He literally gets asked about this directly in the article and admits as much:
> TC: Almost every time we’ve talked over the years, you’ve said that work is busy. Certainly, it slows down sometimes.
> MP: Sherwood has mostly been on an upward run since we started [in 1992], but we did slow down in 2014, and we couldn’t figure it out. Well, VCs were running their companies further to the edge to [improve their internal rates of returns before they hit the fundraising trail]. Turns out we had our best quarter ever in 2015 [as soon as they stopped funding those companies].
Blame the news industry for running with the same lead every couple of years. It works.
Much like the predictably news industry, people her predictably don't read the article before dismissing it.
Yeah the 2008 financial meltdown saved my lumbar region. Paid 250 for a 1,600 euro chair. Very happy. On the other hand a lot of people lost everything. So that was the flipside.
In my area, there were tons of mortgage companies going under left and right back then. Definately lots of people lost their jobs but the glut of cheap office furniture allowed my dad's cost-conscious company consistently upgrade for a while. Since they were a descent-sized firm, buying a lot of chairs or monitors was easy but I wonder how often for someone like myself interested in just a single desk or chair could compete with someone interested in buying a lot.
I'm keeping an eye out for a La Marzocco espresso machine. I've seen a few through windows in Palo Alto that will probably be up for grabs before too long.
heh, you may or not be familiar with the axiom: "A startup's potential is inverse to the number of Aeron chairs they own"
There was a startup, Quokka Sports, where we did the office design for them in a brick-and-timber building in SF, and they freaking folded just before the office build-out was complete... going through their office, the conference rooms were literally PILED with brand new aeron chairs... So I had several for a time...
Probably sounds bizarre, but when I was setting up my home office, I didn't really have time to go out and look for chairs. I decided just to use a $10 stool until I could find a chair that I really liked. 2 years later, I love the stool :-) I have to think about posture, but I'm convinced that the complete lack of support has helped strengthen my core. I don't really want to go back to a normal chair.
I worked with a guy that swore by this concept. He said chair backs are like wearing a back brace, it will eventually weaken all your muscles and cause you all kinds of pain.
If you're in sfbay, there's tons of used office furniture vendors on the peninsula. You can find them on CL or yelp. Drive down, pick one out, and you can walk out with it on the spot.
Something something it's literally impossible to hire engineers who aren't showered in toys and treats.
But yeah, I generally agree with you. I like my fancy chair because I spend an awful lot of time in it every day, and I'm tall (6'6"), so most chairs are pretty uncomfortable for me and my lower back already sucks.
there was an article a while back about how any type of exercise movement, weight lifting to running to walking would ease up lower back pain.
Ultimately comes down to strengthening those muscles. Sitting all day atrophies the muscles. I had lower back pain for the first 30 years of my life, then started deadlifting and the back pain is gone. g'luck
Staying active definitely helps, but isn't a silver bullet from my experience. Once upon a time I was a serious athlete, and it was still something I dealt with. My biggest problem is probably seated posture. I tend to slide forward in my seat so my back fits more comfortably on the backrest, or lean too far forward when I'm sitting upright. Trying to be mindful of it, but old habits die hard.
Of course, the most common injury when deadlifting form slips is probably lowerback related.
I still think everyone would benefit from some strength training! Any strenuous physical activity has risk from injury, but I think that risk is better to accept than the risk from doing nothing. But it's worth looking up some powerlifting videos on YouTube for good form and cues. (I've seen deadlifting videos from non-powerlifters, and I have not been impressed.) This is a good one: https://www.youtube.com/watch?v=d5eGGZXb0Is Layne Norton is a smart, thoughtful guy and an elite powerlifter.
Layne Norton is smart and thoughtful. There are others as well. Basically I learned a million time more from these guys than I ever learned in all the yoga classes I ever took.
I squat ATG and my back muscles are stronger now. Before I'd complain about my back but no more. Now I'm not going to load up. But I do knock out sets at 145. Odd thing is that I don't like deadlifts. Probably personal taste.
I went to work for a utility company blocks away from Puppet HQ, New Relic, Tripwire, Simple, and many others. There are tradeoffs but it has been one of the best decisions that I've made for my work-life balance in years. Perks are basically non-existent, but they ring hollow if the work isn't enjoyable or rewarding enough on its own.
I know the feeling. I'm digital marketing guy for an electronics manufacturing shop, our office environments are likely similar. Occasionally I interview at startups when I think what they're doing is actually interesting, and it always feels like I'm visiting another planet. My nights and weekends are worth more than free meals and laundry.
I'm 6'3" and completely screwed up my lower back from rowing. In 2013 I had got to the point where I could not sit down at a computer for more than 10 minutes.
After four years of swimming 3-4x/wk, my back is now totally fine! Highly recommended.
Swimming is definitely something I've thought about, especially because I want to be good to my knees as well - years of outdoor basketball took its toll haha. My problem is that I find it pretty boring, so I have a hard time getting motivated. I should just do it anyway, or make some time to go to the beach or something.
I've slept under my desk because the couch was already occupied. I think a certain amount of pain in a startup focuses people and I'm very good with that.
As for sedentary, it doesn't have to be. I worked at 100 Hamilton Ave once before it was Palantir. Boring work but there was a gym in the basement. I got my bench 1RM up to 270.
And I've worked at a certain company where the VP of Resources personally adjusted the Aeron to my 6'4" as part of my onboarding. This did not impress me.
Maybe. $1600 is still $1600 though, and the luxuries add up to real money. Especially worrisome when you're generating no real revenue and operating on other people's dime.
except they don't? You could choose to not buy 20 chairs and... get 1 engineer for a couple months?
Meanwhile you have things like ad campaigns that have "unlimited" budgets. Hell, there's tripling staff size in a year without some matching revenue growth!
No, it doesn't. $0.78 per person per hour is a lot of money; 10% of minimum wage. Ofc you're not paying people minimum wage but it's still a nontrivial amount
> $1500/1920 work hours a year = $0.78/hr. Seems reasonable to me.
If that sounds good to you, consider $150/1920 instead for a thought experiment! Sounds about fair for someone like me who assuredly could work for years on end sitting on a rock or any random plastic chair outside Hanoi for all I care.. I'd be madly paranoid about spilling coffee or such sitting in a 1500 piece of furniture
I write to you from an Aeron chair I acquired from a failed startup in 2001. I've gotten almost 16 years out of it so far, and I spend at least 8 hours a day 5 days a week in it. I've spilled coffee and food on it, and was able to clean it with just a bit of Dawn detergent and a hose.
I'm not willing to compromise on my health or my working conditions. Too old for that. Spend money on things that make your life more comfortable or easier when you can.
Cheap for an engineer in some parts of the USA. Can we please stop pretending that (what are in most of the world) large amounts of money are actually small potatoes. It is not ignorance, you know you're better off than the rest of us so please stop pretending like it's nothing.
that's a typical engineer salary in a funded startup or a big tech company in basically any U.S. city that has funded startups or big tech companies.
I know engineer pay is lower in some other countries. UK comes to mind as particularly awful for engineer pay. Still, the context of the discussion is in how much it costs _the company_ not how much it costs the engineer. It's small potatoes for a company.
And 80% of the software engineers in the world aren't in America.
If you think the countries like the UK where pay is lower than the US, which is the highest in the world, is "particularly awful", you might be living in a bubble.
Not to mention plenty of people making less than 100k even in the US, even for big tech companies you've heard of in big cities like Seattle and New York.
I'm a bit disappointed in the accusatory tone of your post. Literally everyone is in a bubble. My bubble is New York City. What's yours?
There are zero humans anywhere in any time or place that have global awareness and are not bounded by their personal experience and local context. So what are you even trying to say?
Yes, yes, of course we have limited experience. However, there are more than a few things that every functional adult is expected to be aware of. The scale of global poverty is certainly among them. For software developers, it's not unreasonable to additionally have some passing familiarity with the going wages for similar work in other countries.
For the people lucky enough to be living in the world's number one economy, in an expensive city, in a well-funded startup or an established tech company, 100k is "not a lot" and spending $1500 on a chair can seem something other than absurd.
The other commenter that you replied to above pointed out very clearly that this applies only to some parts of one particular country, and it is perhaps not very polite to act like this is completely unknown to you.
You responded to this from your bubble, and then defended yourself against me by saying that we are all in a bubble. Well, no kidding, but some of us at least try to be aware of it!
Now are you starting to get even the slightest idea of what I'm trying to say?
It seems as if there are people who like mesh chairs and people who like cloth/foam chairs. Personally I still love my 10+ year old Aeron but I've also known quite a few folks who don't really care for them.
>MP: We sell a lot of patents, maybe more than anyone else. Usually, the only way to pay back [lenders’] loans is to sell the patents. So people aren’t paying what the company would have been worth but usually enough to pay back that secured debt.
So many companies saying they'll only use their patents defensively... may find that their patents will fall into the hands of someone who doesn't share their perspective.
Really, this guy is not a vampire. He's the grim reaper.
I worked for a startup that got shutdown. Don't like failure? Don't work in Silicon Valley. Anyways, Cisco (our probable exit strategy) leaned ever so slightly in the other direction and the VCs pulled our funding. But they also sent in a turnaround guy to reposition us for either the direction Cisco ever so slightly leaned in (soon to lean back) or something else.
Guy was the biggest asshole in the world. Moving the company to Microsoft Exchange is not a worthy accomplishment for a turnaround executive. Two weeks later, he shut us down for good but not before putting his 8 months pregnant wife on the insurance plan. This was a strange detail given that he was worth about $20M.
This guy had taken the job to shut us down. He then brought in a squadron of his buddies who shut us down properly and put a bow tie on it only after laying off everyone else. Basically, he sucked a lot of money out of the VCs. I occasionally Google'd him to figure out if he'd ever done anything afterwards of any merit. Nope.
This is why the word "suit" exists. There's smart people who contribute value and build companies, clever guys who make money skimming off the top off smart people via finance, and then there are suits who leach off the other two, with no redeeming value.
Not really a parallel. But perhaps it'd be easier for founders of doomed companies to accept the state of affairs if he provided them a Beetlejuice-style document - a "Handbook for the Recently Delisted", perhaps? The title needs some work, but I'm sure you can see where I'm going with this.
Activity of restructuring firms is a good leading indicator of what's happening in private markets. These types of guys get involved well before public announcements of companies like Quixey. [0] It's also a very valuable service. Silicon Valley does well when people and assets from failing companies are freed up to join hyper-growth companies. Lenders are also more willing to take on startups as customers when they are confident that liquidators can get their money back.
It's actually a core and well supported part of capitalism - people hire more when firing is easy, lenders are more willing to lend in industries with repo men, etc. It's kind of morbid, but rich ecosystems like the Amazon mostly exist because dead stuff is rapidly recycled. The economy is no different: slowing down the cycle is incredibly distortionary.
Yeah, private equity is a natural response to business failing in the wake of a bubble, but bubbles themselves are market distortions caused by insane valuations.
Highlighting the value of reclamation just draws the heat off of the irrationality of the tech bubble. Amazon isn't a rich ecosystem, it's oligarchic.
And, indeed, any systemic failure in a capitalist economy gets explained away by saying that some cadre of vultures will exploit arbitrage until the gap closes. No one really questions the systemic failures per se. The economy happily creates this surplus in full anticipation of it being scrapped and fed to vultures. Banks repossess cars and capitalists think "working as intended" instead of "there's so many delinquent car loans that there's an industry of repo men and maybe that's significant." This criticism extends similarly to the tech bubble.
That is, if people being fired from these miserable startups is good for the economy, wouldn't them not having worked there at all have been even better?
Thats true if we already had a way of knowing they would fail but we don't. Startups are how you try new ideas to find the good ones. Do having them work there and fail creates informational value.
This is exactly the point. It's very hard to know which ideas will work, and which teams are best suited for the task. The beauty of the VC model is that it starts companies on the cheap. Many companies fail, and those people can go chase either the companies that won, or new startups. It's much better than a world where you have a couple monopolies with grand strategic plans that don't actually get anything done.
The East Coast Monopoly mindset was why Xerox PARC had money to create things, but never got anything done with them.
Employers are more willing to hire risky people if it's easy to fire them. If it is not, large vetting processes are required and hiring people reduces. Because making a mistakes costs so much. It's even worse for small businesses where one bad hire you cannot fire can bankrupt the company.
It's a reason why young people find it hard to get full time permanent jobs and are instead hired as temps instead.
I've been saying that since mid-2015 we've been seeing a slow down in the startup sector overall. Last year it was clear that new startup creations isn't keeping pace with previous years and shutdowns are more common. I think 2017 will be a disastrous year for startup formation and venture investment. SXSW this year was diminished from what it was in past years and it's clear that there's a pullback across the board.
I was at SXSW but didn't have as much time for Interactive sessions as in past years. Can you expound on your SXSW observation?
I did notice the trade show seemed dominated by the country pavillions like I don't remember before. It made me wonder if they were basically bussing in international startups to cover up for the general lack of startups that wanted to buy a booth.
First, from what I am hearing, there was overall lower number of badge sales for SXSWi. The sometimes large attendance at sessions was masked by the fact that SXSW now allows any ticket type entrance to various events, but only prioritizes certain badge holders.
Second, overall attendance at unofficial events was significantly lower from previous years. Previously you faced huge lines for most parties, but many such lines, if any, cleared quickly this year.
Third, investment by startups in their own official events was significantly lower this year. Startups either attended without running their own events or participated in other party's events instead of running their own events.
Fourth, many large brands decided not to participate this year. Microsoft and Samsung were both absent for the first time in a long time. And many other companies scaled back their events.
Fifth, as you mentioned, the exhibition hall was dominated by non-startup parties moreso than in years past. This indicates that startups are not investing in SXSW as much as they had before.
In general, attendance felt lighter this year vs. 2016, and definitely vs. 2015 and 2014, which felt like a peak year for SXSWi.
While these are SXSW-specific numbers, I would wager that you are seeing similar slowdown with other startup-focused events and conferences. Meetups are more lightly attended, and certainly less sponsored.
It feels like the burst in activity is slowing. Not gone. Just slowing.
At the same time, it's also reasonable to ask how much of it is just SXSW getting past its Sell By date. I don't really have an opinion one way or the other but a lot of events seem to go through a certain natural cycle even when the environment they're operating in remains basically healthy.
While I agree that perhaps SXSW has "jumped the shark", at least the interactive part, you'll find that enrollment and participation at many other startup-focused events is declined in 2017 year over year versus 2016. I would bet that Web Summit, CollisionConf, TechCrunch Disrupt, and others are not as full as they used to be or are facing similar challenges with startup numbers, and sponsorships especially.
The events I attend which tend to be in the cloud-native infrastructure and agile development spaces (DevOpsDays, kubecon, OpenStack Summit, OpenShift Commons, a lot of the Linux Foundation events) have been really well-attended over the past year or two. Selling out, doubling venue size and then still selling out next time. But, although a lot of startups are at these events (as are a lot of bigger companies), they're not really oriented toward the classic SV social/mobile/web startup crowd.
This is interesting. Perhaps prices went up and the culture of SXSW attendees are shifting, from startups to the more mainstream. Also, SXSW seemed saturated with costs and crowds, and is a potential unwise use of funds for many companies. A few won the SXSW lottery each year, but many did some networking like any other conferences. Perhaps it's a sign of maturity amongst how people are spending VC money?
Thanks for the excellent rundown. That matches what I saw as well. I showed up 5 minutes late for a few events, assuming I was out of luck, only to find I could walk right in.
If anything it will be a market adjustment year while companies building startups in low value industries shift to high value ones (ie, anything AI). High spikes and drops are relatively rare (at most 1-2 decades). And some industries don't have that volatility at all. Startups will always to some extent have fluctuations but that doesn't mean it will be world ending like the last two.
Markets and investors adapt to experience. Much like this article said, companies are learning to wind down companies faster and pivot earlier. Founders and VCs get better at managing risk.
Here's an idea. Go talk to these guys when you're starting your company. These guys are seeing all the failures, so they should have a decent grasp of what NOT to do.
Discounting for the fact that they're only seeing failures.
There's some innocence in your comment which I wish I still appreciated. I think the grittier reality is that a lot of these startups were based on generally mediocre ideas, but were funded anyway because of relationships and contacts.
I cringe every time I see another "Come help us change the world at..." or "Come help us reinvent blah blah" here on HN. Instant red flag to me, but I'll be damned if they didn't get funded anyway.
I really wish I remember where I had heard it or maybe read it, but it was an investor's advice to new investors: "If the (startup) company comes in to the (investor) meeting with lots of color and excitement, turn him down. The guy that comes in and nearly bores you to sleep with his spreadsheets, he's the one to invest in."
I admit I'm jaded, but I'm still convinced this is the correct way to look at things: being an entrepreneur is about moving investor's money into your own pocket.
The whole idea of creating a large valuation so that you can have a successful exit is literally just that. You are creating demand for the company so that you can sell it to somebody and keep part of the money. The idea of starting a company so that you share in part of the profit generated by the company is ludicrous in today's world.
But always keep in mind that being "successful" is not the only way to move money from an investor's pocket into your own. You can merely hype the hell out of the company. If successful, you can engineer an exit with no viable product. You can also create the "killer demo" which encourages a large company to buy you just so that they can suppress the technology (not so common in this decade, but was standard practice in the 2000's).
And here's the best part. If you "fail" utterly, you can still pocket a fair amount of cash. Most successful entrepreneurs that I worked with do not have the attitude that "this company must succeed". Not by a long shot. They throw spaghetti up against the wall over and over and over again, with the belief that eventually something will stick. They view the "failures" as the salary they get paid (from investors) while waiting for the money train to roll in to town.
What's even more awesome (as in, it strikes me with awe) is that if you manage to hype your way into the second round (or higher) consistently, then you are a high flyer and people will flock to stuff money into your pockets, even though you have never actually produced a "successful" venture.
I am absolutely convinced that your job as a founder is not to make the company "successful". Your job is to raise money, make connections and sell the company. Sure success is a "nice to have", but leave that to your CTO/COO/unwitting co-founder. I often see founders on HN complaining of burnout, trying to keep it all together. Meanwhile all of the successful founders I've worked with don't get bogged down with that stuff. Their the ones going home at 4:30 while the hired help stays until 2 in the morning propping up the server with popsicle sticks and devising various sacrifices to appease whatever god seems to be angry at the time.
While this is certainly a click-worthy title, I'm much more interested in seeing whether the relative number of startup failures is increasing, rather than looking at this in absolute terms.
2015 was a banner year for startup funding, and you would expect many of those war-chests to be running low right around now.
Isn't this a very healthy statistic? In theory, not all companies are meant to last forever. Heck, no company should last forever.
Infact, I would argue that he should be doing 7-8 a week. Clearing out the deck and making way for the new is a good way we can maintain a long term healthy eco system.
Frankly, many iffy biz models that escape startup death aren't survivors but are just long term zombies that are propped up by investor stupidity with no clear path to sustainable growth.
"Shut down 3 or 4 unicorns" - wonder who they were - and I find it a bit funny that he doesn't seem to know the exact number. Or maybe he's just trying to be less specific on purpose.
Valuation is very much a vanity. You can inflate it in a variety of ways. By the time the companies get to him, I think the joke is that you can't tell whether it was actually a unicorn or not. If common stock is worth 0, nobody cares anyways.
The number of wind-downs a week is presented as interesting, but there's no indication how this represents the health of startups in general instead of his businesses ability to get customers.
The indication (more than normal) is given in the response to the first question, from which the article's title is taken:
> MP: We’re seeing two to four companies wind-down a week, which we’ve never seen before. I think more [investors] are taking the Sequoia Capital approach, meaning if something isn’t working, they’re moving on
edit: I think the parent was slightly edited but apologies if I simply misread.
The question should be is the rate of churn of startups going up.
One might interpret the facts as presented to indicate that startups are fashionable, and more people are starting them. A certain percentage are likely to fail.
I am in Brazil, right now completely unemployed (technically I never was employed in first place, so I don't count as unemployed in statistics), and out of work.
So I am thinking of what business to start, this time... (I legally own 3 business, and I think I am heir of more 3 or 4) Because the ones I have none are profitable at all, and I can't find any work (not even supermarket cashier).
And I noticed, that on social sites (Facebook for example) that shows employment, lots of people are becoming business-people too, for example I noticed scores of 18 year olds that own some business selling cakes, or making clothes, or other stuff like that.
It is basically desperation, people can't find jobs, so they start their own business out of desperation, and of course most of these will fail anyway, from the smallest one (someone selling cupcakes from their garage) to the biggest ones (venture-backed stuff post-IPO...)
> And I noticed, that on social sites (Facebook for example) that shows employment, lots of people are becoming business-people too, for example I noticed scores of 18 year olds that own some business selling cakes, or making clothes, or other stuff like that.
I'm not sure how it is in Brazil, but in some parts of the US, there are many young adults 18-22 who start businesses like this. They either start right out of high school or drop out of college, create an LLC, then start a business. Once every so often, someone does well. They make it 5+ years before calling it quits for various reasons. Most of them fail right out of the gate.
The reality of, "Oh crap. This is my business. I can do whatever I want, but I am literally responsible for everything - including generating income" hits. They see that it's not so easy bootstrapping a photography business or cake business from scratch when there is no formal training in the area. No one wants photos that are washed out when a professional can do it for a few dollars more. No one wants a cake that can be replicated by spending 1/3 the price for a store bought cake mix.
Then they stop actually participating in the business, but their social media profile still says "Owner of Pop Flash Photography" or "Sole Proprietor of Wake n Bake Cakes".
One thing that some CS students in my area have done is to start an LLC once they've written something demoable. It doesn't have to be new or innovative (could be a simple calculator app that's on the app store), but if they can distribute it for use, they license it and publish it under the LLC. They make business cards for the LLC. Then they say things like, "I'm the Founder/Owner of Living Room Launched Software. We have a small app on the app store. Here's my card. Contact me if you need something."
This isn't to knock young people who have the entrepreneurial spirit! I think it's great for people to explore what they want to do in life, and it's better to fail fast straight out of HS than to blow their life savings in their mid-40s. Some kid fresh out of high school looking to get rich quick off of something easy is markedly different from the churn discussed in this article.
This may be true but I doubt that most bootstrapped businesses need the services of a company like this one.
The scope of this article seems to be VC-backed businesses, and more specifically ones that have had more than one round of funding, but have either run out of money, or are on the obvious path to run out of money..
"The price of consolidating the companies is too high."
I find this fascinating, as it really speaks to my experience in small companies. The thing you actually create -- code, docs, self-serve product, sales and marketing collateral -- isn't particularly valuable. Most of the knowledge is tribal knowledge, and you're all just spending time trying to expand that. It's amazing how far you can go, and have to go, with the informational equivalent of duct tape and string.
This is a natural byproduct of the evolution of tech sector becoming THE world leader. We are no longer a small mammal outrunning giant reptiles, we are now the dominant force shaping the future of LIFE. This is a smart corrective measure to prevent a bubble. The best firms have learned that only scientific innovation, technical genius, and world-class leaders deserve capital for their ideas.
This may be a good thing for new start-ups. If investors are not "throwing good money after bad" they may have more fuel in the tank for new bets. Each massive round in a unicorn can fuel ten series A rounds.
I think it's the terminator in the literal sense. Person who terminates things. But if referring to the literal word, why put it in quotes? Why capitalize it?
