I guess this is the beginning of the tech washout. clings to large tech company job
EDIT: 33% layoff today
Jesus, my startup is making about half that with a good sales pipeline for this year and we are 55 employees total. We might hire additional handful this year but that's it. How do you even onboard when you double your workforce every few months?
But of course revenue (and, having achieved that, then profit IMO) should be among the concrete goals. It’s so weird that this is missed so often.
But many of the objective things that count towards a high standard of living are not much better than the rest of the nation, given the eye-watering tax burdens on CA residents. California roads are amongst the worst, housing quality is generally poor and nothing to write home about, failure to promote dense housing has led to encroachment on wooded areas that are huge fire risks, zero investment in burying power lines has exacerbated forest fires even further, and heavy property crime due to the exploding homeless population in core urban areas is continuously threatening public safety. Not to mention the insanely high gas prices (due to CA taxes), consumption taxes and effectively high property taxes which all hit living standards of average people quite hard.
What company is that?
But we’re not really ‘a tech company’, except in as much as we have a website. We did outlast companies in our sector that expanded like startups, though.
Staying relatively small and focussed with growth driven by making money instead of outside investment might be the antithesis of what a lot of people on here are into, but it can produce better results in many occasions.
Did you work in this space and already have connections?
There are lots of people of people out there running highly profitable (and globally well-known) businesses off of Excel sheets. They have identified that they don't want to do this anymore as these sheets have grown so monstrously complex over the years that the employees who have to use them are miserable. Basically there is lots of opportunity to start a tech company whose sole purpose is to get much bigger businesses off of Excel. However, for reasons, this is much harder than it sounds.
Everyone there is used to dealing with it and for every use case except this particular one, it does what they need.
All I did was write a little program to consolidate data from many thousands of spreadsheets, do some aggregations, etc. allowing them to get better insight into scrap and downtime rates per machine and per contract.
I charged $500 for about 1.5 hours of work, and they were thrilled.
Anyway, what I wanted to point out was that totally eliminating Excel is, for many businesses, probably not worth the hassle and productivity problems associated with the switch. But you certainly can move complexity out of Excel and into a place where it is much more manageable. Reading/writing Excel files is ridiculously easy and doesn't need to occur on a machine with Office, or even Windows.
Then they explained it to me. They needed to show growth through hiring in order to raise money.
I mean, I couldn’t even blame them, if that’s a criteria for VC to hand you a check, well you gotta do what you gotta do.
Needless to say this startup, eventually had to cut cost and end up firing most North America employees and replacing them with new hires in east Europe.
I'm always more interested in the low-fixed-cost software businesses like Sublime Text, Pinboard, or Hwaci (SQLite)
to be clear most VC funds are not actually able to do that.
Someone's earlier point about hiring as a growth indicator to VC's reminds me of the point made by the CEO in the documentary about how VCs told him he needed to have 100 employees in order to boost the value of the company, so they ended up hiring people off the street, spouses and family members.
Crazy story.
There have to be tons of businesses like ours. No one cares about small business success though. I'd love to read more books and stories about "small" businesses making $5-40MM and how they go about their day and running the company. Would make for far better reading than all the vaporware and malinvestment in the VC space due to free money over the last 5-10 years.
The thesis is (If I remember correctly) that the backbone of Germanys economy are "Hidden Champions", small but highly skilled and specialized companies that can produce a niche (technical) good at an quality that cannot be matched by any other mean, making them practical the entire market for that thing.
- The book on Amazon: https://www.amazon.com/Hidden-Champions-Twenty-First-Century...
- Wikipedia even has an article on the subject: https://en.wikipedia.org/wiki/Hidden_champions
After 2000 that particular ideal faded away, and also the market for what Inc magazine offered faded away. Slowly, but increasingly, the focus shifted to "unicorns." There were a few contributing factors:
1. In the 1950s and 1960s and 1970s it was still possible to start a business and grow it to $20 million, and then remain relatively stable at that level. However, the creation of new businesses has been in decline since the 1970s, a trend partly offset by the explosion of software startups, but still the trend is downwards.
2. Consolidation. In 1999 there were 8,000 businesses listed on all of the USA's stock markets (NYSE, Nasdaq, etc). In 2022, there are only 3,400 businesses listed. These last 20 years have seen the fastest consolidation in the history of the USA.
As such, the middle zone of American business is under pressure. Much more now than before 2000, a business has to get big, or get bought, or go under. So the dream that Inc magazine was selling in the 1980s and 1990s simply isn't realistic any more.
Knowing nothing about nothing, I wonder about the role of financialization and tax policy in driving this transition. Stuff like the preference for growth stocks over value stocks, replacing pensions with individual retirement accounts, and cutting capital gains taxes.
However we got here, my belief (hope) is our economies would be more resilient with more small to mid-size companies. Ditto more fair.
I guess. Our HQ is in an industrial-commercial zone, and there are no shortage of small businesses making $1-100MM doing stuff I've never heard of, have probably existed for decades, and just do quite well for themselves. I've driven around 5-10 square miles over the last few years around here just to take inventory of said businesses, and so many of them don't have websites or meaningful online presence, yet clearly do decently well.
I think people just don't talk about these businesses, or care very much. Only Mike Rowe really seems to care about small business / blue collar-type work (Dirty Jobs). I guess Guy Fieri does a good job of highlighting restaurants in his work, too.
Kinda sad.
2) Based on their recent fundraise (and assuming that they had 0 dollars at that point), that's basically a burn rate of 25-30M/m. I'm not sure I can event comprehend what that company could be spending that much money on.
I would find it very hard to believe they have increased their headcount by 900% (~4500 people) in 4 months.
While not everyone has a linkedin, 900 employees seems like a reasonably safe pre-layyoffs estimate?
The way to do layoffs is simple. You get managers to stack rank the lot, then you get every single person with 30 or more reports under them in a room.
Then you do the whole layoff in one 5 hour meeting.
Swing the axe and get it done in 2 days.
Most often I saw “divisions” or “capabilities” cut, either entirely or to skeleton crews that kept the lights on.
Next was just randomly applied. And frankly managers with 30 or more reports were frequently layoff targets as they are expensive and don’t add a ton of obvious value to the bottom line (unless they had a sales function).
I'd imagine a lot of paperwork got back up, but presumably the company business roughly kept going. True or false?
That’s true of ninja rockstar developers and vp directors of business dev. Largely the world keeps turning no matter who leaves a firm no matter the circumstances.
It's rare that the damage is surfaced. I did see an event once though when a fairly senior manager made repeated attempts to hand over some data collection and reporting when they were made redundant but were rebuffed by colleagues and their manager alike. Essentially this person was seen as a bit of a third wheel, and many comments were hurled around during the lay off process along the lines of "not clear what his real contribution is".
Well, it turned out that the data that he was collecting, analysising and reporting on was fundamental to the running of a strategic investment. Some months after he left the said project tanked, and because the data was not available a lot of money that potentially should have been recoverable wasn't.
So, it cuts both ways.
This is important, because a company can be held liable for wrongful termination. [2]
[1] https://www.nolo.com/legal-encyclopedia/making-layoff-decisi...
[2] https://www.employmentlawfirms.com/resources/employment/wron...
In California, severance is almost always in exchange for signing away various rights, one of which is likely any claim of wrongful termination. You can always try to negotiate the payout or the terms, though. Just expect to hear "no."
When a second round breaks that trust though, all bets are off.
There is still a huge difference between “this is the only round of layoffs, we will grow past this” (when this is the true intent) and “that’s all for this week. We’ll be back with the next round of layoffs on Friday”
Last valuation of this company was $10+ billion. Absurd. [0]
I'm personally happy to see the correction coming where profits - or lack thereof, more likely around these parts - actually means something these days.
[0]: https://techcrunch.com/2022/01/14/online-checkout-bolt-decac...
I worked for a retailer with >$2B in revenue across stores and 5 websites plus internal tools and we had about 100. And probably half were low cost contractors. Software practices sucked, deploys took forever, they had an ivory tower architecture crew and pie in the sky CTO and yet their digital products all worked fine and made tons of money. Why? Their products and branding were excellent.
The other thing Uber has to do is optimize well. It needs to state competitive with Lyft for both passengers and drivers, minimize driver churn (but not too much), optimize matching, and charge predicted fares accurately.
Uber also processes an insane number of transactions. Not quite Visa, but I'd guess it's in the top 5% of volume as a merchant.
and some more text in a list below
...and yet apparently significantly more revenue per employee than Bolt. Oh, and we were profitable, infinite runway, good growth, solid unit economics, LTVs we understood.
Imagine!
I have no positive view of Bolt myself, but in a situation like this VCs are putting money on future prospects/growth potential, not the early revenue.
(Doesn't work if the company goes bust though)
https://www.crunchbase.com/organization/bolt-5/company_finan...
how can a company burn money that quickly so they end up with only 12-18 months of runway?
Whether it's actually possible to usefully deploy all that money is another matter. Generally it's very hard. I only have an up-close perspective on one such large raise (that ultimately failed) but imo the reason they got the money was that they made themselves a credible way to spend so much so quickly.
Depends on the economic environment. We are headed for a difficult cycle. Downsizing and doing a raise to at least partially "sit on" might be the best strategy at this moment. Money flow can go from huge to nothing faster than one might imagine.
I guess we could interpret that as the cofounder cares about sustainability for as long as it takes to hand off the bag.
People get lazy because things seem good and let questionable hires and other expenses slide by because why not, there's plenty of money.
But that doesn't answer his question. Was it worth it?
You get tech debt a little at a time, but it can be hugely valuable to leverage it for growth.
Now that cheap debt is off the table, that buyback strategy will have diminishing impact as well, forcing companies to find other ways to keep stock up (such as cutting costs)
They just won't have quite as obscenely large of a dragon-esque hoard to sleep on.
Have a compelling product that generates revenue. Unless your workforce is 100% saturated and you don't really _need_ that many engineers, lay-offs are one step above cutting free snacks on the usefulness scale when it comes to trying to stop bleeding.
Packaged dreams and hopes as a product ceases to be investible with high interest rate / high inflation.
2. Public companies will cut the fat, cut “dream” projects, to protect their stock price. The further the money, the more risk to the employee.
3. Things could get a lot worse.
Facebook? Who knows? I don’t follow adTech
Their strategy here is not the same as in US. They came here for cheap workforce, but cheap for them means REALLY cheap.
How would staglfation impact digital advertisement and retail revenues?
It will be 12-18 months at least before we can tell if a long legged tech washout is upon us.