Re:Tech faces hour of reckoning as fundraising drops, layoff...
by w1ntermute on Monday January 18, 2016 @03:52PM
(#10926845)
This is exactly right - the two categories of businesses that will face hardships are:
- Consumer tech startups that have only produced revenue-free growth (ex: Dropbox and Evernote)
- Startups selling to startups (ex: Mixpanel and Stripe, maybe Zenefits)
On the other hand, a company like Airbnb may benefit from a downturn, as people look to save money on travel.
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by elevensies on Monday January 18, 2016 @04:35PM
(#10927144)
As a subset of the 2nd category, I think ad-supported mobile apps are going to suffer, i.e. games, since most of them seem to be advertising for each other.
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by interesting_att on Monday January 18, 2016 @05:05PM
(#10927352)
I would actually disagree. eCPMs on mobile have steadily been going up, but not because game companies have been spending unsustainably. eCPMs have increased because brands have slowly been moving in, there is better adtech/targeting, and because game companies have a higher LTV, hence can spend more. Many US-based mobile game companies have basically given up fundraising from VCs as a significant part of their strategy, because it became too difficult to do so post-Zynga's crash.
Point is: If you're a ad-supported mobile app, can purchase users at an ROI+ rate, and know how to iterate productively, it sounds like you have weathered the storm. Mobile ad-supported companies will stay around (though they may trim workforces to ensure long-term viability).
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by digbyloftus on Monday January 18, 2016 @05:26PM
(#10927463)
Is Dropbox really consumer tech? I would have thought businesses would make up the vast majority of their revenue.
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by w1ntermute on Monday January 18, 2016 @07:30PM
(#10928080)
Yes, that's exactly their problem - they're consumer tech, yet businesses make up the vast majority of their (supposedly meager given their insanely high valuation) revenue.
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by wyclif on Monday January 18, 2016 @06:43PM
(#10927851)
Dropbox is a hybrid, both B2B and B2C.
Re:Tech faces hour of reckoning as fundraising drops, layoff...
by DenisM on Monday January 18, 2016 @06:10PM
(#10927690)
It's rather hard to make a B2B business without the target industry exposure and goodwill. And those are hard to get because many of us, high-tech developers, are not good at listening to the low-tech user, or even each other. That includes me, of course.
I think what is unfolding is a shift away from consumer businesses and back to boring business to business services. The latter tend to have more predictable cash flow (which ironically is a handicap when VC money is flowing to "viral" consumer businesses that can paper up their growth).
B2B services whose customers are not linked to the local tech economy should do just fine. It might be harder to raise money for a while, but that's good too, it'll weed out the weaker companies. OTOH, consumer companies that already have ten years of rapid growth priced into their valuation are pretty screwed. Hard to see where they avoid some really painful and damaging adjustments.
And a word of advice for workers. If you are at all unhappy with your job, or suspect that your company is vulnerable to a downturn, now is a good time to start looking around for something you'll be ok with for a couple years. Once companies start laying people off in larger numbers, it will get ugly (maybe not 2000 ugly, but it won't be fun).