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How do you think it will impact startups that essentially grew by incentivizing users and never achieved unit profitability? A funding crunch can’t be good for

How do you think it will impact startups that essentially grew by incentivizing users and never achieved unit profitability? A funding crunch can’t be good for their survival

timr 4y ago
I think the other thread from YC on what it means for startups is on point. "Survival of startups", plural, is not the metric of relevance. The strong will survive. The ones who were/are running on fumes are gonna have a bad time.
ghaff 4y ago
In an era of belt-tightening, it's reasonable to expect that companies that can't even achieve a profit, including companies like Uber, will have to make changes and the people who have created lifestyles based on VC subsidies will have to face reality as well.
jghn 4y ago
This is where I worry. My recollection of how the dot com crash unfolded was that first the bogus startups folded as expected. But they're part of a larger food chain. There were other b2b companies who had them as customers. And now they're out of money so they fold. Which affects other companies. And so on.
- moron123 4y ago
  Few understand the domino effect. A smaller domino can topple a much bigger one, which can topple a bigger one and so on.
  - jghn 4y ago
    Yep. I worked for a very big domino at the time. It didn't stop them from axing our division. Stuff starts to add up after a while.
- foobiekr 4y ago
  I often wonder which companies are Sun and Oracle this time around. Sun was doing a ton of revenue to companies with extremely marginal future prospects as the dotcom took off. Amazon perhaps, though they have successfully penetrated enterprises.
  - jghn 4y ago
    Yeah probably not Amazon. Sun already seemed a bit on the outside looking in at that point. It could potentially be Oracle. Sure they're in a stronger position than Sun was at that point but there's a similar aspect of having lost mindshare in terms of the go to product in their class.
  - deleted 4y ago
    [deleted]
  - ska 4y ago
    I think we have to be careful with some of this narrative being a bit too neat. I suspect Sun was walking dead long before the crash, and wouldn't have survived without an existential shift that it's not clear they were capable of making. The silly money in the dot-com run up just dragged the process out a bit by masking/hiding the crisis, but I don't think it's correct to say the crash is what killed them.
pjc50 4y ago
They're obviously toast unless they can find a big dumb backer who's still going. I'm more concerned for startups that are early-phase watching their market evaporate, or are selling shovels to the now non-existant gold rush.
- puranjay 4y ago
  here in India, a bunch of 10-minute grocery delivery startups have raised literally billions over the last few months. All operations are extremely capex heavy - they have to create hundreds of dark stores in every city to service a 2-3km area. Growth has been stellar, but what the numbers don't tell you is that the growth is simply achieved by subsidizing users. Delivery is completely free, prices are discounted, and they'll deliver any amount. I know people who will order half a dozen times a day for something as small as a pack of potato chips and a coke (order value: $1). Because why not if you're getting it for free? What happens to these startups if funding dries up and free delivery is off the table is anyone's guess.

How do you think it will impact startups that essentially grew by incentivizing users and never achieved unit profitability? A funding crunch can’t be good for their survival

timr 4y ago

I think the other thread from YC on what it means for startups is on point. "Survival of startups", plural, is not the metric of relevance. The strong will survive. The ones who were/are running on fumes are gonna have a bad time.

ghaff 4y ago

In an era of belt-tightening, it's reasonable to expect that companies that can't even achieve a profit, including companies like Uber, will have to make changes and the people who have created lifestyles based on VC subsidies will have to face reality as well.

jghn 4y ago

This is where I worry. My recollection of how the dot com crash unfolded was that first the bogus startups folded as expected. But they're part of a larger food chain. There were other b2b companies who had them as customers. And now they're out of money so they fold. Which affects other companies. And so on.

moron123 4y ago
Few understand the domino effect. A smaller domino can topple a much bigger one, which can topple a bigger one and so on.
- jghn 4y ago
  Yep. I worked for a very big domino at the time. It didn't stop them from axing our division. Stuff starts to add up after a while.
foobiekr 4y ago
I often wonder which companies are Sun and Oracle this time around. Sun was doing a ton of revenue to companies with extremely marginal future prospects as the dotcom took off. Amazon perhaps, though they have successfully penetrated enterprises.
- jghn 4y ago
  Yeah probably not Amazon. Sun already seemed a bit on the outside looking in at that point. It could potentially be Oracle. Sure they're in a stronger position than Sun was at that point but there's a similar aspect of having lost mindshare in terms of the go to product in their class.
- deleted 4y ago
  [deleted]
- ska 4y ago
  I think we have to be careful with some of this narrative being a bit too neat. I suspect Sun was walking dead long before the crash, and wouldn't have survived without an existential shift that it's not clear they were capable of making. The silly money in the dot-com run up just dragged the process out a bit by masking/hiding the crisis, but I don't think it's correct to say the crash is what killed them.

pjc50 4y ago

They're obviously toast unless they can find a big dumb backer who's still going. I'm more concerned for startups that are early-phase watching their market evaporate, or are selling shovels to the now non-existant gold rush.

puranjay 4y ago
here in India, a bunch of 10-minute grocery delivery startups have raised literally billions over the last few months. All operations are extremely capex heavy - they have to create hundreds of dark stores in every city to service a 2-3km area. Growth has been stellar, but what the numbers don't tell you is that the growth is simply achieved by subsidizing users. Delivery is completely free, prices are discounted, and they'll deliver any amount. I know people who will order half a dozen times a day for something as small as a pack of potato chips and a coke (order value: $1). Because why not if you're getting it for free? What happens to these startups if funding dries up and free delivery is off the table is anyone's guess.