  [deleted]
- noufalibrahim 4y ago
  In cash as opposed to getting the transaction financed.
- afavour 4y ago
  They mean paying in full themselves, not backed by mortgage.
  - Clubber 4y ago
    Even if you get the mortgage, it's the same as cash to the seller. The bank just cut's them a check right away. The mortgage is between the bank and the buyer.
    - smabie 4y ago
      I just bought a house in cash, the seller wasn't willing to accept any non-cash offers. With a cash offer the seller and buyer can close in a significantly shorter amount of time than with a mortgage.
    - ejb999 4y ago
      >>Even if you get the mortgage, it's the same as cash to the seller. Not really, pay in 'cash' and you can close in days, pay with a mortgage and it might take weeks to months. Sellers always prefer cash buyers if they are in a hurry to sell.
    - seattle_spring 4y ago
      Sure if everything works out then the seller gets the same, but there are many more reasons a financed offer will fall through versus an all-cash offer.
tomrod 4y ago
Part of this is because bonds have been out of the picture. Bring bonds back as valid investment vehicles, which impacts many other parts of the economy, and we'll see more assets going to "useful" investment like roads, power lines, and so on.
garren 4y ago
Rising interest rates are starting to slow the housing craziness, at least where I’m at. I was regularly seeing 20-27% over asking with limited to no inspections, new listings going in hours. Nuts. All-cash is basically the new norm. Two years ago that was an issue for regular buyers, but it’s workable now since lenders have jumped into the mix, more and more offer an all-cash option - they make the purchase and transfer it to you under a traditional mortgage. You still have an appraisal gap to contend with, sine they’ll only pay what the place appraises for, but anyone who qualifies for a loan can probably qualify for the all-cash option.
- sydd 4y ago
  Where I'm from (EU) experts say that prices will stagnate amd the market will slow down. On one hand the high inflation pushes out lots of buyers -- they can't or don't want to pay the high interest rates. This lowers demand and prices. On the other hand global supply chain issues (which got much worse with the war) lead to material shortages and rising material costs. This pushes up housing prices. The net result is likely stagnation -- few houses are built and few exchange owners. But prices stay high. Except if there will be a large recession causing people to loose their jobs and unable to pay their mortgages. This will crash the housing market, but looks unlikely now.
  - chaircher 4y ago
    Definitely looks that way in the UK - I've been watching my local housing market like a hawk because I'm looking to buy soon. Houses are staying listed a lot longer, a fair few getting reduced, and newer listings are coming in at more reasonable prices (as much as over £100k is reasonable for a 1 bed flat miles into poverty stricken suburbia). I think people are feeling more risk adverse cost of living etc and want to hold onto money and stay put where they are.
- shrimpx 4y ago
  > All-cash is basically the new norm. It’s paradoxical that all-cash became the norm in a period where mortgage rates were at all time lows…
stjohnswarts 4y ago
I don't think it's housing. It's just that the market had a boom during the bored pandemic times and now that that is over (except in china) the market is readjusting. The market is highly leveraged by psychology over the short term, but in the end even the most exuberant people have to face reality and tighten their belt. Housing will flat line or decrease now as well, since people realize the cost of mortgages is too damn high. Also with lumber and other prices falling that will help new home builds. If Russia ever stops the attempted genocide of Ukraine then markets will probably soar as gas prices come back down instead of increasing.
asta123 4y ago
And for these reasons I question the whole concept of money, working for it, and saving for whatever dream. Flood of money can be so easily created but you have to work for it? Then you have to max out on debt, speculate and risk your hard earned funds, otherwise you are falling behind. Central banks have stuffed this one up and I it is a much bigger problem than inflation.
david927 4y ago
> Need to buy a house? bid 20% more than asking, if you don't - someone else will.. in cash. Buying in cash is being done to skirt the tightened up lending standards that followed the 2008 Crisis: https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022_real_estate_collapse_is_going_to_be/ https://www.reddit.com/r/Superstonk/comments/uflzht/the_2022...
- seattle_spring 4y ago
  It's being done to win bidding wars, because it's much less risky for a seller to choose a cash offer over financing.
- gruez 4y ago
  >superstonk I'm baffled why people would get their economic analysis from a subreddit predicated on a short sequeeze that has failed to materialize.
  - david927 4y ago
    What gave you the idea that it would materialize in your time frame?
zitterbewegung 4y ago
The markets are efficient but they aren’t perfect. In any situation the markets will do the best to optimize but will always fall short of perfection . Since markets aren’t perfect that’s why you can make money by speculation.
- worik 4y ago
  > In any situation the markets will do the best to optimize but will always fall short of perfection The problem with markets is a "market efficient" outcome can be catastrophic for social welfare. During the Irish potato famine the markets allocated food away from Ireland because there were not many there who could afford it. They starved. The market functioned perfectly. Markets find equilibriums. Total collapse is an equilibrium. Starvation can happen at equilibrium. You can have 100_000 homeless people at market equalibrium
  - zitterbewegung 4y ago
    I'm actually saying the reverse and agreeing with you that there are market efficient outcomes that should have been considered or done . In the Irish Potato famine around 1-2 million people left the country. Instead of preserving the workforce they opted for a short term market equilibrium of selling the food to people that could pay and not performing some kind of tax that would feed the needy. The previous Tory government tried to do some charity but then the incoming government did a more of a hands off approach which is an incorrect response. So yes the Irish Potato famine was the result of a market efficient equilibrium that shouldn't have been allowed to occur.
  - thoms_a 4y ago
    Indeed. The "Free Market" can elevate a ruthless plutocracy of robber barons with private armies far longer than the little people can stay alive. As the Bezos Battalion, the Zuckerberg Zealots and the Musk Machines close in around your hometown's lithium supply, you can of course die with pride knowing that you believed in the Constitution and lived as the Founders intended. (plz no ban, I love Free Markets, I'm just working on my creative writing)
chiefalchemist 4y ago
> All around, there have been too many dollars chasing too few assets. You can thank the central banks for this. They seem to be too focused on propping up the wrong metrics. Meanwhile the real economy - and the real people in it - are limping like a three-legged dog. Yet the top layer ignores the messages (e.g., in the USA, Trump being elected, and perhaps re-elected) and persists with the insanity. This cycle - and the associated level of denial - is not sustainable. Not economically. Not socially. And not ecologically either for that matter. We can't consume our way out of this madness.
QuarterReptile 4y ago
Best explanation I've seen of this phenomenon, why it's bad for all involved parties, and knock him effects. It's focused on place making/urban development, but it lines up completely. https://podcast.strongtowns.org/e/strip-mall/ https://podcast.strongtowns.org/e/strip-mall/
- cantrevealname 4y ago
  It would be very useful to have a one or two paragraph summary here. I think that very few people are going to listen to an hour long podcast without knowing something more about the ideas.
  - QuarterReptile 4y ago
    That's fair. Unfortunately I missed the edit window. It talks about the phenomenon (relevant to places that don't seem to be thriving more than to hot cities) of a new strip mall bring built next to a mostly vacant strip mall that's fairly new itself. It explains that this is a developer cashing in on the glut of money chasing returns. He talks about how any business that pretends to be legitimate gets funded, and the competition to loan money to actual functioning enterprises becomes so intense that the eventual owners/lenders/etc. end up having something that looks like a malinvestment because they were the people who predicted the lowest risk and highest returns (in the context of all the other insane things being funded.) I listen to between 300 and 500 podcasts annually and, despite having a backlog of 175 episodes of various things right now, this one was worth the re-listen (at 1.5x speed, of course.)
optimiz3 4y ago
> Need to own a growth stock? prepare to pay upwards of 100x multiple on revenue. Depending on the growth rate, a 100x P/E may be cheap.
- fortuna86 4y ago
  This sentence made my head explode. Growth is the means, not the end.
chrisseaton 4y ago
Saying that paying 20% more than asking is irresponsible depends on whether asking was a fair price. If someone was always willing to pay 20% more then it wasn’t a fair price in the first place, and really people are just under listing for some reason.

MisterBastahrd 4y ago

Same thing happened to me. There's a company in Dallas that had a website that basically presented users who were searching for a product type with a list of products along with their ratings. Apparently they were supposed to make money off of affiliate links. The website was buggy and slow, and also... Google does that already. So they pivoted, and now they've aimed their engine at CBD reviews or something. I still don't see the point.

me_me_mu_mu 4y ago
I wish people would just build solutions to actual problems they have that other people also confirm to have. Not everyone is a visionary like Steve Jobs or whatever, and that’s okay. Just build something that solves your problem and helps others who also deal with it.
- acuozzo 4y ago
  The issue is that many people have my problem (click below), but no scruples. https://news.ycombinator.com/item?id=31217221 https://news.ycombinator.com/item?id=31217221 The desire is there, but the idea(s) aren't and it's not for lack of trying. I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money.
  - NateEag 4y ago
    > I've been reading that "ideas are cheap" for over a decade now, but I can honestly say that I haven't once come up with an idea that would make any money. Ideas are cheap. Good ideas are darned hard to find and even harder to recognize.
  - me_me_mu_mu 4y ago
    Idk either and I’m in the same situation trying to find something that will stick (I think they call it product market fit?) and people/businesses will pay for. I’m sure I’ll figure something out eventually. One thing you can try is just talk to everyone. Literally everyone. I’m a super introvert and socially awkward, but if I’m standing at the bus stop or in a Starbucks I’ll talk to people and 9/10 times they will talk. Sometimes they’re people who run or work at companies in industries unfamiliar to me (construction materials, biologist, textile) and they complain about what sucks. Just keep an open ear and hopefully you can find something interesting and compelling that you can build for. Good luck!

MAGZine 4y ago

the fact that you stopped to ask those questions makes me think that you're at minimum, an above average developer. caring about the business and its fundamentals is important beyond just slinging code.

danielvaughn 4y ago
I agree. I've had a couple of stints as a manager, now as a CTO for a small startup, and it's giving me so much insight into thinking about engineering from a business perspective. As an IC it's hard to get that birds eye view, but it's possible.
- BurningFrog 4y ago
  Can you mention one or two such insights about thinking about engineering from a business perspective?
  - ben30 4y ago
    I've got this bookmarked: https://github.com/kuchin/awesome-cto https://github.com/kuchin/awesome-cto
  - danielvaughn 4y ago
    1. A developers job is not to write code. You happen to write code as part of your job, but your core responsibility is to implement solutions to business problems. Sounds simple, but it's harder to realize in practice. Case in point was a recent freelance job I took on. This client had paid some devs for months of work on a Stripe integration. They had built all this custom code on the front-end and back-end. I came in, read the docs since I was new to Stripe, and quickly learned that a custom solution puts the company on the hook for 300+ security requirements for PCI compliance. I scrapped all the code and directed users to Stripe's own checkout page. Not as nice of a UX, but that company's customers are now much more secure, there is less code to maintain, and the client is happy. 2. Your managers aren't perfect people, but their livelihood is in your hands. It's incredibly stressful to be a manager, so try to have compassion and empathy for the position they're in. They have to explain to the executive team the progress you're making, and if no progress is being made, they take the blame. 3. If you can't connect the dots between what you're doing on a daily basis, and the overall trajectory of the company, then something's wrong. There's a broken connection somewhere, and no one other than you is going to realize it. Speak up if you don't think what you're doing is useful.

prepend 4y ago

It’s funny as that was my experience interviewing with companies between 1998-2000. Just insane business models but brazen confidence in themselves. I remember interviewing with a company in 2000 that had burned through like $40 in two years. This was New York and they hired IBM. I don’t remember their product but it was stupid. They had paid IBM to build their own custom app server for Java because their requirements were too specific for WebSphere that IBM made. They built their own internal Java app server from scratch. So that was stupid. Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. It was such a surreal experience that a whole organization could be so crazy.

maxlamb 4y ago
$40? Did you mean $40 million?
- SauciestGNU 4y ago
  No, it's just IBM for once billing accurately to reflect the value they delivered.
- prepend 4y ago
  Yes, thanks. I swear autocorrect is going multiple words back to change things. They burned $40M. $40 on their own app server in IBM fees would be pretty cool and interesting in a different way.
kenrik 4y ago
> Also the interview was on a Tuesday or something and they said that they were out of money on Friday but were confident they would get more money on Monday. > They wanted me to start immediately and when I turned them down because of the funding, they asked if I would start on Monday. Is is straight out of a comedy sketch, I feel like you could take that to an open mic night and kill with it.
hodgesrm 4y ago

conductr 4y ago

Tangential. But I work in corporate finance. I'm generally privy to a large amount of information about the companies I work for. If there's something I don't know, I ask for it and people share because of my role. If I'm interviewing, we discuss a lot more than most people would about the health of the company that I would be joining. It's normal. That said. I'm obviously heavily biased but I have realized MOST non-finance employees know very little about the financial health of their employer or even how the business model operates, or even what is the current/future strategy of the company. When something MAJOR is announced, M&A/leadership changes/etc, the questions the room typically ask are: 1) will we still get 401k match 2) will we get fired 3) will the office relocate. People don't really care too much about the company, they care about how it's volatility impacts them. I don't think it's such a bad thing, but just pointing it out. In startup land, volatility is huge and the highs and lows can occur with rapid frequency. You have to be an assessor of risk when changing any jobs and this is part of it.

PeterCorless 4y ago
I may be unusual but I've always found it prudent to ask my CEO about things like rate of corporate growth, funding and customer revenue generation, M&A, etc. Because if I am a vesting or fully-vested employee, then that's my own future at stake. The 401(k) can be dwarfed by many times by a successful stock worth millions, or, in a badly run or positioned company, the stock could be worthless underwater paper shares and I become dependent exclusively on the 401(k) for my sunset days. The financial literacy of many workers is low though. They don't understand what options are or what it means to really be a shareholder. When I was at Cisco — I'm talking in the 1990s — we used to describe what we called "stockholder angry." This was when a fully-vested employee heard a VP or above talking about some idea so stupid it would literally cost the company a penny per share or more. That's when the old dogs would get "stockholder angry" and propose alternatives, or ask people to stop ideas that were retrograde for the sake of the company's valuation. Because we knew what a penny per share meant to each of us. I believe it is valuable for employees at all levels to be able to know the state of their company's health, and then, with an informed mind, be able to voice their opinion on the fate of their organizations.
- 4y ago

zeruch 4y ago

"But I'm just an average developer what do I know. " Usually more than the 'above average' founder or VC.

chinchilla2020 4y ago

Management people have built careers and fortunes in tech running sinking companies. Even within FAANG, many people build careers while working on sinking products (Most products in Google are revenue negative...)

photochemsyn 4y ago
According to the article, FAANG is an obsolete acronym, it's now MAMAA...
- ildon 4y ago
  Just killed a man...
- belkarx 4y ago
  I feel like people are going to keep using FAANG for a good while just because 1) MAMAA is not as recognizable yet, and 2) FAANG has the generalized meaning of "big tech company" and most people get that
- wing-_-nuts 4y ago
  I prefer the term FLAMINGASS. It's catchy

ilrwbwrkhv 4y ago

Yes I am sure a lot of companies are building things that aren't required. But there are so many things were indeed better solutions are required, and if they exist would be worth investing in.

aoms 4y ago

I often wonder how many of these startups even exist. How they ever get any funds to keep a run rate.. very puzzling but interesting non the less

Johnny555 4y ago

Is there any growing startup that's not bleeding money? Isn't what the seed and Series A and maybe B funding is about? After series A funding I'd expect some revenue stream, but not enough to pay expenses, after B series, they should have a plan to profitability and some proven customers that show that they can actually get that revenue, and after C I'd expect them to be executing to that plan. If bleeding money scares you, then a startup is probably not the right fit, a huge number of startups fail.

enra 4y ago
There are. It happens when you hit high level of product market fit with a lean team and don’t go on a massive hiring spree after but keep growing the team at a measured pace. I think Github, Notion, Retool, Slack, probably Figma, hit revenues quite quickly as they launched and became profitable or at least close to breakeven.
- Johnny555 4y ago
  You mention Slack, but they had losses of $140M/year prior to IPO: Slack says it may not turn profitable; IPO filing reveals $139 million in losses, Microsoft primary competitor The Slack IPO filing shows annual revenue of $400.5 million, up 60% from the prior year, with a net loss of $138.9 million, for the 12-month period that ended Jan. 31. Slack's actual fiscal year-end date has yet to be determined.
  - kenrik 4y ago
    Slack grew their workforce too quickly. Actually the Slack I remember from when it first came out is more or less the same product they have now. I'm not really sure what all of those people were doing for all of those years.
    - worik 4y ago
      Why slack? I never understood. I never liked IRC. But to not like it and pay for it? I do not understand. Am I a fossil?

scarface74 4y ago

There are a lot of companies with “100 million in revenue” and no profit… Mentioning revenue and not profit is not informative.

scruple 4y ago
Yes. It's astounding (to me, anyway) how many companies aren't even close to profitability.

Animats 4y ago

but things just got awkward as soon as I asked about their revenue I've had that conversation. Anyone remember Cuil, the search startup? No revenue. No revenue model. Then no business.

kolbe 4y ago

What profit does your company generate? I wouldn't call anything 'cushy' or stable until there's a reliable way to cover all expenses and investor expectations--especially given how badly company have exploited Goodhart's Law with respect to revenue.

turtlebits 4y ago

I was in the same boat as you. I was about to accept an offer, then I had a chat with their CTO and I asked some hard questions about their strategy (compelling product - but their vision was becoming a "platform" as a lot of startups do). Think I threw them for a loop and didn't get a great answer. Ultimately changed my mind on joining.

deleted 4y ago

[deleted]

la6472 4y ago

Bubbles are absolutely necessary in an innovative marketplace. There has to be thousands of fail fast companies before a titan emerges.

ramoz 4y ago

Similar story. Knew someone at a Startup with a product & storyline that would make for a comedy fiction show. Their CTO called me, enjoyed a convo, and offered me some untitled job - no interviews, no game plans. But full on salary match, equity, whatever… (I make mid 6 figures) But I’ve been so entrenched in real business that the whole thing just seemed completely off to me.

Throwawayaerlei 4y ago

Replies so far are responding to the startup path to profitability question, but just how good are the usual IT jobs in companies where that's a cost center?? In all the ones I've experienced or looked at, not hardly as good as tech companies pre-FAANG, your "cushy job, fully remote, good pay and full autonomy with flexible hours" strikes me as an uncommon situation.