7 ms·

It's funny I keep thinking about how the same people might work on the same thing but with different terms. As a W2 employee you make great money, but your upsi

It's funny I keep thinking about how the same people might work on the same thing but with different terms. As a W2 employee you make great money, but your upside is capped. Your downside is never capped, of course. As a founder you make okay money, you have better upside. But the same corp that fired you will invest that money with the VC that funded you. So, either way, the capital flows through the corp to you, and the profits flow from you to the corp. There are a few that "make it" and become a corp themselves, but that's the rare exception that follows a power-law distribution. Of course, this is only true for capital intensive startups. My sincere hope is that this wave of layoffs leads to a thousand bootstrapped, customer focused, non-scaling companies, like 37signals. Or kickstarters like the Framework laptop. I believe we need more companies like that, and far fewer moonshots that mostly fail and leave workers broken.

mjr00 4y ago
I agree. I think the next 5-10 years will see a massive wave of new companies come out of this. There's been so much talent locked up in bigtech for so long. The amount of talent in these companies that have had golden handcuffs forever due to the continual rise of their stock grants is staggering. Now suddenly bigtech stock is down 50%+, and they can't issue enough RSUs to cover the compensation gap. Moreover, there's layoffs coming. All of the sudden these extremely talented people, many of whom have a small fortune in savings due to a decade+ of bigtech stock grants, are unleashed on the wider industry, some with 6-12 months of paid severance. They could easily start up a new business with minimal personal financial risk. Will be interesting times, for sure.
- p1mrx 4y ago
  On the other hand, it seems most of the low-hanging fruit has been picked over the last couple decades. What is left for a random small business with software talent to do?
  - patientplatypus 4y ago
    [dead]
  - jemmyw 4y ago
    Plenty of things I'm sure. It seems quite cyclical in that the old products get weighed down by features and stuck, then new ones come along that are slimmer faster and that allows them to explore new ways of working. Its much harder to update the older products. Example: When Jira was the new kid it was all snazzy and sleek and interesting. Over the last few years a lot of alternatives have appeared. Although Atlassian has made some changes, they can't just bring in what makes those products different unless they write a whole new product, and large companies can't make new products. Currently I think we're at or just past a high point. The current lineup of Jira alternatives will probably wittle down, the best ones will get bought, made part of some enterprise lineup, that way of working becomes a standard, they'll get big and bloated and unable to innovate. The cycle will get to a low point and then we'll see another explosion of alternatives. And that's just one niche.
  - javajosh 4y ago
    One example. It is my personal belief is that social media is ripe for disruption in ways we have not imagined yet. Clearly centralized, ad-revenue driven psuedo-monopolies are a big problem. I actually believe there is a parallel problem with software engineering that has focused on larger piles of cloud-hosted complexity that has far outstripped the ability of anyone to hold it in their head. These two things are, I believe, deeply intertwined and so the solution will be at both levels too. Of course, I'm not the only one who sees an opportunity here. I love seeing all the ideas in this space; most of them won't work, of course, but that's the nature of experimentation.
    - rchaud 4y ago
      > Clearly centralized, ad-revenue driven psuedo-monopolies are a big problem. Financially, it's the exact opposite of a problem; it's too profitable. There will always be big market for companies that manage to lock up an audience within its walls.
      - javajosh 4y ago
        A big problem for society. The algorithm is bad for people's mental health, and bad for democracy. These are the externalities of that great profitability.
    - csomar 4y ago
      I'm not sure why you got downvoted. I'm bullish on ActivityPub and the next wave of decentralization.
  - mjr00 4y ago
    I actually strongly disagree -- the amount of business potential for software that isn't trying to becoming a billion-dollar unicorn is massive, and has been extremely underserved during the past decade as most of the money (and talent) chased after the billion dollar moonshot bets, either in B2C businesses or very generic B2B software (think Atlassian). It's harder to find the business potential because the opportunities are much more closely coupled to optimizing specific processes in specific industries. But if you can find the right niche, the business opportunities are there.
    - harimau777 4y ago
      Isn't the opportunity to make "fuck you money" the motivation for the risk of working as a startup? Without that people are probably better off working at a corp.
      - bruce511 4y ago
        Yes and no. Its helpful to see the word "startup" as meaning two distinct things. The "current" use of the word implies VC capital. As in "I joined a startup and we raised..." However in the past it referred to literally "starting a business". Someone sees a gap in the market, builds a product, and looks to fill that gap one customer at a time. Since there is no incoming capital, it has to be revenue positive, well enough for the owners to survive. This sort of business is (somewhat perjorativly) called a "life style" business. In that it provides salaries to some number of people, and provides a (good?) living. The reasons for starting such a business are numerous, and while maybe some do with the goal of being mega-rich, in reality the successful ones end up being merely "rich". But there are a _lot_ of upsides other than money. I'll offer a few from personal experience, but really they offer any goal you like. A) freedom to work on what you want, when you want, where you want, how you want. Yes, of course you are constrained by actually delivering (or you don't get paid) but the mechanics of delivering are up to you. B) job security. It takes time to get to this point, but once a business is profitable the owner has a job for life. (he is literally the last person to get laid off) [1] C) a lack of corporate bullshit. No endless layers of managers. No endless meetings. If you need a new PC you go buy a new PC. (equally true, if you report directly to the owner, decisions get made quickly. If you need a new PC you only have to convince one person.) D) while on the topic, being employed by a small business has huge benefits as well, but to need to move the income needle for the job security. I could go on but I think you get the point. [1] ironically when getting person credit, like a mortgage, ticking "self employed" leads me to a lower credit score, despite the fact that 40-odd people get laid off before I do :) [2] about 5% of new (bootstrapped) businesses make it to 10 years old. I'm not suggesting this route is easy, but it is desirable.
  - ajmurmann 4y ago
    I think there is a huge amount of areas that are less visible to technologists that are underserved. I sometimes think about either partnering or purchasing a small business and just automating the shit out of it. You either become dominant die to the advantage or you start selling the software to competitors. This was mostly spawned by observing a friend's struggles with his property management company while we were on vacation together. Everything they fucked up or for which he had to make phone calls to them could have been triviality automated. I bet there are lots of sectors out there that could be totally disrupted or made more efficient if they got attention from high-caliber developers and UX folks.
- deleted 4y ago
  [deleted]
- whatyesaid 4y ago
  Are they really laying off their best people though or just Leetcoders? Also as far as I am aware, only Twitter really thinks it should be a 200 person company or whatever, whereas these companies actually super overhired during the pandemic predicting a bigger long term trend than turned out to be. That's why these layoffs aren't really that big news all in all.
- propogandist 4y ago
  Many startups that launched in the last several years did not have a proper business model, were not profitable and were reliant on VC money. It was all about growing quickly enough to get to IPO to give early investors liquidity and dump the liability on general public (like Uber). As free/cheap money goes away it should force entrepreneurs to build real businesses rather than VC fueled money pits.
  - javajosh 4y ago
    That's the hope!
- gofreddygo 4y ago
  > the next 5-10 years will see a massive wave of new companies come out of this I want this to be true, but I don't see how. Good talent is still locked up in BigTech. Talent that got freed up was working on things BigTech had no way of make money off of, even long term. On the other hand, SmallTech offers now have a better chance, and seem attractive, to said talent. That must count for something. This round of layoffs is proof that BigTech safety net is a lie. But not enough to push people with dependents to take on the pain and uncertainty that starting up ensues.
  - Fuzzwah 4y ago
    The list of things that turned out to be huge after the stale incumbants failed to find a way to make money off it is pretty long.
- killjoywashere 4y ago
  So far we're looking at ~200,000 layoffs, a far cry from the 1,000,000 laid off in the dot-com bubble. And nowhere close to the capital bonfire of the 2008 housing collapse.
Spivak 4y ago
I think the missing element from “we need fewer moonshots” is that the reason they’re moonshots in the first place is because they’re capital intensive not because the technology has a real story to be an $xbn dollar industry. Like we don’t necessarily notice that any business that employs software developers has to be $5+mil/yr or on the way to it which is not true at all for like a restaurant.
loeg 4y ago
> Your downside is never capped, of course. Surely your downside is capped at zero?
- javajosh 4y ago
  W2 work feels more stable and secure than startup land. If you worked for Google for 20 years you don't expect to be let go with no notice by an automated system. But that is exactly what happened to thousands of people just now. You kind of expect this kind of thing in startup land. Recent events show this downside is not unique to startups, and can affect any worker anywhere. It's chilling, and it should take some of the glow off of W2 work in comparison to startup work. But like I said, there is a third alternative which is, IMHO, far more fullfilling and grounded anyway, which is bootstrapping and working directly with customers.
  - loeg 4y ago
    I don't think this is responsive to my comment.
    - javajosh 4y ago
      Your comment implicitly asserts the faulty premise that downside is purely loss of income, which I implicitly contradicted.
      - loeg 4y ago
        I don't think you even implicitly touched upon what downside might mean in this context, aside from loss of income. Re-reading your comments, I still have no idea what downside you're describing. And certainly nothing explicitly addresses my comment.
  - Aunche 4y ago
    > If you worked for Google for 20 years you don't expect to be let go with no notice by an automated system. Why? From the executive's perspective at megacorps like Google, employees are completely replaceable, and even for a megacorp, Google is incredibly scared of discrimination. The safest way to conduct layoffs is to do so completely randomly. > You kind of expect this kind of thing in startup land. No. In startup land, you should expect that there is a good chance that your entire company is dissolved. Your equity is completely worthless. You have no 6 month severance. You have nothing to show for the longer hours you worked besides a very sub-market salary.
varelse 4y ago
[dead]
vkou 4y ago
> Your downside is never capped, of course. What? Unless your work literally drives you to suicide, the cap on the downside is 'You go out and interview until you find another job.' You aren't risking your own money - you're an employee. You get paid for your work.
- koof 4y ago
  Isn’t it the same for the people “risking” their money? The only “risk” is that they lose their bet, meaning they have to go find a job like the rest of us.
  - majormajor 4y ago
    Let's say you have $50k in savings and an offer in hand for Microsoft or a startup idea of your own. If want to work on your idea, but you don't already have connections to tap for immediate VC funding, any work you do on it is earning $0 income while you're still having to pay the bills. Your downside risk is that after X number of months or years, you've lost $Y dollars of your starting savings. If you take the Microsoft offer, your downside risk is that after X number of months or years, you get laid off, and have to look for a new job, but your $50k is still there, and quite possibly a bunch of new savings as well.
    - epicureanideal 4y ago
      Is $50k enough to attempt anything? Serious question.
  - rcme 4y ago
    No, it's not the same. An uncapped downside would be something like shorting stock. The price of the stock can be unbounded, and you owe the difference between the current stock and the price you opened your short position. So you can literally lose an unlimited amount of money.
    - koof 4y ago
      Which means going back to work to pay the debt off, just like the rest of us. Got it.
kaashif 4y ago
> Your downside is never capped, of course. Of course your downside is capped. You're never going to wake up one day and owe Microsoft a billion dollars. A real example of uncapped downside is when you sell call options on a stock, or short a stock. You actually can wake up one day to your broker telling you you need to find millions of dollars right now because the market moved against you. And it can get worse and worse, the downside is truly uncapped.
- atomicnumber3 4y ago
  >You're never going to wake up one day and owe Microsoft a billion dollars. Unless you use Azure, of course. Then you don't even need to wake up to owe them that much.
atomicnumber3 4y ago
Startups will be out of reach of many in the US until we have a much more robust baseline of public services. First and foremost being health insurance of course. I would love to start the kind of lifestyle (or "non-scaling" as you put it) business, but right now it's a complete non-starter for me because getting a health insurance policy for my entire family would be comically expensive. It's even been harder for me interviewing with smaller startups because compared to single people, my insurance premiums are bonkers.
- threadweaver34 4y ago
  6 months of FAANG severance is better than 2 years of government social safety net, even with a good government.
  - mynameisnull 4y ago
    It’s anecdotal but, I’ve personally known multiple high 200-400k a year earners who went bankrupt or near bankrupt over only medical bills. I myself nearly did. The cost of catastrophic situations is still ultimately too high in the US without or with insurance.
    - abdabab 4y ago
      I thought health insurance puts a cap on how much you can get charged. Could you add a little how that can happen?
      - dragonwriter 4y ago
        > I thought health insurance puts a cap on how much you can get charged. Instead of annual out-of-pocket maximums that are mandatory under the ACA and make that unlikely, plans used to have kind of the reverse: lifetime coverage caps that particularly severe conditions could exceed. (This is one of the reasons premiums are higher for superficially similar—e.g., what services are covered and at what cost sharing rule befoee reaching caps—coverage under the ACA.) I can't see how it can happen post-ACA, unless the condition as a practical matter requires services that are entirely outside the scope of coverage.

mjr00 4y ago

I agree. I think the next 5-10 years will see a massive wave of new companies come out of this. There's been so much talent locked up in bigtech for so long. The amount of talent in these companies that have had golden handcuffs forever due to the continual rise of their stock grants is staggering. Now suddenly bigtech stock is down 50%+, and they can't issue enough RSUs to cover the compensation gap. Moreover, there's layoffs coming. All of the sudden these extremely talented people, many of whom have a small fortune in savings due to a decade+ of bigtech stock grants, are unleashed on the wider industry, some with 6-12 months of paid severance. They could easily start up a new business with minimal personal financial risk. Will be interesting times, for sure.

p1mrx 4y ago
On the other hand, it seems most of the low-hanging fruit has been picked over the last couple decades. What is left for a random small business with software talent to do?
- patientplatypus 4y ago
  [dead]
- jemmyw 4y ago
  Plenty of things I'm sure. It seems quite cyclical in that the old products get weighed down by features and stuck, then new ones come along that are slimmer faster and that allows them to explore new ways of working. Its much harder to update the older products. Example: When Jira was the new kid it was all snazzy and sleek and interesting. Over the last few years a lot of alternatives have appeared. Although Atlassian has made some changes, they can't just bring in what makes those products different unless they write a whole new product, and large companies can't make new products. Currently I think we're at or just past a high point. The current lineup of Jira alternatives will probably wittle down, the best ones will get bought, made part of some enterprise lineup, that way of working becomes a standard, they'll get big and bloated and unable to innovate. The cycle will get to a low point and then we'll see another explosion of alternatives. And that's just one niche.
- javajosh 4y ago
  One example. It is my personal belief is that social media is ripe for disruption in ways we have not imagined yet. Clearly centralized, ad-revenue driven psuedo-monopolies are a big problem. I actually believe there is a parallel problem with software engineering that has focused on larger piles of cloud-hosted complexity that has far outstripped the ability of anyone to hold it in their head. These two things are, I believe, deeply intertwined and so the solution will be at both levels too. Of course, I'm not the only one who sees an opportunity here. I love seeing all the ideas in this space; most of them won't work, of course, but that's the nature of experimentation.
  - rchaud 4y ago
    > Clearly centralized, ad-revenue driven psuedo-monopolies are a big problem. Financially, it's the exact opposite of a problem; it's too profitable. There will always be big market for companies that manage to lock up an audience within its walls.
    - javajosh 4y ago
      A big problem for society. The algorithm is bad for people's mental health, and bad for democracy. These are the externalities of that great profitability.
  - csomar 4y ago
    I'm not sure why you got downvoted. I'm bullish on ActivityPub and the next wave of decentralization.
- mjr00 4y ago
  I actually strongly disagree -- the amount of business potential for software that isn't trying to becoming a billion-dollar unicorn is massive, and has been extremely underserved during the past decade as most of the money (and talent) chased after the billion dollar moonshot bets, either in B2C businesses or very generic B2B software (think Atlassian). It's harder to find the business potential because the opportunities are much more closely coupled to optimizing specific processes in specific industries. But if you can find the right niche, the business opportunities are there.
  - harimau777 4y ago
    Isn't the opportunity to make "fuck you money" the motivation for the risk of working as a startup? Without that people are probably better off working at a corp.
    - bruce511 4y ago
      Yes and no. Its helpful to see the word "startup" as meaning two distinct things. The "current" use of the word implies VC capital. As in "I joined a startup and we raised..." However in the past it referred to literally "starting a business". Someone sees a gap in the market, builds a product, and looks to fill that gap one customer at a time. Since there is no incoming capital, it has to be revenue positive, well enough for the owners to survive. This sort of business is (somewhat perjorativly) called a "life style" business. In that it provides salaries to some number of people, and provides a (good?) living. The reasons for starting such a business are numerous, and while maybe some do with the goal of being mega-rich, in reality the successful ones end up being merely "rich". But there are a _lot_ of upsides other than money. I'll offer a few from personal experience, but really they offer any goal you like. A) freedom to work on what you want, when you want, where you want, how you want. Yes, of course you are constrained by actually delivering (or you don't get paid) but the mechanics of delivering are up to you. B) job security. It takes time to get to this point, but once a business is profitable the owner has a job for life. (he is literally the last person to get laid off) [1] C) a lack of corporate bullshit. No endless layers of managers. No endless meetings. If you need a new PC you go buy a new PC. (equally true, if you report directly to the owner, decisions get made quickly. If you need a new PC you only have to convince one person.) D) while on the topic, being employed by a small business has huge benefits as well, but to need to move the income needle for the job security. I could go on but I think you get the point. [1] ironically when getting person credit, like a mortgage, ticking "self employed" leads me to a lower credit score, despite the fact that 40-odd people get laid off before I do :) [2] about 5% of new (bootstrapped) businesses make it to 10 years old. I'm not suggesting this route is easy, but it is desirable.
- ajmurmann 4y ago
  I think there is a huge amount of areas that are less visible to technologists that are underserved. I sometimes think about either partnering or purchasing a small business and just automating the shit out of it. You either become dominant die to the advantage or you start selling the software to competitors. This was mostly spawned by observing a friend's struggles with his property management company while we were on vacation together. Everything they fucked up or for which he had to make phone calls to them could have been triviality automated. I bet there are lots of sectors out there that could be totally disrupted or made more efficient if they got attention from high-caliber developers and UX folks.
deleted 4y ago
[deleted]
whatyesaid 4y ago
Are they really laying off their best people though or just Leetcoders? Also as far as I am aware, only Twitter really thinks it should be a 200 person company or whatever, whereas these companies actually super overhired during the pandemic predicting a bigger long term trend than turned out to be. That's why these layoffs aren't really that big news all in all.
propogandist 4y ago
Many startups that launched in the last several years did not have a proper business model, were not profitable and were reliant on VC money. It was all about growing quickly enough to get to IPO to give early investors liquidity and dump the liability on general public (like Uber). As free/cheap money goes away it should force entrepreneurs to build real businesses rather than VC fueled money pits.
- javajosh 4y ago
  That's the hope!
gofreddygo 4y ago
> the next 5-10 years will see a massive wave of new companies come out of this I want this to be true, but I don't see how. Good talent is still locked up in BigTech. Talent that got freed up was working on things BigTech had no way of make money off of, even long term. On the other hand, SmallTech offers now have a better chance, and seem attractive, to said talent. That must count for something. This round of layoffs is proof that BigTech safety net is a lie. But not enough to push people with dependents to take on the pain and uncertainty that starting up ensues.
- Fuzzwah 4y ago
  The list of things that turned out to be huge after the stale incumbants failed to find a way to make money off it is pretty long.
killjoywashere 4y ago
So far we're looking at ~200,000 layoffs, a far cry from the 1,000,000 laid off in the dot-com bubble. And nowhere close to the capital bonfire of the 2008 housing collapse.

Spivak 4y ago

I think the missing element from “we need fewer moonshots” is that the reason they’re moonshots in the first place is because they’re capital intensive not because the technology has a real story to be an $xbn dollar industry. Like we don’t necessarily notice that any business that employs software developers has to be $5+mil/yr or on the way to it which is not true at all for like a restaurant.

loeg 4y ago

> Your downside is never capped, of course. Surely your downside is capped at zero?

javajosh 4y ago
W2 work feels more stable and secure than startup land. If you worked for Google for 20 years you don't expect to be let go with no notice by an automated system. But that is exactly what happened to thousands of people just now. You kind of expect this kind of thing in startup land. Recent events show this downside is not unique to startups, and can affect any worker anywhere. It's chilling, and it should take some of the glow off of W2 work in comparison to startup work. But like I said, there is a third alternative which is, IMHO, far more fullfilling and grounded anyway, which is bootstrapping and working directly with customers.
- loeg 4y ago
  I don't think this is responsive to my comment.
  - javajosh 4y ago
    Your comment implicitly asserts the faulty premise that downside is purely loss of income, which I implicitly contradicted.
    - loeg 4y ago
      I don't think you even implicitly touched upon what downside might mean in this context, aside from loss of income. Re-reading your comments, I still have no idea what downside you're describing. And certainly nothing explicitly addresses my comment.
- Aunche 4y ago
  > If you worked for Google for 20 years you don't expect to be let go with no notice by an automated system. Why? From the executive's perspective at megacorps like Google, employees are completely replaceable, and even for a megacorp, Google is incredibly scared of discrimination. The safest way to conduct layoffs is to do so completely randomly. > You kind of expect this kind of thing in startup land. No. In startup land, you should expect that there is a good chance that your entire company is dissolved. Your equity is completely worthless. You have no 6 month severance. You have nothing to show for the longer hours you worked besides a very sub-market salary.

varelse 4y ago

[dead]

vkou 4y ago

> Your downside is never capped, of course. What? Unless your work literally drives you to suicide, the cap on the downside is 'You go out and interview until you find another job.' You aren't risking your own money - you're an employee. You get paid for your work.

koof 4y ago
Isn’t it the same for the people “risking” their money? The only “risk” is that they lose their bet, meaning they have to go find a job like the rest of us.
- majormajor 4y ago
  Let's say you have $50k in savings and an offer in hand for Microsoft or a startup idea of your own. If want to work on your idea, but you don't already have connections to tap for immediate VC funding, any work you do on it is earning $0 income while you're still having to pay the bills. Your downside risk is that after X number of months or years, you've lost $Y dollars of your starting savings. If you take the Microsoft offer, your downside risk is that after X number of months or years, you get laid off, and have to look for a new job, but your $50k is still there, and quite possibly a bunch of new savings as well.
  - epicureanideal 4y ago
    Is $50k enough to attempt anything? Serious question.
- rcme 4y ago
  No, it's not the same. An uncapped downside would be something like shorting stock. The price of the stock can be unbounded, and you owe the difference between the current stock and the price you opened your short position. So you can literally lose an unlimited amount of money.
  - koof 4y ago
    Which means going back to work to pay the debt off, just like the rest of us. Got it.

kaashif 4y ago

> Your downside is never capped, of course. Of course your downside is capped. You're never going to wake up one day and owe Microsoft a billion dollars. A real example of uncapped downside is when you sell call options on a stock, or short a stock. You actually can wake up one day to your broker telling you you need to find millions of dollars right now because the market moved against you. And it can get worse and worse, the downside is truly uncapped.

atomicnumber3 4y ago
>You're never going to wake up one day and owe Microsoft a billion dollars. Unless you use Azure, of course. Then you don't even need to wake up to owe them that much.

atomicnumber3 4y ago

Startups will be out of reach of many in the US until we have a much more robust baseline of public services. First and foremost being health insurance of course. I would love to start the kind of lifestyle (or "non-scaling" as you put it) business, but right now it's a complete non-starter for me because getting a health insurance policy for my entire family would be comically expensive. It's even been harder for me interviewing with smaller startups because compared to single people, my insurance premiums are bonkers.

threadweaver34 4y ago
6 months of FAANG severance is better than 2 years of government social safety net, even with a good government.
- mynameisnull 4y ago
  It’s anecdotal but, I’ve personally known multiple high 200-400k a year earners who went bankrupt or near bankrupt over only medical bills. I myself nearly did. The cost of catastrophic situations is still ultimately too high in the US without or with insurance.
  - abdabab 4y ago
    I thought health insurance puts a cap on how much you can get charged. Could you add a little how that can happen?
    - dragonwriter 4y ago
      > I thought health insurance puts a cap on how much you can get charged. Instead of annual out-of-pocket maximums that are mandatory under the ACA and make that unlikely, plans used to have kind of the reverse: lifetime coverage caps that particularly severe conditions could exceed. (This is one of the reasons premiums are higher for superficially similar—e.g., what services are covered and at what cost sharing rule befoee reaching caps—coverage under the ACA.) I can't see how it can happen post-ACA, unless the condition as a practical matter requires services that are entirely outside the scope of coverage.