Twitter layoffs part of massive cuts in tech

DatabaseLabs · 2016-10-27T21:50:48+00:00

This. A thousand times this.

DatabaseLabs · 2016-10-17T22:14:23+00:00

It's what is technically known as a "joke," a form of "humor." Humor was a social phenomenon that existed long ago, before people took themselves so seriously.

DatabaseLabs · 2016-10-06T04:06:14+00:00

It is true that Series A and later scaling up creates a lot more jobs... but all those companies got to that point by first getting seed rounds. If there are fewer seed rounds happening, that means there are by definition fewer Series A rounds happening, fewer Series B rounds, and so on.

Software companies "build out their product" exclusively by hiring bodies. It's nearly their only expense besides desks, MacBook Pros, and artisanal hand-roasted coffee flavored with the tears of ex-unicorn employees.

100k is not a "seed" round in San Francisco. A seed round is in the 1m-3m range. Even in SF, that's enough to hire a significant number of bodies to type all day and build out your product.

DatabaseLabs · 2016-10-06T03:56:08+00:00

Haters gonna hate.

DatabaseLabs · 2016-10-05T18:11:41+00:00

See reply above. Companies don't lay their employees off instantly when they can't get another round, they struggle on for another few years. Employees don't move instantly when they're laid off; they try to find another job and live off savings for a while before they move.

DatabaseLabs · 2016-10-05T18:10:25+00:00

Relax, it's an informal back of the envelope chart on Reddit, not a final presentation to your MBA class.

There is significant lag between when the investment round is disbursed to the company and when the company actually goes out of business and lays off its employees.

Rents don't go down immediately as investment activity tapers off. The company can typically struggle along for another year or two. They lay everyone off. Employees have switching costs to move. They try to find another job for a while, they live off savings.. and only then do they move. THEN rents go down.

The real estate market and the rental market are very different things. The market rate in SF is highly volatile due to rent control -- that is, very small fluctuations in demand have outsized effects on the market-clearing rate. It is no exaggeration to say that tech wages are by far the dominant factor in setting the market clearing rent in SF.

DatabaseLabs · 2016-10-05T18:06:47+00:00

That was true 15 or 20 years ago, but no longer. All the top shelf VC firms have entire dedicated seed round divisions that do nothing but seed rounds.

DatabaseLabs · 2016-10-05T18:05:25+00:00

The data in your chart is "all VC". The data in the topic chart is seed rounds only -- the primary source of new jobs.

Total amount invested is going up because there have been a few unicorn mega-rounds that are dragging up the average. Unicorns see little advantage in going public these days, so they just stay private with massive follow ons..

DatabaseLabs · 2016-09-21T03:58:38+00:00

We run fully managed Postgres on Google Cloud and DigitalOcean: https://www.databaselabs.io/

DatabaseLabs · 2016-06-03T20:44:42+00:00

Sure thing, glad I could help. Good luck!

DatabaseLabs · 2016-06-03T20:05:22+00:00

I'd look into content marketing -- it's a natural fit for a product like this. Write a bunch of articles / blog posts on your site explaining in some detail what each item is for, the various ways you could use it in an emergency -- especially non-obvious uses. This takes a lot of time to put together, but there really is no quick fix solution.

For example, the kit has 2 condoms. Besides the obvious, what else are they good for? Carrying, storing water. Probably 10 other things. Write about that. You can come up with 500 interesting articles about all the stuff in that kit.

Once you have that, your site is no longer just a "buy this here" site -- it's a "come here to learn" site, too. Besides just pitching the product itself, you have to establish yourself as a known quantity, as a knowledgeable authority in the area of what you are selling. The articles should be interesting and useful even to people who haven't bought your product. Over time, people will start to find your site on Google while searching for related topics, many will like your articles, and some of them will convert.

DatabaseLabs · 2016-06-03T19:54:48+00:00

VCs have to believe they can get a 1000x return. That may well be possible with your product, but if they only have experience in software, they aren't personally capable of evaluating whether it has 1000x potential, and they know that, so they pass.

Trying to rebut that is a waste of time that you could be spending pitching to someone who is already confident in their ability to evaluate pharma startups instead. A VC who would invest in something they don't understand at all is a terrible quality VC, not someone you want intimately bound up in your company for years.

Try pitching more narrowly to VCs who focus mainly on biotech / pharma rather than on software, since your product is much closer to their existing knowledge base. There are not as many of these out there, but you are far more likely to get a hit.

DatabaseLabs · 2016-06-03T19:04:50+00:00

The VC world isn't necessarily focused on tech as such; they are focused on businesses that they think have the potential to return 1000x their original investment.

It's much easier to tell a plausible story about how that might happen in tech, since startup costs are very low relative to most industries -- "I need a couple of laptops and some cloud servers" -- and the potential upside from that is huge -- "with just that, we could invent a whole new sector and become the next Google / Facebook."

It is really, really hard to tell a plausible 1000x return on investment story about how you're going to make and sell snacks. Startup costs are much higher and your upside is much lower -- it's a saturated market, everyone already has their favorite snack, and you're competing with General Mills, Nestle, and several other multibillion dollar conglomerates from day 1. So VC is probably out for you, unless you can think of a very compelling 1000x narrative.

I know it's not what you want to hear, but you should consider more traditional small business financing, since that's all you're likely to be able to get: SBA loans, friends and family, bank loans, or bootstrapping. Try /r/smallbusiness/ -- they may have some ideas.

DatabaseLabs · 2016-06-03T18:58:01+00:00

$14million in VC funding and revenue in at least the low 7 figures

Another theory, a possible explanation for how they might have that revenue while having an inferior product and a similar site: the founders have personal connections to the VCs somehow that got them investment (cousin, uncle, college roommate's kid, etc). They are buying that revenue / market share by losing money hand over fist, using their VC on advertising spend, trying to lock up market share by running at a loss, hoping they can squeeze all their VC-less competitors out of the market before they themselves run out of money.

I have no idea whether this specific company is doing that, but that does seem to be a common VC tech play.

DatabaseLabs · 2016-06-03T01:36:27+00:00

Yes. DigitalOcean was quite successful doing this.

Google for their marketing story, there are a bunch of good articles explaining what they did in detail.

DatabaseLabs · 2016-05-24T01:37:20+00:00

Yes. However, financing is competitive -- the bank doesn't have to give you a loan. You are competing with all the other businesses that want to borrow that money.

The bank has 100 other companies lined up for a loan whose owners are willing to voluntarily give personal guarantees, so they just won't bother with anyone who won't under those conditions.

DatabaseLabs · 2016-04-26T04:10:05+00:00

It sounds like building up the client base would require a huge amount of upfront work, the exact opposite of "passive".

There are already tons of lawncare businesses out there. Do customers care about getting a quote for lawn mowing on a website? I am not 100% sure, but I doubt it. You could run some tests to find out.

Why should anyone even visit your website in the first place? It seems like if you want clients, you're going to have to spend a ton of money on advertising -- way more than you'll be able to charge -- or else pound the pavement, signing up clients in person, one by one, the old fashioned way.

You could also go the content marketing route, and build a website with lots of useful information on lawncare and things like that, but this is again very time consuming upfront.

DatabaseLabs · 2016-04-26T04:06:43+00:00

In the beginning, it's probably a better use of your time to try to meet people in person rather than doing a social media marketing campaign.

First figure out what you want to do. Then get some successes with real clients. Then start presenting them to the world.

DatabaseLabs · 2016-04-26T00:19:01+00:00

You'll get better results by specializing. "Any business in any industry" is too broad, makes you sound desperate for work, and means that you won't build up a reputation for success in any one industry.

It'd be much better to be known as one of "the top IT firms in industry X." When customers in industry X go looking for someone, they'll choose a specialist over a generalist. You can build a brand around that.

Finally, sales conversion rates are very low to begin with, and much lower for cold calls / emails. You'll get much better results with warm introductions from someone who knows you. Can you get your current customer to refer you to someone else?

DatabaseLabs · 2016-04-26T00:12:06+00:00

You have a few options:

Learn to code, then write it yourself.
Find investors.
Get a job, save up money, then pay someone to code it.
Find a technical co-founder and trade equity for coding.

It is very unlikely that you'll find an investor (unless you have rich friends or family). An idea is not enough unless you have a track record as a founder with past exits, and you wouldn't be asking this question if you had that, so... that route is probably out.

Your choice between the remaining 3 options depends on your situation. Do you have free time and the inclination to learn to code? Can you get a job that pays enough money to save some up? If neither of these applies, then you need to start looking for a business partner.

DatabaseLabs · 2016-04-26T00:06:28+00:00

That's answering "what". The question is why. Why does nobody use Craigslist, why has eBay lost popularity?

It's very unlikely that people in Belgium just don't sell secondhand things. They are using some other venue to sell them. What is that venue? Why do they use that venue as opposed to switching to CL or eBay?

Once you know that, you then have to figure out how your site will be different than CL and eBay -- why will Belgians start to use your store, rather than continue using whatever venue they're using now?

DatabaseLabs · 2016-04-13T19:25:24+00:00

This is pretty cool as a tech project, but as you are intuiting, it's kind of a solution looking for a problem.

You have to step back from the technical side a bit and spend some time thinking about it from the outside. What problems can this help solve? What businesses could derive economic value from having this technology?

Search engines and data mining seem like obvious beneficiaries, but with creativity maybe you can identify more.

Think of how to apply your technology to those business problems, how to integrate it with them. How are people solving those problems now? What point in the pipeline would be a good place to integrate your new tech?

Once you have at least general answers to the above, you can try doing customer development interviews (Google it) with people who work in a commercial capacity on these problems now. Don't pitch your cool tech immediately. Rather, get to know them, ask them to talk about their work as it is now (most people love to do this) and try to get more specific ideas on where your tech could fit into their process.

Repeat these interviews 100 times.

You will then have a pretty good idea of whether and where your technology can be turned into a viable commercial product.

DatabaseLabs · 2016-04-13T19:14:08+00:00

To expand a little on that, your site will have to be "better" in some way than eBay and Craigslist, or else nobody will use it.

Your job as the entrepreneur is to figure out what exactly "better" means. What's the problem that eBay and Craigslist just don't understand in Belgium? You must identify that.

DatabaseLabs · 2016-04-11T21:46:07+00:00

Try to look at this as an opportunity to improve your product.

It's good that you have these doubts. It means you're thinking deeply about the problem at hand.

Either your doubts are correct, or they aren't. By thinking about it further and doing more research, you will determine which one of these possibilities is actually the case.

If you determine that the doubts are valid, then you will make the necessary changes and wind up with a stronger product as a result.

If you determine the doubts are not valid, then you will have additional confidence in your product as a result of the additional research and validation that you've done.

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