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Every company is now blaming the “macro environment” for poor strategic business decisions. Meanwhile unemployment is still at an all time low.

klardotsh 4y ago
Especially companies which claim to have solid runway blaming "the macro environment" is perplexing. But then, venture capital backed companies generally (arguably by design) are not profitable, so their ability to weather storms is likely weakened and maybe the boards get squirrely when faced with the threat of bad weather.
- singron 4y ago
  Promising but pre-profit VC-backed companies don't want to raise in the next 2-3 years since there is a huge risk of down-rounds. Everyone is trying to squeeze their runways out over that time period. Unfortunately, if your customers are mostly other tech companies, they are doing the same thing. It seems like a bunch of healthy companies are putting on the brakes hard enough to collectively cause the recession they are trying to avoid.
- endorphine 4y ago
  > But then, venture capital backed companies generally (arguably by design) are not profitable I've heard this before but I don't get it. Why are they not profitable "by design"? Edit: not sure if it was the reason this is downvoted but this was an honest question
  - jiveturkey 4y ago
    They spend every cent (and then some) on growth. The model is to capture the market. You have to spend to do that. Once you do that, you can set the terms. Also, it happens to bring growth company valuations and a nice exit. What happens after that (ie if the entire thing was unsustainable), honey badger VC don't care. You also don't have a choice but to play the game. If you don't, your VC funded competition will outspend and destroy you.
    - endorphine 4y ago
      Thanks for this clear explanation.
  - karolist 4y ago
    Because growth is prioritized over profit in hopes of an exit. Built for exit startup economy.
olliej 4y ago
I’d be curious what the numbers look like in the next quarter, also I recall that the US has some absurd definition of unemployed that conveniently undercounts the unemployed. That said I think the real story now is that the previous recessions haven’t really impacted the big tech companies, but this time it is so we’re seeing the first mass layoffs that this generation of developers has likely ever encountered. Couple that with the “tech” companies that are essentially just advertising companies that write software (obviously FB and G, but many of the startups aren’t too different) discovering that attention based advertising isn’t as stable a revenue stream as was thought, and you get a _lot_ more “safe” jobs disappearing.
- AnonMO 4y ago
  The percentage you see flying around doesn’t include people who aren’t actively looking for jobs u-3.if you include them it goes to 4.4 go to bls.gov and find alternative measures of labor underutilization. Its not undercounting just different levels/definitions of unemployment qualifications
  - olliej 4y ago
    Right, but there's all sorts of issues in how that is counted. For example if a person is stuck in a town where there are no jobs (say a large employer going out of business), that person isn't looking for a job because there are none, but then they also no longer count as unemployed. A person who just got laid off and is having a break on their termination benefits is also not "unemployed". But there's also just simple lag on the unemployment numbers as companies like Facebook, etc have only just started large scale layoffs. As a side note, I am curious how much the less fragile companies are going to be using current events to get rid of "expensive" or "unproductive" employees. Previously companies got around legal reporting requirements by simply laying off people in groups of < N people where N is a legal "laying off N people in X days must be reported" - do "current macroeconomic" effects provide a different path? I write code, not legal docs so know nothing of such things and am kind of curious how it goes
- UncleMeat 4y ago
  The "the government is lying about unemployment" narrative is foolish. The number presented in most media headlines is just one number that the government publishes. Right alongside U-3 they publish numbers using definitions that include more people. It'd be a pretty stupid conspiracy to lie and publish the "true" numbers right next to your lie. Both U-3 and U-6 are near historical lows. Even if you don't believe that U-3 is meaningful, you can compare the U-6 numbers now against other times in history and see that unemployment is indeed low right now.
KerrAvon 4y ago
the billionaires decided that it’s recession time, so we’re gonna recess.
- dang 4y ago
  Please don't post unsubstantive comments. You may not owe billionaires better, but you owe this community better if you're participating in it. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
anm89 4y ago
> Meanwhile unemployment is still at an all time low. That is incredibly circular logic. So companies shouldn't be doing layoffs because unemployment is low? Are you arguing that the macro environment isn't bad? A G7 country is in a mexican standoff with its bond market and pension funds to avoid a systemic collapse in the next 3 days. How much worse is the macro situation supposed to get before businesses should worry?
- deleted 4y ago
  [deleted]
yieldcrv 4y ago
When the credit market is hot, issue more debt When the equity market is hot, issue more shares When the consumer market is hot, sell more product It has nothing to do with employees unless you are trying to bribe a politician with “jobs” you’ll bring to their area
ddispaltro 4y ago
I mean the feds goal is to raise unemployment at this point (to slow down inflation) so in that sense this the fear of a recession is in fact creating a recession?
- Octabrain 4y ago
  Is this something openly known or just some kind of guess from you? Jez, if we've reached the point where the US goverment forces unemployment (with all the suffering it implies to ordinary people) in order to protect the overall economy (the elites and goverment itself)....if that's not something to make everyone to lose any remains of faith on the system then I don't know what it is.
  - kasey_junk 4y ago
    https://thehill.com/policy/3658981-why-the-fed-is-pushing-unemployment-higher/amp/ https://thehill.com/policy/3658981-why-the-fed-is-pushing-un... The fed is in full bore inflation fighting mode. The only tool they have for that has the known and expected result of driving up unemployment. They currently view that as the lesser of 2 evils.
    - thehappypm 4y ago
      To put it another way, unemployment is an A right now and inflation an F. They would prefer both to be B’s than this situation.
ryanSrich 4y ago
The economy _is_ to blame if your business strategy is to burn VC money at a faster and faster rate, which is the goal of most billion dollar growth stage startups. I know HN likes to rip on these types of businesses, but that is literally the strategy. You can not like it, but blaming it on incompetence is foolish. When the economy turns you have to adjust that strategy, which is what they are doing now.

klardotsh 4y ago

Especially companies which claim to have solid runway blaming "the macro environment" is perplexing. But then, venture capital backed companies generally (arguably by design) are not profitable, so their ability to weather storms is likely weakened and maybe the boards get squirrely when faced with the threat of bad weather.

singron 4y ago
Promising but pre-profit VC-backed companies don't want to raise in the next 2-3 years since there is a huge risk of down-rounds. Everyone is trying to squeeze their runways out over that time period. Unfortunately, if your customers are mostly other tech companies, they are doing the same thing. It seems like a bunch of healthy companies are putting on the brakes hard enough to collectively cause the recession they are trying to avoid.
endorphine 4y ago
> But then, venture capital backed companies generally (arguably by design) are not profitable I've heard this before but I don't get it. Why are they not profitable "by design"? Edit: not sure if it was the reason this is downvoted but this was an honest question
- jiveturkey 4y ago
  They spend every cent (and then some) on growth. The model is to capture the market. You have to spend to do that. Once you do that, you can set the terms. Also, it happens to bring growth company valuations and a nice exit. What happens after that (ie if the entire thing was unsustainable), honey badger VC don't care. You also don't have a choice but to play the game. If you don't, your VC funded competition will outspend and destroy you.
  - endorphine 4y ago
    Thanks for this clear explanation.
- karolist 4y ago
  Because growth is prioritized over profit in hopes of an exit. Built for exit startup economy.

olliej 4y ago

I’d be curious what the numbers look like in the next quarter, also I recall that the US has some absurd definition of unemployed that conveniently undercounts the unemployed. That said I think the real story now is that the previous recessions haven’t really impacted the big tech companies, but this time it is so we’re seeing the first mass layoffs that this generation of developers has likely ever encountered. Couple that with the “tech” companies that are essentially just advertising companies that write software (obviously FB and G, but many of the startups aren’t too different) discovering that attention based advertising isn’t as stable a revenue stream as was thought, and you get a _lot_ more “safe” jobs disappearing.

AnonMO 4y ago
The percentage you see flying around doesn’t include people who aren’t actively looking for jobs u-3.if you include them it goes to 4.4 go to bls.gov and find alternative measures of labor underutilization. Its not undercounting just different levels/definitions of unemployment qualifications
- olliej 4y ago
  Right, but there's all sorts of issues in how that is counted. For example if a person is stuck in a town where there are no jobs (say a large employer going out of business), that person isn't looking for a job because there are none, but then they also no longer count as unemployed. A person who just got laid off and is having a break on their termination benefits is also not "unemployed". But there's also just simple lag on the unemployment numbers as companies like Facebook, etc have only just started large scale layoffs. As a side note, I am curious how much the less fragile companies are going to be using current events to get rid of "expensive" or "unproductive" employees. Previously companies got around legal reporting requirements by simply laying off people in groups of < N people where N is a legal "laying off N people in X days must be reported" - do "current macroeconomic" effects provide a different path? I write code, not legal docs so know nothing of such things and am kind of curious how it goes
UncleMeat 4y ago
The "the government is lying about unemployment" narrative is foolish. The number presented in most media headlines is just one number that the government publishes. Right alongside U-3 they publish numbers using definitions that include more people. It'd be a pretty stupid conspiracy to lie and publish the "true" numbers right next to your lie. Both U-3 and U-6 are near historical lows. Even if you don't believe that U-3 is meaningful, you can compare the U-6 numbers now against other times in history and see that unemployment is indeed low right now.

KerrAvon 4y ago

the billionaires decided that it’s recession time, so we’re gonna recess.

dang 4y ago
Please don't post unsubstantive comments. You may not owe billionaires better, but you owe this community better if you're participating in it. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

anm89 4y ago

> Meanwhile unemployment is still at an all time low. That is incredibly circular logic. So companies shouldn't be doing layoffs because unemployment is low? Are you arguing that the macro environment isn't bad? A G7 country is in a mexican standoff with its bond market and pension funds to avoid a systemic collapse in the next 3 days. How much worse is the macro situation supposed to get before businesses should worry?

deleted 4y ago
[deleted]

yieldcrv 4y ago

When the credit market is hot, issue more debt When the equity market is hot, issue more shares When the consumer market is hot, sell more product It has nothing to do with employees unless you are trying to bribe a politician with “jobs” you’ll bring to their area

ddispaltro 4y ago

I mean the feds goal is to raise unemployment at this point (to slow down inflation) so in that sense this the fear of a recession is in fact creating a recession?

Octabrain 4y ago
Is this something openly known or just some kind of guess from you? Jez, if we've reached the point where the US goverment forces unemployment (with all the suffering it implies to ordinary people) in order to protect the overall economy (the elites and goverment itself)....if that's not something to make everyone to lose any remains of faith on the system then I don't know what it is.
- kasey_junk 4y ago
  https://thehill.com/policy/3658981-why-the-fed-is-pushing-unemployment-higher/amp/ https://thehill.com/policy/3658981-why-the-fed-is-pushing-un... The fed is in full bore inflation fighting mode. The only tool they have for that has the known and expected result of driving up unemployment. They currently view that as the lesser of 2 evils.
  - thehappypm 4y ago
    To put it another way, unemployment is an A right now and inflation an F. They would prefer both to be B’s than this situation.

ryanSrich 4y ago

The economy _is_ to blame if your business strategy is to burn VC money at a faster and faster rate, which is the goal of most billion dollar growth stage startups. I know HN likes to rip on these types of businesses, but that is literally the strategy. You can not like it, but blaming it on incompetence is foolish. When the economy turns you have to adjust that strategy, which is what they are doing now.