[HN Gopher] Y Combinator's Message to Founders
___________________________________________________________________
Y Combinator's Message to Founders
Author : thesausageking
Score : 370 points
Date : 2022-05-19 14:50 UTC (8 hours ago)
(HTM) web link (twitter.com)
(TXT) w3m dump (twitter.com)
| gz5 wrote:
| Also an opportunity:
|
| 1. Good people will be more available (there will be public
| company cuts and private cuts, as well as resignations,
| especially people working for companies in the Series B to Series
| D range (who raised those rounds at the old multiples) who will
| need massive growth/patience for their options to grow into the
| new multiples).
|
| 2. As businesses cut costs, those are opportunities for products
| and services which enable efficiency.
| axlee wrote:
| > As businesses cut costs, those are opportunities for products
| and services which enable efficiency.
|
| This is key. Innovation aside, if you can simply provide
| comparable services at a lower price point, the downturn just
| increased your customer base tenfolds: nobody is looking too
| much at cutting costs when things are looking up. Find niches
| that got too greedy over the past few years, and undercut them.
| daniel-cussen wrote:
| That's happening to me, I'm peddling the exact same thing at
| half the cost, and it's verifiable. You can just check that
| it's correct in a second with a laptop, after computing it
| for several hours on thousands of machines.
|
| https://www.fgemm.com, coming soon.
| gls2ro wrote:
| I think this sounds good when you think about a very small
| nieche, but if you think about global market, then in a
| recession as many companies go bankrupt, then there are few
| chances to find cheap providers so that what you offer will
| stay at lower cost.
|
| I hope to be wrong about this as I would like very much to
| see some lower prices in some areas.
| thecleaner wrote:
| Is it possible to raise a series A before reaching product market
| fit ? I thought it's more like you raise a Series A to scale up ?
| Why would someone give you 20M dollars to just do research ?
| Never did this myself btw do maybe all these questions are tosh.
| SpicyLemonZest wrote:
| In the fundraising environment of the past few years, well-
| connected companies could raise a series A before even having a
| commercial product.
| (https://techcrunch.com/2019/12/17/anyscale-ray-project-
| distr... is the example I remember most clearly)
| dredmorbius wrote:
| https://nitter.kavin.rocks/refsrc/status/1527238287471292417
|
| OCR'd text:
|
| 4:11
|
| Greetings YC Founders,
|
| During this week we've done office hours with a large number of
| YC companies. They reached out to ask whether they should change
| their plans around spending, runway, hiring, and funding rounds
| based on the current state of public markets. What we've told
| them is that economic downturns often become huge opportunities
| for the founders who quickly change their mindset, plan ahead,
| and make sure their company survives. Here are some thoughts to
| consider when making your plans:
|
| 1. No one cannot predict how bad the economy will get, but things
| don't look good.
|
| 2. The safe move is to plan for the worst. If the current
| situation is as bad as the last two economic downturns, the best
| way to prepare is to cut costs and extend your runway within the
| next 30 days. Your goal should be to get to Default Alive.[1]
|
| 3. If you don't have the runway to reach default alive and your
| existing investors or new investors are willing to give you more
| money right now (even on the same terms as your last round) you
| should strongly consider taking it.
|
| 4. Regardless of your ability to fundraise, it's your
| responsibility to ensure your company will survive if you cannot
| raise money for the next 24 months.
|
| 5. Understand that the poor public market performance of tech
| companies significantly impacts VC investing. VCs will have a
| much harder time raising money and their LPs will expect more
| investment discipline. As a result, during economic downturns
| even the top tier VC funds with a lot of money slow down their
| deployment of capital (lesser funds often stop investing or die).
| This causes less competition between funds for deals which
| results in lower valuations, lower round sizes, and many fewer
| deals completed. In these situations, investors also reserve more
| capital to backstop their best performing companies, which
| further reduces the number of new financings.
|
| This slow down will have a disproportionate impact on
| international companies, asset heavy companies, low margin
| companies, hardtech, and other companies with high burn long time
| to revenue.
|
| _Note that the numbers of meetings investors take don 't
| decrease in proportion to the reduction in total investment. It's
| easy to be fooled into thinking a fund is actively investing when
| it is not._
|
| 6. For those of you who have started your company within the last
| 5 years, question what you believe to be the normal fundraising
| environment. Your fundraising experience was most likely not
| normal and future fundraises will be much more difficult.
|
| 7. If you are post Series A and pre-product market fit,[2] don't
| expect another round to happen at all until you have obviously
| hit product market fit. The Series A Milestones[3] we publish
| here might even turn out to be a bit too low.
|
| 8. If your plan is to raise money in the next 6-12 months, you
| might be raising at the peak of the downturn. Remember that your
| chances of success are extremely low even if your company is
| doing well. We recommend you change your plan.
|
| 9. Remember, that many of your competitors will not plan well,
| maintain high burn, and only figure out they are screwed when
| they try to raise their next round. You can often pick up
| significant market share in an economic downturn by just staying
| alive.
|
| 10. For more thoughts watch this video we've created: Save Your
| Startup during an Economic Downturn.[4]
|
| Best,
|
| YC
|
| ________________________________
|
| Notes:
|
| Presumed links (I do not have a copy of the original message).
| See also https://news.ycombinator.com/item?id=31436244
|
| 1. Default Alive: http://www.paulgraham.com/aord.html
|
| 2. Pre-product market fit: See:
| https://www.ycombinator.com/blog/ycs-essential-startup-advic...
| "do things that don't scale: remain small/nimble"
|
| 3. Series A Milestones: Presumably private.
|
| 4. Save Your Startup during an Economic Downturn:
| https://yewtu.be/watch?v=0OVSTWozvfY?vq=hd720
| ilamont wrote:
| > This slow down will have a disproportionate impact on
| international companies, asset heavy companies, low margin
| companies, hardtech, and other companies with high burn long
| time to revenue.
|
| Wonder how things will shake out for biotech. I know biotech
| investors have long timeline, but surely they are feeling
| pressure too ("LPs will expect more investment discipline")
| dredmorbius wrote:
| Much of that depends on how long and deep the recession goes
| on, and the extent to which investors are forced to sell even
| high-quality assets to meet cash obligations.
|
| Bad investments driving down good is one of the perverse
| dynamics of panics that J.K. Galbraith notes in _The Great
| Crash: 1929_ :
|
| _The great investment trust boom had ended in a unique
| manifestation of Gresham 's Law in which the bad stocks were
| driving out the good._
|
| (Chapter VI)
| quadcore wrote:
| Layperson here, I didn't know we were in an economic crisis that
| bad, is it global? What are the reasons?
| rrrrrrrrrrrryan wrote:
| Inflation and interest rates are rising (for lots of reasons),
| which means money is getting much more expensive. This means
| that high-growth companies and unprofitable companies are going
| to get burned hard in the near future, because their very
| existence relies on access to cheap money.
|
| The wider economy isn't terrible. Inflation is rising and GDP
| is pulling back a little bit, but unemployment is low, and
| wages are mostly flat.
|
| But the NASDAQ (comprised of mostly tech stocks) is down 26%+
| year-to-date and falling. People on this forum mostly work in
| software, and this downturn will almost certainly shift the
| balance of power from unprofitable high-growth companies
| (especially crypto, Web3, etc.) to companies that actually make
| real money.
| gen220 wrote:
| There's a trend of global economic inflation, caused by supply
| issues in energy (oil, gas in all forms) related to the war in
| Ukraine, supply issues more broadly related to a hangover from
| COVID's supply/demand shocks.
|
| Interest rates are rising, to appease inflation.
|
| As the interest rate goes up, allocators of capital have less
| appetite for risky allocations. This makes access to capital
| for VC firms becomes more competitive. This makes access to
| capital for "startups" becomes more competitive.
|
| There's also a bigger macrotrend, which is another hangover
| from COVID: investment poured into the tech sector, which was
| booming during COVID. Investors over-bullishly priced-in the
| idea that this boom was, in fact, a new baseline or indicative
| of future exponential growth. As we recover from COVID, these
| pricings are increasingly revealed to be wrong as companies
| generally report post-COVID numbers that are closer to pre-
| COVID numbers.
|
| This is bad for investors leveraged on tech. Therefore, it's
| bad for VCs that raised LP capital on the basis of COVID
| performance. Therefore, it's bad for companies that raised >20x
| ARR multiples on the basis of COVID performance.
|
| Basically, it's a single or double whammy for most of the
| economy, but a double or triple whammy for unprofitable
| startups.
| MaxHoppersGhost wrote:
| Energy prices being high are only a small part of it.
| Unfettered stimulus, even when we didn't need it (eg rent
| payment moratoriums and stimmy checks while at full
| employment), is what's driving it.
| mikeg8 wrote:
| The largest portion of "unfettered stimulus" went to
| private companies in PPP loans... but that's rarely brought
| up, which I always find interesting.
| pyb wrote:
| The stock market is down and inflation is up, but are we really
| in an economic crisis just yet, or just predicting one in the
| future ?
| somewhereoutth wrote:
| Zero Interest Rate Policy.
|
| Encourages resource mis-allocation, which means there is less
| stuff we actually need to go around.
|
| We should have used fiscal policy more aggressively to fix the
| Great Recession, but that would entail taking money from rich
| people and giving it to poor people, and we can't have that can
| we?
| rkagerer wrote:
| Can anyone post a copy with intact links?
| hoofhearted wrote:
| https://news.ycombinator.com/item?id=31433221
| petesmithy wrote:
| "Default Alive" - http://www.paulgraham.com/aord.html
|
| "pre-product market fit" - links to a list of resources: - The
| only thing that matters by Marc Andreessen
| https://pmarchive.com/guide_to_startups_part4.html - What is
| "product/market fit" by Emmett Shear:
| https://twitter.com/eshear/status/1155180521485242368?lang=e...
| - Andy Rachleff on "How to Know If You've Got Product Market
| Fit" https://greatness.floodgate.com/episodes/andy-rachleff-on-
| ho... - How Superhuman Built an Engine to Find Product/Market
| Fit by Rahul Vohra https://firstround.com/review/how-
| superhuman-built-an-engine... - The real product market fit by
| Michael Seibel https://www.ycombinator.com/library/5z-the-real-
| product-mark... - Jeff Chang's blog - specifically his take on
| retention as measure of PMF https://www.growthengblog.com/ -
| Sequoia's Doug Leone discusses PMF
| https://streamable.com/rm7pr7 - Dalton Caldwell & Michael
| Seibel discuss PMF https://youtu.be/UqKzpLqXuI0
|
| "Series A Milestones" - links to a private resource available
| only to YC founders
|
| "Save your startup during an economic downturn" -
| https://www.youtube.com/watch?v=0OVSTWozvfY
| upupandup wrote:
| can somebody share the Series A Milestones resources?
| om42 wrote:
| Is the internal Series A Milestones different than the
| Series A Guide:
| https://www.ycombinator.com/library/14-series-a-guide
| adamqureshi wrote:
| THANK YOU!
| babelfish wrote:
| Thanks for sharing. Would be cool if you could share some of
| the Series A Milestones.
| farzatv wrote:
| lvl102 wrote:
| There were so many unicorns that were pulled forward to go public
| that I don't even think there's this gigantic fluff remaining (a
| la dotcom). They already busted and it doesn't even feel like we
| crashed.
| irthomasthomas wrote:
| Bleak.
|
| "No one cannot predict how bad the economy will get, but things
| don't look good."
|
| Clif notes:
|
| - Plan for the worst ... cut costs within 30 days... get to
| Default Alive[0]
|
| - Get money if you need it, and if you can
|
| - With or without money you must survive 24 months
|
| - VCs are people too, and subject to the same downturn. Adjust
| your fund raising expectations in the same direction. Expect
| lower valuations, lower rounds and many fewer deals.
|
| - Disproportionate impact on international, asset heavy, low
| margin, hardtech, high burn, long road to revenue companies
|
| - If you get a meeting, don't take that as a good sign, we still
| take a lot of meetings.
|
| - Future fundraises will be much more difficult than they have
| been in the last 5 years.
|
| - Don't expect more money until you demonstrate product market
| fit.
|
| - If you planned on raising money in the next 6-12 months, we
| recommend changing that plan, or you may be tryng to raise at the
| peak of the downturn
|
| - If you survive, and your competitor does not, you may pick up
| significant market share.
|
| [0] http://www.paulgraham.com/aord.html
| scarface74 wrote:
| The stock market is not the economy. If you are working for a
| money losing VC backed company and the VCs aren't willing to
| keep throwing money at you, that's because the VCs know startup
| funding is a Ponzi Scheme and they will be left holding the bag
| instead of being able to pawn their investment off onto the
| retail market.
| sbierwagen wrote:
| >- If you get a meeting, don't take that as a good sign, we
| still take a lot of meetings.
|
| They don't explicitly spell this out, but this is because being
| a VC is still a job. Even if they're not actually making any
| deals, management doesn't want to see everyone sitting at a
| desk scrolling twitter for 8 hours, so instead they do
| pointless meetings.
|
| Matt Levine had a fun Great Recession story which I cannot find
| right now, which is that during 2008 in the M&A department at
| Goldman Sachs everyone still came to work, even though
| obviously merger and acquisition activity was way down. They
| would spend every day doing calls and making pitchbooks, all of
| which went nowhere. Goldman didn't close a deal for a full
| year. A floor full of people could have just collected a salary
| and stayed home for 12 months and it would have had an
| identical outcome.
| [deleted]
| pl0x wrote:
| eqmvii wrote:
| Hard to believe there isn't a storm coming at this point.
| jollybean wrote:
| It will be harder for startups than other companies.
|
| The 'storm' will be focused heavily on capital and so all that
| liquidity will tighten up.
|
| Big waves up, big waves down.
|
| Healthcare won't miss a beat.
| wolverine876 wrote:
| Perception is reality.
| throwanem wrote:
| Well, I wouldn't say it's _coming._
| wolverine876 wrote:
| Like inflation, it's self-fulfilling. Perception is reality. Some
| people who strongly influence public perception - to whom we seem
| to have ceded our power to think critically and independently -
| who look for social disruption, want it.
|
| If businesses pull in their horns, stop supporting innovation,
| the economic result is easy to predict.
| liuliu wrote:
| That's why it is extremely frustrating to watch this unfold.
| The easiest way to kill inflation is to kill growth. But that
| won't help people in need anyway.
|
| An empty shelf of baby formulas are not a sign of "economy is
| too hot". It is a sign of supply issue.
| bushbaba wrote:
| Worse yet, everyone over-ordered due to the supply chain
| issues to reduce future disruptions. We're going to end up in
| a recession with huge surplus of inventory.
| matwood wrote:
| This is what I've been predicting. Right around when the
| fed crushes demand, the supply chain will finally get
| fixed, flooding the market with supply that no one now
| wants.
| ordu wrote:
| _> An empty shelf of baby formulas_
|
| Can I ask you why you've chosen this particular example? It
| is not about I agree with you, or I'm going to contradict in
| a some way, it is completely unrelated question. A complete
| off-topic.
| shortstuffsushi wrote:
| I believe the example was likely chosen due to the recent
| controversial bill in congress [0]. However, I think the
| choice of baby formula shows that some "core" needs in the
| economy are missing as well, and that the tech bubble
| struggling.
|
| 0:
| https://www.bloomberg.com/news/articles/2022-05-19/house-
| pas... (Picked at random from a search for "baby formula
| bill")
| liuliu wrote:
| The cause of this round is not some sudden bubble burst.
| Fed raise rates because they want to signal that they are
| serious about taming the inflation. That caused sharp
| sentiment change in capital market.
|
| The cause of this round of inflation can be many things,
| we've been in low-interest environment for 10+ years with
| occasional QEs. It hasn't inflated the economy as much as
| we hoped for that 10+ years. It is lazy thinking to
| attribute back to QE for this round of inflation.
| toomuchtodo wrote:
| That growth would've just gone predominately to the
| wealthy/shareholder class anyway. Better to destroy asset
| values and growth to destroy demand, which reduces inflation.
|
| Baby formula is a poor example; that was Abbott having
| regulatory capture and a de facto monopoly [1].
|
| [1] https://mattstoller.substack.com/p/big-bottle-the-baby-
| formu...
| hopefullywrong wrote:
| If it's a demand issue maybe companies fall in line and all
| have their layoffs at the same time, reduce worker purchasing
| power, and then there's fewer shortages of things. problem
| solved. </armchair supply chain economist>
| hopefullywrong wrote:
| Agreed, some part of this feels like capital is flexing its
| muscle after a period of employees having incredible gains.
| guerrilla wrote:
| This comment seems crazy given that we just had COVID-19, a war
| causing a massive energy crisis and multiple systemic
| commodities problems and then climate change... Also you're
| assuming interest rate hikes have no effect? I have no idea how
| you could think what's coming isn't entirely material... How
| can you just ignore all that?
| liuliu wrote:
| We had COVID-19 for 2 years. The U.S. is surging back with
| unique challenge of spending transition from goods back to
| services. It is a challenge.
|
| "A war causing a massive energy crisis" seems to be a good
| time to increase energy production with more investment in
| things like fracking, which from what I heard, people are
| reluctant to invest due to the economy and rates concerns
| (they borrow from banks too).
|
| Interest rate hike certainly has impact, but that is the Fed
| to decide. Remember, Trump asked Fed to not raise rate before
| and JPow kowtowed to that just fine.
|
| China's shutdown is a Black Swan. The market apparently
| haven't digested that yet (APPL "only" down 20% YTD).
| TigeriusKirk wrote:
| I feel like we talk ourselves into maybe half of the economic
| downturns we experience. It's probably inevitable and maybe
| even necessary psychologically.
| SkipperCat wrote:
| Companies that have a good ideas and provide needed
| product/services will survive. I think the era of stupid money
| chasing silly ideas are over. Same thing happened at the end of
| the dot-com era.
| Mimmy wrote:
| I think the causation can be reversed: Companies that survive
| long enough have a higher chance of eventually finding the
| right idea and developing needed products / services.
| [deleted]
| adamsmith143 wrote:
| >I think the era of stupid money chasing silly ideas are over.
| Same thing happened at the end of the dot-com era.
|
| It's called the Business Cycle. Those days are not over,
| they're merely hibernating
| throwanem wrote:
| Hibernating? They've been the order of the day since 1987.
| Sure, there's booms and crashes, but that's why we call it a
| _cycle_.
| adamsmith143 wrote:
| Yeah. My parent comment was insinuating that "This time is
| different" which of course it won't be.
| throwanem wrote:
| Oh. Yeah, I apparently can't read today, that's fair.
| sokoloff wrote:
| > I think the era of stupid money chasing silly ideas are over
|
| It's quite possible that _this_ era of that is over, but I 'll
| eat my hat if another era of stupid money chasing silly ideas
| doesn't spring up within a decade.
| paulgb wrote:
| "Yeah, but this time it's different!" - Someone in 5-10
| years.
| mupuff1234 wrote:
| "We called it fin-tech cause it kept going under"
| escapecharacter wrote:
| Web 5.0: This time it's personal!
| babyshake wrote:
| Here we go again, again!
| wpasc wrote:
| Who left the fridge open.
| jcuenod wrote:
| "The problem with the crypto revolution is how centralized
| it all was. That's why we've realized we should disrupt
| that whole industry with these new rainbow farting
| unicorns"
| [deleted]
| checker659 wrote:
| > are over
|
| For a few years
| altdataseller wrote:
| Lots of startups provide needed products and services. I don't
| think that's enough. They need to provide needed
| products/services in a way that can be sold/marketed
| profitably, and scaled profitably.
| ackbar03 wrote:
| Yes. I always need 1 dollar for 95 cents.
| malfist wrote:
| You joke, but a 5% ROI isn't bad YoY in the long run.
| Especially if it's low risk.
| rightbyte wrote:
| With 8% inflation it is essentially better to stuff your
| bed with some commodity than go for 5% ROI.
| postalrat wrote:
| Did he say a year? I want it immediately. Unlimited and
| no delay.
| daniel-cussen wrote:
| You know that's my pitch? Selling a commodity for half.
| Because I SUCK at selling, so that's my out, the same exact
| thing anybody can do in exactly the same way, that every
| company is on track to spend more than 10% of their revenue
| on, but for half.
|
| The bottleneck of machine learning in half.
|
| In fact you're being quite generous with your offer of 1
| dollar for 95 cents, but I must decline. 50 might work much
| better for you, you might secretly need 1 dollar for 50
| cents more than you need 1 dollar for 95 cents. But are
| embarrassed to ask. Provided we're talking about matrix
| multiplication.
|
| And like everyone's business plan is turning matrix
| multiplication, better known as AI, into money, so there
| could be a good synergy there.
|
| https://www.fgemm.com, coming soon.
| seaourfreed wrote:
| Good, unless inflation stays high
| danielrhodes wrote:
| A company that provides a needed product/service has the
| minimum it needs to survive. But you also need positive cash
| flow and you need to not have surprises and many other things.
| So it's easy to get caught in a bad situation and the company
| is forced to shut down, even though it was otherwise doing good
| things. Startups are particularly vulnerable, regardless of
| their PMF.
| babelfish wrote:
| What are the Series A Milestones linked in the email?
| forgingahead wrote:
| Might be this?
| https://www.ycombinator.com/library/1k-benchmarks
| aresant wrote:
| Dagnabit. Here we go again - this is a fantastic, pragmatic
| amendment to those notes ->
|
| https://dalton.substack.com/p/letter-to-myself-in-late-2008?...
|
| For a taste:
|
| "Doing multiple small layoffs is a form of cascading failure. Do
| one layoff, but much much deeper than seems correct. Do it
| decisively. Do it so that you get profitable. In your case that
| is something like a 70% cut, not a 5-10% cut. Yes you read that
| right: a 70% cut. Cutting once and cutting hard allows you to
| reassure the people that are still here that you are truly
| profitable and won't need to do it again. Doing a layoff and
| remaining unprofitable and counting on fundraising to save you is
| a stupid plan."
| blueboo wrote:
| "Race, don't chase." Find a way to profitable -- default alive
| -- and grow from there. Don't lie bleeding and default dead.
| Sounds like Dalton could've used this podcast at the time...
|
| https://www.manager-tools.com/2008/10/race-don't-chase-part-...
| bachmeier wrote:
| > a 70% cut...Cutting once and cutting hard allows you to
| reassure the people that are still here that you are truly
| profitable
|
| If your employees are dumb enough that they interpret a 70% cut
| of the workforce as a sign that your company is stable, you're
| doomed. It's hard to imagine the dumbest person in the world
| interpreting that as a sign of stability.
| matwood wrote:
| You're too focused on the 70% used for effect. The point is
| to make a single cut that puts the company profitable, so
| there is a chance to survive. And even then it's going to be
| hard, but gives the company a chance.
|
| No person should have assumed stability in a company that was
| not yet turning a profit. I'm not saying they are bad
| companies to take a gamble on, but understand they were/are a
| gamble. VC money suddenly drying up was part of the that
| gamble.
| tharne wrote:
| Even a 20% cut tells you that management is incompetent. If
| you're a CEO and you can cut 20% of your staff without
| destroying the business, why on earth did you hire all
| those extra people and add all that expense in the first
| place?
|
| Put another way, if you couldn't staff right in the good
| times, why would remaining employees trust that your "one
| big cut" will work now? _Hint: they won 't_
| matwood wrote:
| Cuts are done because the business has changed. Some part
| of the business was destroyed by external factors, and
| now the company needs to adjust to the new reality. It
| could be that VC money dries up or that customers stop
| spending. It doesn't mean that 20% wasn't required in the
| past, only that they are not required now.
|
| This is also why a company should cut a little more than
| needed, so they have some cushion for things to get worse
| before getting better again.
| tharne wrote:
| I think what you're saying is true in the best run
| businesses, but that's not what we're seeing right now.
| We're seeing cuts from business that were hiring like
| crazy a few weeks ago.
| imperialdrive wrote:
| I mean, if there is some transparency and the numbers add up,
| and 70% cut appears to do the trick, then it would be pretty
| awesome being in the 30% with a real chance to shine. I
| imagine there would be a big increase in stock and pay to put
| things in motion too. Sounds great!
|
| Now if the plan is going to end in flames anyway, it still
| seems like a great reason to stick around and absorb the
| knowledge and experience.
|
| I'm a fix-it person and would love the opportunity to turn a
| company around - it's like the ultimate challenge.
| mcguire wrote:
| In increase in pay? During a layoff where they're trying to
| save money?
|
| And then there's the 3x increase in workload.
| tshaddox wrote:
| If the numbers add up to justify the layoff, then doesn't
| that mean that in the time leading up to the layoffs the
| numbers didn't even come close to adding up? I'm not sure
| the transparency and fiscal competence the company
| demonstrated to justify its layoffs would dazzle me enough
| to make me miss the fact that they had overhired by 3x or
| more.
| endymi0n wrote:
| Here's the deal: The mere mortal ,,stock package" got
| pretty much worthless the day the ,,bridge financing"
| (which actually was a down-round) got announced.
|
| Recovering from a 70% layoff only happens once in a blue
| moon, and usually only when a founder led company that has
| already reached revenue and product-market fit makes a well
| executed hard cut that does an exceptional job at keeping
| and supporting the core team amd managing emotions.
|
| In any other more chaotic situation, the
| product/emotion/revenue death spiral ensuing is usually
| impossible to stop.
| mdoms wrote:
| scarface74 wrote:
| I took the opposite approach around 2010. I was one of the
| survivors of the mass layoff and I didn't think about looking
| for another job.
|
| I did build up my savings, actively engage my network "just
| in case" and updated my resume.
|
| Once the final hammer hit and we got acquired for our
| customer list and everyone got laid off. We went to lunch,
| hung out in the office after our layoffs and from looking at
| LinkedIn, everyone had a job within a month.
|
| At each round of layoffs, people reached out to their network
| and had jobs quickly.
|
| I met a recruiter for lunch that following Monday and had an
| offer Thursday.
|
| No matter how your company is doing, you should always "keep
| your running shoes around your neck".
| benjaminjosephw wrote:
| It's a sign that you intend the company to survive.
| sirius87 wrote:
| As someone who has witnessed such a deep layoff and was left
| in the 30%, I began job hunting and moved on soon after.
|
| When I eventually quit, senior management then explained how
| I was part of their grand comeback plans and offered a salary
| bump, and in my mind, all I could think of was how they were
| trying to balance a cost equation.
|
| People far more talented than me had landed pink slips,
| presumably because of how "expensive" they were for their
| "output".
|
| That may be the right call for longevity of the business, but
| I could easily be the one being disposed after my valuable
| output is put to use and my expense-output is reconsidered.
| slg wrote:
| >As someone who has witnessed such a deep layoff and was
| left in the 30%, I began job hunting and moved on soon
| after.
|
| As someone who has witnessed repeated smaller rounds of
| layoffs, I also began job hunting after the pattern was
| evident. A layoff is an inherit signal that management made
| mistakes. Sure, there are probably better ways to handle it
| than others. However there is no getting over the fact that
| prior mismanagement now necessitates drastic measures to
| recover from it. That is going to be enough to get some
| people looking for an escape regardless of your approach.
| StillBored wrote:
| I was at a startup during the .com bust. I survived 3
| rounds of layoffs over the space of ~18 months. I like
| everyone remaining at the company, could see the writing on
| the wall and I was spamming resume's to anyone who looked
| like they were hiring. Zero responses, pretty much no one
| was hiring except when it was an emergency. The
| big/profitable companies were bolting down the hatches, and
| everyone else was cutting to stay afloat.
|
| I was genuinely scared when my time came, and it took
| another 4 months, but I consider myself lucky but am
| uncomfortable with the fact that a previous manager of mine
| at one of those large/profitable companies which had one of
| those fishing job postings, saw my resume and swapped me
| for one of his under performers (aka someone got laid off
| at the end of the fiscal year, and I got hired). And I took
| a ~40% pay cut for the privilege.
|
| Literally the only people who were getting hired in my area
| where situations like that. Never assume you will get hired
| during a downturn unless you have a really solid network of
| people who will risk their own positions for you and/or
| work at companies that treat people like cogs to be
| replaced if they can get a cheaper/more effective cog.
|
| I was at another stable but small company during the 2008
| downturn, and I sadly had to turn away a lot of people I
| would have loved to work with again, but we were on a hard
| hiring freeze (the ones where upper mgmt breaths a sigh
| every-time someone leaves of their own volition because it
| gives them a bit more breathing room). So these times hurt
| no matter which end of the table your on.
|
| So, don't assume the job market will remain the way it is
| today.
| hef19898 wrote:
| Which raises the question of when to jump ship, doesn't
| it? If your current employer is looking like lay offs and
| bad times are a head, and the market is really good, do
| you stay and wait or do you start looking _now_? You
| defenitley shouldn 't wait to be last one to tirn of the
| lights, because at the very least your gonna compete with
| your former co-workers.
| BryanBeshore wrote:
| If you plan to move in the next 6-12 months, you are
| probably better off moving now.
| lumost wrote:
| Pretty much, if you can choose the parts of the company
| which are profitable and self sustaining. If given the
| choice, avoid profitable businesses that rely on other
| companies growth projections (aka ads)
| pjmorris wrote:
| "If you must panic, panic early. Be scared when you can,
| not when you have to. " @nntaleb
|
| I was an independent consultant from a 2001 dot-bomb
| layoff to the beginning of 2008. I saw hard times coming
| and took a job with the most bomb-proof client I had, and
| it worked out really well.
| karaterobot wrote:
| I was in the same boat, and this is right on. The founders
| assumed everyone who got spared was going to be so happy
| they stayed with the ship until it went down. In reality,
| we experienced a combination of survivor's guilt for our
| unemployed friends, burnout at the increased workload, and
| anger at the founders for making choices that led to that
| situation. The remaining people on my team just used the
| reprieve to find new positions while being able to pay
| their bills, and we all quit, coincidentally on almost the
| same day.
|
| The founders did not adequately think through the
| ramifications of their decisions, and it did seem (as
| another commenter in this thread succinctly put it) that
| they viewed everyone as very predictable NPCs in their
| narrative.
| corrral wrote:
| I'd just assume the company's already dead and someone's
| trying to suck some remaining value out of it or make a hail-
| mary acquisition deal to bail out their investor pals (at no
| return to employee stock holders, I'm sure) if that happened.
| I'd be working on my resume on the "work" day when that's
| announced, for sure.
| CalChris wrote:
| The CEO should be able to spreadsheet an argument at the
| all hands meeting to the remaining employees that they are
| now profitable and/or have 48 months of runway. Of course,
| employees are always unrestricted free agents. They can
| weigh this with the prevailing economic outlook and make
| their own decisions. Remember, YC's letter is to founders
| and not employees.
|
| I believe Ben Horowitz made a similar decision and a
| similar pitch to his employees that he recounted in _The
| Hard Thing About Hard Things._ I don 't remember Horowitz
| getting into the depth of the cut but I remember
| survivability being a stressed point.
| lumost wrote:
| If your talking to employees who care at all about the
| supposed equity they were given, then you need to be
| prepared to reset the employee equity pool to be
| meaningful.
|
| In particular, many of the employees will have options
| that are obviously underwater. Any belief they had in
| dreams of billion dollar valuations will be gone.
| barkingcat wrote:
| what if they try repeated 70% cuts?
| fzeroracer wrote:
| A 70% cut is a great way to kill your company once the
| remaining 30% start jumping ship. Either because of the
| destroyed morale or because they're doing a lot more work in a
| higher stress environment.
| foobarian wrote:
| I mean, losing money is a great way to kill your company.
| What's better: cut 10%, lose money, people leave, cut 10%
| more, still losing money, more people leaving, cut 10% more,
| still losing money, more people leaving. Likely at 50% now
| with no pivot and bad morale. Compare to cut 70% + some
| people leave, but now you can hopefully do a major pivot and
| do better?
| mcguire wrote:
| Could anyone give, say, 3 examples of that happening?
| danrocks wrote:
| I don't know what "that" refers to, but I was at Nokia
| for a long time while they did 5,10,15% layoffs and it
| did destroy the morale, people started running for the
| hills as soon as they could.
|
| AirBNB did a 25% one-off layoff and is now doing fine.
|
| I don't know of any 70% layoffs but I tend to agree that
| cutting once and hard is the best approach, given what I
| experienced with paper-cut layoffs.
| itsoktocry wrote:
| > _Cutting once and cutting hard allows you to reassure the
| people that are still here that you are truly profitable and
| won't need to do it again._
|
| Famous last words. I'm _pretty_ sure that companies always
| believe this (or at least tell their staff such), whether
| cutting 5%, 25% or 75%.
| VirusNewbie wrote:
| I cannot imagine a way I would interpret a 70% layoff as
| anything other than the CEO/management team being incompetent.
| I mean, if you can actually execute with 70% less, why did they
| hire in the first place?
|
| The only way this might work is if a company was expanding into
| a completely new market and pivots away from that (ie, software
| startup gets a hardware division going, etc)
| mason55 wrote:
| > _I mean, if you can actually execute with 70% less, why did
| they hire in the first place?_
|
| Hiring and onboarding takes awhile. VC-funded companies are
| intended to grow quickly. Those two things put together means
| you need to hire for where you want to be in a year or two
| and not where you are right now.
|
| The actual goals & constraints have changed.
|
| When you hired those people your goal was scaling up as
| quickly as possible and your constraint was having enough
| people (in this scenario, money is not one of your
| constraints).
|
| In the new world, the goal is "stay alive" and the gating
| constraint is runway.
|
| So, no, the fact that you can survive after large staff cuts
| doesn't mean the CEO was incompetent. It might, but it might
| also just be a function of the goals/constraints/execution
| strategy/environment having all changed.
| gadders wrote:
| I called it: https://news.ycombinator.com/item?id=31422495
| thecleaner wrote:
| Honestly I would just go work for FB/Google/MS/Apple and maybe
| Amazon. I'll only consider a startup if I can grow with the
| company and corresponding opportunities don't exist in the big
| ones. If the YC theory is basically that employees are a toxic
| asset, they are bound to get people who turn out that way since
| the more performant and responsible folk will opt for bigger and
| more stable companies.
|
| Edit: I don't really think all YC backed companies think that low
| of employees.
| drcongo wrote:
| > _No one cannot predict how bad the economy will get_
|
| Make an effort YC.
| junon wrote:
| Yeah no kidding, wow.
| daniel-cussen wrote:
| Predicting how bad it will get is possible, it's just
| apocalyptic thinking, which is frowned upon and dangerous. Like
| the whole paranoia bullshit thing about how paranoid people are
| inferior, or something I can't listen to such bullshit. Ties in
| nicely to making everyone buy and hold, value investors.
|
| Well earlier this week I myself made a prediction this week
| there would two days were the market would fall, one down
| -2.9%, the other down -2.2%[1]. I told this to a friend who
| speculates. Telling him we should talk that day, Sunday,
| instead of later in the week, because after those shitstorm
| days he would have no fucking time. Just booked solid, bailing
| out shit from those storms.
|
| I was wrong, there was one day down -4%, another down I think
| down -1%. So I was wrong. No one can predict how bad a market
| will get. At the same time, my speculator friend hasn't written
| back.
|
| [1] Yeah I realize down -2.2% might be interpreted as a double
| negative. In other languages like French and Spanish, and
| African languages, negatives are emphasis. It's an English
| thing to say even number of negations is positive. Basically so
| the words in people's denials could be deformed into
| admissions. Making their defection defective. Obviously the way
| to express a market rise is "the stock market went up +2%."
| Note also the + symbol, very rarely seen.
| kilovoltaire wrote:
| Fun to read the typo literally--it does often seem true that no
| one can resist predicting
| corrral wrote:
| Maybe it's a "don't think about a pink elephant" kind of thing?
| Once one considers the possibility that one might predict how
| bad the economy will get, one naturally thinks up such a
| prediction?
| thom wrote:
| Works on contingency? No[,] one cannot predict how bad the
| economy will get.
| drcongo wrote:
| Beautiful Simpsons reference, thank you.
| junon wrote:
| Aha, yeah. Hadn't thought of that. Amazing the difference a
| comma makes.
| MontyCarloHall wrote:
| Translation: as has been the case since the dawn of capitalism,
| companies going forward will have to turn a real, liquid profit
| from selling an actual good or service. Gone are the (highly
| anomalous) days of starting a purposefully unprofitable company
| whose only path towards "profitability" is a) getting acquired or
| b) endless rounds of VC funding.
| rchaud wrote:
| >> starting a purposefully unprofitable company whose only path
| towards "profitability" is a) getting acquired or b) endless
| rounds of VC funding.
|
| and worst of all, c)pursuing a predatory pricing strategy to
| monopolize the market and crowd out competitors.
| MontyCarloHall wrote:
| Yup. I think that fits under b), since it's only possible to
| run out the clock on competitors with a predatory pricing
| strategy with endless rounds of VC funding.
| vagab0nd wrote:
| Could someone post the date of the email? I assume it's around
| the same time as the tweet?
| nopenopenopeno wrote:
| I am currently graduating with a CS degree and interpreting this
| as a warning to not accept the offer from the exciting startup
| and instead accept the offer from the big corporate fintech
| company. Is there any reason I could be wrong?
| aurbano wrote:
| I started in the big corporate company and now work for the
| exciting startup.
|
| You want to maximise your learning, as long as there isn't a
| massive salary discrepancy try to have a lengthy chat with your
| future tech lead and pick the one that seems better -
| ultimately this is the person you'll be learning from the most
| in the next few years.
|
| And also, don't be scared to quit or change teams early. Don't
| stay longer than you have to.
| AdamH12113 wrote:
| You should definitely ask lots of questions about a startup's
| operations, revenue situation, funding status, etc. before you
| join, no matter what the economic circumstances. You should
| also consider whether the big company might have large layoffs
| soon. Which one you should choose depends very much on the
| specifics of the companies, as well as your financial
| situation, career goals, and personal temperament.
| cheeseblubber wrote:
| Choosing between a startup vs a big corporate is a separate
| topic. There are advantages and disadvantages to each. In
| essence you trade learning for stability. It really depends on
| what you are looking for and type of environment you want to be
| in. If you have done the calculus and are more interested in a
| startup I would recommend asking what the run rate of the
| company is and do they have any plans to hit profitability.
| altdataseller wrote:
| It depends. You just need to do more due diligence and ask
| harder questions to that exciting startup, especially around
| burn rate, and profitability goals.
| tschellenbach wrote:
| This issue impacts any high growth companies. It's pretty much
| all of tech both public and private. You can't avoid it unless
| you go work outside of tech
| adamsmith143 wrote:
| If you discount your stock options to be worth 0 (which is the
| most likely scenario) and it still makes sense to work at the
| Startup then go for it but save aggressively because while they
| may tell you there won't be layoffs and they are in a strong
| financial position when layoffs do come they are almost always
| last in first out.
| MarkMarine wrote:
| There are plenty of startups that will weather this storm, and
| you're going to have a lot more actual accomplishments on your
| resume, and actual experience building things from a year or
| two at a startup.
|
| Just be pragmatic about what companies you pick, the companies
| I view most skeptically during the downturns are the ones that
| cater to startups, like dev productivity startups, or those
| startup credit card companies, and given the chaos in the
| crypto markets, those don't look like safe bets to me either.
| You can always ask about the company's run rate, profitability,
| and war chest. They might not show you, but that is a sign
| also.
| fzeroracer wrote:
| A simple question to ask: Are you willing and/or able to
| potentially wait 6+ months for a new job if the startup goes
| under? Hiring for entry level engineers is already difficult
| and becomes much harder when companies institute hiring freezes
| due to an economic downturn.
|
| Take the safer option, weather out the recession and if you
| find an exciting startup you can join them with confidence that
| even if they fall apart you'll have the experience to find the
| next job much faster.
| chernevik wrote:
| Take the job where you will learn the most. If that's a startup
| and it dies no one will hold it against you. If you're good
| you'll probably be able to find something even in a lousy
| economy.
| mehphp wrote:
| As others have said, now is the time to be risky. If you think
| that startup will hang around for a bit (1 - 2 years) that will
| be more than enough experience for you to land the next job.
| I'm not telling you to job hop, but it is completely normally
| to only stay at a position for 2 years (or less).
|
| I personally would choose the one that would help me grow more
| as an engineer and IMHO, you can get pigeonholed much more
| easily at a big corp than at a startup.
| raviparikh wrote:
| This is not necessarily true. "Bigger" does not mean "more
| stable." Big companies like Netflix did layoffs just now;
| meanwhile there are plenty of small companies that are
| profitable and doing great. A friend of mine runs a profitable
| startup (~50 people). A few months ago, a candidate turned them
| down to join a 500+ person well-funded company that seemed more
| stable-that company is now bankrupt, while my friend's startup
| is continuing to grow.
|
| I wrote a blog about this topic:
| https://www.airplane.dev/blog/evaluate-startup-offers-in-a-t...
| wolverine876 wrote:
| > I am currently graduating with a CS degree and interpreting
| this as a warning to not accept the offer from the exciting
| startup and instead accept the offer from the big corporate
| fintech company.
|
| You will be the first to be laid off. When everyone is
| competing to keep their jobs, you will have no influence. Also,
| fintech can be cutting edge, which is not what people spend on
| during downturns.
| ilrwbwrkhv wrote:
| This is the time for you to take the maximum possible risks.
| Usually as you get older your appetite for risk decreases.
| Ergo, take that startup offer. You will always have a job as a
| programmer.
| koolba wrote:
| > This is the time for you to take the maximum possible
| risks. Usually as you get older your appetite for risk
| decreases.
|
| Taking risks for the sake of increasing risk is a combination
| of naive and stupid. Increased risk taking must come with an
| increasing reward.
|
| In an economic collapse and likely recession, having a stable
| job at a large established company would give you stability
| and, soon enough, capital for buying up home and basement
| prices.
|
| Working at an unprofitable early stage startup will give you
| a couple high fives from the founders, but you'll be in
| constant fear of losing that paycheck. The reward must be
| _substantially_ higher than a steady big-corp job in normal
| times, and even more so in today 's job and economic
| environment.
|
| > Ergo, take that startup offer. You will always have a job
| as a programmer.
|
| Working at a startup does not magically make you a better
| programmer any more than working at a large company
| automatically turns you into a cog churning out Java beans.
| ilrwbwrkhv wrote:
| > Working at a startup does not magically make you a better
| programmer any more than working at a large company
| automatically turns you into a cog churning out Java beans.
|
| Working at a startup has a far better learning curve and
| better feedback about your rate of learning compared to a
| large company.
|
| Buying up capital for home and basement prices is not a
| part of my equation at all.
| S_A_P wrote:
| Take the safe job when you are old and have family/dependents.
| Take the long shot bets when you are young. You have the
| potential to learn way more way more quickly at a startup and
| if it folds you are still young and have experience. I wish I
| would have taken this advice when I was 25...
| scarface74 wrote:
| I'm by definition "old" at 48. But my "safety" comes from
| always being _employable_. Since 2008 and I was already 34 (I
| stayed at my previous job before then for 9 years), I've had
| six that ranged from startups to big enterprises to my latest
| BigTech company that has a reputation for PIPs.
|
| I never worried about whether I wouldn't be able to find a
| job.
| micromacrofoot wrote:
| I was young and poor, if you're young and poor don't take the
| long shot bets. You need to build stability. Long shot bets
| will burn you out if you don't have a safety net (and living
| with your parents is a completely reasonable safety net, just
| unfortunately one I didn't have!). I wasted my 20s thinking
| if I worked 60+ hours a week for a startup I would be one of
| the lucky ones, and it was foolish.
|
| As usual, there's no one-size fits all advice.
| S_A_P wrote:
| But if you are working in a startup you will hardly be poor
| esp with a comp sci degree.
| micromacrofoot wrote:
| I'm not talking about SV startups really, more like every
| rich dipshit in a podunk town that wants to abuse someone
| for some "big" idea (or advertising companies). I guess
| times have changed a bit though, and just about any
| developer can more easily get big paychecks from
| reputable companies these days.
| throwawayboise wrote:
| But don't spend all your money! You have very few obligations
| when you are young. Basically feed yourself and pay rent.
| Save the rest. You will thank yourself when you are 50,
| because you can't catch up if you wait until then.
| tester756 wrote:
| I'd be careful taking opinion about startups vs corpo from HN,
| bias as hell.
|
| I've been reading about how corpos are bad for years and my
| experience is completely different from what people say
|
| My personal opinion on corpos is:
|
| _____________
|
| pros:
|
| working on real and complex tech products that actually make
| huge $$ instead of burning VCs cash on yet another
| food/car/room/dating app
|
| strong execution (it definitely doesnt feel like it is moving
| slowly, waiting a few weeks for simple decisions)
|
| good $$$
|
| way stronger brand on CV
|
| contact with people who define industry
|
| you can change teams and do something different, you don't have
| to change company because huge corpos probably do "everything"
| (im simplifying)
|
| ___________
|
| cons:
|
| your impact is small, there are hundreds or thousands of people
| involved
|
| your exposure to whole development process (from getting
| requirements, to initial architecture, development, then just
| support) is small because you'll probably be thrown into
| existing project
|
| ___________
|
| As others suggested - at the beginning small company / startup?
| where you are touching everything and doing various stuff may
| be very helpful to learn, but it's not like corpos are bad and
| you should avoid them as hard as you can
| time_to_smile wrote:
| If you have the choice between "exciting startup" and "big
| corporate fintech company" then you don't have worry and
| economic down turns at all.
|
| The reality is that in a turn down turn _you aren 't choosing
| among great options_. In 1999 software engineers making 100k+
| in 1999 (this was a lot more money back then) working for a
| cool startup ended up working in banks making boiler plate code
| for ~80k. Most of them were forced out of the industry.
|
| If you're in a position to be making choices like you describe
| than there is no meaningful down turn in your industry.
|
| A more likely outcome in the event of a serious is that in 5
| years you aren't doing CS related work. Talk to people that
| have worked in aerospace during various periods of down turn
| (or any similar industry).
| rubidium wrote:
| It depends on your appetite for risk. But fintech means you'll
| have a job in 2 years (likely). Nothing is guaranteed.
| throwanem wrote:
| _Finance_ means that, probably. Fintech isn 't the same
| ballgame.
|
| Work for a startup and you'll have an embarrassment of riches
| for learning opportunities. Work in finance and you'll likely
| need to take some initiative, and earn and deploy some
| political capital, to make your own.
|
| Right now, though, it's time to be looking for a safe port
| above all else. If you're young and good, you won't have
| trouble ending up with a compelling story to tell about your
| time with BigCo. In the meantime you want to think about how
| much worrying you'd like to do about where your next check's
| coming from.
| jonas_kgomo wrote:
| I was at Palintir, and one of the things I learned from visiting
| is that they thrive in times of war, pandemics and recessions.
| Why aren't companies designed to be antifragile like this
| candiddevmike wrote:
| Going to be interesting to see which free plans get cut, prices
| skyrocket, or what companies stop having "open core" software.
| Growth hacks like these have always traded revenue instead of
| cash for advertising/exposure, and I think it gave well-
| capitalized companies too much of an edge where they can
| effectively give things away and undercut competitors who are
| trying to be sustainable.
|
| Would've also been interesting if they had separate guidance for
| crypto startups.
| lumost wrote:
| The guidance for crypto startups might be to fold and return
| investor money. There are a few ideas which seem "interesting"
| such as enterprise blockchains for bank accounting, or smart
| contracts for inter-bank contracts. These help large financial
| institutions prove to auditors that they met their contractual
| obligations and no funny business happened. BTC will probably
| stabilize as a tradeable store of value as a hedge against
| "unfriendly" governments.
|
| But there is a huge sea of blockchain startups which are
| trading alt-coins, or providing trading analytics
| software/exchanges for alt-coins, or simply making coins which
| have vague differentiators, or whatever web3 is supposed to be.
| I suspect that any crypto company that doesn't have a specific
| use case that customers pay for will struggle for the next few
| years.
| mcguire wrote:
| " _No one cannot predict how bad the economy will get..._ "
|
| ???
|
| I get that it's twitter, but grammar is still a thing.
| somewhereoutth wrote:
| To be honest 'I could care less'
| [deleted]
| [deleted]
| UncleOxidant wrote:
| I still get a couple dozen emails/week from recruiters in
| addition to phone calls, linkedIn connection requests,etc. - it
| seems like it's still close to the peak number. However, I
| suspect that's about to stop abruptly.
| ditonal wrote:
| This "default alive" advice is repeatedly shared.
|
| One thing it obviously does not address is the human element of
| who you cut and whether they will be "default alive" unemployed
| in a recession. A huge amount of YC advice in general positions
| founders as protagonists and employees as NPCs then are shocked
| people pick Google over their startup offer.
|
| Funny thing is I've seen this exact advice destroy a company. In
| March 2020 they did deep layoffs and cited the need to be
| "default alive." Then their main market surprisingly quickly grew
| in the rest of 2020 , they wanted to capitalize on that, but they
| had laid off too many engineers who knew their infra and had
| enough outages and slow product development that they lost to
| their competitors and are now way underwater on their valuation.
|
| They decided to be serious and prudent and go "default alive"
| which ironically killed them. Of course if 2020 had gotten worse
| maybe they would look smart but the takeaway is there's no easy
| answers.
|
| I would just like to see the human impact of layoffs at least
| lightly considered in these conversations which it rarely is. And
| it's bad for business to as Im sure many people are hesitant to
| join companies that will have a gut reaction of doing 70%
| layoffs. If you even think about doing 70% layoffs you clearly
| over hired and are not making good leadership decisions leading
| up to the layoff.
| thecleaner wrote:
| That's just bad software engineering. In general, I would
| expect software to scale well as far as traffic is concerned
| esp in today's environment where scaling infra is not really a
| big deal. Coping with feature requests on a shoestring staff is
| a different story.
| tshaddox wrote:
| Aren't you kinda just saying "no matter how many engineers
| you currently have maintaining your infrastructure, your
| infrastructure should be just fine with fewer engineers"?
| ditonal wrote:
| Maybe it's bad software engineering but it's a reality that
| most companies have "bad engineering", there's always piles
| of tech debt and even stuff out of your control.
|
| For example, one outage related to Google Ads API changing
| their parameters. This led to ads not being run which
| directly cost revenue since those ads were profitable. The
| outage went on for much longer than it needed to since people
| with expertise on the marketing pipelines were gone.
|
| Id say the "bad engineering" here is mostly Google ads who
| should version their API changes. But if Google can't do good
| engineering, I'm not counting on too many other companies to
| do so. This idea that infra is a "set and forget" operation
| because autoscaling exists is a fantasy for conference talks,
| not reality.
| jimhi wrote:
| > If you even think about doing 70% layoffs you clearly over
| hired and are not making good leadership decisions leading up
| to the layoff.
|
| 100% agree with this part.
|
| Going default alive was not the cause of whatever this company
| was dying. At best, it would slow or kill your growth, not your
| company. It sounds like it was mismanaged and prioritized
| something else over fixing their product. It is not bad for a
| company to focus on profitability.
|
| More employees also does not mean faster product development,
| every developer knows this is often the complete opposite.
| tharne wrote:
| > More employees also does not mean faster product
| development, every developer knows this is often the complete
| opposite.
|
| This is only true up to a point. Otherwise, every startup
| would be a one man show.
| timr wrote:
| That's true, but the intrinsic bias of...well, pretty much
| everyone...is to overhire, so that's what you need to
| fight. I don't think I've met anyone who was suffering from
| under-hiring, unless it was a situation forced upon them by
| lack of resources.
|
| People feel important and "arrived" when they lead a big
| organization, and also, it can _feel_ like you 're doing
| the right thing, because it alleviates some stress. Even if
| you're otherwise allergic to large teams, you're so busy as
| a founder that any help feels like good help.
| vmception wrote:
| > One thing it obviously does not address is the human element
| of who you cut and whether they will be "default alive"
| unemployed in a recession.
|
| An individual's personal financial circumstance is not a factor
| though. There are many people that have fixed their personal
| finance issue adequately. And for those who really don't have
| easy choice of employers or personal runway, then they're
| fucked. Did that really need to be said? That's what is going
| to happen.
| lumost wrote:
| It's not a bad decision for a founder to protect the company
| above all, it's their job. However, at the same time -
| cutting people who took a bet on you should be difficult.
|
| When you cut 70%, it'll make future hiring difficult, it'll
| make existing employees recognize where they stand (no
| where). Getting laid off is one of the worst events that can
| happen to a person, and you really have no way of knowing
| what the impact on them is.
|
| Which is to say, If a founder decided to cut exactly 70% of
| their staff based solely on an email from YC - I'd be very
| certain to dissuade anyone in my network from working with
| them in any capacity.
| kaycebasques wrote:
| > Funny thing is I've seen this exact advice destroy a company.
| In March 2020 they did deep layoffs and cited the need to be
| "default alive." Then their main market surprisingly quickly
| grew in the rest of 2020
|
| I recognize that later in your comment you say "Of course if
| 2020 had gotten worse maybe they would look smart" but I think
| it's worthwhile to compare/contrast the pure macroeconomics of
| early pandemic versus now. To the Fed the pandemic was an
| exogenous shock and they unleashed all their tools to keep the
| economy going. Now they are dealing with the backlash of
| unleashing all their tools (inflation) and are making it very
| clear that their priority is to bring down inflation and they
| are very aware that they do that by bringing down employment.
| So encouraging startups to go default alive is very much what
| the Fed wants right now. Big difference in policy direction.
| Exogenous shock versus endogenous course correction.
| tru3_power wrote:
| Are they just trying to reduce the amount of capital the
| working class has? Are there no other ways to reduce
| inflation right now than to curb demand? Wouldn't a concerted
| effort to resolve supply issues have a similar effect?
| slg wrote:
| When all you have is a hammer...
|
| Part of the problem is that Congress is largely broken and
| can't adequately address issues like this. That pushes most
| of the responsibility onto The Fed and they have a much
| smaller bag of tools than Congress.
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