Startups Best Positioned To Weather A Downturn | Hacker News Reader

Startups Best Positioned To Weather A Downturn

techcrunch.com

How about the profitable businesses that have taken far less funding, or none at all? This list is ridiculous and only serves to perpetuate excessive valuations, feature-not-business and built-to-flip strategies, and wasteful investments.

It's an endorsement to take a ridiculous (or any) amount of funding based on the thought that more money == better! This is moronic. If you're building a business that requires 20mm in capital to build out an infrastructure, fine, but you damn well better have a business model and accurate profit projections to go along with that.

But, whatever. Go ahead. Follow the TC Way(tm). Take a shit load of money with no firm plan for spending it. Waste all your time trying to make good hires then hire managers to manage those hires and VPs to manage them. Give most of your company to a firm with deep pockets and far less knowledge of your industry than you have. Give up most of your stake in the company. Hope to Christ you do really well so your business doesn't get folded into another portfolio company so they don't have to count you as a loss. Answer to a board of directors when you want to change a font color.

The rest of us, we'll still be here, slowly growing our existing profits, spending nearly nothing, and making smart moves that grow our businesses without excessive cap expenditures. And later, if we need it, the money will be there. My Father told me something once that has stuck with me for many years. Essentially: "Don't worry so much about money. There will always be money and there will always be ways to make it, when you need it."

The irony? AFAIK TechCrunch hasn't taken any cash, and is profitable.

By this measure, TC is not well-suited to survive the downturn.

Haha, I hadn't even considered that! Something tells me they will prove their own "omg only tons of money will save you" thesis wrong... to the continued detriment of us all.

YOU CAN SAFELY SKIP THIS ARTICLE. (that's for those who came here to read comments and decide whether to read the article). Accurate summary: economy is down, money is scarce, hence startups with lots of funding will survive. Now, look at our huge list of a hrefs!

A pointless article that just pulls down the standard of TC even lower than what it has become. Who cares about the guys with millions and millions of VC? How about an analysis of what kind of product is well-positioned for customers with tight wallets?

Of course I'm not getting off the hook without supplying my own interpretation. I'm bullish on something that decreases distance between international netizens. Facebook? Sure, but they only tackle one facet of it. There are lots of nontrivial, invisible, local-dependent barriers to get around.

"YOU CAN SAFELY SKIP THIS ARTICLE" probably applies to just about everything on techcrunch.

(that's for those who came here to read comments and decide whether to read the article).

Thanks.

Seems kind of a shoddy list. It'd seem for those numbers to be meaningful you'd also need to know their burn rate, how long they need to be profitable, and what their valuations were from those funding rounds and what that might mean for them if some of the exit opportunities start becoming scarcer.

That's been one of the more interesting things that I've thought through a little -- what will the opportunities for exits look like in the upcoming years? Will the big acquirers tighten their belts?

What a load of crap. How much did pets.com have in their war chest back in the day? How far did that get them?

Massive "startups" vs the small agile ones are like the dinosaurs vs the rodents. Who survived and thrived after the meteor hit?

Yes, a sucky list, but it feels kind of good to see mahalo.com isn't there.

I agree. This list is pretty pointless. The companies that are most likely to succeed in a down economy are those that solve actual problems for people. These problems could be ways to save money, or otherwise. But, it has to be a problem truly worth something to the consumer if it is solved. Because in a down economy, consumers won't spend money on solving problems that are just nice to have solved, instead of need to be solved.

if you raise $455 million I would hardly call you a startup

Sure, you're just a start-up with a ton of expenses that hasn't figured out how to make the revenue necessary to sustain without that kind of cash.

If it's not a "start-up", what is it? It sure as hell isn't an "established, profitable business." It's not established because people are still willing to invest 100s of millions of dollars based on a hope that it'll pay off huge later and it's obviously not very profitable.

Its just a business. You don't have to be profitable to be considered one. Doesn't facebook has something like 700 employees at this point?

To me once you have revenues of 1mm per year, you are no longer a startup.

What if I have a 30-year-old restaurant with revenues of $900K?

I was wondering about the definition of "startup" the other day. Would it be reasonable to define it in terms of profitability? Once you reach profitability you have a proper, self-sustaining business; before that you're in the much riskier position of being a start-up, burning through cash in the hopes of becoming profitable later on. This would mean that things like restaurants fall into the startup category only briefly, while (say) biotech companies can be startups for a decade or more.

I think the term startup describes an unproven business.

You can have all the funding in the world, or have been operating for 10+ years, and it still may not be clear that you've got a viable business.

I do think it's important to distinguish between startups and growth companies. Facebook is no longer a startup, it clearly (to me at least -- though I'm sure this will be contentious) is a viable business, all that extra VC is about fueling mega-growth.

Incredible!

The argument made is that these companies a recession proof because they don't make any money?

In a bizarre way it makes sense. Can't affect your income if you don't have any income. It'll be hard for newer startups to get funding (perhaps) so the barrier to entry for competitors grows.

Works as long as they don't hit a wall before things recover.

Yes.

A credit crunch is great news. Big, established businesses can't raise huge amounts of money to grow.

So small, flexible business raise little amounts in unusual and novel ways and have room to grow.

Hey, I don't want this thing to blow up, but if it does, there is going to be all kinds of bright sides, including the ability of people/firms with lots of cash to start their own lending institutions.

Reply on news.ycombinator.com