Please don’t be afraid but I just need your opinions and experience on this subject. Federal bank 6-7 rate hikes… Stock market tanking… War in Europe… Increasing news about Possible recession… With rate hikes comes less investments in risky businesses/startups… With rate hikes comes less bank loan… In last 2 years startups borrowed loads of money from banks and investors and hired talent by giving loads of compensation. “If cash is business oxygen, laying staff off lets a company breathe more slowly, extending its life expectancy without an infusion of external capital (air).” - Tech crunch article Now with tight market, do you think, startups might start lay-offs? P.S. blind tax - TC - 210 with 5YOE #tech #Startups #bigtech #google #Microsoft #Amazon #meta #Facebook #Netflix #uber #lyft #roku #Nvidia #rivin #intel #imb #rubrik #docusign #ai #apple #cisco #stripe #blend #asana #roblox #block #salesforce #tiktok #Coinbase #Robinhood #brex #snowflake #instakart #twilio
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What
Companies that don’t generate comfortable amounts of fcf are fked as rates rise
If economy worsens big tech will join layoff party
Big tech generates multiples of what they spend. If they get pushed to layoffs that means startups are basically gone
The larger startups series C,D,E, have been laying people off for months now and it's because they went through their own hyper growth phases and then they transformed into top heavy businesses that could no longer evolve and produce good products / services, so the investors get pissed because they don't have the 10x returns they're looking for and then those businesses flounder as they can no longer get funding / IPO and then begin to rely on funding through taking on debt. This in return means their balance sheets begin to slide as the interest payments become crippling, sure, the first few months are, meh, ok, because they have 50 million in the bank but then their boards push them to take bigger risks and pivot to become that sexy startup they were last year, this, of course, doesn't work save as they lose more and more ground through endless pivots, etc, they're using tons and tons of money. This spirals out of control and the only way to stem the bleeding is, you guessed it, lay off employees as it's the easiest way to free up capital to pay off debt, fund new product pivots, etc This is why startups are laying people off right now. If you come across a startup that says they're in a hyper growth stage, you have maybe a year into the layoffs happen, if they already did that and said they're steady and making thoughtful moves to dominate the market, etc, stay away. If you're looking at pre-seed, A, and maybe B, you're likely safe; series C,D,E,F and beyond are just not safe right now.
What about recently IPO companies, such as datadog?
Seems valuable inputs, do you work at Managerial levels bro? I would like to ask few more Questions
I remember interviewing with them 3 years ago before they IPOed. They're pretty safe, although a good chunk of their staff are bro douchebags. The comp plans have become meh, it's really sexy if you're a tooling kind of person, but you're not going to bank the big bucks going there. They're destined to become much like the other tool companies (think Jenkins, puppet, etc etc) and just being steady but not doing anything incredible. They'll likely get acquired by IBM, etc
This is datadog?
Yup
I’ve worked exclusively in late stage startups throughout my career (did get big tech offers) and most of the time have found the opposite to be true: larger companies can always find corners to cut and fat to trim whereas at startups, almost every single team is essential and every lost employee has more significant ramifications. However, in times of severe economic downturn, startups are more likely to make drastic moves like chopping off a significant portion of engineering (better.com, clumio etc). I think the risk is greatly mitigated by choosing a healthy startup with good leadership and by proving to your manager that you would be hard to replace.
Doesn't Cisco layoff like every quarter/year?
They do
They didn’t it seems since Jan 2021. I have been doing 4 hours a day work since I joined Cisco. Its been 3 years, i had no issues. 😉
Does it matter if the startup a large runway? For example, I know a startup that has 3 years worth of runway and is generally not hemorrhaging money. If they don't meet investor expectations, would it be likely that the startup would start laying off people?
It has started.
“Please don’t be afraid” Lol
Yeah, I didn’t want to scare people. I am just presenting some facts and asking people their opinion. So we all can take sane decisions in this kind of market