Panic in Startupland
nicolasbustamante.com
nicolasbustamante.com
Evolution had the same problem actually. Due to the way it works it took absolutely ages to evolve a way to recycle lignin, a problem that is now giving us issues millions of years after.
We're supposed to be smart though. If we'd not been scared of an occasional recession cleaning out various industries, we'd have more resilient businesses.
Now what we've bred is a generation of founders and investors that only know how to apply max pedal. Have a good idea? Eat the world, get a monopoly, exploit it. That's the only plan for a large number of currently famous firms.
That other plan, where you maybe grow into a sensible size and dominate a local market is what we really need if there's going to be an actual market economy.
I agree with you, but the persistently low interest rates have also fueled malinvestment and speculation on relatively low-potential, high-risk, long term investments.
When some of these startups need to layoff, I'm curious if they'll actually be able to maintain KTLO operations on their reduced staffs without making large product cuts.
Companies need to go max pedal? Consult with them to help them go max pedal!
Companies need to save as much fuel as possible? Consult with them to help them cost-optimize all the things!
My suspicion is if you start with that practice you can build the same app with fewer people and less code right from the start.
Just that people don't really know how to accomplish that anymore.
https://www.imf.org/en/Publications/WP/Issues/2019/12/20/Mon...
Like forest fires in the southwest USA, you need one occasionally to clear out the fallen dead materials, or in our discussion the unprofitable zombie corporations.
That's a bon mot if there ever was one.
Lmao, we came out of a once-in-a-century pandemic with nothing more than a couple scratches and minor inflation and you find a way to complain? The real misallocation would have been seeing profitable, healthy businesses die in the months following March 2020 - has everyone just forgotten the mass panic until the Fed stepped in? A couple overconfident hedge funds and bad SPACs who have already been brought back down to earth is a very small price to pay (I paid very little since I did not invest in meme stonks).
it had very big bill attached: +6T national debt, and maybe several dozens T funneled through cheap loans with twice inflated stocks and real estate, rich became much richer, and poor are screwed dramatically in exchange to $600 stimulus check.
These bloggers always act like everything is binary. "It's a shite business or a great one."
> Ok, what about the silver lining?
>
> Good business will have the time of their life. Fast-growing, profitable startups will have the opportunity to buy out struggling competitors, invest in an environment where CAC will decrease, and hire people with fair compensation packages. Startups with positive cash flows are the cool kids again - until the next exuberance of course.
In this environment, I think lots of companies that have fundamentally sound businesses are still going to be very conservative.
(Not disagreeing with you, exactly, just adding more thoughts and some context for why it's not enjoyable to work in a bad macro even if your business is ultimately the healthier for it.)
A fantastic and profitable business over the long term can be affected by macroeconomic effects.
1. Bridgewater estimates 10% of AMZN/GOOG/FB revenue, 44 billion/year, comes from startups. Startup revenue from other startups will likely be much higher on average.
> acquire businesses and consolidate their business. They will expand, not contract like the rest of the market.
Maybe a good time to say: That also means we are now getting way more enterprise/gov customers than ability to support them, so if you are into rapids.ai (gpu dataframes), dask, seaborn, streamlit, igraph, graph neural nets, etc. esp for tricky core graph problems like detecting fraud, security breaches, mapping supply chains, ... plz email build@graphistry.com :)
A great business as a fair price is always a good deal. Time to buy.
It’s frustrating seeing this straw man BS come up here. Everyone (on HN as well as at large) knew it was the Fed’s historic low interest rates that meant the easy money..
I have no idea if that revenue number is real, or if I’m misremembering.
The question isn't "is it neat?" The question is does the money expended save more than if a human performed the equivalent labor? Does Confluence and Jira save more money than having a human librarian and project manager manually tracking the status of projects?
There will always be room for "neat" software that replaces necessary human labor costs. If you can allow a team of 5 to do what used to take a team of 10, you will be able to sell that for the equivalent of the fully loaded cost of 3-4 people.
Do that for enough people and you have a successful business.
> Introducing the hype ratio and the burn multiple.
Hype Ratio = Capital Raised / Annual Recurring Revenue.
Burn multiple = Net Burn / Net New ARR
If these ratios are superior to 3 then there is a problem. It’s not uncommon to see startups with a 10+ ratio these days.
Doing startups when money is sloshing around, often leads to zombie companies that are on life support.
The panic in startupland stems from the fact that most of them are cut off from said life support.
What will qualify as "fast-growing" in this climate?
So "hype ratio" < 2. Am I looking at this right?