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Comment by Animats | Hacker News Reader

Is it better to just shut down now? For his example business, a corporate catering business, the answer is probably yes. That industry is going nowhere for at least a year and may never come back. After the epidemic is over, many people will still be working from home. (Commercial real estate is going to be hammered. Watch them scream for bailouts.)

"The number one existential threat right now is running out of capital." No, the number one existential threat is running out of market. If you're a cruise line or a convention service, there's no market. Doesn't matter how much capital you have, it won't help. On the other hand, if you're selling work-from-home tools or face masks, you have plenty of orders and can get capital.

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You seem very certain about your predictions; do you believe you have some non-obvious insight?

REITs, which own and rent out a great deal of commercial, industrial, and residential real estate have already dropped in value, losing 50% of their market capitalization in many cases. Most vacation and luxury related companies have also dropped precipitously in value.

It seems you think the market is underestimating the damage; how much money have you bet on further drops?

Startups are built on feedback. Those first customers aren’t just cashflow and validation, they are a vital source of guidance for product/service direction.

My customers are sport associations and federations, and they are 99% in hibernation right now. It’s not runway I’m short of, it’s feature requests.

Marketing is a bidirectional exchange.

> It seems you think the market is underestimating the damage; how much money have you bet on further drops?

Given that the fed is printing money hand-over-fist, and throwing it at the market, it's quite possible for the market to become completely disjointed from the main street economy.

If it weren't for the printing presses working overtime, there wouldn't be any talk of any v-shaped recovery. Instead, we'd all be panicking over the unemployment numbers.

> we'd all be panicking over the unemployment numbers.

I'm not sure why you aren't? capital might help companies stay afloat but they won't be hiring till theres work again.

Main Street is panicking, Wall Street doesn't seem to care. Look at the valuations.

Canada isn't expecting to return to normal for a year or longer.

What's the alternative? I don't get how anyone thinks that things will just go back to normal anytime soon.

ATM everyone is talking about flattening the curve. The big question is: then what?

All the curve flattening is doing is removing pressure of medical staff. It isn't a solution. Vaccines are a long time off, and otherwise people are taking stabs in the dark about other things which _may_ help, but the truth is we most likely aren't going to have anything reliable in the near future.

So what options do we have?

After the flattening of the curve if we go back to "Living normal" then the virus will simply pick up again. "Herd immunity" they say - which might not be 'too bad' in theory, but it will overload the current medical systems, and we'll be forced to go through this process all over again.

You can try an elimination approach, and perhaps for a small island based country like New Zealand (that got started early) that might work, but for everyone else it's really not an option.

The world right now is literally buying time. It buying time in the form of economic output, and right now all these measures are being pitched as a temporary solution. But the thing that everyone doesn't seem to be paying any attention to, is: what is the long term solution? And unfortunately I think the answer is that we don't have one.

It’s a unique situation though in that the trigger for the collapse of these markets was not underlying economic issues in the markets themselves.

Unless you assume that the virus will never go away or that we’ll all develop permanent agoraphobia, you have to figure many of these markets will come back strong eventually.

If you can find a way to weather the storm, you’ll be in a great position for the rebound, since much of the competition will probably get wiped out.

> may never come back

This is absolutely bonkers. People still eat. People wil eat in the future. There will be corporate locations and events that will need catering in the future.

> Doesn't matter how much capital you have, it won't help.

If you have enough capital you could weather it for years. At some point, people are going to have conventions again.

> This is absolutely bonkers. People still eat. People will eat in the future. There will be corporate locations and events that will need catering in the future.

I think you're missing the point. People who go into offices will still eat, sure. But a startup focusing on corporate catering is betting on a sizable and specific market that's built around in-person work and relatively well-off companies being so flush with cash and desperate to hire that they provide catered meals.

That could well come back. But it could well end up being seen as just a crazy artifact of tech boom times, a perk that died during a global pandemic, multi-year recession, and subsequent reallocation of capital to other sectors that don't depend as much on keeping a small number of used-to-comfort workers happy.

> relatively well-off companies being so flush with cash and desperate to hire that they provide catered meals

Providing food for workers is a pretty basic thing to do in any industry at any cash level. Even old style factories provide a cafeteria. Even a prison needs to feed people!

I would like to see some data on that. I worked in a few different factories and never saw that; the best I recall is coin-op vending with dubious sandwiches. And I've consulted for a whole bunch of companies over the years; the ones that provided free on-premises meals were rare indeed.

Except most of that is not free for the worker. A lot of it is actually run for profit by subcontractors. And if you have to pay out of your own pocket, you probably wont hire catering.

The only people outside tech getting their meals paid by work are usually higher ups, and even then not neccesary.

Corporate catering is a market that is mostly not serving “tech.” Businesses of all sorts use catering. Car dealerships have promotions with “free barbecue,” random offices have lunch meetings with catered food. Retail stores often cater food for employees during inventory. Holiday parties are huge business.

Thinking that corporate catering is “food for overfed tech workers” is a ridiculous simplification. Corporate catering is worth billions and it isn’t even a majority of “tech companies,” who buy those services.

Reading the case study in TFA, it really doesn't seem like they're talking about car dealerships offering barbecue for an afternoon. Their focus is on delivering meals to office workers, and from the language I don't think they're talking about the occasional lunch-and-learn. Especially when they talk about "restart rate" I read it as regular catered staff meals.

> If you're a cruise line or a convention service, there's no market

Cruise lines are in a rough place. Same as airlines.

Lots of convention and vacation related businesses might face a more interesting dynamic. I briefly worked for one in college. Their fixed costs were probably less than $500/year and they kept low six figures in the bank (very high variable costs, mostly enterprise clients, and a fairly old-school owner).

Lots of small travel-related business can “survive” basically in perpetuity. But they will probably face a lot of new friction when events held at the convention center start running again. They can burn capital to stay alive and feed the owner in the mean time, but as that capital burns away, so does the business's feasibility (because of cash flow issues). Bankruptcy and business closure rates are going to vastly under-estimate the number of small business that de facto die out.

> "After the epidemic is over, many people will still be working from home."

Rather improbable. The consensus at my employer is that working from home has been, at best, a mixed blessing. Personally, I can't wait to go back to the office despite the fact that I detest open-plan offices.

It would be a hell of a lot better if coffee shops and co-working spaces were open, and schools weren’t closed.

(edit: misunderstanding, see below)

I think the person you're replying to meant that under normal circumstances (where you can go to these places), WFH would not be as bad.

That was my intention, yeah. I don’t want people to die for my convenience, I just mean these circumstances are significantly worse for most people than WFH would ordinarily be.

I'm glad that's what you meant, and I apologize for reading it otherwise. There's an ugly strain of "it's just a flu" around here and "better" is ambiguous. :)

No offense taken! Misunderstanding or failing to communicate clearly in places like this happens all the time normally, let alone when everyone’s a bit on edge. Good luck and stay healthy.

It would be better, but it would be that much better for me at least. I miss sitting next to my team and interacting spontaneously. Zoom and Slack are fine, but it just isn't the same. YMMV, but my sense from talking to people is most people prefer being colocated in an office.

And for introverts, the reverse. Your sampling migt be biased (anecdotally, in my team of 8 people, 2 want to be in the office, and 6 would rather keep working from home).

Could be. Although I think it'll depend a lot on how long this lasts. I could see some places not reopening their offices until a vaccine, at which point people may have gotten pretty comfortable with not commuting.

It also depends on how hiring happens. Right now I'm involved with a startup that intended to be fully collocated. But since right now the people we hire are regardless working remote, it's very tempting to hire people wherever they are.

Even if most companies end up nominally back in offices, I think this is going to break the inertia that supports a lot of the "you must always work in the office" rules. So I think we'll see a lot more flexibility in scheduling.

I’ve never interpreted corporate catering as a perk, at least with tech companies. It’s designed to keep employees in the office as much as possible. I can’t imagine that BigTech hasn’t done a cost-benefit analysis and concluded that it’s worth it.

>Is it better to just shut down now? For his example business, a corporate catering business, the answer is probably yes.

I don't know, he may be a good position to pivot to some kind of food delivery service. Those are going gangbusters right now.

> If you're a cruise line or a convention service, there's no market. Doesn't matter how much capital you have, it won't help

Nintendo can go roughly 50 years without making any profit at all. Capital is kind of important.

What percentage of people do you think even have jobs that potentially could be done from home? [0]

And then what percentage of those do you think will remain remote in a scenario where transmission worries for the current virus have mostly subsided?

[0] https://www.fromdayone.co/2020/04/02/new-study-how-many-jobs...

> No, the number one existential threat is running out of market.

The article is specifically written for VC-funded startup founders. That type of company burns capital to fuel customer (not revenue per se) growth. The point of this statement (and the surrounding text) is that you can't do that now, and have to switch to preserving runway and/or growing revenue.

Obviously the number one existential threat is different for each startup. He's simply saying that lack of runway is the most likely cause of death now. Most industries will probably return to normal in 2-3 years time.

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