[HN Gopher] Startup Restructuring 101
___________________________________________________________________
Startup Restructuring 101
Author : walterbell
Score : 195 points
Date : 2022-11-27 01:00 UTC (22 hours ago)
(HTM) web link (cyrilgrislain.substack.com)
(TXT) w3m dump (cyrilgrislain.substack.com)
| alzaeem wrote:
| > _The past two years created a new type of hype: PMs. Until the
| Tech Giants (eg: Google, Meta, etc) made PMs the 'new normal' of
| how to get any product functionally built and delivered, down to
| the tiniest button, startups used to do just fine with no PMs.
| Chances are very high you could do with less (no?) PMs. Also an
| excellent forcing device to kill some of your internal
| bureaucracy._
|
| I think the PM fad has been around much longer, to the point one
| almost forgets how to build products without PMs. But from my
| experience, I find that the prevalence and empowerment of PMs is
| largely turning Devs into highly-paid code monkeys, as opposed to
| the highly-paid and empowered value builders that they should be.
| Much of the busy work that many PMs are doing can be replaced
| with a bit of Agile/Scrum training of a few devs per team.
|
| At the same time, I would say that having a product owner who
| develops a deep understanding of the domain, actively talks to
| customers, and steers the vision and direction is immensely
| valuable. But I hardly see any of my PMs doing it.
|
| Anyway, I am seeing a lot of negative sentiment towards the
| prevalence of PMs these days, which I mostly share. Would love to
| hear any counter-thoughts or corroborations of this. Are PMs
| necessary? How should they be utilized?
| xyzelement wrote:
| Was an engineer, eng manager and now PM.
|
| The important point is that _someone_ is thinking about product
| vision and how you are actually going to sell /deploy to market
| your stuff.
|
| If engineers or eng managers were doing that consistently, the
| PM role would not need to exist.
|
| The reality is that most of the old-school engineers used to do
| this. As the "aperture" for engineers widened, the ratio of
| engineers who can actually apply this relevance/business lens
| to their work has decreased significantly so you need someone
| whose job is to be accountable for the vision and actual
| ability to turn code output into dollars.
| trynewideas wrote:
| As someone who moved from an open-core, engineer-driven
| company to a closed-source, product-driven one - this is spot
| on. When this article says that startups used to not need
| PMs, it's true, it's just that the startups that were
| product-focused won and the ones that weren't were acquihired
| by the winners for their tools and engineers.
|
| Whether product focus came from product-focused engineers or
| product-focused management, it didn't matter. "Startups
| didn't always need PMs" really means that before PMs,
| engineers used to have to be product- and value-focused -
| they had to care about customers and profitability - and more
| specifically the early engineers who worked for the winners
| were probably better at product focus than engineering.
|
| Also, if tech PMs who haven't worked outside of tech before
| read this article and feel depressed or angry, remember that
| there are massive sectors - agencies, health care,
| construction, any level of government - that need tech-
| literate PMs to manage vendors and contractors. You'll be the
| only person who knows or cares what it's like to work in
| tech, which is often more than enough to ship projects. If
| you're not looking to become a product-focused developer
| (which, see above), then ride out this wave of anti-product
| sentiment outside of startups. I promise there's space out
| there.
| rexreed wrote:
| The term PM is never really defined here. Is it project manager
| or product manager? Are we talking PMs with PM certifications
| like PMP or is this something else?
| pclmulqdq wrote:
| Product managers are the PMs being discussed. Project
| managers have been around for a while, and have some value
| (especially good ones).
| fidrelity wrote:
| I believe the PM is a direct result born out of the inefficient
| org chart of most organisations. So in the status quo it's a
| necessary evil.
|
| I wrote about that here[1] but I also think there are ways how
| you can reinvent structures to cut out the PM[2]
|
| 1: https://andreschweighofer.com/agile/whats-wrong-with-
| traditi...
|
| 2: https://andreschweighofer.com/agile/collaborative-product-
| ow...
| rvba wrote:
| > largely turning Devs into highly-paid code monkeys
|
| Maybe senior devs can organize their work, but juniors cant.
| That's the reason to have PMs - cost cutting. PM cuts the
| problems into small pieces that can be done by some junior
| programmer.
| achow wrote:
| I'm in a consumer tech company:
|
| 1. PMs are not needed. Design+Engg launches great features and
| products. Design thinks about users, produces design, Engg
| turns into dev designs; and things are launched. PMs are useful
| when partnership etc. are needed (that is non user focussed
| activities).
|
| 2. PMs are essential in a domain driven tech space - ex.
| software for construction industry or rocket scientists. Here
| PMs with appropriate background connects Design+Engg to the
| industry.
| arcturus17 wrote:
| 1. PMs in software have been around _much longer_ than the last
| couple years, in orgs of all sizes. Ben Horowitz was a PM at
| Netscape in '95. The author toots his own horn a lot about his
| achievements in the startup world - this is _such_ a weird
| point to make.
|
| But to your point:
|
| 2. I have been a developer and product manager myself. I still
| do both things, and hire developers. I don't think I'd even
| trust 1 out of 10 devs I meet with business analysis or product
| management responsibilities. Yes, both skills can be learned by
| a single person, but it takes much more than just a couple days
| of coaching to teach someone not only _how_ to build something
| but _what_ to build.
|
| I have 7 years of experience in each and I still find it
| ridiculously difficult to juggle both skills. The context
| switching and the amount of skills needed (user research /
| talking to customers, UX, project management, full-stack
| development, thinking abstractly and tackling open-ended
| problems, vs acting concretely and solving more close-ended
| problems, etc.) make it very challenging.
|
| Yes, in the 80s and 90s there were many more
| analyst/programmers. Perhaps the stacks were simpler, perhaps
| there was less competitive pressure for software companies, I
| can only think of hypotheses. The fact is that today, doing
| both is very hard even for the smartest of cookies, which is
| why the roles have been largely separated. This was "invisible
| hand" economics at play, not the whims of Google and Microsoft
| in the last two years (again, what a _weird_ point to make!)
| moonchrome wrote:
| I've joined a startup with no PM and CEO assigning tasks to
| devs. I've spent two weeks chasing my tail and working on stuff
| other people were already working on as a part of some huge
| block of work dumped after a month of development or stuff made
| irrelevant by features being worked on. I quit after ~3 weeks.
| martin_drapeau wrote:
| The CEO was doing it wrong. They should have empowered you to
| talk with the customer, identify the pain point and a build a
| solution. You were right to leave.
| valenterry wrote:
| Partly on the CEO but also partly on you. If that's a
| startup, you should be able to figure out what's going on by
| talking to the others and getting an understand what is being
| worked on. That is, unless it's a "startup" with hundreds of
| employees...
| moonchrome wrote:
| The guy running the company and playing ad-hoc PM isn't
| aware what people are working on and is assigning me tasks
| being worked on already.
|
| Meanwhile I'm supposed to onboard to the project, deal with
| technical mess that is start-up with a live product and get
| a hang of what everyone else in the team is doing in two
| weeks ?
| jjav wrote:
| > But from my experience, I find that the prevalence and
| empowerment of PMs is largely turning Devs into highly-paid
| code monkeys, as opposed to the highly-paid and empowered value
| builders that they should be.
|
| Indeed. In the first ~17 years of my career in software I never
| met or heard of a PM. That's a job for engineering leadership
| (architects or equivalent).
|
| Nothing good comes out of having a separate non-technical
| person making architectural decisions. Also as you say, it
| disempowers engineering which is a sure way to drive out the
| best.
| kfarr wrote:
| In theory a PM is not making architectural decisions
| martin_drapeau wrote:
| PMs are essenial for B2C. You need to abstract a huge mass of
| end-users into discrete pain points and offer solutions.
|
| PMs are not essential for B2B. An engineer can talk directly to
| the customer. Remember back when devs were called
| programmer/analysts? Exactly for that.
| spamizbad wrote:
| I feel like most PMs in a B2B contexts are basically just
| Business Analysts. Which generally aren't getting comped at
| the level of Product Managers who theoretically are supposed
| to be "mini CEOs"
|
| This is really where I think the wheels came off cart for the
| role, because PMs are rarely given a significant degree of
| autonomy and are usually just a cog in the broader product
| org.
| xyzelement wrote:
| In my job search a few years ago I was shocked at how
| different the PM scope was across companies. Some places
| "got it" and were looking for a mini CEO. Others basically
| wanted someone to run the Jira board.
|
| The comp for the role was a great way to tell what was
| what. Nearly a 10x difference from Jira monkey to mini CEO
| arcturus17 wrote:
| > Remember back when devs were called programmer/analysts?
| Exactly for that.
|
| I remember, and I am business PM or business analyst and
| full-stack developer. Like I said in another comment replying
| to GP, I can totally see why many orgs separate the roles.
| It's messy. I need to fit the following activities in my
| schedule:
|
| - Doing user research / speaking to customers
|
| - Project management
|
| - Basic UX, up to wireframing
|
| - Design-as-I-code skills
|
| - And of course, full-stack development, with all that this
| entails
|
| Let me tell you, it can get crazy. I wouldn't change it for
| anything because I love being a generalist, but I'm surprised
| I cope sometimes. I have about 12 years of experience where
| I've done PM/BA, dev, or both at the same time and I often
| feel I haven't reached 70% of my potential.
|
| I also hire devs and would only maybe trust 1 in 10 with this
| breadth of responsibilities. It's not that they aren't smart
| enough - some are infinitely smarter than me -, it's that
| they haven't been exposed to this breadth of tasks. Many of
| them wouldn't want to, either.
|
| The roles have been separated because specialization is a law
| of nature in many contexts.
| ghaff wrote:
| >PMs are not essential for B2B.
|
| It depends how you want to split things up. You can almost
| certainly move PM duties into other roles. Product Marketing
| can (and often does) handle competitive analysis and pricing.
| Engineers can certainly spend a chunk of their time meeting
| with customers, talking with the field, etc. But it will take
| time away from engineering.
| sarchertech wrote:
| In my experience the overhead of adding the additional
| layer of indirection is almost never worth it. Engineers
| have to spend nearly as much time meeting with product as
| they would meeting directly with customers. And so much
| gets lost in translation that I would almost always meet
| directly with customers.
|
| When I first started we had business analysts, subject
| matter experts, and customers that we talked to. Replacing
| those with PMs has not been beneficial from what I've seen.
| gedy wrote:
| > PMs are essenial for B2C. You need to abstract a huge mass
| of end-users into discrete pain points and offer solutions.
|
| Maybe at some level, but I've also seen talented UX and front
| end/UI engineers idling away being fingers for PMs who just
| focus their days spoon feeding tasks to teams without
| involving them in solutions. I left a supposed startup
| earlier this year due to this.
| intelVISA wrote:
| Not an expert on PMs (is anyone?) but my understanding is the
| value to the business is, as you mentioned, abstracting the
| need to manage SWEs as value builders and instead as cogs
| within the Abstract Agile Machine, in this Sick Reality the PM
| is Programmer Remade and we are reduced to function calls.
| Software makes a lot of money and plenty of smarter people out
| there have invented roles to extract some of that (your) wealth
| without having to touch Vim.
|
| Due to the relative novelty of CS I think we're still going
| through the early motions of trying to mesh together a web of
| programmers from bootcamps to MIT into one cohesive corporate
| apparatus... eventually we'll land on something similar to
| medicine or other engineering areas where accreditation is
| prerequisite and individual cogs have a bit more agency due to
| licensing etc. Hopefully.
|
| My personal, unsubstantiated, take is that we'll come to look
| back on this odd time, with the glacial pace and grift
| hierarchy of enterprise software, as quaint. Some startups are
| coming around to the idea that you don't need 6 person
| multidisciplinary teams for generic CRUD, pay one competent
| engineer those 6 people's salaries and you'll get it built
| unless it's something special - in which case you pay that
| engineer 60x and their name is Bellard.
| pclmulqdq wrote:
| The PM ladder is undoubtedly there for MBAs to perform wealth
| extraction from you. And it works, for now.
|
| If you see those "day in the life" videos going around
| Twitter/YT where the person literally does no work, it's
| always a PM. Sundar Pichai (and I think Satya Nadella too)
| came up through this ladder. It's a role for professional
| office politicians created under the guise that engineers
| can't figure out what to do for themselves.
| xivzgrev wrote:
| I don't think the specialization of engineers is accidental.
|
| I've worked at a number of companies and engineers are ALWAYS
| the limiting factor. Simply put, there's a chronic shortage
| of people who can build valuable stuff.
|
| I believe companies have sought to offload this bottleneck.
| Have engineers just build, and hire people to do everything
| else.
| ceres wrote:
| > eventually we'll land on something similar to medicine or
| other engineering areas where accreditation is prerequisite
|
| You are saying people will need to be certified to be
| programmers?
|
| This is just gate keeping and considering how accessible
| computing is, it would never work anyway.
| intelVISA wrote:
| There already is gate keeping though, and that gate is
| manned by corporate which, ironically, is how so much bloat
| can sneak in at your expense.
|
| I am not fond of gates either; for as long as your skill
| can produce capital value it will be gatekept in some
| capacity. I'd rather see that gate moved closer to our side
| if it must exist.
|
| If gambits like Musk's prove successful then there is
| further precedent that lean engineering teams can still
| operate at scale - just with fewer layers of indirection
| and wealth extraction.
| ghaff wrote:
| Engineering accreditation (at least at the Professional
| Engineer level) is not that common in the US except in civil
| engineering. It's basically needed to sign off on designs
| etc. for regulators. (You also see it with consultants who
| give expert witness testimony, etc.)
| sarchertech wrote:
| Even for other engineering disciplines that don't require a
| PE, it's common to require an engineering degree from an
| ABET accredited program. Much more common than it is in
| software.
| ghaff wrote:
| I've never seen that myself but it's probably pretty
| common for companies to often effectively require a four-
| year degree from a school they've heard of--which
| probably boils down to more or less the same thing.
| sarchertech wrote:
| The ABET accreditation thing is interesting. Last time I
| looked into it there are even some things that require it
| for CS (becoming a patent lawyer for example).
|
| Here's. the first job I found when I searched for local
| MechE jobs.
|
| >This position requires a BSME or MSME from an ABET
| Engineering Accreditation Commission-approved program
| with a strong academic background and interest in
| thermodynamics, heat transfer, fluid
|
| https://www.monster.com/job-openings/-winter-2022-entry-
| leve...
|
| When searching for local EE jobs. Out of the first 5
| results, 1 required a PE, 3 required a degree from an
| ABET accredited program, and 1 just required an EE degree
| without specifying ABET.
|
| >Bachelor of Science in Electrical Engineering or related
| degree from an ABET accredited program.
|
| https://lensa.com/staff-electrical-engineer-substation-
| chatt...
| soneca wrote:
| I don't know about big tech, but on medium-sized startups, I
| never saw a PM that does not talk with customers regularly.
|
| On small ones too, except that the "PM" is usually one person
| with a title like "Head of Product".
| hn_throwaway_99 wrote:
| I think great PMs are invaluable. Unfortunately, I find the
| vast majority of PMs are nearly a net negative on productivity.
|
| My biggest issue is that I believe PMs _must_ be technical, but
| many aren 't. So what I often see happen is PMs come up with
| designs and requirements that have 0 consideration for how much
| they will cost to implement. Then there is a painful back and
| forth with engineering where we say "OK, this is just flat out
| impossible" or "there is a way we could do this that is 10
| times easier". It's like trying to design a car without knowing
| which car parts and technologies are available.
| paulryanrogers wrote:
| This has been my experience as well. Yet finding technical
| PMs is difficult, I've only ever seen two in my nearly 20
| years. For SAAS non-technical PMs are the worst since so much
| of the offerings are tech.
| sirwhinesalot wrote:
| I share the exact same thoughts. a good PO is worth their
| weight in gold. PMs are often more of a detriment than
| anything. Developers should not be cornered off from customer
| needs, quite the opposite, they should be made intimately aware
| of them.
|
| Not only is seeing customer struggles a strong motivator for
| why they do the work that they do, but it also helps with
| coming up with good solutions.
|
| A poorly thought-out task list that needs 10 refinement
| sessions before it is actionable is very much not that.
|
| That said, devs are not sales people, that's why the PO is
| there, and the PO could very well have "PM"-like people under
| him to handle the customer connections before getting devs
| involved, but that's different from the "PMs define user
| stories" approach I see everywhere.
|
| The result of that is that the PMs end up in a managerial sort
| of role (the name doesn't help) where they boss around the PO
| who in turn bosses around the devs until they get fed up with
| the relationship and the dev lead starts pushing back, and the
| whole thing turns antagonistic.
| ghaff wrote:
| I agree but let me provide some perspective from hardware
| system product management a couple decades ago.
|
| We did indeed make an effort to bring engineers into customer
| meetings when it made sense. However, you end up with
| tradeoffs.
|
| - Bring select engineers into a few customer meetings at your
| company location which doesn't take a lot of time and does
| provide some outside perspective. The downside is that they
| get a very filtered sample which it's easy to over-generalize
| on.
|
| - Make talking to field people, customers, etc. a significant
| part of their job and you're essentially making them product
| managers, at least in part, and they don't really have the
| time or focus to do nearly as much active development.
|
| (Note that this was rather long-cycle hardware development--
| though software wasn't really much different. There really
| wasn't a lot of methodology to product management at the time
| except whatever internal processes we put in place.)
| sirwhinesalot wrote:
| Yeah option 2 is pretty much a no go because of what you
| said, so it has to be option 1. Ensuring bad
| generalizations don't happen would be the PO's job in that
| case I suppose. If there was an obvious solution we'd
| probably have converged on it by now, but at least where I
| work the PM/Dev relationship isn't really optimal in any
| way. Unclear tasks, pissed off devs, messy project, etc.
| ghaff wrote:
| Back when I was a product manager, I really was the
| product owner in so far as I was the point person for the
| field, owned pricing, attended product reviews, had at
| least a big say in launch decisions, wrote/reviewed
| external comms, coordinated with field engineering, etc.
| But, as I say, product management meant something
| different than it does much of the time with modern
| software. I never had any specific training on it.
|
| Sometimes we did bring engineers in to have deeper
| technical backup for a specific discussion. Most of the
| value though was probably to provide some sense that we
| weren't just making things up.
| neeleshs wrote:
| Do you mean Project Manager , or Product Manager? What you
| described as training a few devs sounded like Project Manager.
| If so, I agree. But a product manager's role is different. And
| you are right - it's about competitive research, domain
| expertise, customer interviews, and a product vision.
|
| I have not seen a single product manager do the project
| management details in my 25 years of product/eng career.An
| engineering manager typically does that. I now run my own
| startup, and empowering engineers to define the product does
| not work. You may get some interesting and nice features, but
| you won't get a cohesive product that solves for a domain with
| decent usability. You need a PM/UX pair for any nontrivial
| product.
| bgoldste wrote:
| Did not realize 'tabus' was the plural of taboo. Anyone else?
| klysm wrote:
| I don't think I've ever seen that word in text, and would not
| realize that was the definition because 'taboos' is acceptable.
| 331c8c71 wrote:
| He also wrote "Assana" meaning "Asana" I suppose.
|
| > Double-down on tracking discipline and focus (don't have an
| Assana yet?)
| neilv wrote:
| When I had to use Asana, pronouncing it Ass Sauna seemed
| entirely appropriate.
|
| (Putting the miserable sauna behind an Instagantt wall
| helped.)
| simonswords82 wrote:
| Anecdotal data but..
|
| Was at a party with an acquaintance a week ago who said they need
| more money by February or they're dead. Series A but still not
| profitable.
|
| From the outside looking in they have nearly 100 employees, PMF,
| great marketing and appear to be crushing it. So it was sobering
| to hear the reality.
|
| I asked what the plan B is if money is not forthcoming and he
| looked at me like I was asking a stupid question. I think the guy
| running it has been in this situation previously and do or die
| mentality is there. However as many people are saying this
| downturn feels different, deeper and more prolonged.
|
| I will be watching their progress with great interest from
| February and use their ability to weather this storm as a
| yardstick albeit acknowledging it's just one data point.
|
| Bootstrapped companies that are profitable and sustainable will
| be rejoicing at the moment for sure.
| pclmulqdq wrote:
| The fact that a lot of startups end up on this kind of
| trajectory is a big part of why I haven't sought seed funding
| for my current company. However, this has meant learning how to
| do sales, and suffering from a comparative lack of connections
| (and credibility) that come from investors.
|
| Bootstrapping definitely has its upsides and downsides, but I
| assume that in ~12-24 months, if this recession (or whatever
| you want to call it) continues, a lot of venture funded
| companies may find the money drying up. VC firms are likely
| finding it harder to get money for new funds, and this will
| trickle down to a tightening in the startup ecosystem.
| Bootstrapped companies will likely be able to thrive by
| essentially feeding on their carcasses.
|
| There may be a third way for startups that is actually better
| in this environment - doing a few rounds (seed through maybe
| series B-C) and then making it to reasonable levels of
| profitability, giving up ambitions of "eating the world" - but
| I'm not sure that most startups can achieve this. It seems to
| be a lot harder than either bootstrapping or taking funding to
| grow until you IPO (while still unprofitable).
| simonswords82 wrote:
| For sure most fund raises are on the basis of hockey stick go
| big or go home. It's a moonshot and if you get stuck in orbit
| and cannot escape the pull of gravity you'll burn fuel until
| you re enter the atmosphere...usually breaking up in the
| process.
|
| At which point your business might be sold at garage sale
| prices. Or restructured with the C suite removed in the
| process. It's just brutal.
|
| We bootstrapped over 15 years (not a typo) and for sure can
| survive the next two years without issue which I'm very
| thankful for.
|
| I love your idea of trying to find a balance but investors
| will need to be much more patient than they have been
| historically. Most won't wait a year or two for return which
| means they are fantastically short sighted.
| wongarsu wrote:
| Most VCs go in with a go-big-or-go-broke mentality. The
| entire calculation is to get a couple 10x-100x exits to
| offset all the failed attempts. Leveling off after a series C
| to "just" a profitable company makes business sense for the
| company and founders. But if you do that the series B and
| series C investors can't get their big exit, so they will do
| whatever they can to prevent that.
|
| The best way out once you're in this deep is probably an IPO.
| The investors get their exit, and you're now "only" beholden
| to shareholders, who are more used to sustainable businesses
| that can survive decades or centuries.
| pclmulqdq wrote:
| After writing this, I realized that that is kind of how
| businesses used to work. You would take a few rounds of
| funding from friends, family, and eventually connections/PE
| firms before going public. The whole idea of IPO-ing after
| series F is the new, weird thing.
| tarr11 wrote:
| you aren't immune from these problems just because you aren't
| taking VC funding.
|
| Most bootstrapped companies need some initial funding which
| usually comes from the founders bank account, with the idea
| being that's it.
|
| But it can be tempting to accelerate your bootstrapped growth
| by taking debt financing (credit cards, mortgages and other
| personally guaranteed loans)
|
| The difference is that in most of these cases you are
| personally liable whereas you can walk away from VC funded
| businesses.
| simonswords82 wrote:
| Started my business with PS20k of credit card debt. Would
| have sucked had it not worked out. Was a huge sigh of
| relief the day I was able to pay it off.
| ScipioAfricanuz wrote:
| I don't think receiving funding from VC's has anything to do
| with regards as to how you manage your company e.g if you
| wish to be profitable from the start
|
| Sure they can pressure you but especially at the preseed -
| series A they shouldn't have any sort of operating control
| [deleted]
| morelish wrote:
| The author sounds absolutely horrible.
| s1k3 wrote:
| Meh. Some of this advice is pretty common sense.
|
| Some of it a little cut throat.
|
| I don't see anything in here that isn't in a playbook I've seen
| multiple times, do you?
| hef19898 wrote:
| As other already pointed out, myself included, yhere are some
| risky things, eg. stopping payments without legal analysis and
| talking to vendors and suppliers, which I am sure the author
| knows need additional steps to do properly (well, I assume he
| does given his background).
|
| This one advoce here:
|
| >> Founders must go back in the trenches and own back the direct
| leadership on: product development, engineering, monetization and
| hiring
|
| I more or less strongly disagree with. Because it highly depends
| on the founders, whether or not they have the necessary
| background to lead the restructuring. Because we shouldn't
| forget, it was most likely the founders that got the company in
| question (the article is about start-ups of sorts after all) into
| trouble in the first place.
| monero-xmr wrote:
| It's shocking that a short 10 months ago the recruiters were
| getting recruited and tech workers were demanding 4 day work
| weeks. It's always been a boom and bust industry but this last
| boom was surreal.
| quickthrower2 wrote:
| Wat? Next they'll be demanding oxygen in the office!
| baxtr wrote:
| In a similar vein this bust seems also to be exaggerated.
| walterbell wrote:
| Based on the first chart in the story, this restructuring may
| be only getting started.
|
| If intermingled with a change in the definition of legal
| tender (e.g. CBDCs), there's no recent precedent. Perhaps
| London around 1666.
| baxtr wrote:
| So you think it's just the start?
|
| What's the thing with CBDCs?
| walterbell wrote:
| _> What 's the thing with CBDCs?_
|
| Potential scenarios include a digital euro/dollar/yuan
| that lives alongside existing paper cash, "Johnny's Cash
| and the Smart Money Nighmare" (search for that video
| which has a short half-life on YT), or something in the
| middle if elected legislators represent their citizens in
| negotiations with the BIS/IMF, https://en.wikipedia.org/w
| iki/Bank_for_International_Settlem....
|
| There's an intro in this thread,
| https://news.ycombinator.com/item?id=32777875
|
| And a few hundred comments in earlier threads, https://hn
| .algolia.com/?dateRange=all&page=0&prefix=true&que...
| quickthrower2 wrote:
| Feels like a slow bust. Need some collapsing banks for me to
| even think about it.
| college_physics wrote:
| imho structurally this downturn is much more serious than the
| dot.com bust. that one was a classic and contained
| speculative bust in a nascent domain. what we have now is a
| very different type of challenge. a fully developed tech
| universe, with demonstrable revenue streams but the
| sustainability and even legitimacy of those streams being
| questioned in fundamental ways. this is coupled with an
| apparent innovation fatigue and alternative growth options
| like the metaverse feeling completely bonkers.
|
| most importantly, digital tech has become too important: both
| within countries (democracy, privacy, competition etc) and
| between countries (security, supply chain political control,
| trade advantage etc). this does not mean we should expect a
| wipeout, there is significant inertia in consumer, corporate
| and government choices, but I would not expect another boom
| cycle to materialize before global geopolitical stars align
| towards some sort of consensus of how tech is to be deployed
| and controlled
| drewcon wrote:
| "legitimacy of those streams being questioned in
| fundamental ways"
|
| How?
|
| Meta lost 11 billion building second life, not because they
| can't monetize fb/ ig etc.
|
| Twitter fired half its staff because their new god king
| wanted to run a different company with lower costs and
| different standards and product direction, not because
| advertising performance meaningfully changed.
| college_physics wrote:
| > How?
|
| a simple policy change by another market participant [0]
| shows one of those ways. Changing regulatory / political
| winds are some other ways [1]
|
| [0] https://www.cnbc.com/2022/02/02/facebook-says-apple-
| ios-priv...
|
| [1] https://www.barrons.com/news/meta-calls-for-uk-govt-
| rethink-...
| debaserab2 wrote:
| > but I would not expect another boom cycle to materialize
| before global geopolitical stars align towards some sort of
| consensus of how tech is to be deployed and controlled
|
| That's a really interesting statement. What do you think
| that could look like?
| college_physics wrote:
| the only scenario that can be ruled out is one in which
| the total addressable market for technology first movers
| is the entire planet. yet this was the thesis until quite
| recently :-)
|
| so we are moving from the short lived digital Pangaea
| (where an advertiser even attempted to issue a global
| private currency) to a planet segmented into digital
| continents. How many continents and how connected at the
| physical and informational layers remains to be seen.
| Evolution never stops and in silico it works much faster
| than with organic matter.
| samtho wrote:
| I agree. This sort of thing becomes a self-fulfilling
| prophecy unfortunately, and the incentives that publicly
| traded companies are given do not align with going against
| the grain.
| lmeyerov wrote:
| The funding market dropoff for Series A+ startups is a big
| deal for startup employees assuming they can keep high 6
| figure salaries at vc-dependent companies where, in recent
| years, fundraising has far exceeded revenue. Ex:
| https://tomtunguz.com/fundraising-seasonality/ . Keeping
| large salary for many will be HARD, eg, seeing folks have to
| go to wall st, and junior (bootcamps etc) was already hard
| without this.
|
| We are still waiting for the other shoe to drop. Many high-
| burn co's did not cut, and of companies that did a round of
| layoffs, most followed a statistically suspicious trend of
| 10-20% that suggests a bunch should have done more but
| didn't. With hiring freezes everywhere.. a lot of pain for
| job seekers even before more cuts. Worse, even a regular
| 2-year downturn would flush a lot of startups as fundraises
| are generally for 12-24mo payroll, and many raised with
| historically horrible fundamentals (vs valuation) over the
| last few years.
|
| I'm not saying end of world, but I wouldn't want to be a new
| grad at many seemingly shiny series b/c startups right now.
| When I was a new grad, I wouldn't have even known the right
| questions to figure out if my unicorn was really a donkey.
| baxtr wrote:
| I think VC money needs to be deployed eventually. They made
| promises to their GPs within a certain timeframe.
|
| So any money held off now needs to be invested in the
| coming 1-3 years. So I'm not very pessimistic about startup
| funding. But of course you need to stay alive until then.
| lmeyerov wrote:
| I asked around similarly earlier this year. Some money
| goes somewhere... But likely not as much, and not widely
| distributed.
|
| In my convs with GPs, most LPs are very happy to avoid
| capital calls right now, as they went too far in during
| the heyday. They will remember GPs forced them during a
| bad year.
|
| When they do go in again, it is at lower valuation
| multiples, which can easily break cap tables of recently-
| raising startups. That triggers a downward spiral if they
| luck into such a fundraise. I bet more likely is what
| happened ~4 years ago was a lot of the $ went into a
| smaller # of stronger co's, and I'd expect even more
| pressure now. Big funds need big winners, and FTX style
| frauds and less ponzi acquisitions means return of later-
| stage diligence.
|
| When LP money turns back on, unclear if at rate of last
| few years, which is largely attributed to dumb outside
| money enabled by low interest rates and startups being
| good risk/reward. There was fear due to lack of IPOs &
| historically weird revenue vs valuation multiples, but
| the above factors counter-weighed. So with valuation
| multiples cutting and low interests shrinking.. different
| world for LPs.
|
| Net:
|
| 1. less $, and to fewer co's
|
| 2. This is _still_ a historically amazing time for
| startups & founders, but feels closer to 10 years ago,
| than the last few years which supported a lot of people
| who were mostly providing value on paper, not in revenue.
| baxtr wrote:
| To your second point: maybe that's a good thing :) I had
| the feeling there were startups with anything meaningful
| and a ton of money.
| rexreed wrote:
| > For the 20% of your customers generating 200% of your cash
|
| I don't get this math.
| ridruejo wrote:
| First time I heard the term Mokita... interesting in this context
| iamflimflam1 wrote:
| Anyone working in a startup right now should be evaluating these
| hard truths from the article: We raised a 'hot'
| Series A, but have not proven PMF Our uniqueness is more
| in our narrative than in our product We are building a
| feature, not a product We have no clue how to get solid
| unit economics We have built a high-pay '9 to 5' spoiled
| culture (btw, 'Startups are hard' is not meant to be true only
| for Founders) Our top performers will quit as soon as
| they find another job
|
| If you are one of the "top performers" then you should be
| thinking about how much you really believe the business can make
| it.
| rexreed wrote:
| Startup companies in many ways are like funded high-risk
| research projects. They live and die by the support of their
| benefactors. In this case, the benefactors are investors who
| are interested only in one thing -- the growth value of an
| asset, their share of your company. If it's all inflating, then
| it's all good. If not, then the research project comes to an
| end. Whether or not they generate real revenue or provide
| customer value seems to be primarily an afterthought or side-
| effect of growing the asset value of the company. Startups are
| really financial products more than technology companies in
| many ways.
|
| Maybe we should call these startups investor-funded businesses
| (or perhaps more precisely, non-revenue generating pre-market
| fit investor-funded technology-centric companies). Then again,
| maybe that's what startup means these days. In which case I
| guess 20% of customers generating 200% of cash might make
| sense.
| b1zguy wrote:
| Thank you for succinctly encapsulating what 'startup' means!
| I can now die in peace.
| [deleted]
| arcturus17 wrote:
| > We have built a high-pay '9 to 5' spoiled culture (btw,
| 'Startups are hard' is not meant to be true only for Founders)
| > Our top performers will quit as soon as they find another job
|
| What are startups to do if devs have plenty alternatives that
| pay highly and offer good working conditions?
| debaserab2 wrote:
| Are the alternatives still plentiful? I'm not sure that's
| true even now, and I doubt even moreso that will be true in
| the coming months.
| arcturus17 wrote:
| There might be difficult times ahead in the next ~2 years,
| but I'm talking about a longer term. There is too much
| software running in the world - mostly in enterprise - and
| there will always be someone who is willing to pay more
| money and offer better conditions to devs.
| 9dev wrote:
| > and there will always be someone who is willing to pay
| more money and offer better conditions to devs.
|
| This might just not age too well, although I sure hope so
| :-)
| tianqi wrote:
| Although I didn't learn anything new, I must say that not a
| single word of this article is incorrect.
| arcturus17 wrote:
| It's not only the recession that will self-correct the startup
| explosion of the last few years, but perhaps more importantly the
| rise of interest rates. Billions or trillions of investment will
| be re-allocated back towards the other end of the spectrum
| (fixed-income assets).
| hn_throwaway_99 wrote:
| Thanks for posting this, I think this is the most important
| point, and I also think it's a great thing. The downside of the
| business cycle is no fun, but it should be expected nearly as
| much as the sun rises and sets. What I believe _is_ truly
| different, though, is that a generation of people have never
| known "reasonable" interest rates. People are acting like
| we're near end times when the effective fed funds rate was
| still only 3.08% in October [1]. Yet for decades before the
| start of ultra-low rates with the Greenspan years, rates were
| much, much higher. And there are fundamental structural changes
| that mean that ultra low rates will be dead probably for the
| rest of my lifetime:
|
| 1. The end of the Cold War brought a "peace dividend" and
| wildly increasing globalization. That trend has abruptly
| reversed. It will be a long, long time before countries
| outsource so much without considering the geopolitical
| consequences.
|
| 2. The ongoing retirement of the boomers, and a re-evaluation
| of many women in the workforce who have found that it doesn't
| make sense to make a relatively low wage just to spend it all
| on childcare, means that labor will be much tighter than in the
| past couple decades. Also, my hypothesis is that vastly
| increasing wealth inequality means that a lot of folks who
| would have previously focused on their careers now no longer
| see themselves as "temporarily embarrassed millionaires", as
| we've seen a resurgence in interest in unions.
|
| The good thing about a renormalization of rates is that
| companies will actually need to make money again to stay alive.
|
| 1. https://fred.stlouisfed.org/series/FEDFUNDS
| rukuu001 wrote:
| "Dedicate a street smart colleague to collect outstanding
| receivables."
|
| Could be taken the wrong way :)
|
| (We have a running joke about 'sending the boys around' to a
| customer who owes us a lot of money and no plan to pay)
| zuhayeer wrote:
| > Have you even straightly asked your users: what would you be
| ready to pay for?
|
| It's a bit up front, but this works. After providing some context
| to your customer, ask what they'd pay for. Even if they don't
| answer directly, they're likely to share some more information on
| what they're looking for or even slip a max budget they might
| have. Either way it's a win for you to glean some information and
| make the sale. You can always tailor your existing offerings to
| the context of your customer, and make them feel like it's
| specific for their needs.
|
| Rest of the article was a great write up on the mindset shift
| needed to turn around from default dead to default alive.
| hackernewds wrote:
| Surveys are a terrible idea. Customers are prone to not being
| representative or not knowing their own biases - famously Ford
| said "if you ask a horseman what kind of vehicle you'd want,
| they'd say a faster horse".
| fakedang wrote:
| It's not about finding what they "want". It's about figuring
| out what's the core problem they're facing.
| samtho wrote:
| Surveys also terrible because people answer them in 3
| different ways on the whole and it's impossible to figure out
| which ones are genuine:
|
| - the participant answers the survey genuinely
|
| - the participant answers the survey as the person they
| wishes they were
|
| - the participant answers in a way they think the surveying
| organization wants to hear
| heisenbit wrote:
| Who said that asking users is done through surveys? You
| should be in a dialogue with your users or if there are many
| with key users.
| pavlov wrote:
| I know it's getting boring to talk about Musk, but the ongoing
| Twitter experiment is just so fascinating because it's the first
| time in history that someone has tried to autocratically reboot a
| $40 billion tech company with massive regulatory liabilities.
|
| So I'm wondering about this part:
|
| _> Elon is currently applying the playbook to Twitter:_
|
| _> Scale back drastically, ideally the closest to your Series A
| size and cost base;_
|
| _> Protect your core: engineering and science_
|
| What exactly is he doing to protect the core? It seems like it's
| been all stick, no carrot. What are the incentives for Twitter's
| best to stay, other than second-hand exposure to the Musk aura?
| YetAnotherNick wrote:
| > What are the incentives for Twitter's best to stay?
|
| Money maybe? If the employee count is half and they have more
| lax firing due to non performance, theoretically it could allow
| them to better reward top performers. Not sure if that is
| practically what is happening, but Musk seems to have good
| enough track record previously in building teams of productive
| people.
|
| Also lot of best people like to work in productive teams, and
| don't like teammates that slack off without repercussion.
| jsnell wrote:
| Musk has a great track record at building top teams in
| situations where the company has a world-changing mission,
| and the company is basically the only place in the world you
| can work to achieve that mission (Tesla, SpaceX). That
| attracts people who care about that mission, and means
| they'll accept relatively low pay and Musk's abusive
| management practices.
|
| Nu-Twitter doesn't have that. They've got interesting
| infrastructrure problems, but so do a dozen other companies
| working at similar scale. Musk's product vision seems to be
| incredibly incremental, e.g. the $8 checkmarks. Honestly, the
| only mission that Musk seems to be setting up in his public
| writing is the free speech bit, applying only to his alt-
| right pals? And if that's the mission he tries to build a
| team around, it's hard to see advertisers and normal users
| sticking to the platform for much longer.
| YetAnotherNick wrote:
| There are many more space with good funding(Blueorigin,
| Virgin Galactic etc.) and lot more EV companies with more
| money to burn than Tesla. It could be just luck that Tesla
| or SpaceX became top in their field, but having watched lot
| of Musk's interviews, I am biased to say that he has talent
| in understanding engineering inefficiencies and assembling
| team to solve those.
| willmadden wrote:
| He hasn't shown you his hand.
|
| The obvious stuff:
|
| * adding features people want but are denied by ESG
| transnationals (privacy, e2e encryption, removing
| politically motivated censorship) - this is huge and a
| guaranteed win short term.
|
| Stuff that will happen if the google/Apple make the wrong
| moves, which they likely will:
|
| * programmable mobile phone with crypto chip and starlink
| carrier for recurring revenue when/if google and Apple ban
| Twitter app from their walled gardens
|
| * adding crypto/stable coin based "wallet" to Twitter which
| cross-sells the mobile phone with crypto chip
| pavlov wrote:
| A new phone platform. A crypto wallet for regular people.
| Two massive projects where other companies have wasted
| billions for zero traction.
|
| The solution to cracking both at once is somehow to
| cross-sell this to Twitter users, the vast majority of
| whom want neither to switch phones nor to make crypto
| payments on the hellsite? I remain sceptical, to say the
| least...
| bootsmann wrote:
| > programmable mobile phone with crypto chip and starlink
| carrier for recurring revenue when/if google and Apple
| ban Twitter app from their walled gardens
|
| This all sounds very far-fetched to me and not at all
| obviously profitable in any way. If Microsoft didn't
| manage to build a viable smartphone ecosystem I don't see
| how twitter will.
| phailhaus wrote:
| > removing politically motivated censorship
|
| Musk is quickly learning that the "censorship" is
| motivated by advertisers, not politics. As he scrambles
| to bring them back to the platform, expect the same
| policies to trickle back.
| nkohari wrote:
| > programmable mobile phone with crypto chip and starlink
| carrier for recurring revenue when/if google and Apple
| ban Twitter app from their walled gardens
|
| This would be a world-class feat of engineering, which
| would also require that Twitter hire a set of engineers
| entirely different than the ones they have. It's
| difficult to see how they'd pull this off successfully.
| Firmwarrior wrote:
| Man, I was wondering about this myself, as a guy with 10
| years in the phone firmware business
|
| I don't think Musk has any realistic chance of competing
| with Apple. Apple has been poaching from the best of the
| best in every level the phone industry for over a decade
| now.
|
| He could quickly and effectively crank out an
| undifferentiated Android phone for sure, but I'm not sure
| what he'd do with it or how he'd convince anyone to buy
| it. His phone would be more expensive to make than the
| ones out of Moto, Huawei, etc, and it wouldn't work as
| well. Maybe if he hired aggressively or borrowed people
| from Tesla somehow he could make a good Android phone,
| but I don't see why anyone would buy it.
|
| I actually thought that by now we wouldn't really be
| bothering with apps so much, and computers would be more
| like the one on Star Trek. I don't think Musk could just
| toss that together any time soon though, haha.
| luckylion wrote:
| > What are the incentives for Twitter's best to stay, other
| than second-hand exposure to the Musk aura?
|
| Fun, maybe? I'm not smart enough to work on those kinds of
| problems, but I do love a challenge. If I was an actual CS
| person with relevant experience, I could totally see myself
| working at that kind of company.
|
| It's not what you do forever, but it's totally fun.
| pavlov wrote:
| That's the same kind of fun one can have at a well-funded
| startup, and it doesn't come with the technical and
| regulatory baggage that Twitter carries.
|
| From my POV, the massive scale of Twitter is nothing but
| downside for engineering focus in the current situation where
| all the moderation and legal frameworks have been blown to
| bits. I spent a couple of years at Facebook, so I've seen
| what the legal reality is for product work in high-volume
| social media. Nothing could entice me to work in a situation
| where I as an engineer became personally responsible for
| managing that. Yet that's the de facto situation at Twitter.
| They're not even taking meetings with EU regulators anymore
| because there's nobody left at the company! It's not my kind
| of fun if I'm being asked to make rushed decisions that can
| lead to multi-billion fines and/or distress and physical harm
| to users.
| luckylion wrote:
| Maybe, but most startups aren't at that scale and impact
| yet (and they'd be smart not to build as if they were
| imho), so it's a different kind of fun, and t. The mental
| reward of getting a fire-fighting assignment and putting
| out the flames is something I enjoy occasionally.
|
| I'd imagine the same exists on the legal and product side,
| too. They need people who love a challenge and want to see
| whether they can overcome it, they need adventurers. No
| clue if it'll be successful, but I can see the appeal.
| dalbasal wrote:
| One of the reasons MuskStuff us getting boring us that he
| hasn't said anything real/significant regarding his intentions,
| strategies, motivations, analyses and whatnot.
|
| There was an investor case/ business plan that could have been
| prepared by 19year old MBAs. There was some nonspecific media
| bait on free speech. That kind of noncontent is pretty typical
| for business comms, but it's not what Musk did before. With
| Tesla/SpaceX/neuralink/etc... Musk told us the strategic case.
| We knew what he was up to, what the main risks were, the goals
| the milestones, the reasons.
|
| All commentary about Twitter is rooted in speculation and
| smartarsery.
|
| Maybe what you describe (reboot) is what Musk's up to. We don't
| know. It's like taking sides in the abusive screaming session
| happening in the house next door.
|
| No one cares when
| texasbigdata wrote:
| Speculation: option pools (at least pre-ipo) are generally a
| fixed %age and therefore relative size. With fewer engineers
| the ones left get a higher piece of the pie? Just a guess.
| lucideer wrote:
| That makes the incredibly naive (but equally incredibly
| common) that employees are literal resources of equivalent
| value.
|
| In actual fact, excepting "cultural loyalty" (which is
| usually interrupted in any such large acquisition/disruption
| event) essential employees are typically the most
| transient/difficult to retain. Many are not as remuneration-
| driven (more likely to be comfortable & their competence is
| often driven by a more vocational motivating factor) & even
| those who are can negotiate good terms elsewhere with
| relative ease.
|
| This leads to a concentrated brain-drain where the fewer
| engineers remaining to partake in the pie aren't contributing
| as much value. That ain't protecting your core.
| pavlov wrote:
| But will that compensate for the almost inevitable outcome
| that the next liquidity event will be a massive downround
| compared to the $44B valuation of the acquisition?
|
| Maybe there's only 25% of employees left to share the pie,
| but the pie itself is now only worth $10B. That's not a great
| incentive when asked to work nights and weekends on
| capricious initiatives that come and go.
| texasbigdata wrote:
| I've never received RSUs in a public company but can't you
| basically set the strike price at whatever value you want?
| It's just a financial instrument after all. NOTE, I'm not
| arguing for backdating.
| toast0 wrote:
| RSUs have a strike price of $0 kind of by definition. And
| they're income when the restriction lapses, and that's
| complex when the stock is illiquid, so that's not ideal
| (sometimes, there's a dual restriction with time and
| liquidity, but that's messy as well)
|
| Stock options could have a strike price of whatever, but
| tax favored stock options need to be granted at fair
| market value. Granting non-favored options away from FMV
| needs to be treated as immediate income, which is messy.
| 411111111111111 wrote:
| It is if stopping to work is equivalent with getting
| deported though. Great system the US created with h-1b
| ghaff wrote:
| The problem is that the following is what is was intended
| for:
|
| "The H-1B program allows companies and other employers in
| the United States to temporarily employ foreign workers
| in occupations that require the theoretical and practical
| application of a body of highly specialized knowledge and
| a bachelor's degree or higher in the specific specialty,
| or its equivalent."
|
| Note, among other things, the word "temporarily" and the
| phrase :highly specialized knowledge." The real problem
| is that H-1Bs are often used by companies in very
| different ways than their stated purpose.
| eschneider wrote:
| Assume that's true. Ask yourself this question: Is Elon Musk
| the sort of person who'd fire you just before you vest so he
| didn't have to pay out?
| texasbigdata wrote:
| Not sure, but I'd assume I'd be such a rounding error on
| the cap table that it probably wouldn't be worth a
| milisecond of his processing time.
| eropple wrote:
| He spends his time complaining on Twitter and hosting
| faux polls to unban right-wing trolls while misquoting
| "vox populi, vox dei".
|
| He can almost certainly make time for spite.
| ido wrote:
| I want to highlight this paragraph: Freeze all
| payments that would not result in an outage: rent, non
| technical vendors, professional services, etc.
| You'll get back to them in a more discriminate way in a couple
| of weeks, once you have a clearer overall plan
|
| Is the author suggesting screwing over the companies you buy
| services from by not paying them?
| bjornsing wrote:
| > Is the author suggesting screwing over the companies you buy
| services from by not paying them?
|
| In a bankruptcy or restructuring someone is going to get
| screwed. That's sort of the definition of it.
| hef19898 wrote:
| Usually that happens undet proper bancruptcy proceeding
| (Chapter 11 or some variety of that depending on
| jurisdiction).
| simonebrunozzi wrote:
| Yes. As hard and unfair as it sounds, if you have finite
| resources and too many expenses, at some point you have to take
| drastic decisions.
|
| The big difference is in how you handle them "in a couple of
| weeks". You can totally screw them, or you can honor their
| credits.
| wirrbel wrote:
| Either you default or you honor your credit and potentially
| rebalance credit. I your business was operated responsibly
| you shouldn't be in a situation where you stop all payments
| to ,,sort out your business numbers"
| zomglings wrote:
| Whether or not your business was operated responsibly does
| not affect your current best marginal decision. Assuming
| you want your business to survive, this may be to take the
| author's advice.
| wirrbel wrote:
| Ahem. You also cannot delay filing of insolvency because
| the law decides which marginal decision are allowed and
| which aren't.
| ido wrote:
| How do you know you will actually have money in a couple
| weeks?
| javawizard wrote:
| If you wouldn't have money in a couple of weeks, how does
| this make any difference?
| ido wrote:
| It may not to you, but your unpaid vendors would know to
| not wait on you hoping you'll pay up at the end & try to
| figure out a backup.
|
| If I was providing services to a company I'd much prefer
| they tell me they're unable to pay ASAP then just delay
| as much as they can and then not pay at the end.
| hef19898 wrote:
| Delaying bacruptcy can, and has, landed people in jail.
| ehnto wrote:
| Just keep them in the loop so you don't end up with a nasty
| surprise of your own. I have dealt with this scenario from
| both sides, and suppliers are often pretty well situated to
| ride out a few missed payments. But by the nature of your
| situation, you are in no position to be shopping around for a
| new service should they cut you off for non-payment. Keep
| people on your side by being communicative as early as
| possible.
| hef19898 wrote:
| Doing so ruins a companies financial crediability, and it is
| opening thr door for your vendors to sue you for delaying
| bancruptcy. You can _ask_ for drlayed payments as part of
| restructuring, unilaterally stopping payment is a sure way to
| disaster.
| Closi wrote:
| > Is the author suggesting screwing over the companies you buy
| services from by not paying them?
|
| Some companies play this game all the time - I've even heard it
| referred to as "supplier stretch".
|
| They pay eventually, but late to improve cash flow. The flip
| side is when they come to renegotiate their contract, you take
| late payment into account in the new offer, and they have hurt
| the relationship, so it's not a particularly long term strategy
| (and once you have started, it can be hard to pull back to a
| position where you aren't late for everything depending on cash
| flow).
| ehnto wrote:
| You also don't get to dictate the suppliers response to
| stretching them. If you keep stretching me, one day I'm going
| to be fed up and not send a shipment until you've paid. If
| you're truly running it tight like many are, you may have
| been relying on selling that stock to pay for it, shoot
| that's a bad spot to be in.
|
| As I've said in other comments though, keep people in the
| loop and you'll have a much better time. Communicate first
| and make decisions based on the outcomes of that. Maybe the
| outcomes the same, and you don't get sent the goods, that's
| fine at least you know ahead of time and can react.
| r_hoods_ghost wrote:
| What I've done to avoid being put in this situation is put in
| intentionally punitive late payment terms (16% + base rate
| AER calculated monthly), and then hold customers to it if
| they start to play this game. This is double the statutory
| rate and if they're being really arsie I start adding on
| "reasonable cost" charges every time I have to chase an
| invoice. This works because every month (or even more
| freqently) they get a credit note for the old invoice and a
| new invoice with the interest and chasing fee added. This
| costs money not just in the added interest etc., but also in
| time. The way I figure it, the payment terms on my invoices
| are 30 days. The "real" payment terms (before I start doing
| the above) are 60 days. If you haven't paid by then, you're
| either incompetent, insolvent, or in danger of becoming so.
| hef19898 wrote:
| Some companies do it intentionally. Some do it out of sheer
| incompetence in the procurement and accounts payable
| departments / processes. Personally, I almost prefer the
| first option, it is somewhat easier to recover from.
| doctor_eval wrote:
| > They pay eventually, but late to improve cash flow.
|
| I've never understood this. If you stretch creditors out to
| say 120 days, then you only gain the difference in value
| between the amount owed today vs the same amount in 4 months,
| which is next to nothing. Once you've stretched a creditor to
| their limit, your payments occur at the same frequency as
| they would if you didn't stretch them. So it provides a very
| marginal one-time benefit, at the cost of pissing off
| companies you need.
|
| I mean, stretching creditors _will_ make your bank balance
| look fatter, but it doesn't mean anything because the trade
| creditor liabilities will remain on your balance sheet, and
| it's your balance sheet that counts. Of course, it might be
| desirable to have cash in the bank if you're sailing close to
| the wind, but you'll be sailing close to the wind when those
| debts become past due, too.
| hef19898 wrote:
| Cash flow is differwnt from overall profit and loss.
| Stretchibg payment terms doesn't help you with the latter,
| it certainly does with the former. Assume you get your
| money from clients faster than you pay your suppliers,
| something quite common in retail.
|
| One can be profitable and cash positive (best place to be
| in), cash positive and unprofitable (acceptable, especially
| for growth-focused businesses), cash negative and
| profitable (kind of ok-ish assuming some reliable backing
| by banks to cover any cash constraints) or cash negative
| and unprofitable (the by default dead category, excluding
| VC money I have the feelong a lot start and scale ups fall
| in this category at the moment).
| gillesjacobs wrote:
| The freelance contractors at the start/scale-up where I
| previously worked did not get payed for 5 months (some even 9
| months). Only after Series A completed did they get their bills
| paid.
| gwnywg wrote:
| Wow, this is shocking... I guess they had other customers who
| were paying them so they could afford to keep betting for 9
| months? I would have to stop providing services to customer
| who would not pay one invoice, but I'm probably too junior to
| judge.
| texasbigdata wrote:
| Having actually worked as a financial advisor in
| "restructurings" aka bankruptcies, many (most?) of the
| comments in this sub thread are not correct. Pre-petition,
| post-petition and restricted payments (say management bonuses
| a few weeks before bankruptcies which are ellgibile for claw
| back) are treated differently. There is a strict order of
| preference (priority) which can be found in the bankruptcy
| code. Generally, employee wages are sacrosanct. What ends up
| happening with vendors is the following: "hey guys everything
| pre petition is washed, but here's 2 cents on the dollar for
| your claim, AND the bankruptcy court has allowed us to use
| cash collateral to keep using you, soooooo, since it's a sunk
| cost, how about you keep servicing us? And when we emerge the
| bk court requires a test of financial validation to our plans
| so you'll know for sure we're safe. ". As unfair as that is,
| many/most vendors take the deal. A large vendor will have a
| certain small %age of their customers go bk every year so
| they're generally sophisticated and know how to play the
| game. Same for landlords. Also the unsecured creditors have a
| committee through which they voice their concerns. Further,
| if you play games and try to not sign the bk papers as a
| debtor, 7 creditors can band together and force you in, which
| doesn't usually happen because of the game theory around
| that. But basically, as a general rule, don't fuck around.
|
| Your scenario as described is unethical, and a virtuous
| investor would have topped up those delinquent payments with
| some premium since those employees essentially funded the
| company with financing. In a bk, you also have access (I
| won't explain this) to debtor in possession financing which
| is super senior to everything except basically tax liens
| iirc, and if there's a working capital deficit like the wages
| mentioned in your case, those can be resolved.
|
| The courts are very very strict on the bright line on pre and
| post petition spend and liabilities and shenanigans aren't
| really tolerated. Also, the "zone of insolvency" brings
| significant liability to officers and directors of the
| company, and D&O insurance won't always protect you against
| risk of this magnitude, so it's best to steer far far away
| from unseemly behavior in any liquidity constrained
| situation. Those refs bite, and they bite hard.
|
| Sorry you had to go through that.
| hef19898 wrote:
| Yeah, most (some?) suppliers and vendors will take the
| deal. It does show two things so, first those vendors of a
| bankcrupt start-up are actually much more sustainable, and
| grown up, businesses than the start-up. And two, one has to
| negotiate those deals with suppliers, good simply
| defaulting on a couple of invoices without as much as
| shrugg emoji in the lead up to an actual bankcruptcy
| proceeding.
| kingkongjaffa wrote:
| Most B2B are on 30/60/90 day payment terms anyway. You should
| be able to get your shit together in 30days without delaying
| any payments.
|
| The more prudent thing would be to scrap all subscriptions/SAAS
| solutions you can live without, with one month notice where you
| are not contracted, where you are see how to activate any
| break-clauses etc.
|
| So this month you pay the same but maybe next month you
| cancelled some nine essential stuff and your burn rate is 1-10%
| leaner? _shrug_
| vvanpo wrote:
| > _Hours worked is the #1 driver of any worker's output: use your
| right to monitor._
|
| I don't think hours behind a screen have ever had much of a
| correlation with productivity for me. Autonomy, stress, being
| tasked with solutions that actually make long-term sense, etc.
| must have a much stronger correlation. The enormous erosion of
| trust that having my hours monitored would have would certainly
| impact my output.
| groestl wrote:
| I've spent years doing stuff that I'd better not done at all.
| So yeah, hours worked is not a good metric by any means.
| pavlov wrote:
| Yes, it's terrible advice if applied to engineering teams at
| least.
|
| The number of hours that an individual spent staring at the IDE
| or punching commands into the CLI have no meaningful
| correlation with the organization's long-term goals.
|
| A manager who spends their time monitoring engineers' screens
| is like a web developer who writes a CRUD back-end in x86
| assembly. It's the wrong level of abstraction for performing
| the job.
| chenmike wrote:
| This is the weirdest sentiment out of the entire article. "Only
| hire A-players" and "monitor them". I know exactly 0 A-hire
| engineers who would tolerate being monitored. Why wouldn't they
| leave to go to one of the many companies that would love to
| have them and where they won't have someone breathing down
| their neck?
|
| Perhaps it's a take on how bad the job market is right now, but
| I still disagree. There are far fewer job prospects out there
| but way more than 0.
| quickthrower2 wrote:
| It also changes the focus: "what is good for the company" ->
| "what makes me look good and not get fired". Following Elons
| antics I bet twitter LOC count is growing very fast!
| chrisweekly wrote:
| Yeah; code is a liability, not an asset.
| luckylion wrote:
| The problem is that you can only later tell what made sense
| long-term, who was able to handle autonomy etc.
|
| I work for a company (as a contractor) that doesn't monitor
| hours worked for their employees and the team is incredibly
| unproductive. It feels like some have a second job while others
| are playing games. I'm sure you could get rid of 75% if the
| remaining people worked full-time for their full-time salaries.
| sirwhinesalot wrote:
| You'd think so but if people are playing video games or not
| working, adding monitoring won't increase your productivity,
| people will just do pointless busywork instead.
|
| Cutting down the number of people will make everyone else
| more productive because they need to pick up the slack, but
| that doesn't mean the output will be higher quality, it will
| very likely be worse quality since you've taken a bunch of
| relaxed people and made them highly stressed.
|
| To me it sounds like a failure of management and/or
| processes. The people are not motivated and their tasks are
| not being defined appropriately.
| luckylion wrote:
| If someone is doing pointless busywork, they might as well
| do real work, they're often similarly annoying.
|
| People in bureaucracies aren't famously slow because their
| tasks aren't well defined, they're slow because it's
| tolerated. When you stop tolerating it, they either improve
| their attitude or get filtered out. I've found that to
| apply to all organizations past some head count. People
| settle in and do less and less. That's not a problem while
| the money is flowing in like water during a flood, but it
| becomes a problem when that changes.
| sirwhinesalot wrote:
| I don't know how it is where you work (I guess working as
| a contractor skews things) but where I work this is how
| things go:
|
| - some tasks are estimated - a resource bound is set per
| sprint/per person - tasks are picked for a sprint such
| that the resource bounds aren't exceeded. - people work
| on those tasks until the next sprint.
|
| Now, software engineering is notoriously hard to
| estimate. Hard to predict you can't work for 2 days
| because someone updated a package that totally follows
| semver except not really and it takes 3 days of
| debugging.
|
| So tasks get estimated with a _lot_ of slack because
| hitting the sprint targets is more important than doing
| more work. That 's a process problem.
|
| Even then what mostly happens is that some tasks end up
| wildly overestimated while others wildly underestimated,
| to the point they end up shifted to the next sprint (at
| which point one must question the whole exercise).
|
| This all assumes the requirements for the tasks were in
| any way clear, often they aren't.
|
| Either way, the outcome is that some weeks there simply
| isn't enough work assigned, while others there's too
| much. Sometimes there's an issue that's on someone to fix
| and everyone else is waiting for that before they can do
| their work.
|
| What should they be doing with their time? Improve the
| tests? The docs? I guess, but unmotivated people doing
| boring work always ends up with a shitty output
| regardless of how many hours they dedicate to it.
|
| Much better to trust people to get the job done, given
| them a reason why they do what they do, and set processes
| that let them work at a consistent pace. That's what
| Agile was originally all about.
| dalyons wrote:
| (I know you're a contractor so you don't get to choose
| but:) stop working in artificial sprints. In some cases
| they're useful(external client stuff) but mostly they can
| be replaced with just working down a continuous backlog.
| Then you don't have this weird artificial feast and
| famine game. I think from your last sentence you agree.
| gedy wrote:
| Agreed, kanban style is so much better than sprints
| sirwhinesalot wrote:
| Yes I most certainly agree, I was a manager for awhile
| and pushed for that but it got rejected by the higher-
| ups. Not a manager there anymore ;)
| wirrbel wrote:
| I'd still say that monitoring hours seems like a strange idea
| when the company itself has trouble setting expectations and
| delivering goals
| luckylion wrote:
| It's a shortcut because measuring output is too hard for
| any sufficiently complex work.
|
| It's easy when you have a well-defined task that you know
| the average complexity for, e.g. first level support ticket
| responses. It's very different for e.g. the developer who
| looks into a ticket to find out why. Might be just 60
| seconds because technical understanding + experience give
| you the ability to see what customer + support agents have
| missed. Might be 6 hours for a complicated bug and fix,
| might turn into a huge deal that takes days.
|
| How do you handle that and accurately predict how much time
| that should take?
| wirrbel wrote:
| Basically you have just given reasoning for why there is
| a job description ,,engineering manager".
|
| I am actually all for monitored work hours and I clock in
| an clock out of my unionized 35h work contract. But
| frankly i expect from a sw eng Organisation more insight
| into their own development processes
| neilv wrote:
| Some of the thinking about getting back to real startup dynamics
| sounds good, but this part didn't:
|
| > _Labor market is in your favor: renegotiate compensations,
| starting with the B players. Whoever leaves will not be hard to
| replace. [...] Layoffs are disgusting for everybody. Multiple
| waves are not OK. Be courageous and sensible: any additional wave
| further depresses your team and worries your customers. And, at
| least a few thousands of the 175,000 laid off are surely better
| and cheaper than your bottom 20% performers. Probably more hungry
| too._
|
| > _Founders who managed to be relatively less diluted thanks to
| recent sky-high valuations: carve-out a portion of your own
| equity to compensate your pivotal talents or new hires_
|
| If you just listened to the savage management consultant type,
| and laid off everyone you possibly could, and then hope to take
| advantage of the misery of others, to hire more desperate
| replacement workers...
|
| Those "pivotal" people with experience are going to see there's
| no loyalty nor trust in the company. Which doesn't bode well for
| a startup.
|
| Uh, yeah, rather than more equity, cash is good. And, uh, let's
| switch to weekly payroll, given slippery slopes and the foot-
| dragging that the management consultant advised about payables to
| vendors.
| nikanj wrote:
| I feel like you missed the grand theme of the piece: "How to
| keep the lights on at your startup, by doing whatever it takes"
|
| There's a whole ethics discussion to be had here (is it better
| to fire 40% and save 60%, or end up closing shop and 100%
| losing their jobs), but "taking advantage of the misery of
| others and hiring desperate workers" just sounds like you're
| not understanding how damn hard it is to be in the CEO seat.
| sneak wrote:
| Expecting loyalty or trust from a purely transactional business
| relationship is a mistake to begin with.
|
| You should trust that your counterparty will abide by the
| written terms of the contract. Believing anything further is
| folly.
|
| It's just business.
| fakedang wrote:
| I think it's justifiable for employees to feel some amount of
| loyalty to the concept of the startup when they join it,
| since they are inevitably taking a significant amount of risk
| when joining an early-stage company (growth stage startups
| will be fine).
|
| What I don't get is how not many founders believe that
| loyalty is a two-way street - you should expect to be as
| loyal to your employees as you expect them to be to your
| startup.
| neilv wrote:
| If it's only about transactional business relationships,
| that's a high percentage of one's energetic waking hours to
| be spending on it.
| asah wrote:
| > The past two years created a new type of hype: PMs.
|
| um, no. In the 1990s, it was widely recognized that PMs "pay for
| themselves" at around 6-10 engineers. Obviously, the ratio
| depends on the kind of work, but PMs are generally much faster
| and better at human-human communication and decision-making,
| where engineers (generally) get bogged-down with minutiae and
| struggle to tell a business-relevant narrative, to the right
| people, at the right time and in a way to get better decisions
| made. The extreme example:
| https://lettersofnote.com/2009/10/27/the-result-would-be-a-c...
| (this "should" have been enough, and it wasn't - which is why
| it's a good example)
| say_it_as_it_is wrote:
| > I worked with Founders, CEOs and funds to save 7 companies from
| bankruptcy. In B2B, Consumer, and Infrastructure, from Series A
| to post-IPO. Saving tens of thousands of jobs, generating $2B+ in
| cash, and rising again, stronger than ever.
|
| Why bother reading the article with this level of self-
| aggrandizing absurdity? How much fiction will be presented as
| fact?
| zomglings wrote:
| This article is a worth a read from anyone who is currently
| operating a VC-funded technology business.
|
| Most people running such businesses in the last few years have
| been applying lessons and processes well-suited to a much
| rosier economic environment. Many companies have not yet
| transitioned their attitudes and processes to suit the current
| economic environment.
|
| You may feel that this article is absurd, but it legitimately
| tells you how deep a cut you can make to survive as a company.
| And the shapes this cut can take.
|
| Another piece I recommend is "Peacetime CEO/Wartime CEO" -
| https://a16z.com/2011/04/14/peacetime-ceo-wartime-ceo/
| codingdave wrote:
| While much of the advice in here is good, some of it is really
| off, including a huge miss in the very first sentence. While
| bankruptcy has its problems, declaring bankruptcy is not the same
| thing as shutting down. Bankruptcy is a tool used to do exactly
| what this article is talking about -- restructure the business.
|
| It isn't the right answer all the time, and I have my own
| personal philosophical problems with bankruptcy, but when an
| article doesn't even point out that it can be a part of this
| process, there is a big gap in the perspective presented.
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