More Startup Layoffs Are Coming as Investors Push Founders to Conserve Cash

Silicon Valley startups are facing hard choices: Cut jobs now or risk incurring worse pain later. From a report: Following a hiring and funding boom in 2021, technology startups have started to lay off workers to conserve cash. In the past month alone, more than 2,000 employees have lost their jobs at half a dozen startups, including delivery company Gopuff and e-commerce software firm Fast, according to an analysis by The Information. More cuts are likely to come. Venture capitalists, concerned that startups won't be able to fundraise as readily as they did last year, say they have been pushing companies to reduce head count or slow hiring and potentially raise money at lower valuations. And professionals whose business booms when times get tough are seeing a rise in demand.

The Fed raised rates

[rsilvergun]

partially to create job losses and "cool" the job market in the hopes that lower wages would cut inflation.

When your only tool's a hammer...

But stop and think about what this means. The gov't, as a regular matter of public policy, one that is completely nonpartisan and uncontroversial, is actively taking measures to get people fired.

They are doing this because the alternative for curbing inflation (anti-trust enforcement and gov't programs to build affordable housing and for tuition free college) isn't on the table. Homebuyers are still competing with cash buyers (read: billionaire rent seekers) and little Johnny has to start paying his student loans or papa Wall Street will get angry.

Re:

[fropenn]

When loans are cheap, companies are willing to take more risks (such as creating a new division of XXXX in your company). When those risks don't pay off and continuing to get more loans gets expensive, they may close those divisions and layoff those workers. But remember the Fed doesn't set the cost of loans directly. It is much more complicated and complex.

And if you will blame the Fed for getting you laid off, will you credit them for getting you hired in the first place?

Yes I blame and credit the Fed

[rsilvergun]

Because this is the system we've created. It's a very unstable system prone to breaking down. We didn't create it this way because it's the best or even the right way to create it. We created it this way because of certain class of people wants things to be this way because it benefits them, specifically the centi-billionaires, and because the large number of people falsely believe that not everybody can have a good life and it's some suffering is necessary in this world and even desirable.

Somewhere alo

Re:

[phantomfive]

the alternative for curbing inflation (anti-trust enforcement and gov't programs to build affordable housing and for tuition free college)

It's on the table in California. What's wrong with your state?

Re:

[rsilvergun]

Dear God where do I start?

Re:

[Powercntrl]

It's on the table in California. What's wrong with your state?

I live in Florida. Do I have to take a number, or do I get to skip the line with my "Frequently Fucked-up State Pass"?

Re:

[phantomfive]

Well, I can give you some ideas. Have you considered asking yourself, "Is this better than being eaten by a crocodile?"

Re:

[guruevi]

So your solution to the government spending too much money (inflation) is for the government to spend even more money. Please explain how giving even more welfare (more money chasing too little product) is going to help.

Creating crash -- Conserving cash

[OrangeTide]

almost sound the same.

If there is a pull back we can easily slide into a new economic situation that is self reaffirming. One where capital is difficult to obtain, expansion of business is therefor more limited, and economic growth falters. People lose buying power and must work longer to maintain what they have. Governments find less tax revenues due to mortgage defaults and declining economic activity.

A lost decade is a very real possibility on the horizon. I think it's avoidable, but I don't think any on

2022 recession?

[Okian Warrior]

almost sound the same.

If there is a pull back we can easily slide into a new economic situation that is self reaffirming. One where capital is difficult to obtain, expansion of business is therefor more limited, and economic growth falters. People lose buying power and must work longer to maintain what they have. Governments find less tax revenues due to mortgage defaults and declining economic activity.

A lost decade is a very real possibility on the horizon. I think it's avoidable, but I don't think any one person has the power to prevent it.

I've been following the financial situation closely for several years. I started by asking the question "when will the next recession happen", and have been checking about once a month or so for the last 5 years.

It got interesting about a month ago when a survey said that 81% of Americans expect a recession this year.

Then inflation spiked for the 2nd month in a row, then the Fed raised rates to compensate, and Deutsche Bank predicted a recession "at the end of 2023".

So we have high inflation (2 months and r

Good luck with that!

[haggie]

People think that burn rate is elastic. It really isn't.

By the time a VC-backed start-up is laying people off in substantial numbers because of external economic factors, they are already halfway to failing. Staff cuts equal sales misses or product roadmap misses or both which turns into disappointed investors which means a down round or worse.

If you are laying off 30% or more of your staff because of an economic hiccup, you weren't going to make it anyway.

Founders will blame it on "bad timing" and "market forces" when it really was them all along.

More layoffs are coming

[Otis B. Dilroy III]

Because the cocaine laced ass lube that "fake it until you make it" fraudsters used while doing investors asses begins to wear off.