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Agree. It's not enjoyable to work in a bad macro environment. My point is that companies that have significant cash flows won't have to lay off employees and mi

by nbstme 4y ago

Agree. It's not enjoyable to work in a bad macro environment. My point is that companies that have significant cash flows won't have to lay off employees and might even continue to hire, acquire businesses and consolidate their business. They will expand, not contract like the rest of the market.

aetherson 4y ago
One thing that I think works against businesses expanding right now -- even profitable businesses -- is that with it having been like 12+ years since anyone worked in a bad macro environment is that nobody really knows how their company behaves in a recession. Like, sure, you're profitable right now, but right now we're not in a recession, the bad times are pretty limited to just the tech sector. If the whole economy does go into recession, do your customers vanish on you? Even if you were around in 2008, your business is probably different now in 2022, and you don't really know what the pressures are going to be like. In this environment, I think lots of companies that have fundamentally sound businesses are still going to be very conservative. (Not disagreeing with you, exactly, just adding more thoughts and some context for why it's not enjoyable to work in a bad macro even if your business is ultimately the healthier for it.)
tyrfing 4y ago
Sure, if you're working at Google in 2000, you're fine. However, cash flow isn't enough, and a lot of tech is very cyclical. If a business has already hired to sustain growth which doesn't appear, they will lay people off. Advertising is leveraged on the state of the economy, and in a contraction will shrink more than goods sales, so a company relying on it will lay people off or have some very ugly financials. If software is licensed by head or usage and all your customers are shrinking, your revenue will be directly impacted. It's very hard to forecast these effects, but so much of tech revenue is fueled by advertising, consumer discretionary spending, and venture capital [1] that assuming a business cycle contraction is irrelevant strikes me as incredibly foolish. A fantastic and profitable business over the long term can be affected by macroeconomic effects. 1. Bridgewater estimates 10% of AMZN/GOOG/FB revenue, 44 billion/year, comes from startups. Startup revenue from other startups will likely be much higher on average.
andrekandre 4y ago
> acquire businesses and consolidate their business. They will expand, not contract like the rest of the market. exactly, downturns are an opportunity for the big players to "buy cheap", expand their marketshare, then wait things out and "sell dear" when things get hot again

by nbstme 4y ago

aetherson 4y ago

One thing that I think works against businesses expanding right now -- even profitable businesses -- is that with it having been like 12+ years since anyone worked in a bad macro environment is that nobody really knows how their company behaves in a recession. Like, sure, you're profitable right now, but right now we're not in a recession, the bad times are pretty limited to just the tech sector. If the whole economy does go into recession, do your customers vanish on you? Even if you were around in 2008, your business is probably different now in 2022, and you don't really know what the pressures are going to be like. In this environment, I think lots of companies that have fundamentally sound businesses are still going to be very conservative. (Not disagreeing with you, exactly, just adding more thoughts and some context for why it's not enjoyable to work in a bad macro even if your business is ultimately the healthier for it.)

tyrfing 4y ago

Sure, if you're working at Google in 2000, you're fine. However, cash flow isn't enough, and a lot of tech is very cyclical. If a business has already hired to sustain growth which doesn't appear, they will lay people off. Advertising is leveraged on the state of the economy, and in a contraction will shrink more than goods sales, so a company relying on it will lay people off or have some very ugly financials. If software is licensed by head or usage and all your customers are shrinking, your revenue will be directly impacted. It's very hard to forecast these effects, but so much of tech revenue is fueled by advertising, consumer discretionary spending, and venture capital [1] that assuming a business cycle contraction is irrelevant strikes me as incredibly foolish. A fantastic and profitable business over the long term can be affected by macroeconomic effects. 1. Bridgewater estimates 10% of AMZN/GOOG/FB revenue, 44 billion/year, comes from startups. Startup revenue from other startups will likely be much higher on average.

andrekandre 4y ago

> acquire businesses and consolidate their business. They will expand, not contract like the rest of the market. exactly, downturns are an opportunity for the big players to "buy cheap", expand their marketshare, then wait things out and "sell dear" when things get hot again