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Comment by jesuscript | Hacker News Reader

My best guess is that raising funding helps raise the valuation, especially as they approach IPO. So raise money for the sake of raising the valuation.

You don’t really need the money, but you got it. What are you going to do with it to appease the investors? Well you gotta act like you are doing something with it, especially something that shows growth.

Hire more. Hire more because we imagine more. Keep imagining until imagining doesn’t work anymore. Then fire, and say sorry. Hopefully you sold enough equity at the ridiculous ipo price.

Sorry, but not sorry.

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I interviewed with them last year and while I didn't get the job, looking back now I'm kind of thankful it turned out how it did. From my limited perspective interviewing there, it seems like they started branching out into all things crypto.

One manager I interviewed with explained that they wanted to become the "Amazon of Crypto" where any service related to crypto such as wallets, NFT's, etc are all on Coinbase. It was clear back then to me that Coinbase wanted to dethrone both Metamask as the wallet of choice and OpenSea as the NFT marketplace of choice. You hire a ton of people for these projects but end up letting them all go when they realized those projects weren't going to pan out.

> You hire a ton of people for these projects but end up letting them all go when they realized those projects weren't going to pan out.

Which is weird, because they're not especially difficult projects. OpenSea was built by like five people.

Presumably the difference is that those 5 people really wanted to build OpenSea, where Coinbase staff were just assigned to projects.

I agree with your sentiment and I think you would agree with this, just wanted to get it out there.

I've seen teams of 10-15 people that do absolutely nothing. Have 10 meetings about specs but space them out over a year, so that by the time the next meeting happens, everyone forgets the entire context of the project... so you have to cover everything again. By the end of year, its gone absolutely no where due to 2-3 layers of bureaucracy. Coinbase _can_ hire good talent... wonder if managing it is the/a problem.

> Coinbase _can_ hire good talent... wonder if managing it is the/a problem.

I've worked at a company where at an individual level people were quite talented, moreso than competitors who did better than them .... but getting anything done required Y different meetings with X different teams, satisfying N different gatekeepers who just want to push their own product on you, avoid stepping on the toes of persons X,Y,Z, etc etc.

Company multiplied in size a few times over the course of a few years and had just no idea how to handle it.

I've seen a large non-tech company (you probably know them) increase dev time by like 50% (plus increase defect rates) across several projects because someone inside had built an identity as "the [niche database] guy" and successfully sold [niche database] to the org (with the help of [niche database]'s marketing material) as the solution for all problems, when it was actually a pretty terrible fit for almost everything they were doing.

This dude cost them millions, for no benefit whatsoever, by causing morale-crushing slowdowns on every project. It was crazy. Wouldn't be surprised if he's running the tech-side of that whole place by now, either. They seemed to love the guy.

The more people you have, the longer things take. Everyone has an opinion and you need to spend time to get people to agree on things. This compounds with XFN teams and people coming up with make work or competing for top spot for the sake of performance reviews.

Probably better to have a small team quickly ship a v1 and get everyone involved after.

It's a classic problem with big companies and software development. Say you worked for a Fortune500 company and they wanted you to build a TODO list app. The core app can be built in a week, but it ends up taking 3 months and a team of 10 engineers, why is that?

* Well we need to integrate it with our engagement platform, meetings required with engagement to determine scope and requirements.

* Well we need it to also integrate with our productivity API, another set of meeeting to determine scope of integration.

* We need deep reporting capabilities, please get with the reporting team to determine requirements.

* Also this app will need to integrate into EXISTING_TOOL_A and EXISTING_TOOL_B. App cannot be built in React and must be built in Angular with OLD_SOFTWARE_PKG_1 and OLD_SOFTWARE_PKG_2 in order for it to successfully integrate with these old apps.

* Hey we just signed a contract with CLOUD_PROVIDER_Y, we know you were using IN_HOUSE_PROVIDER_1 for your infra but now please modify the entire app to work with CLOUD_PROVIDER_Y.

* Oh and it also needs to be backwards compatible with IN_HOUSE_PROVIDER_1 because it needs to run in parallel while we onboard CLOUD_PROVIDER_Y

The requirements will expand too. The startup is probably not worried about ADA compliance, deep Unicode compatibility, localization (the reason why we need to be good at Unicode), complying with the backup policy, security team review, auditing requirements, immediate compliance with privacy laws in other jurisdictions (e.g., a US startup might ignore EU law right away but the Fortune500 might not want to), especially with regard to personally identifiable information, etc.

You list a lot of perfectly valid "external" things that a Fortune500 company might add, but there's also internal things that it may need immediately that a startup won't.

(The backup policy being a particularly trenchant one, in my opinion. It's not an every day thing, but we've certainly seen several stories over the years on HN of startups basically going "whoops, we accidentally the data, sorry we're shut down now because this is unrecoverable for us".)

Reminds me of when I worked at Altavista (the "original Google") for all of two months in late 1999. They had rolled up many companies and I was assigned to work in one of the recent acquisitions, and the manager and I met twice in that time. They asked me to get some insight into how the search operation worked. I played a lot of pool. Found out they hadn't successfully indexed the web for a while. Altavista was trying to be everything to everyone and was spending a ton on celebrity advertising (Pamela Anderson for example). I left.

I think CMGI rolled up the remnants of Altavista.

I recently heard that a stale index was the thing that really killed AltaVista.

https://twitter.com/danluu/status/1117859464793583616

Do you have any insight into why that happened?

I feel the same way about interviewing with OpenDoor. The hiring manager was so condescending and when I didn’t get an offer I was bummed, but their stock is down like 90% since then so… yeah. “Sorry about your RSUs bro”.

I think everyone was completely caught off-guard by the ferocity and pace of the crypto drawdown.

Volumes have atrophied completely. It's not a cooling of retail interest vis-a-vis the stock market, but complete apathy and/or hatred.

See the volume data for OpenSea as an example.

Absolutely nobody paying even a drop of honest attention was surprised by any part of the crypto drawdown

I don't agree. People were aware of all of the same problems in early 2021. Is it a surprise that the momentum behind the ecosystem eventually fled once people couldn't sell to the next bagholder as easily? No. Is it a surprise that it happened in 2022? Yes. Nothing about the industry fundamentally changed between 2020/2021 (massive explosion of interest) and 2022 (collapse). In Dec 2021 there wasn't a particularly good reason to predict that the industry would collapse in 2022 instead of any other year.

This is silly hyperbole. I was paying honest attention to crypto and I was continually surprised that it didn’t crash. Eventually I gave up and stopped guessing it was going to crash. Then it did :shrug:

Bitcoin has dropped about the same amount as Netflix, Meta and Tesla (~70-74%)

It has significantly outperformed VC darlings like Peloton (-93%) and WeWork (-90%).

You can't tell me that WeWork stock wasn't working on the greater fool theory any more than Bitcoin's price works on finding more bagholders. It's all a grift, some worse than others.

Peloton in particular was a beneficiary of the pandemic and lockdowns. With no ill will, I'm content to see their stock price drop if it is correlated with an improvement in the general state of the world.

It's absolutely not informative to compare their returns to various crypto.

Peloton got massively mismanaged by its ceo.

WeWork wasn’t public, and SoftBank in particular seems more than willing to be the greater fool on bets we all know are terrible.

Equity/market are down generally, and some VC companies are frauds.

That doesn’t change the fact that crypto is zero/negative sum.

Obviously hindsight, but the combination of 0% interest rates and the rise of retail investing post-March 2020 was fuel that had to run out eventually.

Predicting tops/bottoms is a fools errand, however. If you thought Bitcoin was overpriced at $15,000 and see it rise to almost $70,000, only to see if fall, but not past the point where you initially thought it was overpriced -- well, hopefully you at least didn't bet on it being overpriced at $15k.

I remember thinking how crazy Tesla's price seemed to me in June/July 2020. It then proceeded to go up more than 4x that price over the next 1.5 years before falling, but TSLA is still trading ~30% higher than those June/July 2020 prices.

Absolutely everyone was surprised by the pace of the tech meltdown. It's not everyday that "blue chip" companies like Netflix and Meta and Tesla drop 60-70% within months.

Meta crashed 73%. Tesla crashed 70%. Netflix crashed 72%.

Everyone knew it was always going to come down, but if I were to tell you in September 2021 that Meta was going to trade 70% down within a year, you wouldn't have believed me

> if I were to tell you in September 2021 that Meta was going to trade 70% down within a year, you wouldn't have believed me

I would have probably asked "who is Meta?" at which point you explain you are a time traveler, and Facebook was to change their name in the next few months, too. After my initial laughter, I suppose I'd believe your whole story, because you can't make this stuff up. Next thing you'll tell me, Zuckerberg has legally changed his name to "The Cooler Mark".

Sure I would. I've been through a couple of recessions now.

You know, I really like this comment because its pretty true. I think a lot of people will say they say the signs... and I initially wanted to say that too. It happened so "slow" though and its crazy to think about how "good" it was pre-covid. I mean, things generally were going up and IMO, life felt more "stable" so a tech crash 2-3 years out just wouldn't be on the radar.

I have always said (w/comments to back it up) the $600 checks were going to cause huge issues sooner than later. I don't think its that prophetic or controversial (its basic econ) but at the time it seemed if you even suggested the idea that printing so much money was a bad idea you were seen as "hating poor people" or some other flavor of "against the common man."

Still. I can't say I would have believed you. Otherwise, I would have shorted the whole tech sector.

I saw the signs and I was convinced it was going to crash, and I even shorted it at 55kish. And it did crash.

Then out of the blue, for no real reason, it went up again, hitting another new high.

Point is: markets are completely irrational and predicting what they're going to do or not going to do is a futile exercise.

Yea, I understand that. I actually run a trading firm but I don't do "long term" bets like that. Also exactly for that reason.

> but if I were to tell you in September 2021 that Meta was going to trade 70% down within a year, you wouldn't have believed me

Maybe not down 70%, but certainly down a lot due to iOS privacy changes, which are being taken up by other platforms and browsers as well.

A big chunk of the negative sentiment however can be attributed to those ridiculous metaverse demos that they've spunked $15b of cash on.

The overall tech meltdown, sure. The crypto meltdown, no, that was not surprising.

Crypto meltdown wasn't surprising simply because it went up so much, so fast that it was always going to come down.

In real terms, Bitcoin and Ethereum didn't perform any worse than most major tech stocks, and outperformed many pandemic tech stocks (Zoom, Peloton).

If you were caught off-guard then you've been sitting in a massive bubble. There has been open distrust and hatred of cryptocurrencies since long before NFTs were a thing.

I would argue that NFTs did more to spread the word that cryptocurrencies are a farce than they did to create "value" for those behind them.

it's not a question of you getting caught off-guard but a massive exchange being trapped now (what do they do?) I kinda feel for them because they tried to build a legit-looking exchange business unlike the famous scams, but now they are stuck and these losses are mind-bending

I feel the same about HOOD. I own some of their stock but every time I see them announce a new crypto product, investment, team, feature etc I cringe. They have coupled themselves and the success of their non crypto products tightly to the success of crypto and I wonder if there will come a time when they try to cut out crypto or if it's too late to do so. I'm holding because I'm hoping they can swing it, but it's been tough to watch because I'm a crypto bear and always have been. I love what they've done with their equity marketplace and their new retirement product seems interesting - but so long as crypto is still around stinking up the place it's hard for me to be a consumer of theirs.

The Indian version of Robinhood - Zerodha - reported a profit of nearly $250M on revenues of $650M last year. It never raised venture funding and never sold any crypto.

Bootstrapped businesses have the best execution.

I've seen hatred of crypto, constant insistence that it's 100% fraud, and claims that it's worthless and will collapse for many years now.

In 2019, no one was saying it would crash in 2022; they were saying it would crash in 2019 or just "it will crash eventually"

In 2020, they weren't saying it would crash in 2022, they were saying it would crash in 2020 or just "it will crash eventually"

In 2021, they weren't saying it would crash in 2022, they were saying it would crash in 2021 or just "it will crash eventually"

In 2022, they said it would crash in 2022 or just "it will crash eventually", and people who didn't realize it would actually happen in 2022 were in a bubble?

It turned out that 2022 was different, but the predictions weren't any different, which means they weren't actually meaningful predictions.

This house is garbage, it's gonna collapse. Didn't collapse last month.

Didn't collapse the next month.

Finally collapses the one after. Was it still a POS garbage house? Probably.

If it can prevent any buy-and-hold/long-term retail investors from putting their money into something vastly overvalued, I'd argue that "it will eventually crash" is an extremely meaningful prediction even without a precise time frame.

You are intentionally mixing up 2 types of prediction and belittling the one that's a more powerful driver than "it will crash on X date".

"it will crash eventually" is more important, it results in people staying away/getting out of this market, for good. It's much more powerful than oh it's gonna crash on this or that date.

To be clear, this is the thread we're in:

> > I think everyone was completely caught off-guard by the ferocity and pace of the crypto drawdown.

> If you were caught off-guard then you've been sitting in a massive bubble.

OP is saying people were caught off-guard by the specifics of the crash. That doesn't require being in a bubble, because there weren't any specific correct predictions that were distinguishable from the specific incorrect predictions.

Non-specific predictions may be useful, but they don't prevent you from being surprised by the specifics.

Coinbase was caught off guard because they drank the koolaid.

You know who didn't drink the koolaid? Cumberland/DRW and Jump.

They are very useful when the prediction resulted in not participating in this market at all.

For those who are in this market (as Coinbase is), they are useful in terms of planning and setting up a large reserve of rainy day funds - for less risky venture it may not be necessary, but for crypto it absolutely is. Unless plan B is to crash and burn which seems to be the MO for most crypto companies.

Note that they were all saying "it would crash"

I mean, if it was easy to time when things would collapse, you could make a lot of money. But it is sometimes possible to point to something and say "that'll collapse, sooner or later, because it doesn't make any sense" where it isn't practical to predict the time of the collapse.

People started saying "yeah, there's a problem here" about the Irish property market in 2003 or so. Lots of people were saying "this will crash any day now". For years. Then between 2006 and 2010, prices halved, for broadly the reasons the doomsayers were saying (the global financial crisis was arguably a trigger, but doesn't explain the whole thing).

(Also, I would note that Bitcoin did crash in 2021, as well. And it's not like 2022 is likely to be the last crash, either).

People were calling crypto a scam. Which is not a prediction, just an observation. Trying to market time an irrational bubble like crypto is a fool's errand.

You're being way too kind to the crypto haters, who were predicting crashes in 2014, too.

HN has predicted 10 of the last two crypto crashes.

Timing the drawdown was difficult, but the whole thing was incredibly bubbly. If there's no fundamentals, only a desire to eventually sell out to a greater fool, the drop can be hard.

Plus there's also the "Lehman Brothers moment" provided by FTX. People are learning what "counterparty risk" is. If you're not daytrading, then suddenly it's worth considering moving your crypto off the exchange and assuming the custody risk yourself.

> I think everyone was completely caught off-guard by the ferocity and pace of the crypto drawdown.

You have to believe. Especially if you claim to be a leader.

This is no different to other tech companies and startups that have over hired during the low interest hype and have aggressively raised money. It is essentially the VC hype cycle and are meant to dump their holdings on retail once the stock is publicly listed.

We're all just see how tech startups and other companies are getting slaughtered over market conditions and NOW need to cut costs, spend less, hire less and turn a profit rather than continued losses.

The era of "Lose money for decades just like Amazon did and so can we" is over.

> [...] that have over hired during the low interest hype [...]

Well, in a sense that's exactly what low interest rates were supposed to accomplish: get people in the economy to spend.

Amazon was founded in 1994 and turned their first profit in 2001. A better example would be Uber, which ran negative until they had less than one year of runway remaining and then were somehow allowed to scam pedestrians into keeping their unprofitable taxi business solvent.

what do you mean by scam pedestrians?

Uber lost all of the money all of the original investors gave them, and sold that bag of dog shit to the public. Everyone who bought the IPO lost money.

classic vc growth story, almost a fairy tale.

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