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Both "we overhired" and "it's because of the market" can be true at the same time. You get a $335 million in Feb with a common understanding with current inves

by IMTDb 4y ago

Both "we overhired" and "it's because of the market" can be true at the same time. You get a $335 million in Feb with a common understanding with current investors that you are going to raise $ XXX in roughly 24 month, depending on results compared to an agreed upon business plan. You thus plan for a roughly 24 month runway. 4 month later (now) you get a call from your investors that your planned next series is going to be significantly lower/harder. You now need to stretch your 24 month runway to at least 36 month. SO you have to adjust plans. They didn't overhire compared to the initial plan, but overhired compared to the current situation, where basically all rounds are 50% lower and many are just not happening at all. The ycombinator downturn letter (https://techcrunch.com/2022/05/19/yc-advises-founders-to-plan-for-the-worst/ https://techcrunch.com/2022/05/19/yc-advises-founders-to-pla...) just says something like this: > The safe move is to plan for the worst. If the current situation is as bad as the last two economic downturns, the best way to prepare is to cut costs and extend your runway within the next 30 days. Your goal should be to get to Default Alive. That sounds exactly like what Bolt is doing.

nrmitchi 4y ago
> They didn't overhire compared to the initial plan... Frankly I don't care what their plan was if they "planned" to spend ~350M in 2 years while making 10-40M in annual revenue while getting sued by their largest customer. That is an absolutely insane level of spending. Just because you had a plan to do some unsustainable and irresponsible crap doesn't absolve you of responsibility when it turns out to be unsustainable and irresponsible. > The ycombinator downturn letter ... You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC, and thought "Oh ya, let's definitely doing what YC said. YC definitely knows what they're talking about. I personally trust all of their decisions and statements."?
- deleted 4y ago
  [deleted]
- IMTDb 4y ago
  > You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC No, but I strongly suspect that both YC and Bolt CEO reached the same conclusion: "what was true few month ago isn't anymore, so we need to buckle, focus a bit less on growth-at-all-cost and a bit more on extend-the-runway"
clpm4j 4y ago
More broadly I've gotta believe that raising $335 million (after many more hundreds of millions previously), and still expecting to need to raise more down the road is just a seriously flawed approach to running a business.
- datavirtue 4y ago
  Yeah, if they have $300MM and are laying off, something is seriously wrong.
- billylindeman 4y ago
  I also believe that it is flawed, but it is the model that most of valley is built on. It's frustrating. I wish more companies would just focus on building value and becoming profitable. VC funding for growth makes sense, but it shouldn't be in lieu of a profitable business model. If we keep funding unprofitable companies with unproven business models capitalism breaks, efficiency is lost, and someone ends up holding a bag - usually the mom and pop investor in the public markets.
YZF 4y ago
https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-startup-bolt-lays-off-more-than-200-people-or-at-least-25-of-its-staff/?sh=1835e0f22201 https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-... $355M is a lot of money... Nobody can tell today what the market will look like in 24 months and nobody could tell in February what the market will look like in 24 months. You need to include some uncertainty in your plans anyways. If there's a downturn it's not all negative, the people you were going to hire in 6 months might now be better and cheaper. Sounds to me more like the CEO feels there was over-hiring anyways and this is just an excuse. Also maybe this is a little about "after acquiring crypto startup Wyre in April" and the current outlook on crypto?
PheonixPharts 4y ago
Who in the world didn't foresee the market cooling dramatically as the pandemic "ended"? I remember interviewing at real estate start ups during the pandemic hiring like crazy, as if this wasn't obviously a temporary boom period. The problem is that the vast majority of startups suffer from a Markov memory problem where they can't fathom a world different from their current state no matter how absurd that view is to anyone with common sense.

by IMTDb 4y ago

nrmitchi 4y ago

> They didn't overhire compared to the initial plan... Frankly I don't care what their plan was if they "planned" to spend ~350M in 2 years while making 10-40M in annual revenue while getting sued by their largest customer. That is an absolutely insane level of spending. Just because you had a plan to do some unsustainable and irresponsible crap doesn't absolve you of responsibility when it turns out to be unsustainable and irresponsible. > The ycombinator downturn letter ... You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC, and thought "Oh ya, let's definitely doing what YC said. YC definitely knows what they're talking about. I personally trust all of their decisions and statements."?

deleted 4y ago
[deleted]
IMTDb 4y ago
> You really think that Bolt, and Bolt's ex-CEO, saw a letter from YC No, but I strongly suspect that both YC and Bolt CEO reached the same conclusion: "what was true few month ago isn't anymore, so we need to buckle, focus a bit less on growth-at-all-cost and a bit more on extend-the-runway"

clpm4j 4y ago

More broadly I've gotta believe that raising $335 million (after many more hundreds of millions previously), and still expecting to need to raise more down the road is just a seriously flawed approach to running a business.

datavirtue 4y ago
Yeah, if they have $300MM and are laying off, something is seriously wrong.
billylindeman 4y ago
I also believe that it is flawed, but it is the model that most of valley is built on. It's frustrating. I wish more companies would just focus on building value and becoming profitable. VC funding for growth makes sense, but it shouldn't be in lieu of a profitable business model. If we keep funding unprofitable companies with unproven business models capitalism breaks, efficiency is lost, and someone ends up holding a bag - usually the mom and pop investor in the public markets.

YZF 4y ago

https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-startup-bolt-lays-off-more-than-200-people-or-at-least-25-of-its-staff/?sh=1835e0f22201 https://www.forbes.com/sites/kenrickcai/2022/05/25/checkout-... $355M is a lot of money... Nobody can tell today what the market will look like in 24 months and nobody could tell in February what the market will look like in 24 months. You need to include some uncertainty in your plans anyways. If there's a downturn it's not all negative, the people you were going to hire in 6 months might now be better and cheaper. Sounds to me more like the CEO feels there was over-hiring anyways and this is just an excuse. Also maybe this is a little about "after acquiring crypto startup Wyre in April" and the current outlook on crypto?

PheonixPharts 4y ago

Who in the world didn't foresee the market cooling dramatically as the pandemic "ended"? I remember interviewing at real estate start ups during the pandemic hiring like crazy, as if this wasn't obviously a temporary boom period. The problem is that the vast majority of startups suffer from a Markov memory problem where they can't fathom a world different from their current state no matter how absurd that view is to anyone with common sense.