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Comment by noizejoy | Hacker News Reader

It may not be entirely coincidental that a lot of financial carnage is happening just after the large scale printing of money (quantitative easing) stopped, interest rates started rising and borrowing money became no longer almost free (for the wealthy).

Arguably numerous “new” financial constructs only worked with free money. Meme stocks, crypto, SPACs and very large VC funding may have needed all that free money to “work”?

So maybe we’re just returning to more traditional financial investment patterns?

Some or all of those financial constructs probably still have their place on a much reduced scale in more specific contexts. But it’s no longer guaranteed free money.

I’m assuming that there are quite a few PhDs and other books in the works that will analyze those connections/dependencies in considerable detail.

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To add to that list of factors: it's also the end of the decades-long ride in Technology stocks which drove a lot of FOMO sentiment that made that money so easily available... nobody wanted to miss out on the next Facebook, the next Uber, the next Airbnb, the next Theranos--wait

The quality of the assets for these moonshot unicorns declined over time (IMHO partially because they were increasingly moving away from pure-bits to bits-and-atoms, making business cases much harder to execute and expensive to fund) and then the macro backdrop soured and here we are

Bonus: here's what StableDiffusion drew for "A dream of moonshot unicorns, 4k trending artstation" because why not... https://i.stack.imgur.com/sFxIw.png

Uber and Airbnb have made money?

Airbnb had an adjusted EBITDA of ~$230m in Q1, so Airbnb has turned a profit once. Not sure about Uber

Adjusted means you made a profit if you ignore the fact that you made a loss.

Especially when servicing interest on debt (the I) isn't nearly as cheap as it used to be, unless the debt is locked in at a lower interest rate. Even if it is, but the term ends, a rosy-sounding EBITDA can turn ugly.

Uber has been adjusted EBITDA profitable since 2021 and is close to GAAP profitability (might reach it this year or 2024).

"Adjusted" EBITDA is frankly a sign that the company is making "magic" (read: misrepresentations) on its balance sheets. It's not surprising that Airbnb, Lyft and Uber are the only prominent companies using them.

They did for the early investors >:^P

my understanding is that Uber has a knob they can turn to just be profitable, and have chosen not to because they keep on wanting to grow and have access to more money.

Many firms have been saying this for a long time… it’s unclear how easy it is to turn this knob.

Investors seem to be demanding cash returns from mega caps now. At a minimum - if Uber has to raise money again, we’d expect it to be in worse terms.

Folks who have spent time working in SV tech companies know that for many companies (AirBnB is absolutely one) there is a knob which can be turned. The cost structures have a lot... fat. The spending in many of these places is beyond belief.

Sure, but twitter is somewhat of a litmus test for this. When twitter started trying to cut fat they also crashed their revenue.

Organizations love to accumulate fat, I don’t think anyone really has a clear idea of what is necessary fat and what isn’t. Your best bet would be getting consultants in to figure it out… who probably don’t know a heck of a lot about running a tech company.

Additional tests will be Salesforce, Twilio, Docusign, Facebook - all have promised efficiency from here on out. My guess is they'll all start putting up very good numbers.

Somewhat fair point. But there are entire areas (like product initiatives) that are extremely speculative and just pet projects which can be cut at many places. Google for example wasted a billion here or a billion there like it was nothing, on things that made little sense, years ago.

Salesforce has >30% EBITDA margins and annual revenue growth of 10-15%. They're massively profitable... if anything they are the aspirational benchmark nearly everyone else is trying to reach

No, they don't have those EBITDA margins.

They report an "adjusted" (ie, fake) EBITDA number in the 20's. It's bs and investors know it's bs. It doesn't include stock based comp.

I think we shouldn't oversubscribe twitter's failures here. If "normal" vultures had come in and done layoffs Twitter would be in a very good situation. The problem with Twitter's financials now is that it was a leveraged buyout (so now their debt obligations are much higher than they were 12 months ago), and on top of that everything is happening in order to make it toxic to advertisers.

Even before the purchase Twitter was getting to profitability quite comfortably!

I'm looking forward to companies that actually have viable product ideas.

When money is tight, you are less likely to throw it at an AI-powered cheese-straightener, just because the founder did a great TEDx talk.

After the last couple decades of our tech industry, I'm wondering who's going to be capable of executing on those viable product ideas.

When the goal isn't "growth" and IPO/M&A exit, but to provide a product that people want, in a viable business model... and to do it without huge hiring... a lot of us will have to recalibrate/relearn how to think about everything we do.

I am. I've spent my entire adult life, shipping software.

I know there's lots of folks like me, out there.

The problem is ... how do I put this ... It's really embarrassing ...

You see, we're all old.

If we want to market some of us more, uh, battle-scarred engineers, for the emerging business environment, "old" could use an image makeover.

The reason is, AFAICT, the current ageism started with dotcom startups, and by now might have enough inertia to linger long past when the VC-growth-appearance party is over.

(I'm thinking we saturate the streaming services with new shows glorifying people with graying hair. Elite military commandos, brilliant business strategists, heartthrobs, revolutionaries, etc. In the shows, they should frequently draw upon their experience -- wisdom, as well as surprise esoteric skills -- to save the day. They should also have excellent taste in some of the better style of past decades, such as by driving classic exotic cars, and listening to timeless great music. They should be admired and loved by all.)

Well, I understand (but disagree with) the reasoning behind the current ageism.

There’s definitely a “personal” element to it, but that’s the age-old disrespect for our seniors that has haunted humanity since Oog ignored his parents, and poked the scorpion with his finger.

The newer part, is the “cargo cult” mentality, that only young people can be creative, and that process can replace experience, thus, freeing these creative young people from the chains of negativity, imposed by their elders.

I don’t think it’s working out so well.

Greybeards and Greybuns (hey, us old ladies in tech need a catch-all)

Isn't the average age of founders of successful startups 40+? I don't think being old is really an issue.

> successful

That's the key. We're not really talking about "successful" ones, here...

> I don't think being old is really an issue.

I keep hearing that, then I get another "OK Boomer" response, and realize that it's B.S.

Well, people not trying is a self defeating mindset, is how I see it at least.

"Not trying" is not the same thing as "not dancing in a minefield."

There's a difference. Folks try to make it seem as if there isn't, but that changes nothing.

I have often been called "negative," and a "naysayer," because I say really bad stuff, like "You know, we tried that, a couple of years ago, and it didn't work. Here's why..."

People think that I'm saying "We shouldn't try." Instead, I am saying "This way won't work. What should we do differently?".

There's that famous quote, attributed to Alexander Graham Bell, where he has had 10,000 failures, and he's asked why he doesn't give up, and he answers "Well, I now know 10,000 things that won't work."

What you get, with experienced people, is folks that have a map of the minefield.

I can tell, you, from my own perspective, that I have spent my entire life, Making It Happen. It's my job to ship, not make a bunch of noise, like I'm doing something, and nothing is happening.

I am currently working with a designer, on an app. He can't believe how quickly I'm implementing his vision. That's because I designed the app structure, to allow easy access to the chrome.

Wait until he finds out that I'll be able to implement his help overlays, using the voiceover (accessibility) text.

Not sure how anything I said contradicts what you said, as I'm not even talking about "not dancing in a minefield." I am more so talking about this:

> I am currently working with a designer, on an app. He can't believe how quickly I'm implementing his vision.

That's good, because my point is that most people don't even try building their own products yet somehow want to have a successful company.

The folks who just got laid off from the bottom of the org chart.

There are a lot of bootstrappers making profitable businesses, hell the entire website IndieHackers is all about them. I know people making 1MM USD ARR just with the single founder working.

Absolutely, but there's an elephant, in this room.

Successful people (especially young ones) make a great deal of noise. Everyone is aware of their success.

Unsuccessful people, on the other hand, kind of die quietly in the corner, unless you have major blowouts, like FTX.

For every SV unicorn, prancing around the Bay, there's a charnel pit, filled with the corpses of ten thousand goats and donkeys, with horns tied to their foreheads.

Sure, but that's any endeavor. You simply cannot get away from the power law. The truth is though that it's much easier to get to, say, $5k or $10k and support yourself than it is to have a Silicon Valley level success, so that's what I advocate people try for. If the business is successful enough, one can always try raising money afterwards, like Carrd did, or sell for X multiple and get a good chunk of change, if not set for life.

Or if that's too much work, work at a FAANG, stack cash in VTI and retire in 20 years.

Meme stocks are the weirdest part of it for me. GameStop is still priced several times the pre-meme value.

The company is also in a much better financial position than it was pre-meme. They took advantage of their insanely valued share price in mid-2021 and performed an at-the-market equity offering which allowed them to pay off loans and improve their balance sheet significantly.

> GameStop is still priced several times the pre-meme value.

As long as it keeps going on its current trajectory, it won't stay above the pre-meme value for much longer.

AMC is almost back to prepandemic levels though

Its a chaotic tipping point. The analogy for the market for lemons isn't as good as an analogy with 80s junk bonds.

Groupthink is incredibly strong so if there's an underserved market, well, tough cookies for them, until the underserved market is so huge someone eventually takes the bait. Given that its been an underserved market for a long time, its pretty easy for the first entrant to make insane profits off the first couple deals. Then the usual suspects gather around and say they knew it all along that it was always the best idea ever and its going to be the new paradigm for the entire market going forward and only the best people have been in it from the start. By then even the slower retail investors are piling in, like an out of control crowd at a sporting event, and the crowd is starting to crush people. Of course its a very small market so returns seemingly instantly go from insanely high to insanely low because there's not many good deals in a tiny market, because its a tiny market, but the money is pouring it from the late entrants. Then when the new deals all collapse, the usual suspects lecture everyone about the inherent evils of capitalism and how they knew it was a bad idea all along, and everyone forgets about it until the cycle repeats.

There is a valid realistic market for SPACs which are kind of "headhunter for mergers with small companies" but the problem is there's too much cash sloshing around and ALL of it flows at the same time to whomever had the highest rate of return last year, even if the market of good deals in that sector completely emptied out last quarter.

Really the pity is its easy to see these situations develop but hard to "sell short" a fad. If I knew how to sell fads short I'd be a billionaire.

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