[ChuckMcM]

For those of you going through this for the first time, this is what the loss of "loose money" feels like. For some it will feel "sudden" but it started last year. "Big name" startups were getting re-valued downward by their investors and founders trying to raise a series A or B kept getting "we would prefer to follow in this round, rather than lead it."

I feel for the employees. One of my friends in the dot com bust showed up for work to find the doors locked and a line of other employees outside. A security guard was there who would escort the employee inside, they were given a box and supervised while the put their stuff in the box (and it was inventoried by the guard) and then they were allowed to leave and the next person was let in. No linkedin or big social media at the time so they didn't know that the 3 founders were all now at Apple, that Monday had been the founder's first day in their new jobs. The dissonance was huge, it was if the startup had never even existed. It took 3 months but his final paycheck arrived, written out by a legal firm representing an insurance company.

Default dead, or default alive. That is a really important question right now.

[dmix]

The company that nearly acquired Skully before they apparently "messed up" (LeSports) just got $1.2 billion in capital so I don't think you can say easy money has stopped floating around for AR startups. This headline could just have easily been that the company was getting bought out.

Skully just couldn't hit their targets for the 2nd round. Especially with the founder getting dramatically booted out and Intel Capital Partners is quoted in this article as still being actively involved until the very end - they clearly had greater problems than access to capital.

So I'm not sure this story backs up your narrative very well.

http://variety.com/2016/biz/asia/chinas-le-sports-raises-1-2...

[kevin_thibedeau]

Basically LeSports has all the technical know-how now and can respin this concept using cheaper NRE for a lower price point with the pesky Americans out of the picture.

[jessaustin]

If you're implying that LesPorts looked over their shoulder and got valuable IP for free, that too would be something of a failure on the part of Skully's management.

[ChuckMcM]

I don't know how it went down at all, but I can relate a story about a dot com casualty that I helped purchase. The company's assets were bought from the investors, as far as I could tell that transaction happened between the board of directors at the company where I worked, and their board of directors. The "cover story" that their board told their CEO and CTO was that they should consider taking us over, and we went over and talked to everyone and did some technical due diligence. I found both the CEO and CTO fairly annoying with their "why would we want to buy you?" attitude.

Then on Monday the week after that get together our CEO told us they had purchased "certain assets" of that company and we should "hire" anyone who we thought was good, we had a spreadsheet with their time of service and salary info. And a green light to just move them into our org with the same salary. They came right across as a horizontal transfer as far as the employees were concerned.

I know for a fact that it surprised the heck out of the CEO as when we went over there to talk to people his office monitor was sitting on the floor and the CRT tube was broken. And we never saw any of the senior management after that one time. Definitely left a sour taste and it reminded me how "expensive" it was to take bridge funding.

[nzjrs]

Ip? It's hardly rocket science. More like they killed them to get first to market.

[dmix]

I thought Skully was already on the market? Just with supply chain issues. Unless you mean in a mainstream form.

[hkmurakami]

I also feel for the junior developers being minted in droves from the various bootcamps across the country, but particularly in the SF Bay Area. Since we have it the hottest here, the pain will be the most acute as well when the downturn finally arrives in full force. Those who believed in the narrative that a 10 week developer bootcamp was the ticket to a good job in the "new era" will be in for a rude awakening. It'll be akin to the Law School false promises (though not nearly as severe with respect to time and financial commitment and loss).

I hope they have made contingency plans, or have pursued robustness in their skills.

[argonaut]

The downturn is in startups. I see these bootcamps graduates being snapped up by large corporations all the time. Including lots of companies that are not as sexy as the big Silicon Valley firms, yet still desperate for tech talent.

[chaostheory]

Sure not having positions open will suck, but it's not like their knowledge is useless. If you can't find a good company that'll hire you... just make one yourself.

https://www.theguardian.com/technology/2014/feb/20/facebook-...

[danielhooper]

What about all the tens of thousands of students that graduate with CS or related degrees every year?

[kstrauser]

They seem to fare much better, at least that I've seen. I've been in places that've hired freshly minted BS/CSes, but I'm only aware of hiring one bootcamp grad. She was exceptionally brilliant and motivated, and did the bootcamp to round out her otherwise excellent skillset.

I contrast that with some I've seen turned away for being able to make a Rails site, for instance, but with little or no knowledge of CS fundamentals. They too might have been brilliant and motivated, but they didn't come with the underlying knowledge they'd need to succeed in the roles we had available.

Bootcamps seem to teach tech, not theory. That's fine if you're hiring for that specific tech! My employers have been more interested in broad theory, though.

[aphextron]

CS is essentially an engineering degree. You can retrain into practically any technical field with that foundation of math and science. Bootcamp grads wont be so lucky.

[NotSammyHagar]

Seattle has thousands of jobs. Please come fill some of them.

[ben_jones]

I would feel for them if their weren't tens of thousands of C.S. graduates who payed north of $80,000 and four years of their lives for the privilege of entering the future job market. We need more STEM right?!

[johncolanduoni]

To be fair, not getting a CS degree (even if you want to code) has been fairly popular advice for a while now.

[ben_jones]

Try making this argument on a high school or college campus.

[Retra]

If that's all they're getting out of their education, then they've squandered it.

[abtinf]

> No linkedin or big social media at the time

https://en.wikipedia.org/wiki/Fucked_Company

[chaostheory]

https://www.reddit.com/r/shutdown/

[aoki]

well that's a blast from the past, thanks. though it did totally jump the shark when any bad news at any company of any size got to be "newsworthy."

[shostack]

Is there an indicator that large tech companies that have their business model figured out are laying off people or are expected to at this point?

My read on this is that the downturn is limited to funded startups with no clear revenue model or who can't scale large enough to secure future funding. This in turn could lead to a feeding frenzy by the big established players who see talent they can scoop up from people looking for stability.

I'd also love it if you or anyone has numbers on the percentage of people employed by such startups compared against those employed by the large tech companies. My gut says the % employed by the funded, pre-revenue startups is pretty minimal compared to the overall employee count of the large tech giants that are doing just fine.

Plus, given that this fallout would be largely limited to the private markets, I wonder if the outcome will really be that disastrous.

[mathattack]

"we would prefer to follow in this round, rather than lead it."

There are some legal reasons for this if it's a down round. If the initial investment is in one fund, and there's a down round in another, they need someone else to drive pricing so that it doesn't look like they're favoring one fund at the expense of the other. (I'm not sure why this isn't an issue during an up round)

[ganeumann]

It's often an issue in up-rounds as well.

Sometimes firms can't follow-on from a different fund even if they're following, up-round or down-round. That's why funds usually reserve money for follow-on investments.

Firms often have to go back to their LPs if they want to invest in the same company across funds.

[mathattack]

This highlights why it's important to see how VCs operate over time on issues like these. Some VCs make transition rounds easier than others.

[467568985476]

Anecdotally, it seems that investors (funds, really) are getting more conservative with series A rounds, but the seed money is still quite loose. But bubble-spec is kind of a pointless thing to argue on the internet. Either buy your short positions and laugh all the way to the bank if you're right, or don't, but creating FUD is bad for everyone.

[lifeisstillgood]

My question is that with 10 trillion dollars in bonds that the lender now has to pay in order to lend to the Swiss / US / Japanese governments, just how good does the likely return on startups have to be to get some of that money re-investing?

Or is it simply that with wars, elections, terrorism and Brexit, everyone is scared?

[Noseshine]

Wars, elections, terrorism have always existed, and if by "elections" you mean Trump, business in general would not care (of course, some businesses may benefit more from this or that candidate). Business has been and is being done regardless of politics for ages. The guy who organized the already heavily ailing GDR (East Germany) another 5 billion DM credit in 1983 was the most right-wing party head of Germany at the time - the political differences between the players can hardly be any more extreme. Terrorism has in Europe has been much higher in previous decades - Germany, Spain, Britain (and I may forget a few other countries) all had their own very active domestic terrorists.

What's the use of pointing to negative interest rates - if you can't make money with the business you'd always lose even more. Same reason why pointing to tax rates is disingenuous except for special cases - either a business makes sense or it doesn't. If you don't show a profit tax levels there's no need to worry about tax levels. Same goes for your example, if the business does not seem viable what use is it to point to an overall difficult situation, should you continue investing into what you think is a bad business just because of that?

[lifeisstillgood]

Unless we are seeing the end of VC, then there should always be a new up and coming business. In which case there should always be an investment opportunity - and at expected returns better than negative.

Installation of renewable energy, mobile network roll outs, basic R&D for science, that alone could consume a few hundred billion globally and the returns would be 10% or better. (Sell electricity to 3bn people in india and China at 100usd pa / house - approx 100bn pa marketplace there)

I refuse to believe "well that's it lets stop making new businesses"