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The advice in these types of economic times from VCs etc. is to get to default-alive, e.g. a viable shot at cash flow positive before the money you have in the
by gz5 4y ago
The advice in these types of economic times from VCs etc. is to get to default-alive, e.g. a viable shot at cash flow positive before the money you have in the bank is gone.
While that view is understandable, can folks think of companies who did 20% type layoffs at the eve of bad times, e.g. 2001 or 2008, and then became market leaders, expanding as the market recovered?
I know Coinbase is not a typical startup given their IPO but they are a startup in other senses.
- ryanSrich 4y agoCoinbase is an extremely profitable company. I don't think any VC advice applies to them. I think their valuation just got way out of hand, and with the crypto bear market just getting started I imagine they'll downsize like this during every cycle to come.
- paxys 4y agoProfitable, yes. Sustainable, probably not. They are scrambling to open up lines of stable revenue that they can rely on once crypto mania starts dying down (and that is already happening to some degree).
- drinkzima 4y agoThey burned almost a billion dollars in operating cash flow last quarter, and nearly all of their profitability in the past flowed from retail, which has shifted down dramatically. Not quite as simple as extremely profitable. Page 10 for basic breakdown: https://s27.q4cdn.com/397450999/files/doc_financials/2022/q1/Coinbase-Q122-Shareholder-Letter.pdf https://s27.q4cdn.com/397450999/files/doc_financials/2022/q1...
- ajross 4y ago> can folks think of companies who did 20% type layoffs at the eve of bad times, e.g. 2001 or 2008, and then became market leaders Amazon did a quite famous layoff in 2000, actually.
- zippergz 4y agoThat was WELL under 20% of their workforce. I think it was 1 or 2%.
- ajross 4y agoLooks like it was 15%, and actually in January 2001: https://www.wsj.com/articles/SB980887670133130934 https://www.wsj.com/articles/SB980887670133130934 But it was very heavily covered at the time, and viewed as a sign of the inevitable collapse of the internet economy. They ended up doing OK.
- puranjay 4y agoBut that’s just one company. And Amazon is pretty much one of the greatest businesses built in the last 50 years. How many others like Amazon did 20% layoffs and then died anyway?
- paxys 4y agoMost of the largest tech players today (including Microsoft and Google) did rounds of layoffs in 2008. Of course in those cases it was more trimming some fat rather than a do or die situation. But there are plenty of companies that have survived existential crises of this nature and come back stronger.