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Comment by rexreed | Hacker News Reader

I'm sorry for some of my schadenfreude here, but really, so many of these startups are overfunded with way too many employees to begin with. They've often paid top dollar for expensive technical talent in locations with very high cost of living.

I can't wait to see a pull back to solid fundamentals. I don't see why a daily vacation rental company honestly needs 240 highly paid employees. One company cited in the article (WanderJaunt) laid off 56 out of its 240 total employees, but honestly I bet they could do just well with 20 total employees.

Let's put the Lean back in Lean Startup and provide real value instead of playing the magical, mysterious game of VC musical chairs.

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Why is it so offensive to people in this industry that our skills are valued?

Sometimes it seems a little crazy to me too, but I'm not, like, excited to need to live with 5 roommates 90 minutes away from work again like you seem to be.

The GP is not complaining that our skills are valued, it's complaining that those companies have an awful low productivity.

You know, people filling low productivity jobs means that our skills aren't valued enough.

> it's complaining that those companies have an awful low productivity.

That is just human nature, once the company starts going big and has the funds, the managers start empire building.

You answered your own question. It's not that people don't think you're valued, it's that the value you are getting commensurate with pay levels is unsustainable in the region. When the tide goes down, the first boats to flounder are the ones on high ground. I hope we can also see an unwinding of the ridiculous cost of living that is part of the rationale behind unsustainable wage growth. These things go hand in hand.

>> I hope we can also see an unwinding of the ridiculous cost of living that is part of the rationale behind unsustainable wage growth.

From your mouth to god's ear. The ridiculous cost of living is what made me reconsider the Bay Area (South Bay) after 5 years there.

My wife and I are very financially conservative. We pay cash to own assets - car, house etc. That just wasn't possible out there. And I couldn't imagine shelling out >$1M (not that I have it) in cash to own a mediocre house that would be worth 5 times less almost anywhere else.

Work remote, move to the midwest (or, really, anywhere outside of the bay area or NYC), own your house outright.

The idea that the options are "get paid usurious amounts of money" or "live 90 minutes from work with a bunch of roommates" is a false dichotomy.

Interesting perspective. My employer entertains remote workers and satellite offices only to the extent that it feels the Bay Area is “tapped out.” If that thinking is at all representative of the industry, I think we’re likely to see those options evaporate rather than grow.

There are definitely IT jobs “native” to the Midwest, but they’re overwhelmingly seen as cost centers to be deskilled/automated/offshored rather than value-creating R&D.

I mean, I've been doing it for the vast majority of the last decade, so my feeling is that it can only increase. The housing prices and the sheer stress of living in bay area / nyc are so overwhelming.

I've been working remote for only a short time, but it's been interesting to watch as my entire company (its a software company) now goes remote due to COVID-19. There's a lot of people that seem to be having lightbulb moments like, "oh wow, I'm just as much if not more productive than I was before" as well as some people that seem to be having a crisis and not know what to do with themselves. The people that don't know what to do with themselves seem to be correlated with the same people that I previously felt had a negative impact on our velocity.

Any company that truly believes all the talent is on the coasts isn't the kind of small-minded company I would want to work for anyway, so it's kind of moot for me.

But I think there will be a lot more understanding of what jobs work well in a remote setting due to quarantine, and plenty of software companies will realize they can save a ton of money by not retaining an expensive office space, while gathering talent from a wider pool of diverse perspectives.

A fair number of tech jobs can draw from areas within an hour or so of tech centers where housing is, if not cheap, a lot less than much of the Bay Area. And in many cases the companies aren’t even downtown anyway.

The SF/NYC vs. back of beyond dichotomy is pretty silly.

I can't speak to your skillset or your job, but there are a lot of people working in our industry not because their skills are valued, but because investor dollars are often thrown at growing headcount.

In my experience the pareto principle is hard at work in VC funded startups that went for rapid headcount expansion.

Bingo. This is exactly what I meant.

And when the industry / economy in contraction, the first jobs to go is the "excess fat" of those 80% non-productive that accounts for 80% of wages. The remaining 20% are the high value contributors, which honestly represents what the true employment should have been.

VC economics are not the same as general market economics.

I know it's not the crux of your argument but your lamentation is more about prohibitive housing, bordering on classism.

The lamentation that engineers are "paid too much" is about prohibitive housing. If you consider engineering compensation in terms of the lifestyle it buys rather than the nominal dollar values, it's a pretty normal college-educated middle class living.

See also the "Austrian business cycle theory". But the bust, while clearing the economy of a lot of mal-investment, goes on for quite a painful while before the previous level of output/employment/prosperity is matched.

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

Are you implying that venture funding at previous levels is a function of low interest rates (that's the theory in ABCT linked above). I don't think that specifically applies here. While it's possible venture funding is accelerated by low rates, this was not the case in the late 1990s prior to the 2000s dot-com crash.

Rather we're seeing a Black Swan event causing macroeconomic pull back, and it's pulling back the covers on companies that really had no fundamental underlying value or support. The only real exit for these companies was acquisition or public markets. But with both exits now drying up, there's nothing but overvalued, overfunded companies with revenue streams (if they have any) drying up faster than the glaciers are melting.

The fundamentals were never there, and it was only the fat-times of VC investment keeping them afloat. There might be a role to play with ABCT with regards to VC investment as a whole, but this downturn is more than just a normal business cycle.

Ah yes, ABCT.

First, assume the market is made up of rational actors. Second, assume that sustained irrational investment choices have been made by the rational actors.

A rational person can make mistakes.

What is "rational". I don't think that this theory assumes anything about "rationality".

It's many of the other economic theories that are built on the pinnacle of "rationality".

I mean, the fact that ABCT is not backed up historical events either is a bit of a blow to its credibility.

Have you ever seen the chart of fed funds rate with shaded recessions?

https://fred.stlouisfed.org/series/FEDFUNDS

Schadenfreude is an absolute awful response to this. A lot of us are just trying to put food on the table and pay off student loans.

You know the numbers. 90%+ of startups fail. In an economic downturn, it's more like 99%+. If you're trying to put food on your table, startups are probably the wrong place to turn.

Maybe I don't know the numbers. Maybe I only work for a startup because it allowed me some flexibility I wouldn't have had otherwise. Maybe I didn't know that a global pandemic was going to shut down the economy. Maybe I'm fresh out of college and don't know better. Maybe I lost my last job and had to take this job because the other option was to go bankrupt. Who knows?

My point is the same as it was in my gp; your attitude is grim and you're misplacing your negativity onto real people. This is the wrong time to do that. In this situation, there is only one explanation for schadenfreude and that explanation is that the person feeling it is an asshole. I'm glad I've only head the pleasure of speaking to you on the internet.

> Maybe I didn't know that a global pandemic was going to shut down the economy.

Then you are a fool.

The tech economy crashes on 5-7 year cycles. See: Dot bomb. 2008 Financial Crash. Covid-19 in 2020. I can go backwards in time, too. 3D graphics card startup crash. Microprocessor startup crash. AI winter. etc.

Too much money flows into the sector and then eventually the VC funds want it back. Roughly on 5-7 year timescales. Funny how that aligns with crashes, no?

This time VC's changed tack--they won't put money into anything which produces a product so they can simply keep the shell game going. Presumably that's why this crash is a little late.

If you aren't ready for this kind of cycling, you shouldn't be in a startup.

My point isn’t that you or the parent that I’m replying to are incorrect at all. You seem to be missing my point entirely.

Feeling schadenfreude when a business fails is tantamount to being happy that someone loses their job. That’s fucked up- and I can’t believe anyone would be stoked about this. Seek help.

I don't see a problem in feeling good that a bad company failed and feeling bad that employees at that company are losing their jobs and going to suffer. Conflicting emotions are a natural result of complicated situations.

This is part of why I think we need a much stronger economic safety net with UBI and universal healthcare. Too often, we protect objectively bad institutions and companies because of the very real need to preserve the jobs they provide. If involuntary job loss became a less disastrous event, we might be more keen to cut out waste and inefficiency in the system because we're no longer potentially destroying people's lives in the process.

This is great insight. We protect bad companies because we want to protect good employees. In the process we reward bad management and bad investors and the good employees get shafted anyways.

> crashes on 5-7 year cycles. See: ... 2008 Financial Crash. Covid-19 in 2020.

2020-2008 is 12 years. Your second piece of evidence contradicts your main claim. Try again

I already said that. VC's decided that they weren't going to fund anything hardware related this time.

You can keep the shell game going infinitely with social crap built by 20-somethings to flog to the FAANG's because you can keep skimming until you hit your 100x.

Now that the unicorns are finally busted, we'll see what the landscape actually looks like.

Can you explain how your argument doesn't apply to local businesses as well?

And I would hope you would see the problem with telling people not to work at local businesses. Ultimately the only companies built to weather something like this is the larger multinational corporations and in times like these, it kills both startups and local businesses alike.

I don't think being multi-national confers much of an advantage considering this has spread across the globe.

Companies providing essential services (supermarkets, healthcare) will probably be fine. Otherwise having lots of cash on hand or no liabilities (rent, debt, etc).

The schadenfreude isn’t necessarily directed towards individuals who choose to work at a startup and have the misfortune of being laid off. I believe it was meant towards an overly aggressive/ borderline reckless leadership mentality that has founders raise tens/hundreds of millions in capital, pump a majority into explosive, unfettered growth objectives, without having to exercise much of the fiscal conservatism that many other industries try to operate by. Working for a startup is inherently risky, but more so when founders are too aggressive and do not leave themselves options to retain employees during an unexpected crisis. If a positive outcome of this event is more conservative spending strategies by founders, that’s great. However, based on past patterns, that may be unlikely. And as an employee choosing to work in that world, YOU have to accept those possible realities.

Exactly! This comment reflects the best summation of what I meant and how I feel. The schadenfreude is directed at the COMPANIES not the INDIVIDUALS. And honestly it's directed at the VC.

I agree. At the end of the day, the startup ecosystem is much healthier when the market is sane. On the one end you have newbie angel investors and VCs throwing money at pre-revenue startups that will go nowhere. On the other end of the spectrum you have Softbank pumping in billions and ruining what could've been great businesses. Honestly, WeWork had (and still has) such a great value proposition. It could've been a very stably profitable company with a valuation in the hundreds of millions, but here we are.

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