6 ms·
There’s nothing surprising here. This is a typical cycle for a venture backed technology business. There’s just nothing else to say here other than this is 100
by AndrewKemendo 3y ago
There’s nothing surprising here.
This is a typical cycle for a venture backed technology business. There’s just nothing else to say here other than this is 100% expected outcome if you decide to build a product on venture capital money, which requires an exit and an increasingly large exit to the point where you IPO.
Unless you avoid this structural pathway, you will be 100% guaranteed to do this.
I am unaware of a venture capital funded technology company that has maintained the core of what they do, and the value proposition, but didn’t push most of their money into paying for sales marketing executive compensation and eventually finally, stock buybacks, or other things that directly enrich investors at the cost of employees.
Having had a couple points with Jeff Lawson I believe he’s a good person who wants to do the right thing for the most amount of people and do it ethically, which is why he jumped into this thread. However, he faces the same pressures as everybody else, and so it’s honorable that he is attempting to find ways to mitigate the downside harms of this new direction but at the end of the day the arrow of history is clear.
- refulgentis 3y agoWho is Jeff Lawson and what thread did he jump into?
- nordsieck 3y ago> Who is Jeff Lawson https://www.linkedin.com/in/jeffiel/ https://www.linkedin.com/in/jeffiel/ "CEO and cofounder of Twilio" > and what thread did he jump into? https://news.ycombinator.com/item?id=36383229 https://news.ycombinator.com/item?id=36383229
- deleted 3y ago[deleted]
- louwrentius 3y agoIt’s funny to me that I’m reading this while listening to “Abolish Silicon Valley” by Wendy Liu. I don’t think any CEO can be moral if your primary obligation is “shareholder value”. Or in plain language: making other people more rich at the cost of others. I’m just happy the guy got out when the company didn’t align with his values anymore and he has the means to afford himself a conscience.
- sethammons 3y ago> making other people more rich at the cost of others Not everything is zero sum. There is a reason that when you purchase something both sides say thank you.
- AndrewKemendo 3y agoThe world is 100% legally zero sum unless you can legally appropriate property with no money or any other type of compensation then where is this magical free pie?
- brigadier132 3y agoThe world is trivially not zero sum. If it were zero sum we would all be living worse off than medieval peasants
- rapind 3y agoEvery “win-win” most certainly produces side effects, usually unmeasured, which leads to naive statements like “it’s not zero sum”. We may no longer be peasants (hard to prove), but a large number of extinct species and ecological disasters would like to argue the “not zero sum” point.
- brigadier132 3y agoIf the world were zero sum, that means no new value has been created for humanity, ever. The world population has grown ~22x since 1400s. Are we now splitting our meager peasant loaves of bread 22 ways? Nobody cares about your stupid degrowth ideology that advocates for death and people to be poorer. Just state what you actually are, which is anti-human.
- anon-3988 3y agoWhat he said that "its hard to prove if we are still peasants" is wrong. But you cannot argue that we human have benefitted at the cost of nature? Also, >Nobody cares about your stupid degrowth ideology that advocates for death and people to be poorer. Is also not true. Having a 1km lawn is excess. Flying solo on a private plane to visit an office halfway across the world for 1-2 days every other week is excess. No sane person arguing for this position is claiming that people who can barely find food every day is living in excess and must suffer degrowth. It is the privileged that needs to degrowth and redistribute their excess wealth. Do you really think that the Earth can sustain had every single person on Earth lives like the ultra wealthy? Or even as the middle-class American with single unit home in the suburb? We would probably annihilate almost all of "interesting" flora/fauna and be left with chickens and cows if that at all. Maybe that's a perfectly reasonable trade? AFAIK humanity must take priority over every other being AFAIC.
- el_nahual 3y agoHow do stock buybacks enrich investors at the cost of employees? They are (almost identical) to a dividend, which yes, enriches shareholders but a) that's kind of the point of a business b) especially in startups employees are often shareholders as well, and meaningfully so c) even if they weren't, how do they hurt employees?
- reaperman 3y agoStock buybacks represent excess profits which otherwise could be used for employee bonuses or salary raises. There's a lot of room for argument here, because it's not clear if in the absence of stock buybacks, that excess profits wouldn't go more directly into the pockets of the owners via direct capital withdrawal. But it's not an entirely invalid viewpoint. There really is a lot of room for reasonable minds to disagree.
- VirusNewbie 3y agoStock price increase benefits workers quite a bit though.
- ethbr0 3y agoAssuming workers own stock.
- VirusNewbie 3y agoWe are talking about Twilio specifically.
- kelnos 3y agoWhich they do. Twilio's equity comp was fairly generous, at least for a time, and I believe all employees had equity as some percentage of their compensation. In addition, Twilio offered an ESPP that all employees could take advantage of. (Full disclosure: former Twilio employee and current Twilio stockholder.)
- 3y ago
- jmacd 3y agoVenture capital has been long gone from Twilio at this point. It's a public company and no matter what the history of how the company raised the capital to build its business initially, it is simply acting as a public company now. Had they chosen to stay private and continue to use venture capital, they may not have had to reposition the way they have. See: Stripe. Plenty of privately owned businesses IPO and become subject to the same forces. Less than 50% of publicly listed companies are VC backed.
- dheera 3y agoI think they were saying that a investor-backed company only has a pathway to either (a) acquisition, likely by a public company, or (b) going public. Investors need (a) or (b) to get a payout, that's their business model, that's the reason they invest in your company. If you avoid the venture investor route, you can avoid both outcomes (a) and (b), keep the company privately owned, just stay awesome and customer-friendly forever, and avoid being forced to eventually prioritize shareholders over customers.
- TheRealDunkirk 3y agoAll the perfectly-successful, privately-owned companies seem to have a price at which they eventually sell out to a soulless conglomerate, q.v. StackOverflow and GitHub.
- jmacd 3y agoYes, every business needs to be recapitalized at some point. There is an entire industry that focuses on finding the non-public companies that OP mentions. It's called Private Equity and they buy these companies when they have come to the end of their natural cash flowing life. The owners have either (at great pain) developed a sufficient capital base and succession plan to provide continuity (which would require significant ongoing investment in R&D out of cash flow in order to develop competitive products), or they must find a plan for the business. Going public solves this problem for them, so does selling privately. Neither option really eliminates the requirement to remain competitive.
- satvikpendem 3y agoBut...Twilio is a public company, VC shareholders have already sold their stock, so most of what you say isn't applicable, unless you mean to imply that a public company also acts similarly to a VC backed one.
- AndrewKemendo 3y agoIt likely wouldn’t be publicly traded without VC The public market is the idealized landing spot for VC and in fact is usually the default and desired pathway for all institutionally funded companies To the extent that startup boards choose or heavily push a specific category of CFOs in order to drive company structure that would lead to an IPO. Go look at the employee history of a lot of startups and you’ll see they either changed CFOs or got one for the first time, after a massive B but certainly not long after a C round.
- activitypea 3y agoWhat's the difference? You still have to find a way to maximize profit at the cost of pretty much everything else. The only difference is that VCs are more willing to play the long game, whereas the stock market wants better results year over year.
- vikramkr 3y agoI notice there's always this impulse to blame VCs for how startup businesses evolve but like, founders want to make money too, and plenty of founders dream of building a huge company with a massive exit or ipo etc etc and push for that as a company without vcs needing to force it
- deleted 3y ago[deleted]
- FrenchTouch42 3y agoWhat about Expensify?
- kelnos 3y ago> stock buybacks, or other things that directly enrich investors at the cost of employees As a former Twilio employee (and current stockholder), I have to disagree with this. Stock buybacks generally raise the stock price (or at least keep it from falling). Up until 2020 or so, Twilio was fairly generous with equity comp (at least for some of us; obviously I can't speak for all employees), so employees do indeed benefit from stock buybacks. I suppose you could make the argument that, as a company spends cash to buy back stock, base salary raises get worse, since the company has less cash on hand to fund those raises. But I think you'd need evidence to back that up.
- JDEW 3y agoFollowing of the “Uber for x” trend of the 10s, we really need an “X but without VC pressure” trend for the 20s…
- djvdq 3y agoThere already are such companies, but they aren't that visible, because they don't have VC money to burn in order to grow, so they have to do it organically, which usually means slower.