6 ms·

The Unicorn Boom Is Over, and Startups Are Getting Desperate

42 points by kjhughes 2y ago

kjhughes 2y ago
https://archive.ph/QxWHG https://archive.ph/QxWHG
anovikov 2y ago
Isn't it expected? With the high interest rates, how can insane valuations be kept? Also it means that ~15% of them still go public and that's good stats. Many others will just keep existing as going concerns, bringing profits to investors. In perverted mind of a VC that qualifies as failure, but it really isn't.
- insane_dreamer 2y ago
  > In 2021 more than 354 companies received billion-dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs. That's 1.5% going public, not 15%.
jmclnx 2y ago
That is fine by me. What benefit have we gotten from these Unicorn other than enriching the founders and lenders. I have seen no real benefit from Silicon Valley for decades. Seems at this point, Silicon Valley is acting kind of like a Ponzi Scheme.
- cft 2y ago
  Do you think that LLMs are not a benefit? Smartphones? Electric cars?
  - toomuchtodo 2y ago
    No, I think there was little benefit besides overinflated tech salaries and founders cashing out in tech unicorns. Smartphones are products of Big Tech, EVs a handful of startups (Tesla, Rivian, Lucid). Most recently, Silicon Valley is a grift ecosystem (fueled by zero interest rate policy) masquerading as innovation and a load bearing component of the economy. We can do without unicorns, the world will be better off for it (and legit value will need to be demonstrated vs fairy tale valuations). (VC as an asset class has poor returns, VC funds make their fees throwing darts pretending to be thought leaders when it’s mostly luck, etc)
    - ryandrake 2y ago
      > (VC as an asset class has poor returns, VC funds make their fees throwing darts pretending to be thought leaders when it’s mostly luck, etc) It's like the world declaring someone World's Greatest Coin Flipper after and not before that person flips a coin 12 heads in a row.
      - toomuchtodo 2y ago
        https://longbets.org/362/ https://longbets.org/362/
    - relaxing 2y ago
      EVs are the product of big auto manufacturers as well.
      - toomuchtodo 2y ago
        Yes, but they had to be dragged there by Tesla and BYD. https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
        relaxing 2y ago
        My recollection is the Leaf and Volt were selling in numbers while the Tesla Roadster was a less practical, low volume novelty.
        toomuchtodo 2y ago
        The Leaf and Volt were compliance cars. The Tesla Roadster was “make it work” in “make it work, make it right, make it fast.” Note Nissan and GM’s EV offerings today, considering how long they had since then. (early TSLA investor after a ride in the Roadster)
        relaxing 2y ago
  - insane_dreamer 2y ago
    Those did not emerge from these unicorns, except maybe OpenAI. (Tesla was already public prior to this. Smartphones didn't come from a VC-backed startup.)
    - machine_ghost 2y ago
      >Smartphones didn't come from a VC-backed startup. This isn't entirely correct: both Palm and Apple (the creators of the smart phone) were originally venture-backed.
      - insane_dreamer 2y ago
        Yes, but by the time Apple created the smartphone it had long been a large public company. And Palm never created a successful smartphone.
      - squiffsquiff 2y ago
        Apple did NOT create the smartphone. When the iPhone released in 2007 it was a feature phone- no app store and famously missing featured like copy and paste. Besides Palm who you have mentioned there was Symbian and Windows Mobile which each had third party after market apps available.
        jitl 2y ago
        Apple & Android took the smartphone from something that belonged in a businessman’s belt holster to something that lives in the pocket of every person on the planet who can afford it, from niche to ubiquity. For sure they did not invent “phone with store”, but they did create or strongly participate in a complete change of the market that left the earlier players - Windows Mobile, BlackBerry, Nokia, etc buried six feet under.
        evanelias 2y ago
        Indeed Apple did not invent the concept of the smartphone. But by all accounts the first iPhone was absolutely considered a smartphone, based on its superior hardware, advanced operating system, and fully-functional web browser. You seem to be equating "smartphone" with "has third party apps", but that isn't the defining characteristic of "smartphone" based on any common usage. Besides, when the iOS App Store was launched ~1 year later, the original iPhone was able to use it.
  - backpackviolet 2y ago
    No, obviously not. Smartphones are a mixed blessing, I'm not sure we're better off with the little distraction machines, but both them and electric cars were things that could plausibly have developed more slowly, deliberately and thoughtfully over time without being "juiced" by distorted market incentives. They could have developed by companies simply evolving phones and cars over time.
    - bee_rider 2y ago
      They are quite useful as GPS/camera/general info lookup devices. But virtue of having web browsers they also channel social media. Having social media come in through our phones does make it worse, but it was already bad even on laptops. (Writing this on a social media site using my phone is kind of funny).
  - analog31 2y ago
    Electric cars, and to a more limited extent, smartphones are both beneficiaries of the development of batteries and rare earth magnets. Smartphones, from the dull but vital investment in wireless infrastructure. This also explains why the boom in e-bikes waited until the past few years, despite the level of demand that would have been obvious to anybody, and the minimal support tech needed to make them work.
  - taurknaut 2y ago
    Smartphones at least are absolutely crippled by being locked down by user-hostile app stores and rent schemes. Instead of uplifting us, they've made us angry crackheads. I think the valley is a risk to humanity's survival at this point. LLMs and electric cars simply have zero impact on my life, and I imagine that other people would have had few issues coming up with the latter.
    - trainsarebetter 2y ago
      Agree with your first point, but Ev’s are starting to have a impact on local air quality… just because you don’t have one Dosent mean you don’t benefit
- CrossVR 2y ago
  Yeah I don't think I can take much more disruption. I'd like some stability more than anything right now.
netbioserror 2y ago
Maybe because the products suck and there are very few business models for software? I'm gonna focus on the software product segment, and my evaluation might be flawed, but I think that software is an inherent race to the bottom for three important reasons: 1) Dependence on proprietary software is at best a short-term support boon, and in the majority of cases a crippling liability when the vendor changes support terms or goes under (personal experience talking). 2) Open source software is a slow but inevitable creep towards feature-matching and quality that has borne ample fruit already. 3) As ephemeral information with near-zero material cost other than labor, software finds most low-hanging fruit quickly, while higher-hanging fruit attract the formation of non-profit foundations to continue development; there just aren't many more interesting software products to offer. Working business models in the tech industry seem to revolve around the provisioning of hardware because buying software just isn't an appealing proposition to customers in most cases. Sure, LLMs are interesting software, but they're a perfect demonstration: Open source LLMs already exist and gather huge momentum when released; the field is still so new that novel and efficient solutions are not the exclusive realm of proprietary research; and because of these factors, business models can't revolve around interesting model capabilities so much as provisioning the hardware they run on.
- deleted 2y ago
  [deleted]
- Flatcircle 2y ago
  This comment should be its own HN post. For some reason it hit me like a ton of bricks. So true
- jnwatson 2y ago
  There are plenty of B2B opportunities where it just doesn't make sense for an open source competitor to emerge. There are plenty of hobbyist programmers willing to work on operating systems. Accounting systems? Way fewer. International export compliance? Zero. There is plenty of opportunity in boring, unsexy niches. We have enough CRMs and Jira clones though.
  - 2y ago
deleted 2y ago
[deleted]
k310 2y ago
[flagged]
csours 2y ago
As the big players enshit themselves, my feeling that there is no such thing as a "tech valuation" or "tech multiple" grows.
deleted 2y ago
[deleted]
rvz 2y ago
Quite a magnificent prediction. [0] Those valuations were never going to last. > Due to the abundance of companies floating on the markets, This decade will introduce a long awaited tech crash that will reset and purge those companies unable to turn a profit. It will get harder for startups to seek capital since most of FAANG and other established companies with strong portfolios will move into novel industries that will invade their market share. So hardly surprising. [0] https://news.ycombinator.com/item?id=21926473 https://news.ycombinator.com/item?id=21926473
davidw 2y ago
Too many people high on their own supply. I would gladly work for less money for a small company doing something valuable in the real world with realistic ideas about steady, healthy growth. They're tough to find though.
deleted 2y ago
[deleted]

42 points by kjhughes 2y ago

https://archive.ph/QxWHG https://archive.ph/QxWHG

Isn't it expected? With the high interest rates, how can insane valuations be kept? Also it means that ~15% of them still go public and that's good stats. Many others will just keep existing as going concerns, bringing profits to investors. In perverted mind of a VC that qualifies as failure, but it really isn't.

insane_dreamer 2y ago
> In 2021 more than 354 companies received billion-dollar valuations, thus achieving unicorn status. Only six of them have since held IPOs. That's 1.5% going public, not 15%.

jmclnx 2y ago

That is fine by me. What benefit have we gotten from these Unicorn other than enriching the founders and lenders. I have seen no real benefit from Silicon Valley for decades. Seems at this point, Silicon Valley is acting kind of like a Ponzi Scheme.

cft 2y ago
Do you think that LLMs are not a benefit? Smartphones? Electric cars?
- toomuchtodo 2y ago
  No, I think there was little benefit besides overinflated tech salaries and founders cashing out in tech unicorns. Smartphones are products of Big Tech, EVs a handful of startups (Tesla, Rivian, Lucid). Most recently, Silicon Valley is a grift ecosystem (fueled by zero interest rate policy) masquerading as innovation and a load bearing component of the economy. We can do without unicorns, the world will be better off for it (and legit value will need to be demonstrated vs fairy tale valuations). (VC as an asset class has poor returns, VC funds make their fees throwing darts pretending to be thought leaders when it’s mostly luck, etc)
  - ryandrake 2y ago
    > (VC as an asset class has poor returns, VC funds make their fees throwing darts pretending to be thought leaders when it’s mostly luck, etc) It's like the world declaring someone World's Greatest Coin Flipper after and not before that person flips a coin 12 heads in a row.
    - toomuchtodo 2y ago
      https://longbets.org/362/ https://longbets.org/362/
  - relaxing 2y ago
    EVs are the product of big auto manufacturers as well.
    - toomuchtodo 2y ago
      Yes, but they had to be dragged there by Tesla and BYD. https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma
      - relaxing 2y ago
        My recollection is the Leaf and Volt were selling in numbers while the Tesla Roadster was a less practical, low volume novelty.
        toomuchtodo 2y ago
        The Leaf and Volt were compliance cars. The Tesla Roadster was “make it work” in “make it work, make it right, make it fast.” Note Nissan and GM’s EV offerings today, considering how long they had since then. (early TSLA investor after a ride in the Roadster)
        relaxing 2y ago
- insane_dreamer 2y ago
  Those did not emerge from these unicorns, except maybe OpenAI. (Tesla was already public prior to this. Smartphones didn't come from a VC-backed startup.)
  - machine_ghost 2y ago
    >Smartphones didn't come from a VC-backed startup. This isn't entirely correct: both Palm and Apple (the creators of the smart phone) were originally venture-backed.
    - insane_dreamer 2y ago
      Yes, but by the time Apple created the smartphone it had long been a large public company. And Palm never created a successful smartphone.
    - squiffsquiff 2y ago
      Apple did NOT create the smartphone. When the iPhone released in 2007 it was a feature phone- no app store and famously missing featured like copy and paste. Besides Palm who you have mentioned there was Symbian and Windows Mobile which each had third party after market apps available.
      - jitl 2y ago
        Apple & Android took the smartphone from something that belonged in a businessman’s belt holster to something that lives in the pocket of every person on the planet who can afford it, from niche to ubiquity. For sure they did not invent “phone with store”, but they did create or strongly participate in a complete change of the market that left the earlier players - Windows Mobile, BlackBerry, Nokia, etc buried six feet under.
      - evanelias 2y ago
        Indeed Apple did not invent the concept of the smartphone. But by all accounts the first iPhone was absolutely considered a smartphone, based on its superior hardware, advanced operating system, and fully-functional web browser. You seem to be equating "smartphone" with "has third party apps", but that isn't the defining characteristic of "smartphone" based on any common usage. Besides, when the iOS App Store was launched ~1 year later, the original iPhone was able to use it.
- backpackviolet 2y ago
  No, obviously not. Smartphones are a mixed blessing, I'm not sure we're better off with the little distraction machines, but both them and electric cars were things that could plausibly have developed more slowly, deliberately and thoughtfully over time without being "juiced" by distorted market incentives. They could have developed by companies simply evolving phones and cars over time.
  - bee_rider 2y ago
    They are quite useful as GPS/camera/general info lookup devices. But virtue of having web browsers they also channel social media. Having social media come in through our phones does make it worse, but it was already bad even on laptops. (Writing this on a social media site using my phone is kind of funny).
- analog31 2y ago
  Electric cars, and to a more limited extent, smartphones are both beneficiaries of the development of batteries and rare earth magnets. Smartphones, from the dull but vital investment in wireless infrastructure. This also explains why the boom in e-bikes waited until the past few years, despite the level of demand that would have been obvious to anybody, and the minimal support tech needed to make them work.
- taurknaut 2y ago
  Smartphones at least are absolutely crippled by being locked down by user-hostile app stores and rent schemes. Instead of uplifting us, they've made us angry crackheads. I think the valley is a risk to humanity's survival at this point. LLMs and electric cars simply have zero impact on my life, and I imagine that other people would have had few issues coming up with the latter.
  - trainsarebetter 2y ago
    Agree with your first point, but Ev’s are starting to have a impact on local air quality… just because you don’t have one Dosent mean you don’t benefit
CrossVR 2y ago
Yeah I don't think I can take much more disruption. I'd like some stability more than anything right now.

netbioserror 2y ago

Maybe because the products suck and there are very few business models for software? I'm gonna focus on the software product segment, and my evaluation might be flawed, but I think that software is an inherent race to the bottom for three important reasons: 1) Dependence on proprietary software is at best a short-term support boon, and in the majority of cases a crippling liability when the vendor changes support terms or goes under (personal experience talking). 2) Open source software is a slow but inevitable creep towards feature-matching and quality that has borne ample fruit already. 3) As ephemeral information with near-zero material cost other than labor, software finds most low-hanging fruit quickly, while higher-hanging fruit attract the formation of non-profit foundations to continue development; there just aren't many more interesting software products to offer. Working business models in the tech industry seem to revolve around the provisioning of hardware because buying software just isn't an appealing proposition to customers in most cases. Sure, LLMs are interesting software, but they're a perfect demonstration: Open source LLMs already exist and gather huge momentum when released; the field is still so new that novel and efficient solutions are not the exclusive realm of proprietary research; and because of these factors, business models can't revolve around interesting model capabilities so much as provisioning the hardware they run on.

deleted 2y ago
[deleted]
Flatcircle 2y ago
This comment should be its own HN post. For some reason it hit me like a ton of bricks. So true
jnwatson 2y ago
There are plenty of B2B opportunities where it just doesn't make sense for an open source competitor to emerge. There are plenty of hobbyist programmers willing to work on operating systems. Accounting systems? Way fewer. International export compliance? Zero. There is plenty of opportunity in boring, unsexy niches. We have enough CRMs and Jira clones though.
- 2y ago

deleted 2y ago

[deleted]

k310 2y ago

[flagged]

csours 2y ago

As the big players enshit themselves, my feeling that there is no such thing as a "tech valuation" or "tech multiple" grows.

deleted 2y ago

[deleted]

rvz 2y ago

Quite a magnificent prediction. [0] Those valuations were never going to last. > Due to the abundance of companies floating on the markets, This decade will introduce a long awaited tech crash that will reset and purge those companies unable to turn a profit. It will get harder for startups to seek capital since most of FAANG and other established companies with strong portfolios will move into novel industries that will invade their market share. So hardly surprising. [0] https://news.ycombinator.com/item?id=21926473 https://news.ycombinator.com/item?id=21926473

davidw 2y ago

Too many people high on their own supply. I would gladly work for less money for a small company doing something valuable in the real world with realistic ideas about steady, healthy growth. They're tough to find though.

deleted 2y ago

[deleted]