4 ms·

In a similar vein this bust seems also to be exaggerated.

by baxtr 4y ago

samtho 4y ago
I agree. This sort of thing becomes a self-fulfilling prophecy unfortunately, and the incentives that publicly traded companies are given do not align with going against the grain.
walterbell 4y ago
Based on the first chart in the story, this restructuring may be only getting started. If intermingled with a change in the definition of legal tender (e.g. CBDCs), there's no recent precedent. Perhaps London around 1666.
- baxtr 4y ago
  So you think it’s just the start? What’s the thing with CBDCs?
  - walterbell 4y ago
    > What's the thing with CBDCs? Potential scenarios include a digital euro/dollar/yuan that lives alongside existing paper cash, "Johnny's Cash and the Smart Money Nighmare" (search for that video which has a short half-life on YT), or something in the middle if elected legislators represent their citizens in negotiations with the BIS/IMF, https://en.wikipedia.org/wiki/Bank_for_International_Settlements https://en.wikipedia.org/wiki/Bank_for_International_Settlem.... There's an intro in this thread, https://news.ycombinator.com/item?id=32777875 https://news.ycombinator.com/item?id=32777875 And a few hundred comments in earlier threads, https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=central%20bank%20digital&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
quickthrower2 4y ago
Feels like a slow bust. Need some collapsing banks for me to even think about it.
college_physics 4y ago
imho structurally this downturn is much more serious than the dot.com bust. that one was a classic and contained speculative bust in a nascent domain. what we have now is a very different type of challenge. a fully developed tech universe, with demonstrable revenue streams but the sustainability and even legitimacy of those streams being questioned in fundamental ways. this is coupled with an apparent innovation fatigue and alternative growth options like the metaverse feeling completely bonkers. most importantly, digital tech has become too important: both within countries (democracy, privacy, competition etc) and between countries (security, supply chain political control, trade advantage etc). this does not mean we should expect a wipeout, there is significant inertia in consumer, corporate and government choices, but I would not expect another boom cycle to materialize before global geopolitical stars align towards some sort of consensus of how tech is to be deployed and controlled
- drewcon 4y ago
  “legitimacy of those streams being questioned in fundamental ways” How? Meta lost 11 billion building second life, not because they can’t monetize fb/ ig etc. Twitter fired half its staff because their new god king wanted to run a different company with lower costs and different standards and product direction, not because advertising performance meaningfully changed.
  - college_physics 4y ago
    > How? a simple policy change by another market participant [0] shows one of those ways. Changing regulatory / political winds are some other ways [1] [0] https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-privacy-change-will-cost-10-billion-this-year.html https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-priv... [1] https://www.barrons.com/news/meta-calls-for-uk-govt-rethink-over-plans-to-scrap-eu-laws-01669398308 https://www.barrons.com/news/meta-calls-for-uk-govt-rethink-...
- debaserab2 4y ago
  > but I would not expect another boom cycle to materialize before global geopolitical stars align towards some sort of consensus of how tech is to be deployed and controlled That's a really interesting statement. What do you think that could look like?
lmeyerov 4y ago
The funding market dropoff for Series A+ startups is a big deal for startup employees assuming they can keep high 6 figure salaries at vc-dependent companies where, in recent years, fundraising has far exceeded revenue. Ex: https://tomtunguz.com/fundraising-seasonality/ https://tomtunguz.com/fundraising-seasonality/ . Keeping large salary for many will be HARD, eg, seeing folks have to go to wall st, and junior (bootcamps etc) was already hard without this. We are still waiting for the other shoe to drop. Many high-burn co's did not cut, and of companies that did a round of layoffs, most followed a statistically suspicious trend of 10-20% that suggests a bunch should have done more but didn't. With hiring freezes everywhere.. a lot of pain for job seekers even before more cuts. Worse, even a regular 2-year downturn would flush a lot of startups as fundraises are generally for 12-24mo payroll, and many raised with historically horrible fundamentals (vs valuation) over the last few years. I'm not saying end of world, but I wouldn't want to be a new grad at many seemingly shiny series b/c startups right now. When I was a new grad, I wouldn't have even known the right questions to figure out if my unicorn was really a donkey.
- baxtr 4y ago
  I think VC money needs to be deployed eventually. They made promises to their GPs within a certain timeframe. So any money held off now needs to be invested in the coming 1-3 years. So I’m not very pessimistic about startup funding. But of course you need to stay alive until then.
  - lmeyerov 4y ago
    I asked around similarly earlier this year. Some money goes somewhere... But likely not as much, and not widely distributed. In my convs with GPs, most LPs are very happy to avoid capital calls right now, as they went too far in during the heyday. They will remember GPs forced them during a bad year. When they do go in again, it is at lower valuation multiples, which can easily break cap tables of recently-raising startups. That triggers a downward spiral if they luck into such a fundraise. I bet more likely is what happened ~4 years ago was a lot of the $ went into a smaller # of stronger co's, and I'd expect even more pressure now. Big funds need big winners, and FTX style frauds and less ponzi acquisitions means return of later-stage diligence. When LP money turns back on, unclear if at rate of last few years, which is largely attributed to dumb outside money enabled by low interest rates and startups being good risk/reward. There was fear due to lack of IPOs & historically weird revenue vs valuation multiples, but the above factors counter-weighed. So with valuation multiples cutting and low interests shrinking.. different world for LPs. Net: 1. less $, and to fewer co's 2. This is still a historically amazing time for startups & founders, but feels closer to 10 years ago, than the last few years which supported a lot of people who were mostly providing value on paper, not in revenue.

In a similar vein this bust seems also to be exaggerated.

by baxtr 4y ago

In a similar vein this bust seems also to be exaggerated.

I agree. This sort of thing becomes a self-fulfilling prophecy unfortunately, and the incentives that publicly traded companies are given do not align with going against the grain.

walterbell 4y ago

Based on the first chart in the story, this restructuring may be only getting started. If intermingled with a change in the definition of legal tender (e.g. CBDCs), there's no recent precedent. Perhaps London around 1666.

baxtr 4y ago
So you think it’s just the start? What’s the thing with CBDCs?
- walterbell 4y ago
  > What's the thing with CBDCs? Potential scenarios include a digital euro/dollar/yuan that lives alongside existing paper cash, "Johnny's Cash and the Smart Money Nighmare" (search for that video which has a short half-life on YT), or something in the middle if elected legislators represent their citizens in negotiations with the BIS/IMF, https://en.wikipedia.org/wiki/Bank_for_International_Settlements https://en.wikipedia.org/wiki/Bank_for_International_Settlem.... There's an intro in this thread, https://news.ycombinator.com/item?id=32777875 https://news.ycombinator.com/item?id=32777875 And a few hundred comments in earlier threads, https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=central%20bank%20digital&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

quickthrower2 4y ago

Feels like a slow bust. Need some collapsing banks for me to even think about it.

college_physics 4y ago

imho structurally this downturn is much more serious than the dot.com bust. that one was a classic and contained speculative bust in a nascent domain. what we have now is a very different type of challenge. a fully developed tech universe, with demonstrable revenue streams but the sustainability and even legitimacy of those streams being questioned in fundamental ways. this is coupled with an apparent innovation fatigue and alternative growth options like the metaverse feeling completely bonkers. most importantly, digital tech has become too important: both within countries (democracy, privacy, competition etc) and between countries (security, supply chain political control, trade advantage etc). this does not mean we should expect a wipeout, there is significant inertia in consumer, corporate and government choices, but I would not expect another boom cycle to materialize before global geopolitical stars align towards some sort of consensus of how tech is to be deployed and controlled

drewcon 4y ago
“legitimacy of those streams being questioned in fundamental ways” How? Meta lost 11 billion building second life, not because they can’t monetize fb/ ig etc. Twitter fired half its staff because their new god king wanted to run a different company with lower costs and different standards and product direction, not because advertising performance meaningfully changed.
- college_physics 4y ago
  > How? a simple policy change by another market participant [0] shows one of those ways. Changing regulatory / political winds are some other ways [1] [0] https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-privacy-change-will-cost-10-billion-this-year.html https://www.cnbc.com/2022/02/02/facebook-says-apple-ios-priv... [1] https://www.barrons.com/news/meta-calls-for-uk-govt-rethink-over-plans-to-scrap-eu-laws-01669398308 https://www.barrons.com/news/meta-calls-for-uk-govt-rethink-...
debaserab2 4y ago
> but I would not expect another boom cycle to materialize before global geopolitical stars align towards some sort of consensus of how tech is to be deployed and controlled That's a really interesting statement. What do you think that could look like?

lmeyerov 4y ago

The funding market dropoff for Series A+ startups is a big deal for startup employees assuming they can keep high 6 figure salaries at vc-dependent companies where, in recent years, fundraising has far exceeded revenue. Ex: https://tomtunguz.com/fundraising-seasonality/ https://tomtunguz.com/fundraising-seasonality/ . Keeping large salary for many will be HARD, eg, seeing folks have to go to wall st, and junior (bootcamps etc) was already hard without this. We are still waiting for the other shoe to drop. Many high-burn co's did not cut, and of companies that did a round of layoffs, most followed a statistically suspicious trend of 10-20% that suggests a bunch should have done more but didn't. With hiring freezes everywhere.. a lot of pain for job seekers even before more cuts. Worse, even a regular 2-year downturn would flush a lot of startups as fundraises are generally for 12-24mo payroll, and many raised with historically horrible fundamentals (vs valuation) over the last few years. I'm not saying end of world, but I wouldn't want to be a new grad at many seemingly shiny series b/c startups right now. When I was a new grad, I wouldn't have even known the right questions to figure out if my unicorn was really a donkey.

baxtr 4y ago
I think VC money needs to be deployed eventually. They made promises to their GPs within a certain timeframe. So any money held off now needs to be invested in the coming 1-3 years. So I’m not very pessimistic about startup funding. But of course you need to stay alive until then.
- lmeyerov 4y ago
  I asked around similarly earlier this year. Some money goes somewhere... But likely not as much, and not widely distributed. In my convs with GPs, most LPs are very happy to avoid capital calls right now, as they went too far in during the heyday. They will remember GPs forced them during a bad year. When they do go in again, it is at lower valuation multiples, which can easily break cap tables of recently-raising startups. That triggers a downward spiral if they luck into such a fundraise. I bet more likely is what happened ~4 years ago was a lot of the $ went into a smaller # of stronger co's, and I'd expect even more pressure now. Big funds need big winners, and FTX style frauds and less ponzi acquisitions means return of later-stage diligence. When LP money turns back on, unclear if at rate of last few years, which is largely attributed to dumb outside money enabled by low interest rates and startups being good risk/reward. There was fear due to lack of IPOs & historically weird revenue vs valuation multiples, but the above factors counter-weighed. So with valuation multiples cutting and low interests shrinking.. different world for LPs. Net: 1. less $, and to fewer co's 2. This is still a historically amazing time for startups & founders, but feels closer to 10 years ago, than the last few years which supported a lot of people who were mostly providing value on paper, not in revenue.