6 ms·

The "macroeconomic environment" is the evaporation of available VC funding because higher interest rates provide more lucrative investments elsewhere.

runnerup 4y ago
Why would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale. Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.
- gretch 4y ago
  Because their income comes from advertising. Because the economy sucks in general, companies in all industries are being more careful with where they spend their marketing budget. You can see this reflected in the revenue of other advertising companies as well such as google and meta.
  - aaomidi 4y ago
    https://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... https://www.macrotrends.net/stocks/charts/META/meta-platforms/revenue https://www.macrotrends.net/stocks/charts/META/meta-platform... Is it?
    - gretch 4y ago
      uh yeah it literally is? click into your own links? Google has their 3rd worst quarter for YoY Quarterly growth out of the last 12 years. Facebook has 3 consecutive quarters of negative yoy growth
      - deleted 4y ago
        [deleted]
      - TylerE 4y ago
        So, Google still grew, and I’m not convinced the performance of Facebook says anything except that people are tieing of Facebook (and techbros like Zuckerberg)
      - aaomidi 4y ago
        Right so you’re talking about the first and second derivative rather than the value.
  - slg 4y ago
    >Because the economy sucks in general But to be clear the economy does not currently "suck in general" hence the confusion over blaming "the current macroeconomic environment". These companies (including advertisers) are trying to get out in front of an economic downturn that hasn't yet materialized. And if it does materialize, all these companies will have a hand in causing it due to their reduced spending and layoffs which we know has potential to cause an economic slowdown.
    - Kye 4y ago
      Belief in a coming downturn can cause one just as easily as some more tangible factor. Intro econ was a long time ago, but I think this is one of those It Is Known type things.
    - Supermancho 4y ago
      > But to be clear the economy does not currently "suck in general" To be clear, what you say has little effect on reality. The decreased discretionary spending, housing market approaching a complete freeze, layoffs (those not being publicized in the news), inflation impacting every vertical, and the various shuttering businesses (survived covid, but died anyway), are what makes it "suck". This is not quantitative, but it is the sentiment.
      - slg 4y ago
        >This is not quantitative, but it is the sentiment. I'm looking forward to our first "just bad vibes" recession in which all the quantitative numbers behind what you describe are mostly fine, but we are just going to "sentiment" ourselves into a recession anyway.
- jcfrei 4y ago
  Amazon (like every other big company) has raised billions with bonds that they will eventually need to refinance at higher rates.
- louison11 4y ago
  If they laid off 400 employees, it’s probably because they could afford to (nice way of saying: they were not necessary to keep the business functioning), likely a bet on innovation. As the economy struggles and the prospects of such innovation happening seem far, it makes sense that even a big company like Amazon may choose to cut their losses.
- coredog64 4y ago
  Amazon needs to provide attractive returns to shareholders just like a unicorn. If you $AMZN is not up 5% YoY, then sell it and park it in a 6 month T-bill or I series bond. And as holder of $AMZN, I can tell you that they are definitely not up 5% YoY, let alone the 15% that they generally try to get to.
  - TylerE 4y ago
    MYbe it’s time for them to realize there is a point where you have all of the customers, and it’s ok to be boring and just pay a dividend instead of constant growthgrowthgrowthgrowth.
- rossdavidh 4y ago
  The owner of Amazon was the prime beneficiary of VC funding to tech companies, because oftentimes a large chunk of that went for AWS. In that gold rush, Amazon was the one selling shovels. The gold rush is now over, for a while at least, so Amazon is probably seeing a lot of their big AWS customers cutting back, or in some cases disappearing. Essentially, AWS is in the same position as SVBank. If your money comes from lots of tech startups that don't want to have their own infrastructure, and didn't used to need to worry about cutting costs, but now they do, then you can see big "outflows" (except unlike SVB it's more decreasing revenue).
  - fma 4y ago
    Why do you say "probably seeing a lot of their big AWS vueomters cutting back" when it can be verified. AWS grew at 20% in Q4 2022. Grew less than forecasted but still not "disappearing". https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022.html https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022....
jacooper 4y ago
But Twitch is owned by Amazon? They don't need VCs?
- re-thc 4y ago
  The users that use and pay Twitch do? (Not VC but capital in general)
- umeshunni 4y ago
  Their source of revenue (i.e. advertisers) are often startups and DTC brands that were kept alive by VC money.
  - djent 4y ago
    I have never seen an advertisement for a startup on Twitch.
    - TylerE 4y ago
      You mean they aren’t flooded with meal kit and mattress ads like every other form of media?
      - AraceliHarker 4y ago
        Small businesses like startups would rather pay streamers directly to promote their products than advertise on Twitch.
ryanSrich 4y ago
Huh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?
- vineyardmike 4y ago
  Bonds are essentially the "free" rate of return. Assuming you trust the government, there's no reason to earn anything less. That means that everything needs to return something above the bond rate. That goes for debt too, why would you write a riskier loan to someone at a lower rate than the government? LPs looking to put their money somewhere (or many somewheres) will reconsider as rates change. It might not be "vc or bond" but it will cause every part of the financial system to re-calibrate. Maybe a rich person takes out debt against their assets to invest in a VC fund in 2020, but now that the rates rose and stock values fell, the interest rate on that (or comparable) debt is too expensive. For example, Elon's loans for twitter range from 6% to 11%, and would likely be higher if written today. TLDR Interest rates don't need to compare 1:1 to a VC fund's returns to have an affect on the decision by LPs to invest in it.

runnerup 4y ago

Why would Amazon (owner of twitch) care about that? They have tons of cash and revenues are still quite strong. AMZN isn’t looking for VC funding, they are the whale. Net income is hard to judge — yes it’s down but not only is Amazon famous for reinvesting all profits and claiming $0 of net earnings, but they’ve also been writing off a lot of one time charges for severances related to these layoffs.

gretch 4y ago
Because their income comes from advertising. Because the economy sucks in general, companies in all industries are being more careful with where they spend their marketing budget. You can see this reflected in the revenue of other advertising companies as well such as google and meta.
- aaomidi 4y ago
  https://www.macrotrends.net/stocks/charts/GOOG/alphabet/revenue https://www.macrotrends.net/stocks/charts/GOOG/alphabet/reve... https://www.macrotrends.net/stocks/charts/META/meta-platforms/revenue https://www.macrotrends.net/stocks/charts/META/meta-platform... Is it?
  - gretch 4y ago
    uh yeah it literally is? click into your own links? Google has their 3rd worst quarter for YoY Quarterly growth out of the last 12 years. Facebook has 3 consecutive quarters of negative yoy growth
    - deleted 4y ago
      [deleted]
    - TylerE 4y ago
      So, Google still grew, and I’m not convinced the performance of Facebook says anything except that people are tieing of Facebook (and techbros like Zuckerberg)
    - aaomidi 4y ago
      Right so you’re talking about the first and second derivative rather than the value.
- slg 4y ago
  >Because the economy sucks in general But to be clear the economy does not currently "suck in general" hence the confusion over blaming "the current macroeconomic environment". These companies (including advertisers) are trying to get out in front of an economic downturn that hasn't yet materialized. And if it does materialize, all these companies will have a hand in causing it due to their reduced spending and layoffs which we know has potential to cause an economic slowdown.
  - Kye 4y ago
    Belief in a coming downturn can cause one just as easily as some more tangible factor. Intro econ was a long time ago, but I think this is one of those It Is Known type things.
  - Supermancho 4y ago
    > But to be clear the economy does not currently "suck in general" To be clear, what you say has little effect on reality. The decreased discretionary spending, housing market approaching a complete freeze, layoffs (those not being publicized in the news), inflation impacting every vertical, and the various shuttering businesses (survived covid, but died anyway), are what makes it "suck". This is not quantitative, but it is the sentiment.
    - slg 4y ago
      >This is not quantitative, but it is the sentiment. I'm looking forward to our first "just bad vibes" recession in which all the quantitative numbers behind what you describe are mostly fine, but we are just going to "sentiment" ourselves into a recession anyway.
jcfrei 4y ago
Amazon (like every other big company) has raised billions with bonds that they will eventually need to refinance at higher rates.
louison11 4y ago
If they laid off 400 employees, it’s probably because they could afford to (nice way of saying: they were not necessary to keep the business functioning), likely a bet on innovation. As the economy struggles and the prospects of such innovation happening seem far, it makes sense that even a big company like Amazon may choose to cut their losses.
coredog64 4y ago
Amazon needs to provide attractive returns to shareholders just like a unicorn. If you $AMZN is not up 5% YoY, then sell it and park it in a 6 month T-bill or I series bond. And as holder of $AMZN, I can tell you that they are definitely not up 5% YoY, let alone the 15% that they generally try to get to.
- TylerE 4y ago
  MYbe it’s time for them to realize there is a point where you have all of the customers, and it’s ok to be boring and just pay a dividend instead of constant growthgrowthgrowthgrowth.
rossdavidh 4y ago
The owner of Amazon was the prime beneficiary of VC funding to tech companies, because oftentimes a large chunk of that went for AWS. In that gold rush, Amazon was the one selling shovels. The gold rush is now over, for a while at least, so Amazon is probably seeing a lot of their big AWS customers cutting back, or in some cases disappearing. Essentially, AWS is in the same position as SVBank. If your money comes from lots of tech startups that don't want to have their own infrastructure, and didn't used to need to worry about cutting costs, but now they do, then you can see big "outflows" (except unlike SVB it's more decreasing revenue).
- fma 4y ago
  Why do you say "probably seeing a lot of their big AWS vueomters cutting back" when it can be verified. AWS grew at 20% in Q4 2022. Grew less than forecasted but still not "disappearing". https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022.html https://www.cnbc.com/2023/02/02/amazon-aws-earnings-q4-2022....

jacooper 4y ago

But Twitch is owned by Amazon? They don't need VCs?

re-thc 4y ago
The users that use and pay Twitch do? (Not VC but capital in general)
umeshunni 4y ago
Their source of revenue (i.e. advertisers) are often startups and DTC brands that were kept alive by VC money.
- djent 4y ago
  I have never seen an advertisement for a startup on Twitch.
  - TylerE 4y ago
    You mean they aren’t flooded with meal kit and mattress ads like every other form of media?
    - AraceliHarker 4y ago
      Small businesses like startups would rather pay streamers directly to promote their products than advertise on Twitch.

ryanSrich 4y ago

Huh? LPs don’t put money into a VC fund for 4% returns that they can get on bonds. They do it mostly out of diversification. Usually looking for 10-100x. Why would that change?

vineyardmike 4y ago
Bonds are essentially the "free" rate of return. Assuming you trust the government, there's no reason to earn anything less. That means that everything needs to return something above the bond rate. That goes for debt too, why would you write a riskier loan to someone at a lower rate than the government? LPs looking to put their money somewhere (or many somewheres) will reconsider as rates change. It might not be "vc or bond" but it will cause every part of the financial system to re-calibrate. Maybe a rich person takes out debt against their assets to invest in a VC fund in 2020, but now that the rates rose and stock values fell, the interest rate on that (or comparable) debt is too expensive. For example, Elon's loans for twitter range from 6% to 11%, and would likely be higher if written today. TLDR Interest rates don't need to compare 1:1 to a VC fund's returns to have an affect on the decision by LPs to invest in it.