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Bleak. "No one cannot predict how bad the economy will get, but things don't look good." Clif notes: - Plan for the worst ... cut costs within 30 days... get

Bleak. "No one cannot predict how bad the economy will get, but things don't look good." Clif notes: - Plan for the worst ... cut costs within 30 days... get to Default Alive[0] - Get money if you need it, and if you can - With or without money you must survive 24 months - VCs are people too, and subject to the same downturn. Adjust your fund raising expectations in the same direction. Expect lower valuations, lower rounds and many fewer deals. - Disproportionate impact on international, asset heavy, low margin, hardtech, high burn, long road to revenue companies - If you get a meeting, don't take that as a good sign, we still take a lot of meetings. - Future fundraises will be much more difficult than they have been in the last 5 years. - Don't expect more money until you demonstrate product market fit. - If you planned on raising money in the next 6-12 months, we recommend changing that plan, or you may be tryng to raise at the peak of the downturn - If you survive, and your competitor does not, you may pick up significant market share. [0] http://www.paulgraham.com/aord.html http://www.paulgraham.com/aord.html

sbierwagen 4y ago
>- If you get a meeting, don't take that as a good sign, we still take a lot of meetings. They don't explicitly spell this out, but this is because being a VC is still a job. Even if they're not actually making any deals, management doesn't want to see everyone sitting at a desk scrolling twitter for 8 hours, so instead they do pointless meetings. Matt Levine had a fun Great Recession story which I cannot find right now, which is that during 2008 in the M&A department at Goldman Sachs everyone still came to work, even though obviously merger and acquisition activity was way down. They would spend every day doing calls and making pitchbooks, all of which went nowhere. Goldman didn't close a deal for a full year. A floor full of people could have just collected a salary and stayed home for 12 months and it would have had an identical outcome.
- deleted 4y ago
  [deleted]
- CallMeJim 4y ago
  When the first deals started closing again, who would have won the deals? The company that stayed home for 12 months? or the company that continued working for 12 months? Imagine swimming hard against a strong current. You get nowhere (or maybe even go backwards slightly!), but when the current changes you make a lot of progress. If you don't swim at all, you go backwards. When the current changes, you may get to where you were at the start.
  - sbierwagen 4y ago
    That would be a dynamite answer to give during a job interview for a position in the Goldman Sachs M&A department in 2009.
- Gunnerhead 4y ago
  I would love to read that article if you end up finding it.
scarface74 4y ago
The stock market is not the economy. If you are working for a money losing VC backed company and the VCs aren’t willing to keep throwing money at you, that’s because the VCs know startup funding is a Ponzi Scheme and they will be left holding the bag instead of being able to pawn their investment off onto the retail market.
- missedthecue 4y ago
  The stock market is not the economy but GDP in the US printed negative the other week. If it does the same next quarter, we're in a recession.
  - vmception 4y ago
    Think of it like a bad metric thats better than other metrics
    - lordnacho 4y ago
      But it's a self reinforcing story. The two quarters idea is strong, if it happens all the papers will declare a recession and everyone who doesn't normally keep an eye on the economy will think it's a recession. Some of those will be managers who will decide to cut spending.
- eloff 4y ago
  VC backed startups are a Ponzi scheme? I believe all of the FAANG companies started that way (took VC funding in their early days.) How is anybody supposed to take you seriously if you make broad categorical statements that are factually inaccurate?
  - scarface74 4y ago
    Actually, my statements are very accurate. How many tech companies that were founded since Facebook would anyone call “successful”? Apple only took about $20K of investments and was profitable when it went public Microsoft didn’t need any investments before it went public. Bill Gates took funding to get professional advice. Google was profitable before going public and definitely never had billions in losses. Facebook only went public because it had so many investors that the regulations around reporting got so onerous it was easier to go public. But it also didn’t lose billions of dollars at any point. Amazon was the outlier, but it was also using its cash flow to expand. Most people knew that they could have been profitable at any point by not expanding. Amazon is the only one of the BigTech companies that is capital intensive. Well Apple is to some extent. But it has always had high margins. Even if you look at the second tier profitable tech companies like Intel, Nvidia, Oracle, VMWare, etc., you will see the same thing. None of them had billions of losses (even inflation adjusted) before going public and they were all profitable before their IPO. That means they had a proven profitable business model.

sbierwagen 4y ago

>- If you get a meeting, don't take that as a good sign, we still take a lot of meetings. They don't explicitly spell this out, but this is because being a VC is still a job. Even if they're not actually making any deals, management doesn't want to see everyone sitting at a desk scrolling twitter for 8 hours, so instead they do pointless meetings. Matt Levine had a fun Great Recession story which I cannot find right now, which is that during 2008 in the M&A department at Goldman Sachs everyone still came to work, even though obviously merger and acquisition activity was way down. They would spend every day doing calls and making pitchbooks, all of which went nowhere. Goldman didn't close a deal for a full year. A floor full of people could have just collected a salary and stayed home for 12 months and it would have had an identical outcome.

deleted 4y ago
[deleted]
CallMeJim 4y ago
When the first deals started closing again, who would have won the deals? The company that stayed home for 12 months? or the company that continued working for 12 months? Imagine swimming hard against a strong current. You get nowhere (or maybe even go backwards slightly!), but when the current changes you make a lot of progress. If you don't swim at all, you go backwards. When the current changes, you may get to where you were at the start.
- sbierwagen 4y ago
  That would be a dynamite answer to give during a job interview for a position in the Goldman Sachs M&A department in 2009.
Gunnerhead 4y ago
I would love to read that article if you end up finding it.

scarface74 4y ago

The stock market is not the economy. If you are working for a money losing VC backed company and the VCs aren’t willing to keep throwing money at you, that’s because the VCs know startup funding is a Ponzi Scheme and they will be left holding the bag instead of being able to pawn their investment off onto the retail market.

missedthecue 4y ago
The stock market is not the economy but GDP in the US printed negative the other week. If it does the same next quarter, we're in a recession.
- vmception 4y ago
  Think of it like a bad metric thats better than other metrics
  - lordnacho 4y ago
    But it's a self reinforcing story. The two quarters idea is strong, if it happens all the papers will declare a recession and everyone who doesn't normally keep an eye on the economy will think it's a recession. Some of those will be managers who will decide to cut spending.
eloff 4y ago
VC backed startups are a Ponzi scheme? I believe all of the FAANG companies started that way (took VC funding in their early days.) How is anybody supposed to take you seriously if you make broad categorical statements that are factually inaccurate?
- scarface74 4y ago
  Actually, my statements are very accurate. How many tech companies that were founded since Facebook would anyone call “successful”? Apple only took about $20K of investments and was profitable when it went public Microsoft didn’t need any investments before it went public. Bill Gates took funding to get professional advice. Google was profitable before going public and definitely never had billions in losses. Facebook only went public because it had so many investors that the regulations around reporting got so onerous it was easier to go public. But it also didn’t lose billions of dollars at any point. Amazon was the outlier, but it was also using its cash flow to expand. Most people knew that they could have been profitable at any point by not expanding. Amazon is the only one of the BigTech companies that is capital intensive. Well Apple is to some extent. But it has always had high margins. Even if you look at the second tier profitable tech companies like Intel, Nvidia, Oracle, VMWare, etc., you will see the same thing. None of them had billions of losses (even inflation adjusted) before going public and they were all profitable before their IPO. That means they had a proven profitable business model.