4 ms·

Be careful on this. Yes some FANGs make a lot of money but most tech companies lose every year. You want to give up wages to help pay the deficit?

by rr888 4y ago

grapeskin 4y ago
I think the awareness of that reality would turn a lot of heads and make many more developers think, “wait, is this a bubble?” instead of developers jumping from 300k to 400k VC funded niche simple-website-as-an-app jobs with 10 to 500 employee growth in 2 years, saying “dude trust me this company has a future”
- adventured 4y ago
  A zillion 'tech' companies with massive scale operating losses (hey would K8s help with the scaling?!?) are about to find out what it's like when the financing spigots get turned off. Their employees will definitely take a large share of the hit. In the public version of that you can already see how that's working out, as their stocks have routinely collapsed by 70-90% over the past year. Those companies will either have to sell themselves off for a fraction of what they were formerly worth, slash expenditures heavily (ie fire employees and cut expansion plans), or heavily dilute to raise some funds and pray the beating stops before they run out of money. The crash that the pandemic should have brought forth (and nearly did), is here now. They temporarily papered over the disaster, and the bill has arrived regardless as it always does. Some examples: Snowflake: $715m operating loss on $1.2b in sales (lol) | Unity Software: $591m operating loss on $1.2b in sales | Roblox: $511m operating loss on $2b in sales | Palantir: $336m operating loss on $1.6b in sales | Robinhood: $2b operating loss on $1.6b in sales (lol) | Affirm: $632m operating loss on $1.2b in sales | SoFi: $411m pre-tax loss on $1.1b in sales | Twilio: $936m operating loss on $3b in sales | Uber: $2.7b op loss on $21b sales | Lyft: $865m op loss on $3.4b sales | UiPath: $500m op loss on $892m sales | Asana: $265m op loss on $378m in sales (lol) | Lemonade: $258m pre-tax loss on $149m sales (lol) | Fastly: $232m op loss on $371m in sales And so on. Some of these loss vs sales ratios very much resemble the excesses of the dotcom bubble. When the music stops (as it has), the losses become a lot more difficult to manage, the market smashes the stocks, customers pull back in recessionary environments, losses get even worse, companies have to slash and burn, and a lot of things go sideways in that hurricane. Companies like Twilio have seen their stocks implode by 80% for good reason, they're bleeding very badly, their businesses are unsustainable as is. Lyft is a dead company walking, they have to sell themselves off if things don't promptly turn around in the economy and market (which appears unlikely); they're 75% below the IPO levels, it's a disaster for nearly all the shareholders (including employees) that have held. How much is eg Asana really worth when their business consists of $265m in op losses vs $378m in sales? It's a joke. Discount it by 90-95% from the top and that's probably a reasonable start to the grinddown ($145 to $18 so far). How about Fastly? They're dead. They probably have no choice other than to sell themselves off. For fiscal 2021 they added $64m in sales and $112m in operating losses to get that. Aggressively slam the brakes and their stronger competitors will just eat their business, don't slam the brakes and they're dead. $64 to $10 so far on the stock. They're dinner for Cloudflare, Amazon, IBM, someone. These guys are all seriously fucked in one way or another. Those op losses vs sales are comical. Be sure to say hello to the brick wall you're about to slam into. They have several bad options to choose from to start dealing with their epic scale losses (and if they don't, the market will just smash their stocks that much more), including praying that the bad things just pretty please stop happening.
  - bombcar 4y ago
    Adding blank lines between the companies would format it in a rough table. But yeah, these are nuts and almost all these companies were dependent on "stock go up" and now the chickens have come home to roost. They'll all be acquired for pennies on the dollar by big players (though the really big ones like Uber might survive by massive purges). Roblox and Robinhood are the most amusing, how can you screw up a money spigot so badly?
    - adventured 4y ago
      I dislike the extra spacing that HN requires for that style. And unfortunately I'm not aware of any way to do line to next line without the surplus spacing. I have always thought it would be a rather useful formatting option here.
      - bombcar 4y ago
        I've used the code option at times [3487]: Text after a blank line that is indented by two or more spaces is reproduced verbatim. (This is intended for code.) [3487] https://news.ycombinator.com/formatdoc https://news.ycombinator.com/formatdoc
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  - deleted 4y ago
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oragnediscussy 4y ago
Of course there are a lot of big FAANG type companies, and there are a lot of startups with VC funding. I used to work for Google and now I’ve run my own company for the last 10 years without VC funding. I imagine there are many many countless companies similar to mine. I focus on growth and we never have a ton of money. If we get more money we put it into our current and expanding workforce. We do keep some money in the bank but only so we can make sure our company doesn’t fail at some point. But companies are fragile things, if we lose enough employees and can’t get new employees and train them fast enough we probably fail. If we raise our salaries too high and can’t get enough revenue in return we fail. If we have a sales guy who we pay $70k base with $150k commission, then he leaves for $140k base job and we have to in turn hire a $130k base salary guy with $200k commission - what do we do? (This is a real world example) - well we now have one sales guy for almost the same price as we were paying two before. Basically we need to make more money or let people go. A single sales guy can only have so many conversations so we probably need to raise our cost of our product. Which assuming our customers even accept it, will increase their costs and it just keeps repeating down the line. The current type environment is not kind to my type of company and it definitely will cause a lot of companies to fail. We have an amazing product with great demand and i think that’s what has saved us, but please imagine a company that is similar to mine. We try everything we can do to retain our employees, pretty much every dollar we make goes into employees since our product is software. When we had bad years I set my salary at $40k since i wanted the company to survive and we were still small and it made a difference. A ‘normal’ company like mine is totally restrained by cash flow, its a pretty simple equation. When you start having costs increase (i.e. salary) you have to balance it out somehow with more revenue somehow or reduced costs. A gradual increase is always better so we can start planning for it, get loans, get investment, gradually increase our price. Price shocks and huge changes are never easy to handle. I believe companies like mine are doing something good - innovating and creating good products and providing a much better service to our customers than Google and others can do by the virtue of us still being small and nimble and customer focused.

Be careful on this. Yes some FANGs make a lot of money but most tech companies lose every year. You want to give up wages to help pay the deficit?

by rr888 4y ago

Be careful on this. Yes some FANGs make a lot of money but most tech companies lose every year. You want to give up wages to help pay the deficit?

grapeskin 4y ago

I think the awareness of that reality would turn a lot of heads and make many more developers think, “wait, is this a bubble?” instead of developers jumping from 300k to 400k VC funded niche simple-website-as-an-app jobs with 10 to 500 employee growth in 2 years, saying “dude trust me this company has a future”

adventured 4y ago
A zillion 'tech' companies with massive scale operating losses (hey would K8s help with the scaling?!?) are about to find out what it's like when the financing spigots get turned off. Their employees will definitely take a large share of the hit. In the public version of that you can already see how that's working out, as their stocks have routinely collapsed by 70-90% over the past year. Those companies will either have to sell themselves off for a fraction of what they were formerly worth, slash expenditures heavily (ie fire employees and cut expansion plans), or heavily dilute to raise some funds and pray the beating stops before they run out of money. The crash that the pandemic should have brought forth (and nearly did), is here now. They temporarily papered over the disaster, and the bill has arrived regardless as it always does. Some examples: Snowflake: $715m operating loss on $1.2b in sales (lol) | Unity Software: $591m operating loss on $1.2b in sales | Roblox: $511m operating loss on $2b in sales | Palantir: $336m operating loss on $1.6b in sales | Robinhood: $2b operating loss on $1.6b in sales (lol) | Affirm: $632m operating loss on $1.2b in sales | SoFi: $411m pre-tax loss on $1.1b in sales | Twilio: $936m operating loss on $3b in sales | Uber: $2.7b op loss on $21b sales | Lyft: $865m op loss on $3.4b sales | UiPath: $500m op loss on $892m sales | Asana: $265m op loss on $378m in sales (lol) | Lemonade: $258m pre-tax loss on $149m sales (lol) | Fastly: $232m op loss on $371m in sales And so on. Some of these loss vs sales ratios very much resemble the excesses of the dotcom bubble. When the music stops (as it has), the losses become a lot more difficult to manage, the market smashes the stocks, customers pull back in recessionary environments, losses get even worse, companies have to slash and burn, and a lot of things go sideways in that hurricane. Companies like Twilio have seen their stocks implode by 80% for good reason, they're bleeding very badly, their businesses are unsustainable as is. Lyft is a dead company walking, they have to sell themselves off if things don't promptly turn around in the economy and market (which appears unlikely); they're 75% below the IPO levels, it's a disaster for nearly all the shareholders (including employees) that have held. How much is eg Asana really worth when their business consists of $265m in op losses vs $378m in sales? It's a joke. Discount it by 90-95% from the top and that's probably a reasonable start to the grinddown ($145 to $18 so far). How about Fastly? They're dead. They probably have no choice other than to sell themselves off. For fiscal 2021 they added $64m in sales and $112m in operating losses to get that. Aggressively slam the brakes and their stronger competitors will just eat their business, don't slam the brakes and they're dead. $64 to $10 so far on the stock. They're dinner for Cloudflare, Amazon, IBM, someone. These guys are all seriously fucked in one way or another. Those op losses vs sales are comical. Be sure to say hello to the brick wall you're about to slam into. They have several bad options to choose from to start dealing with their epic scale losses (and if they don't, the market will just smash their stocks that much more), including praying that the bad things just pretty please stop happening.
- bombcar 4y ago
  Adding blank lines between the companies would format it in a rough table. But yeah, these are nuts and almost all these companies were dependent on "stock go up" and now the chickens have come home to roost. They'll all be acquired for pennies on the dollar by big players (though the really big ones like Uber might survive by massive purges). Roblox and Robinhood are the most amusing, how can you screw up a money spigot so badly?
  - adventured 4y ago
    I dislike the extra spacing that HN requires for that style. And unfortunately I'm not aware of any way to do line to next line without the surplus spacing. I have always thought it would be a rather useful formatting option here.
    - bombcar 4y ago
      I've used the code option at times [3487]: Text after a blank line that is indented by two or more spaces is reproduced verbatim. (This is intended for code.) [3487] https://news.ycombinator.com/formatdoc https://news.ycombinator.com/formatdoc
- deleted 4y ago
  [deleted]
- deleted 4y ago
  [deleted]

oragnediscussy 4y ago

Of course there are a lot of big FAANG type companies, and there are a lot of startups with VC funding. I used to work for Google and now I’ve run my own company for the last 10 years without VC funding. I imagine there are many many countless companies similar to mine. I focus on growth and we never have a ton of money. If we get more money we put it into our current and expanding workforce. We do keep some money in the bank but only so we can make sure our company doesn’t fail at some point. But companies are fragile things, if we lose enough employees and can’t get new employees and train them fast enough we probably fail. If we raise our salaries too high and can’t get enough revenue in return we fail. If we have a sales guy who we pay $70k base with $150k commission, then he leaves for $140k base job and we have to in turn hire a $130k base salary guy with $200k commission - what do we do? (This is a real world example) - well we now have one sales guy for almost the same price as we were paying two before. Basically we need to make more money or let people go. A single sales guy can only have so many conversations so we probably need to raise our cost of our product. Which assuming our customers even accept it, will increase their costs and it just keeps repeating down the line. The current type environment is not kind to my type of company and it definitely will cause a lot of companies to fail. We have an amazing product with great demand and i think that’s what has saved us, but please imagine a company that is similar to mine. We try everything we can do to retain our employees, pretty much every dollar we make goes into employees since our product is software. When we had bad years I set my salary at $40k since i wanted the company to survive and we were still small and it made a difference. A ‘normal’ company like mine is totally restrained by cash flow, its a pretty simple equation. When you start having costs increase (i.e. salary) you have to balance it out somehow with more revenue somehow or reduced costs. A gradual increase is always better so we can start planning for it, get loans, get investment, gradually increase our price. Price shocks and huge changes are never easy to handle. I believe companies like mine are doing something good - innovating and creating good products and providing a much better service to our customers than Google and others can do by the virtue of us still being small and nimble and customer focused.