3 ms·

This might be true of a lot of companies, but then you look at others like Waymo where the revenue is pure projection, the relationship between staff numbers an

This might be true of a lot of companies, but then you look at others like Waymo where the revenue is pure projection, the relationship between staff numbers and having a workable product unknown and the pile of cash available to fund it not requiring any borrowing, and it looks suspiciously like trend following (with maybe a bit of actually self driving cars are further off than we thought but, hey, not our mistake because everyone else is doing layoffs too thrown in)...

grey-area 4y ago
It’s not trend following, it is genuine existential fear, particularly someone like waymo - With 0% rates money is free and you can take forever to make a profit, nobody cares, just borrow more money if you run out. With 5% rates money is expensive and you have say 2 years to make a profit or everyone loses their job and investors lose their funds. This doesn’t really apply to massive companies like google or MS of course but it does to anyone smaller without a cash cushion (the majority). Now job cuts may or may not be the right decision but they are triggered by very real and urgent fears about plummeting earnings.
- notahacker 4y ago
  I picked Waymo because unlike some startups losing staff obviously isn't the route to profitability for it, and it started off as a Google-branded project backed by the near unlimited cash reserves of Google. If they're in a position where they're not confident of getting further support from that source, I don't think IRR calculations over a 2 year time horizon are the main factor there.
  - grey-area 4y ago
    IRR calculations, profit, value actually matter again because the risk free rate has dramatically gone up and will stay up, after a decade where they didn't matter. Cheap money has distorted the entire market and conditioned a generation of investors to expect unreasonable returns and to ignore the price, revenue, profit and loss.
  - MomoXenosaga 4y ago
    The route to profitability doesn't exist and investors are starting to notice.

grey-area 4y ago

It’s not trend following, it is genuine existential fear, particularly someone like waymo - With 0% rates money is free and you can take forever to make a profit, nobody cares, just borrow more money if you run out. With 5% rates money is expensive and you have say 2 years to make a profit or everyone loses their job and investors lose their funds. This doesn’t really apply to massive companies like google or MS of course but it does to anyone smaller without a cash cushion (the majority). Now job cuts may or may not be the right decision but they are triggered by very real and urgent fears about plummeting earnings.

notahacker 4y ago
I picked Waymo because unlike some startups losing staff obviously isn't the route to profitability for it, and it started off as a Google-branded project backed by the near unlimited cash reserves of Google. If they're in a position where they're not confident of getting further support from that source, I don't think IRR calculations over a 2 year time horizon are the main factor there.
- grey-area 4y ago
  IRR calculations, profit, value actually matter again because the risk free rate has dramatically gone up and will stay up, after a decade where they didn't matter. Cheap money has distorted the entire market and conditioned a generation of investors to expect unreasonable returns and to ignore the price, revenue, profit and loss.
- MomoXenosaga 4y ago
  The route to profitability doesn't exist and investors are starting to notice.