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Comment by 8ytecoder | Hacker News Reader

The long waited startup crash is happening but with a clever camouflage. None of the executives would ever have to admit their product sucked. They’ll simply blame it on the market. It’s employees who’ll face the worst. I hate the VC startup culture even more now.

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I don't think you can tell whether something is a crash, a down turn, or just some companies using C-19 as a convenient cover to cut some dead wood until it's over and you can see the aftermath. This could be the beginning of a huge swath of staff cuts across the whole of tech or it could be a tiny bit of bad news. Shouting about how the sky is falling certainly isn't helpful without more data to back up the claim.

In most cases it is not that their product sucked but rather it isn’t mission critical enough.

It is just a vitamin compared to other things companies/people are paying for. Nothing wrong with being a vitamin (you can be vastly successful) but it’s the first expense that is going to get cut in a recession.

Opendoor was trying to play real estate market maker. This is easy money during an expansionary upswing, and a dangerous game to be in near the end of the credit cycle (a phrase used elsewhere in the capital markets you might apply here: "Picking up nickels in front of a steamroller"); you could suddenly be holding an enormous amount of assets on your books you can't afford the carrying costs for and have to unload them at fire sale prices.

There are some business models that are attractive when capital is cheap, but not so great when the tide goes out and you suddenly have to be a real business, because capital is no longer freely available. I would propose that this is different than the discretionary businesses you describe, that are sustainable outside of extraordinary economic circumstances.

I wonder why this is a problem. Maybe our problem is with the assumption that companies should last forever in the first place. If it was not so difficult and stressful to change jobs, I think it would be better if more companies only existed for as long as they were useful/initiative, but when the steam runs out they are liquidated and everyone can walk away happily.

Anything that would make transitions between roles easier for employees during destruction of orgs sounds like good policy to support economic dynamism. A convo for another thread.

These things include universal health care, decent unemployment benefits, job retraining, child care, all things that business people hate because they need to be paid (usually from taxes).

Not only because they need to be paid but also because they give leverage to the employee.

You can see this in action with the healthcare system in the US, being dependent on your employer for healthcare gives them a huge leverage over an employee, business (on average) will always fight against policies that remove their leverage towards a more equal field.

Sorry but stupid question: why would opendoor need ever rising prices any more than a regular market maker? They just lower their bid/asks.

It’s not a pricing issue, it’s a liquidity issue. Same reason the Fed has stepped into everything except equities. Illiquidity can quickly lead to insolvency.

Yeah but there are market makers on the stock market that deal in illiquid securities, and somehow manage not to die out either.

Reserves and risk/inventory management.

I don't feel like my understanding has changed.

well, most tech companies are non-essential by nature. There are lots of companies that are only feasible in a bull market. There are lots of product people can simply go without in most industries.

Tech just has more non-essential, nice-to-have companies than other industries.

Which industry is not a technology industry according to you? And which companies would survive another century without becoming a technology company?

There are lo-tech spaces, and a great many which are not, or avoid high technology, which is what most people. mean by "tech sector", if not the even narrower band of "high information technology".

https://en.wikipedia.org/wiki/High_tech

Particularly the cited reference, the OECD definition:

Hatzichronoglou, Thomas: "Revision of the High-Technology Sector and Product Classification", OECD Science, Technology and Industry Working Papers, No. 1997/02, OECD Publishing, Paris.

https://read.oecd-ilibrary.org/science-and-technology/revisi...

Page 7 specifically divides industries into four technology levels, high, medium-high, medium low, and low.

Given J.S. Mill's wonderful definition of technology, 'the study of means", there's little in human activity which is ccompletely atechnological. There remains, however, much that is quite some remove from the cutting edge.

In the technology adoption lifecycle, high tech are innovators. An early-adopter firm is itself still not high tech itself.

https://en.wikipedia.org/wiki/Technology_adoption_life_cycle

No, companies who produce mission critical products like chemical modeling and database systems are always going to critical. A product can be essential and still made out of 1s and 0s.

> products like chemical modeling and database systems are always going to critical.

I don't think they will ever represent "most tech companies," though.

> None of the executives would ever have to admit their product sucked.

I personally wouldn't be that harsh. IMO, I used to come across a lot of founders who just didn't understand the point of running a business.

It's an easy trap to fall in when there's lots of investors looking to put their money and willing to work with 1 in 10 success rates.

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