I'm sure most bootstrapped founders are ecstatic that their competitors who have been dumping product at below cost for years are now mostly going out of business. Not seeing much complaining on Indie Hackers.
Given unlimited QE and huge rounds of fiscal stimulus, the financial markets in major developed countries with debts denominated in their own currency are unlikely to suffer for too long.
Once there is a glimmer of hope that Covid-19 will likely be contained or its effects significantly mitigated, the flood of funds seeking yield should start to pour into discounted assets and other investments with good risk-reward ratio.
Looking at Germany and South Korea, mitigation through concerted efforts should be possible within a year or less. Pessimistically, if containment and mitigation fail, the population will have herd immunity by 1.5-2 years.
I think the assumption is that "longer term" is "within your runway" for some set of startups. Early stage startups can have years of runway.
If you're a startup that's recently closed an amount that will carry you through this period I think you're probably in the ideal position. There is an open and obvious question as to how long that may be, but if you have multiple years of runway it feels safe.
this has a bit of a silver lining: it'll help filter out bullshit business models that appear to work in the times of plenty.
This allows certain parts of their business empire to fund the less performant ones e.g. adventure parks. Hilton has no such option, they're quite invested in the hospitality industry which leaves very little room for pivoting.
I can think of a few things:
a) expecting no revenue for a while anyway
b) mostly can work from home / remote
c) early startups can cut back to a few founders on ramen
None of that really applies to mom and pop restaurants / retail etc.
I don't think life is going to change much for pre-revenue startups still trying to find a market fit. Now, they're back to square one working out if they've got a product that can be sold somewhere.. anywhere! Uncertainty continues as usual.
But if a startup had a fit and were marketing for growth, well.. sucks to be them, unless they were in some kind of remote-collab space.
Many, many businesses are suffering in some way, and startups are not impervious to it either - a major question is who is able to suffer through this longer in order to come out the other side alive. The advantage of startups here is that they have more direct “supply lines” to capital to “hold out through the winter” whereas businesses relying on government help and bank loans are not in as good of shape to survive when depending on indirect third-party capital.
Long-term, this sucks the most for non-venture backed companies if they can’t hold out and die, or make it through and are hampered with debt so much that they are handicapped from returning to normal for quite some time. Conversely, I think this is where investors and venture-backed startups will see an opportunity to thrive because they could easily “sink the damaged ships” and corner markets in a new wave of cheap M&A deals and market share growth.
Startups lose money, which means they are usually raising capital for runway, and can conserve as well.
Moreover, many startups don't have working capital requirements, retail rents, inventory etc..
Finally, a lot of products are digital and some booming.
So it's fair to say many startups have an advantage.
A startup that recently closed a big round (and the need to close the round wasn’t necessitated by massive debt or existing expenses — so think almost all of the money can be used as future runway) might be in a better short-term position than a business that is relying on net-30 or net-90 payments from clients that might not come and that will struggle gaining new revenue needed to pay bills. This is especially true if the startup can pause or slow-down hiring for now to extend the runway — but that’s a short-term advantage.
Longer term, there is absolutely nothing inherent to being a “startup” that will make it any better at weathering the future than any other type of business. And when investments come back — and it could take years, we just don’t know at this point the extent of the economic situation — it is the biggest/best-connected that will benefit. Plenty of startups won’t ever be able to raise that future round. Plus, they get the additional disadvantage of trying to figure out an actual business model during a recession. At least existing businesses — even if they don’t survive — had a working business plan in place first.
> I've got friends in manufacturing, hospitality, services, and so on that will not return to work because their businesses are going to or have already failed, for good. That's the fucking terrifying thing happening right now and it's more deserving of attention than us tech bros.
This is the only part I agree with. I don’t want to see any business fold — but I’m much more concerned about people who aren’t venture-backed founders right now.