Will a Tighter Economy Rein In Startups?

Nerval's Lobster writes: It's been quite a ride for the stock market this week. In China, markets cratered; in the U.S., stocks dove for two days, only to rebound on Wednesday. That made many tech firms nervous, both about the Chinese economy (which some of them depend upon) and the continuing flow of money from VCs and investors. While the economic jitters don't seem to be affecting some tech firms' ability to implode themselves, more than one pundit is wondering whether the tech industry will shift into 'fear mode,' which could be bad for the so-called 'unicorns' that need funders to keep partying like it's 1999. Are we going to see money start drying up for startups?

Comments

Not once QE4 starts

[trout007]

Once the firehose is turned on Wall St will be swimming in cash. Main Street not so much.

not like 2001

[phantomfive]

It won't be like 2001. Too many companies are making too much revenue, and a slower economy in China won't change that much.

Re:not like 2001

[LynnwoodRooster]

That IS like 2001 - the focus on revenue, not profit. I don't know of a single unicorn ($1 billion+ valuation, pre-IPO stage) who's making profit right now. Turn off the flow of VC funds and they close - they cannot continue operations.

Back in the dot-bomb days it was the same thing. It was all about growing big, growing fast, and even if you lost money on every customer/user, you'd "make it up in volume". At the end of that era, most of the companies who had big revenues and negative cash flow either folded or scaled back so far they were sold for literally a penny on the dollar and faded away to obscurity. We'll see the same thing with the current crop of unicorns when the market crashes again. Those who can sustain themselves on existing revenues will survive. The rest will either go away completely, or end up being gobbled up by others for a fraction of their "value".

Re:not like 2001

[Dutch Gun]

I think the big difference is that there was a big rush to get on the web during the dot-com boom, and the established players actually didn't care AT ALL about revenue (as the old joke went). They just wanted presence of some sort. The problem was, no one really knew what you could actually do with the internet. Everyone just knew that it was important to get on board fast, and a gazillion e-prospectors showed up with all sorts of pie-in-the-cloud ideas that simply weren't sustainable.

Nowadays, the market and investors have a bit more experience. We still saw some seriously overvaluing (IMO), and now we've seen a correction, likely induced by a slump in the Chinese economy. That's actually a good thing, because long-term periods without the occasional correction tends to lead up to much larger corrections, even over-corrections or outright crashes.

I don't see this as any sort of a crash at all, just a more realistic outlook of where we probably should have been all along. We might even see a few additional corrections in the near future. How long have people been talking about the "tech bubble"? This really shouldn't have surprised anyone in the know. It was just a question of *when* it was going to happen.

Re:not like 2001

[Anonymous Coward]

Your sentiment of 'it is different this time' is the same one a lot of people hold before every bubble busts.

In 2000 everyone was talking about 'number of clicks' 'number of users' 'number of items sold' (sound familiar?). With very little 'we made X and it cost us Y with Z in dividends and an expect increase/decrease of % on X and Y '. The big boys talk that way because they are making money. The VC talk about what they are doing not how much money they are losing.

Re:not like 2001

[Anonymous Coward]

Proper VCs view their startups as cannon fodder. They are buying a lotto ticket they don't expect to cash, but they want to probe the market. Startups, of course, that receive the VC funding view things as "I've made it!" and, without hiring proper financial controllers, blow their money on hookers and booze and die within a few years. I know of one startup down the street that's got about #1.3 billion right now, purely from VC funding. They've got about 150 employees and a hefty customer base. As a service company, they could operate for about 65 years without making a penny (if they spent their money as if it was MONEY EARNED/BORROWED rather than money gifted) but I'd be surprised if they don't close their doors within 6.

Re:not like 2001

[LynnwoodRooster]

Remember a company called Loudeye? At one time (1999 to 2002) they were the LARGEST digital media company in the world. More music, more images than anyone else. Sure, they lost money on every stream they served, but they were HUGE, and were growing at record rates (like 2500% annual growth). At IPO (early 2000 IIRC) they were valued at $1.5 billion, making them one of the biggest "Internet companies" out there. By 2006, Nokia bought the whole thing for $60 million (about three pennies on the dollar, relative to their peak). And now? Loudeye.com doesn't exist.

LOTS of savvy investors back then, with lots of experience. But the market was irrational and thought - just like many people now - "this time it's different". Turns out it's not. At the end of the day, what matters is PROFIT, not revenue, not user base size, not "reach" or "brand awareness" or followers on Twitter. Profit. If you don't make one (or have the ability to pivot to profit within a single quarter, like Amazon) - you're not going to survive the next downturn. You're running on borrowed money, and when that stream dries up, you cannot continue on your own. You die. Or you end up like Loudeye and are purchased for a few pennies on the dollar and fade away.

It won't matter

[pete6677]

We've reached a very perverse point in our history where what's bad for Wall Street is good for America, and what's bad for America is good for Wall Street.

In other words, the fed needs to raise interest rates. It would help everyone but Wall Street.

Re:It won't matter

[Anonymous Coward]

PSST ... higher rates are good for rich people... what you are looking for is higher inflation...

Re:It won't matter

[Anonymous Coward]

We've reached a very perverse point in our history where what's bad for Wall Street is good for America, and what's bad for America is good for Wall Street.

In other words, the fed needs to raise interest rates. It would help everyone but Wall Street.

Same bullshit that went on at the beginning of George Dubyah's first term right before 9-11. He hired a bunch of people to fuck with energy prices by inducing a fake oil shortage and "rolling blackouts" to artificially raise the prices of energy. They got caught red-handed doing it.. Read about a company called Enron.

The Republicans of today are even dumber than the ones from ten years ago. I guarantee you that if the same crap or anything like it goes on in a hypothetical republican presidency after Obama.. it won't just be an president painted as a dumb ass like Bush.. it will be a damn revolt! People are sick of the upper political "snobby child" assholes like we have had in congress for too damn long. Watch closely what is happening in Italy.. it is going to be happening here soon enough.

Re:It won't matter

[kamapuaa]

Why would it be good for the common man? Seriously, why? Right now I can get a cheap home loan. A cheap car loan. As long as inflation remains relatively low, it's in the interest of the common man for the interest rate to stay right as close to zero as possible.

Indirectly, low interest rates helps provide jobs, which is also good for the common man.

Re:It won't matter

[Anonymous Coward]

Most of that crap actually lies at the feet of Duke Energy.

Re:It won't matter

[trout007]

Because when you create money out of nothing and give it to banks for free they get to use the money first which steals real wealth from everyone else. House prices are based on interest rates. Right now home ownership is very low and yet home prices are rising.

Re:It won't matter

[Anonymous Coward]

Its an upcoming election year. The nonsense being said on social media outlets is starting to increase. They want to hear everyone's response to be prepared if they want to push their notion further. On one hand, its nice that people are standing up and taking notice of social media being a force. On the other hand, seeing BS where you'd normally see normal cool dudes talking about stuff is kinda annoying.

Re:It won't matter

[Anonymous Coward]

PSST - rich people are good for poor people. You don't earn interest on money if you keep it stuffed in your mattress. The fallacy of rich savers being bad for the economy is just that, a fallacy. What the hell do you think happens to the money that rich people invest? It sits in a vault somewhere? No it gets spent.

Re:It won't matter

[Anonymous Coward]

As long as inflation remains relatively low

That's not as long as you think.

Artificial bubbles like housing debt or student debt are ways of disguising inflation, but only temporarily.

Re:It won't matter

[Dunbal]

You can get a cheap home loan on a phenomenally overpriced house. How about a loan with higher interest on a modestly priced house? (Yes I'm talking about the same house). Either way, you're paying.

Re:It won't matter

[hawguy]

Why would it be good for the common man? Seriously, why? Right now I can get a cheap home loan. A cheap car loan. As long as inflation remains relatively low, it's in the interest of the common man for the interest rate to stay right as close to zero as possible.

Indirectly, low interest rates helps provide jobs, which is also good for the common man.

You might be able to get a cheap home loan, but that doesn't necessarily mean that you can get a cheap home. Lower interest means people can afford more house for the same payment, so home prices rise since people can bid more for houses.

Re:It won't matter

[orlanz]

Lower interest rates do not make a home cheaper. Its basically offset by a rise in the house price. The monthly payment affordability of someone doesn't change with rates or house prices. All that happens is what percent of that payment goes to interest and what to the loan. Lower interest rates, higher house price. Sure you can "afford" a more expensive home, but with all prices going up, you basically end up with the same "value". So if the rates today all of a sudden jumped to 7%, you can bet the home prices get depressed.

What will more likely happen is that house prices are supposed to go up by 5% but will only go up by 1% due to the interest rate correction. Keeping it low just "inflates" the house price. There are winners and loses when interest rates change. From an investment view point: rates going down, good time to sell; going up, good time to buy). The problem is moving out of the norm. And we been out of the norm too long.

Re:It won't matter

[Anonymous Coward]

PSST if you aren't rich you are likely mostly in debt to rich people... hence their interests are somewhat opposed to yours and most everybody else... Savings are important to an economy sure, but if the balance is too much in favor of rentiers then they concentrate wealth. Higher interest rates bolster them, higher inflation erodes it. Higher inflation forces them to invest in the economy and take risks (which spreads out the wealth, and encourages new growth). You should check if you can support yourself with merely the return on your net assets, rather than being net in debt (likely on housing) and supported via a job or savings like the rest of us...

Re: It won't matter

[Anonymous Coward]

Actually no. That's the problem. The rich do not spend their money. Money being spent makes the economy go. That is why giving economic stimulus to less well of people helps the economy--they spend it. The rich do exactly the economic equivalent of keeping it in a mattress. Sure some don't but most do.

Therefore economic stimulus that benefits the stock market has only a very marginal effect on the real world economy most people live in. Of course conservative leaders know this, which is why that's their favorite kind of stimulus.

So no, you're wrong. Rich people are bad for poor people. What's good for Wall Street was only coincidentally good for Main Street back in the days when we didn't have insane trade policies, when we had effective tariffs, and a government that actually didn't wage economic war on workers all the time.

A prosperous economy is always good for Wall Street and everyone else, but what's going in now is theft from everyone who's not rich in favor of those who are, and this is not a prosperous economy.

On the bright side, if VC funding dries up for silicon valley we can finally stop having to put up with idiotic startups, 20 something "CEOs", and their latest smartphone app that's going to change the world that nobody gives a crap about.

Re: It won't matter

[Anonymous Coward]

Your loans may be cheap but cars aren't and houses aren't. Not even close.

The only thing giving free inventory (money) to banks does is increase inflation in those

Re:It won't matter

[EzInKy]

But wouldn't higher interest rates encourage the common man to save for rather than borrow against his future?

Re:It won't matter

[phantomfive]

The Federal Reserve was created to help the banks.

Re:It won't matter

[kamapuaa]

The same point is made over and over...and no, not really. People don't spend every last dollar they own on a home.

And if they do, and interest rates/mortgage rates go lower...great! They can re-finance their home, and save lots of money!

Re:It won't matter

[kamapuaa]

True, higher interest rates means your checking account gives back a higher percentage, but the barrier to owning stocks and bonds is so low nowadays, who cares?

Re:It won't matter

[Anonymous Coward]

PSST - if you're a rich person you don't give money to poor people. In fact, that's what they all say is what KEEPS them rich. You stuff it in mattresses called "expensive cars", "expensive watches", "Fine Art", "Mansions" and stuff like that. Stuff that either got manufactured (and paid for) years ago or requires relatively few people to produce (and can be maintained by underpriced illegal immigrants).

We spent 30 years or more trying to prove that wealth trickles down by giving incentives to the people on top and over that period, in a variety of economic conditions and political regimes about the only gold that ever trickled down was liquid and had a strong smell of ammonia.

Re:It won't matter

[EzInKy]

True, higher interest rates means your checking account gives back a higher percentage, but the barrier to owning stocks and bonds is so low nowadays, who cares?

That's my very point! Current interest rates make the payoff for savings so low that discourages people from being responsible and encourages them to become indebted.

Re:It won't matter

[roman_mir]

The Fed shouldn't exist and print and manipulate in the first place but it does. The economy needs market rates. Given the amount of debt and lack of production/productivity, the rates need to shoot up into high double digits. The Fed will not do that, since even low single digits will complete the economic collapse that was not allowed to run its course by the Fed so many times. From Greenspan, to Bernanke, to the current incarnation, they want to prop upnthe fake economy - stock and bond and housing and some other prices.

This worked for a long time given that the productive economies of the world absorber the Fed's inflation. However a couple of weeks back China decoupled from the USD and when the dollar pops and crashes, China will not be picking it up this time.

The Fed might even understand this, though I don't think Yellen personally understands anything at all.

In any case, USA needs high rates, but they also will crush its fake economy and the Fed proved that it will give the government whatever government wants and government never wants to be responsible for what is really happening. The problem of the welfare and robbery State will not be solved by the State or the people even, they don't want the actual solution, it is so painful they are scared of it.

The problem will be solved by the market, that will impose real interest rates by stopping credit and by refusing to take in fake money in exchange for real goods.

Wall street would make more REAL money with real interest rates in a healthy economy, but Wall street lives within the reality of the political system that prefers expediency and promises of free cake, so it uses fake 0% interest to its advantage the best it can. The Main street votes in politicians who promise free cake, that in turn leads to a fake economy.

This will end in pain and suffering of course. The collapse of the dollar and the US bond is closer than ever now, no more props by China and nobody else is big enough to prop the US up. Europe is not a coherent structure that can do it either. It was really a genious move by the US to set up the EU in hopes to create a bigger, more coherent market for its inflation. But I don't think it will help much at the end.

The much needed restructuring means a serious depression. The depression like none before, now that USA lost so much of its productive capacity. Americans should pray it is not some nationalist democrat that guides them through it but someone aligned with anarcho capitalist principles instead.

Re:It won't matter

[Mike Frett]

"You don't earn interest on money if you keep it stuffed in your mattress."

Of course I do, I just stick an extra 10 bucks under my mattress every few months. Problem solved...

Re:It won't matter

[Pinky's Brain]

A decrease in home prices would put people underwater on their mortgages ...

Unless you like long winding deflationary spirals you'd have to offset any rate raise with stimulus, and that would make the deficits skyrocket.

Re:It won't matter

[drinkypoo]

A decrease in home prices would put people underwater on their mortgages ...

Lots of people already are. But high home prices are keeping people homeless while we have multiple vacant homes for every homeless person (not family but person) in America. This situation cannot stand.

Re: It won't matter

[BVis]

Like the saying goes, "Rich people didn't get rich by spending their money." Anyone who's worked in some sort of service-industry capacity (hotel workers, bank cashiers, restaurant servers) will tell you that the cheapest, most over-entitled, spoiled brat customers are the rich. I probably tip better than most billionaires. The rich want everything for free and will pitch holy hell if you don't give it to them. They think that just because they have a lot of money that the rules don't apply to them.. and the sad thing is, they're right.

Re:It won't matter

[khallow]

Same bullshit that went on at the beginning of George Dubyah's first term right before 9-11. He hired a bunch of people to fuck with energy prices by inducing a fake oil shortage and "rolling blackouts" to artificially raise the prices of energy. They got caught red-handed doing it.. Read about a company called Enron.

Enron was playing those games before Bush became a factor. Failure was baked into the spot market on electricity years before. And Governor Davis was the primary political factor keeping the mess from being resolved.

Re:It won't matter

[Anonymous Coward]

Its an upcoming election year. The nonsense being said on social media outlets is starting to increase. They want to hear everyone's response to be prepared if they want to push their notion further. On one hand, its nice that people are standing up and taking notice of social media being a force. On the other hand, seeing BS where you'd normally see normal cool dudes talking about stuff is kinda annoying.

It would be nice if there was an "election mode", it's already starting that some friends and family are going to need to be unfollowed for a good while when they start to get really spammy.

Re:It won't matter

[Anonymous Coward]

Why would it be good for the common man? Seriously, why? Right now I can get a cheap home loan. A cheap car loan. As long as inflation remains relatively low, it's in the interest of the common man for the interest rate to stay right as close to zero as possible.

Indirectly, low interest rates helps provide jobs, which is also good for the common man.

You might be able to get a cheap home loan, but that doesn't necessarily mean that you can get a cheap home. Lower interest means people can afford more house for the same payment, so home prices rise since people can bid more for houses.

Similarly to how easy to get government-backed student loans had the side effect of dramatically jacking up college tuition over the past couple decades.

Re:It won't matter

[Anonymous Coward]

Americans should pray it is not some nationalist democrat that guides them through it but someone aligned with anarcho capitalist principles instead.

It is nice to see that you have finally given up on your persistent lie about being an atheist. At least you are getting that much closer to honesty.

Will a tighter economy rein in clickbait?

[timrod]

It's been quite a ride for the clickbait headline writing market this week. In China, headlines cratered; in the U.S., clickbait dove for two days, only to rebound on Wednesday. That made many Slashdot editors nervous, both about the front page of Slashdot (which some of them depend upon) and the continuing flow of money from VCs and investors. While the clickbait jitters don't seem to be affecting some news firms' ability to implode themselves, more than one pundit is wondering whether the clickbait industry will shift into 'fear mode,' which could be bad for the so-called 'ad firms' that need readers to keep clicking like it's 1999. Are we going to see money start drying up for clickbait headlines?

At least Nerval's Lobster is trying harder. A story with two non-Dice sources as opposed to zero is always an improvement.

Re:Will a tighter economy rein in clickbait?

[Anonymous Coward]

The question on everyone's minds is, are either Josh Duggar or Caitlyn Jenner supporters of Donald Trump?

Re:Will a tighter economy rein in clickbait?

[Anonymous Coward]

Nerval's Lobster is actually the author of the article. He links to his own stories, which you can verify yourself by either going back into the posting history to find the email address which links to his twitter account, giving you his name, magically coinciding with the authorship of every article he's submitted.

Probably will just make our jobs harder

[Anonymous Coward]

As someone that worked in the tech industry during the recessions in 1973, 1980, 1990, 2001, and 2007, unemployment for people with good tech skills was almost nonexistent during most of those bad times, but it meant you couldn't afford to hire more people. That made things much harder for the people with jobs. I've noticed that during each recession, the number of hours expected has gone up each time. I worked for a loan mortgage start-up from 2006 until 2009, and the expected hours increased from about sixty to nearly a hundred. We were expected to do 16 hours Mon-Thu then 12 on Fri-Sun. At my current startup, the hours aren't that bad yet, but I see it coming. We had more open dev positions than devs! That was until a couple of weeks ago when our largest customer, who is in China, went under. After that, all of those open positions were closed. It looks like we're expected to make do with half of the number of developers indefinitely.

Re:Probably will just make our jobs harder

[Anonymous Coward]

We call those "hundreds." We have scrum at 11pm to make sure everyone stays late. I will have been in the industry for 30 years as of December, and everywhere I've worked has ended-up like this. I haven't had a full week off since 1993. I've changed jobs several times to get away from this, but the new jobs always end-up like this. Nearly everywhere we've tried to hire more developers, but there's never enough. When you get so far behind, it's harder to hire people since they don't want to work that many hours which makes the problem worse. The startup I work for now has plenty of money in the bank, but we can't even get qualified people to submit resumes. The money is great since there's such a shortage, but I'd rather have my life back.

Re:Probably will just make our jobs harder

[Anonymous Coward]

I have a solution: Hire me! I'll gladly pull 100's for $300k /year. Email: Iwantajob@hmamail.com

Re:Probably will just make our jobs harder

[Anonymous Coward]

>We have scrum at 11pm to make sure everyone stays late

Well there is your problem - read mythical man month and find out why you aren't getting as much done as you think you are.

Re:Probably will just make our jobs harder

[Anonymous Coward]

We call those "hundreds." We have scrum at 11pm to make sure everyone stays late. I will have been in the industry for 30 years as of December, and everywhere I've worked has ended-up like this. I haven't had a full week off since 1993. I've changed jobs several times to get away from this, but the new jobs always end-up like this. Nearly everywhere we've tried to hire more developers, but there's never enough. When you get so far behind, it's harder to hire people since they don't want to work that many hours which makes the problem worse. The startup I work for now has plenty of money in the bank, but we can't even get qualified people to submit resumes. The money is great since there's such a shortage, but I'd rather have my life back.

Because smart people actual value things like work-life-balance, that's why you can't get them to work 100's no matter how much salary you offer them.

Re:Probably will just make our jobs harder

[Anonymous Coward]

> mythical man month

But that is also the reason it is much more efficient to have fewer developers work much longer hours. Communication is such a huge overhead. Adding more developers doesn't really help short-term so we just have to work longer hours.

Re:Probably will just make our jobs harder

[hawguy]

We call those "hundreds." We have scrum at 11pm to make sure everyone stays late. I will have been in the industry for 30 years as of December, and everywhere I've worked has ended-up like this. I haven't had a full week off since 1993. I've changed jobs several times to get away from this, but the new jobs always end-up like this. Nearly everywhere we've tried to hire more developers, but there's never enough. When you get so far behind, it's harder to hire people since they don't want to work that many hours which makes the problem worse. The startup I work for now has plenty of money in the bank, but we can't even get qualified people to submit resumes. The money is great since there's such a shortage, but I'd rather have my life back.

Why would you continue to work in such a job? I've been in the tech industry for nearly 30 years, mostly with startups, and am currently working for a small (but growing) startup. We're hiring tech staff as fast as we can, but can't fill positions fast enough. Yet we still have work-life balance, even working as much as a 60 hour week is rare, everyone is encouraged to use vacation, I've got 3 weeks off in 2 weeks. If you haven't taken a full week off since 1993, that's your own preference, you can't blame it on a job.

Re:Probably will just make our jobs harder

[Anonymous Coward]

> We have scrum at 11pm...

Hey, I've worked there. Oh wait. That's every developer job I've had. Currently we have scrums at 8a and 11pm to handle handoffs to/from our Indian developers and QA. Of course that means we have to work 15 hours while they only have to work nine.

Re:Probably will just make our jobs harder

[0xdeaddead]

Next thing, you are going to tell me that with 18 women, I can't have a baby in 2 weeks.

Re:Probably will just make our jobs harder

[orlanz]

>> We have scrum at 11pm...

I am sorry, but that statement just is so stupid on face value. I understand that most people say "Oh company X doesn't really do scrum" or "Scrum isn't done right anywhere." etc. But if your formal process is to actually have a meeting AFTER business hours... you have a pretty serious problem; least of which is that you aren't implementing scrum. I can understand if you got an off shore team in India/Turkey/Whocaresville. If you need to sync with them during their business hours, then you formally adjust YOUR business hours. You don't come in at 8am... you come on at 3pm and work till midnight.

Forget the IT "Mythical Man month" the other poster said. How do century old disciplines like HR, Legal, and "common sense" not find the above stupid as shit? You are implementing scrum because you have stupid processes that lead to the above and as proven a billion times, decreases return & productivity. But you can't get out of the inefficiency by using the same stupid processes and just labeling it "scrum".

Re:Probably will just make our jobs harder

[Bite The Pillow]

Buy low, sell high. And if your employer sucks, take less money for a more balanced job.

Can't do it? Re-evaluate.

I work 40 hrs max, and the general expectation is no more than 50.

Relocate might also apply.

Re:Probably will just make our jobs harder

[Anonymous Coward]

> can't fill positions...everyone is encouraged to use vacation,

How in the heck does that work? You don't have enough people and still allow vacation time? That doesn't sound likely. I'm a developer in my early forties and nearly all of my friends are developers, but I can't remember any of us ever taking an entire week off. If you can't fill positions as you claim (and I believe that part), how can people take time off?

Also, you don't sound very important if you can take three weeks off.

I've had to cancel at least six vacations that I can remember since I graduated college. I have always been paid back the deposits I lost and have always gotten good bonuses in exchange, but if you don't have enough people, it isn't logical that you let people just not work.

Re:Probably will just make our jobs harder

[Anonymous Coward]

>Also, you don't sound very important if you can take three weeks off.

If the role is operationally important to the business then others should be cross trained so if you go under a bus the place doesn't come to a halt. You might be better at it than others but shouldn't be essential.

If the role is strategic then a couple of weeks won't make much difference.

A lot of posters are confusing being busy with being effective.

Re:Probably will just make our jobs harder

[hawguy]

> can't fill positions...everyone is encouraged to use vacation,

How in the heck does that work? You don't have enough people and still allow vacation time? That doesn't sound likely. I'm a developer in my early forties and nearly all of my friends are developers, but I can't remember any of us ever taking an entire week off. If you can't fill positions as you claim (and I believe that part), how can people take time off?

The feature backlog gets longer and estimates for new features get longer... as we add people, then we can finish features faster. Isn't that how most sane companies do it? I don't see how putting a moratorium on vacations is sustainable in the long run -- each week of vacation is 2% of a FTE, if that 2% is all that's keeping your company from failing, then you should start looking for a new job now.

Also, you don't sound very important if you can take three weeks off.

Your company is in a precarious position if no one can take time off -- there should be enough people cross trained that you can take off work without having work come to a screeching halt because you're not there. Making everyone a critical resource that can't be replaced is a terrible way to build a company and will lead to huge problems when a team member quits (or is sick) and suddenly no one can fill in.

Everyone on our team works hard to make sure that none of us are "very important", so yes, I am proud to say that I am "not very important" -- there's no excuse for having a single point of failure on a team, no one team member should be indispensable, and if he is, then he's not doing his job by cross training and writing documentation. Vacation is a good way to test this out -- it's better to find out sooner rather than later where the coverage gaps are.

I've had to cancel at least six vacations that I can remember since I graduated college. I have always been paid back the deposits I lost and have always gotten good bonuses in exchange, but if you don't have enough people, it isn't logical that you let people just not work.

We don't let people "just not work", we let people take time off for vacation, it's not like they are paid to sit around in the break room in a corner all glassy eyed.

I'd never think that a bonus was fair compensation for canceling a vacation, perhaps that's why I can take a vacation and you can't -- you're happy working at a job where you'll accept payment to cancel a vacation, and I'm willing to work for less money but have a more sane working environment.

Re:Probably will just make our jobs harder

[phantomfive]

As someone that worked in the tech industry during the recessions in 1973, 1980, 1990, 2001, and 2007, unemployment for people with good tech skills was almost nonexistent during most of those bad times

In 2001, U-Haul trucks were streaming out of Silicon Valley. Plenty of good people lost their jobs (do you know how many companies went out of business? Not all of them were full of bad programmers). Also, it depressed salaries for a while. I'm highly in favor of tech salaries rising.

Re:Probably will just make our jobs harder

[Dog-Cow]

You are so totally over-focused on the word "scrum". The point of the GP is that his company has a mandatory meeting late at night to encourage employees to work late. It doesn't matter what the meeting is for. It could be a scrum, it could be company announcements. It could be roll call, followed by dismissal. The only point is that employees are expected to attend.

Re:Probably will just make our jobs harder

[gweihir]

And the stupid thing is that for mental work, not even a 50h work-week increases productivity compared to 40, at least after you have been doing it for 2-3 weeks. Everything above 50 _decreases_ productivity. This has also been known for a long, long time (Henry Ford and contemporaries found it), making managers that demand more than 40h weeks long-term utterly incompetent.

Re:Probably will just make our jobs harder

[PPalmgren]

22 years and you haven't found a non-shitty employer? Ever think that something about your location or that location's culture is perverting the companies you can choose from? Its not the companies, "hundreds" are few and far between. It has something to do with your selection process, or if you're in management, your ability to corrupt a company.

There are plenty of companies willing to provide good pay for regular hours.

Re:Probably will just make our jobs harder

[khallow]

If you can't fill positions as you claim (and I believe that part), how can people take time off?

Since people can just leave, I really don't see the point of mandating ludicrously long hours. Once people start leaving, you just made your inability to hire people even worse.

Also, you don't sound very important if you can take three weeks off.

Sounds more important than someone who can't take three weeks off!

Re:Probably will just make our jobs harder

[ranton]

but if you don't have enough people, it isn't logical that you let people just not work.

Considering the fact that overworked people are less effective than those with a better work/life balance, it is very logical to still encourage vacation time when your staff is busy. Sure there are some rare times when a very important release keeps people working 60 hour weeks for a month or two, but if the company constantly thinks it is always in crunch time their workers will suffer. And that will impact the company just as it impacts the employees.

There are plenty of very successful people who fool themselves into thinking their 80 hour work weeks are more productive than a 50 hour one, but no research backs this up. It is just one example of why you can't assume every opinion of a successful person is golden. Long work hours are a symptom of bad project management, nothing more.

Re:Probably will just make our jobs harder

[Quirkz]

This is the most screwed-up stance. Benefits, all of them, are part of your compensation from the company. In my mind (not necessarily from a legal standpoint) they're obligated to provide the promised benefits, including vacation time. If they pretend benefits exist and don't let you exercise them, it's not a real benefit, it's a lie. Short-term exceptions are one thing (no, you can't take vacation during our busiest week of the year) but if an entire year passes without them finding a way to take your fully allotted amount of vacation, something is deeply, deeply wrong. It does not matter if they're chronically under-staffed. A year is more than enough time to either address it or come to terms with it and allow the existing employees to exercise their promised benefits.

Re:Probably will just make our jobs harder

[Anonymous Coward]

Next thing, you are going to tell me that with 18 women, I can't have a baby in 2 weeks.

You get it! Adding more developers to a project will slow things down. That is why it is so much more effective to force developers to work longer hours. Every hour they work extra is an extra hour of development. For most of the teams I've managed, about 1/3 of the time was spent actually writing code, so adding a new developer doesn't add 40 hours of coding. It only adds 13 hours. It's very easy to force a developer to work 13 more hours. Also, it's much cheaper than hiring another developer. That is why developers are forced to work so many hours. As Brooks figured-out decades ago, it's more efficient.

I'm glad I moved into management. I got tired of working nearly 100 hours a week for twenty years.

Re:Probably will just make our jobs harder

[Anonymous Coward]

> 2001...Plenty of good people lost their jobs

True, but most of them found jobs even before their previous one ended. I changed jobs three times between July 2000 and October 2002. In all three cases, it was because the startup I worked for went out of business. One because they ran out of money and the other two because we couldn't find enough developers so we weren't making progress fast enough to satisfy our investors. In none of those three cases did I take a single minute off between jobs. The first case, we were notified at lunch and by 5pm, I had a new job lined-up for that Monday. In the second, we were let go at noon on a Monday (seriously, that sucked). I went to lunch with a friend and went to work for his startup after lunch. I literally had another job in less than thirty minutes. The third time we actually got two weeks notice so I was able to start my new job about ten days before my old one ended. The demand is so high for developers that companies are failing. There's a reason we get paid so much.

My current employer has nearly nine figures in the bank, but we can't find developers. Most of the developers in the area want to work for a big name like Amazon, Microsoft or Google, so even offering them twice as much money to work for us doesn't work. They know at Amazon they'll not only have to work long hours, but be on call. At Microsoft, they'll be treated like crap. I worked there for two years, and it was amazing the amount of hate the guys in charge had for the people that did the work. I got spit on after I asked for an afternoon off to go to my daughter's first birthday party, and that was a Saturday! I got fired after the next review for not being a team player. The sad thing was that even like being treated like absolute garbage for two years, I didn't want to leave Microsoft. They're so horrible.

Re:Probably will just make our jobs harder

[Lodlaiden]

You're doing it wrong. Just work their hours and have your days to yourself.

General answer: no

[tlambert]

General answer: no

Less general answer: most startups come from the U.S., not China; the economy is bad in China and Greece (and maybe two other EU countries, who are now regretting letting Germany be in charge of their economies, the way Germany wanted to be in WWI and WWII), and that's not a problem for the U.S.. This is not like the dot bomb, where everyone was afraid to invest in startups, who were going to lose money on every customer, but make it up in volume.

Re:General answer: no

[Anonymous Coward]

Wait... Did you just compared the economy of China, which is among the strongest economy on the planet, with the economy of Greece, which is collapsing and can only survive with international help? I understand why many people fear China and so the need to believe China is not that strong, but there's a moment when the delusion must stop!

The actual finance guys I know want interest up

[tlambert]

The actual finance guys I know want interest up.

The day traders I know are afraid it's going to kill their ability to make money.

The high frequency traders I know don't care, since they are still able to game the system.

Re:The actual finance guys I know want interest up

[U2xhc2hkb3QgU3Vja3M]

The high frequency traders I know don't care, since they are still able to game the system.

Up, up, down, down, left, right, left, right, B, A.

Re:The actual finance guys I know want interest up

[phantomfive]

The day traders I know are afraid it's going to kill their ability to make money.

Day traders don't care.....if the market is up, they go long, if the market is down, they go short. What they want is volatility, long, predictable swings where they can jump in and jump out.

Re:The actual finance guys I know want interest up

[tlambert]

The day traders I know are afraid it's going to kill their ability to make money.

Day traders don't care.....if the market is up, they go long, if the market is down, they go short. What they want is volatility, long, predictable swings where they can jump in and jump out.

Money being sucked out of the stock market into the bond market reduces stock liquidity, which in turn, reduces stock volatility. Day traders rely on more or less large swings in stock prices, and when major holdings are not in play (because there are none, if all the institutional investors have fled to bonds), then their ability to profit evaporates.

Day trading is generally based on options with a limit order (to reduce downside risk, since they can't use the Black-Scholes or Black-Scholes-Merton hedging model in order to balance risk via bonds and other longer term instruments -- since they are *day* traders). There is the possibility of using ETFs in order to hedge risk, but then the upside is considerably reduced; generally, to lower than the brokerage fees, so it's not an option (pardon the pun).

Re:The actual finance guys I know want interest up

[pnutjam]

Day traders don't care

Day traders don't know
FTFY

I fucking hope so

[ChesterRafoon]

There, I said it. The valuations of some of these companies is just flat out crazy-insane-stupid, especially compared to some real companies that actually make something. But I do think Pied Piper is going to make it ...

Re: I fucking hope so

[Anonymous Coward]

This. There is too much fluff in the market. Most startups I've been seeing aren't really innovative or relevant, but they burn through VC that rivals some third world nations' GDP. They almost never reach profitability. They are malinvestments clogging the arteries of capitalism.

Re:I fucking hope so

[Anonymous Coward]

"need funders to keep partying like it's 1999" .. what, like perpetuate another bubble?! are you freaking insane?!?

Re: I fucking hope so

[Chris Johnson]

But that IS the market. That IS capitalism. It's not some external, malign force: that's what the market is.

If you want it to actually be good, you're talking about some form of direction, oversight or regulation to stop obviously stupid or broken things from happening.

That's not a market anymore. The market is the thing that stampedes towards the stupid because everybody's doing it. See 'stock market'.

Maybe you just don't like capitalism as much as you thought you did! :)

Re: I fucking hope so

[drinkypoo]

If you want it to actually be good, you're talking about some form of direction, oversight or regulation to stop obviously stupid or broken things from happening.

That's not a market anymore. The market is the thing that stampedes towards the stupid because everybody's doing it. See 'stock market'.

What a stupid thing to say. In fact, you can't have a "free market" without oversight, because without it, people will always find ways to make it less free by gaming the system.

Depends

[Anonymous Coward]

It depends on the nature of the new business. If it's a business where they need to cut bait before fishing, this is probably good (so their product is ready when the economy recovers). If it's a business where they start fishing right away, perhaps not so good.

Sad Birds

[Dutch Gun]

Interesting... so Rovio, the makers of Angry Birds, is laying another 260 employees. Let me put that in perspective for you: I've been in videogame development for the last several decades, working on games ranging from bargain-bin titles to well-known MMOs. I've worked at companies with a dozen employees, and nave *never* been at a company with more than a couple hundred total employees (excluding parent company).

I'm just trying to figure out exactly were they doing with all those people... Does it actually require dozens of people to create an Angry Birds game? I'm having a hard time figuring out what they actually *did* with so many people. They happened to strike gold with Angry Birds, and they must have deluded themselves into believing they could strike gold with each subsequent swing of the pickaxe. Oops, the world has moved on to Candy Crush.

If they wisely invested their incredible earnings, they could have created a much smaller company that would have nearly infinite financial backing to do whatever they wanted. Instead, they succumbed to the temptation to grow into a giant by pretending that they could release the same product an infinite number of times. Now the entire world has played and grown tired of Angry Birds, so there's nothing left to fall back on.

Re:Sad Birds

[gl4ss]

they were doing nothing with all the people.
that's why it's so easy to lay them off.

you have to understand that they kept hiring people because they had money and there plenty of people to hire, they didn't have a plan what they were doing with them.

also you have to understand that hiring shitloads of people gave the execs more prestige in finland.

also just dumping money with no creative thought is why the angry birds marketing pictures are now all fancy 'pretty' 3d with no artistic merit.

also you might want to remember that Rovio's high income comes from product sales(hats etc angry birds crap) that the company doesn't make and which only needs few people in the company to handle the licensing for.

and last but not least they have not come up with a single game idea in house EVER. so the well respected leaders of the company don't really understand how to make another interesting game or how little money it actually took. the leaders really have NO IDEA WHATSOEVER what made Angry Birds a hit and it shows. and they didn't come up with the idea for angry birds either, it's a ripoff of another game LIKE ALL THE GAMES PRODUCED BY ROVIO EVER, that wouldn't be too bad if they knew what was worth ripping off but they're going solely by luck - also they're putting a number of games they did under the rug by not mentioning them on their site at all(like stuff that was made on commission for nokia).

that they have no idea what made it a hit doesn't really stop them from flying around the globe giving ego lectures on what made it a hit. that's only making things worse really.

rovio is dumping 75 million into a movie. if everything is as it seems, that's about 65 million too much for the cgi flick movie they're making - but the thought process was more money = more quality, but it doesn't work like that with art(games are art, movies are art).

in short, they're not what Rare was and the execs were interested in ballooing the company so that they can have a big company - they didn't balloon the company to any purpose so that's why they're laying people off, they never had any work to begin with, you only need so much of angry birds stock graphics..

also it's not really connected to the current startup financial state. they're not a startup. it might affect how much money the execs have to splash around at other startups in efforts to buy some talent though but that's about it.

they should have kept their developer teams at under 10 persons per game. they're just fucking arcade clones of other games that have simple assets to manage and simple engines to write.

Re:Sad Birds

[Anonymous Coward]

> 260 employees

And, this is why good startups can't find developers, and the rest of us have to work so many hours. There aren't enough to go around, and these companies that hire armies of developers are just making the problem worse. Of course, people flock(no pun intended) to the "cool" companies so the uninteresting, but solid startups are left without the ability to hire. The company I work for has nearly three times as many open positions as we do employees, and has for nearly four years, but we haven't had a single good candidate in over a year. We have tons of money in the bank, but no way to spend it on salaries since we can't find people to hire.

Re: Sad Birds

[Anonymous Coward]

I think that in situations like these, you're obligated to post a link to your company's hiring page. Prove it. You're exempt from bad karma.

Re:Sad Birds

[kamapuaa]

EA has 8,400 employees. Activision has 6,700. Blizzard has 5,000. Maybe the companies you worked for were small time?

Rovio also sold Angry Birds T-Shirts, cartoons, etc. I imagine at a huge mark-up. Good for them, they managed to strike lightning with a silly mobile game, and took advantage of it thoroughly. Now these employees are no longer needed. It's not realistic to say they could have taken those profits and make a billion dollars with them. They aren't an amazing game studio, they just got lucky and managed to have one silly breakout hit.

Re:Sad Birds

[Dahamma]

Yup, it's a basic matter of a tiny indie game company that inexplicably had $1B of unexpected revenue dropped in their lap all of a sudden.

They did what many companies, game dev or not would do, and tried to expand as fast as possible. The difference is game companies (with maybe Blizzard/WoW as an exception) can rarely sustain that revenue to the next year without another massive hit. And I'm sure as you know, there are very few left (maybe Rockstar and Bethesda?) who have managed to create that string of massive hits to justify hiring without even having a semi-guaranteed new hit in place...

I bet some big publisher offered them a giant pile of money in the last few years and they rejected it. And I bet they are now kicking themselves (as compared to Notch, who now owns the most expensive house in Beverly Hills...)

Re:Sad Birds

[Dahamma]

If you are working "so many hours", you better be getting something significant for it. Because all of those developers you can't find clearly are, or you'd be hiring them. So if you are not happy with your job or hours and think you are worth more - stop whining, the jobs are out there!

Also: if you work at a startup, have tons of money in the bank and you can't hire, either the work is horrible or you just aren't offering enough. I hear this all the time: "all of the good candidates are going somewhere else!" Well, if you got outbid, no shit they took a better offer. Try harder next time. And if the company/job sucks, you have to pay even MORE to get someone to do it.

If you have 3 times the open positions as employees, how about paying everyone 50% more? Then the current employees and the new hires will both be happy. Unless you don't think you or your coworkers are worth it?

Re:Sad Birds

[Anonymous Coward]

More like
>We don't want to have to bring anyone up to speed for a whole MONTH! We expect to hire people that already code the same way our senior developers code and use all the exact same development software/environment that we've been using. You DO code in a test-based, agile waterfall scrum, right?
And, for extra startup flavor
>They also need to be engaged in the programming community! I want to find out what plugins they've released or how many libraries they have on their github account!

Re:Sad Birds

[tehcyder]

I'm just trying to figure out exactly were they doing with all those people... Does it actually require dozens of people to create an Angry Birds game? I'm having a hard time figuring out what they actually *did* with so many people.

I imagine most of those people were in marketing, merchandising and so on.

Re:Sad Birds

[Anonymous Coward]

If you really want to have your mind blown, check out how big Mozilla is. Then realize that all they really make is Firefox, Thunderbird, and Bugzilla. Granted, a modern web browser is pretty complicated, and Bugzilla does a lot too. But with the resources they have, I would expect a lot more.

Not as long as there's money to be made.

[Anonymous Coward]

Every asshole predicting doom and gloom wants doom and gloom so they can snag stock at a low price before it rebounds, because there's no reason for it to not rebound heavily and quickly.

I doubt...

[Prien715]

So you're an investor, and are trying to make money. We were in love with Ali Baba, but it tanked along with the Chinese economy -- too risky. How about Europe? Well, most of that's tied into the EU with an ever-increasing risk of a Greek Euro exit and disastrous austerity policies, that's probably a good place to stay out of too.

The fundamentals of the US economy are looking great in comparison. Housing prices are starting to come back, unemployment is down, and a deficit to GDP ratio that looks to be under control.

The Dow was up 4% in trading today along with the Nasdaq as investors look for a safer but still profitable place to put their money.

Re:I doubt...

[Dunbal]

The fundamentals of the US economy are looking great in comparison to what? Are you seriously content because "at least we're not in as bad shape as Greece!"? Housing prices are starting to come back - that's a good thing right? That no one can afford a house unless they sell their and their children's future into usury? Because a fundamental gauge of the economy is the PRICE OF YOUR HOUSE. No, that's only good for bankrupt americans who have no equity at all except the meagre slice they are forced by the banks to have if they buy a house. Buying a home then selling it is not a valid "business model". It's speculation. And just like any other speculator, one day honey you are going to get screwed.

Re: I doubt...

[Anonymous Coward]

What? Housing prices have been coming back the last 3-4 years. Now they're dropping again.

Re:I doubt...

[Prien715]

Uh, the debt is just a number. If the debt goes too high, the dollar drops relative to other currencies, making US goods cheaper abroad. If debt is too low, the dollar strengthens our currency relative to other currencies (based on their debt:GDP ratios). However, we haven't seen a weakening of the dollar nor the incoming inflation apocalypse predicted by debt worry fetishists fear.

The newer housing market seems to be fine as increased regulatory scrutiny have caused most banks (the ones I've talked to anyway) require quite a bit more principle on down payment as well as more thorough proof of income. This seems like a valid business model to me.

Can we get a new summary from someone smarter?

[rebelwarlock]

This summary is just a bunch of silly bullshit with vague references to actual news.

more than one pundit is wondering whether the tech industry will shift into 'fear mode,' which could be bad for the so-called 'unicorns' that need funders to keep partying like it's 1999

Fuck you. Go to jail. This isn't buzzfeed.

Share Market =/ Economy

[Harlequin80]

Just because the share market value dropped does not mean that the overall economic conditions changed one bit. If anything the share market was over valued with price / earnings ratio being above the long term average and it has now corrected to just under that long term average.

Unlike what happened with Lehman brothers there is no capital crunch happening. Companies balance sheets are ridiculously strong at the moment with crazy amounts of cash sitting there doing SFA. Christ Cisco decided to take out a $5 Billion dollar loan just because it could even though it had $54 billion of cash sitting there. Currently US companies have over $1.5 Trillion dollars on their balance sheets! Nearly a quarter of that is held by Cisco, Microsoft, Apple & Google alone.

If you look at those numbers and then compare them to what investment an IT startup needs and you can see there are several orders of magnitude difference in them. If your startup can't gain enough traction with a couple of 100k it was never going to happen for you you anyway.

Re:Share Market =/ Economy

[sfcat]

If your startup can't gain enough traction with a couple of 100k it was never going to happen for you you anyway.

Depends on the business you are in. If you are a mobile game startup, then 100k might be enough to see if the idea has legs. If you are an enterprise software platform startup, you need $50m to be competitive and even then you need better tech than your competitors with much deeper pockets. If you are starting a bank, even $50m might not be enough. If you are starting a restaurant, $500k or $1m might be a good amount to start with depending on your location and type of restaurant. But $100k is rarely enough to start more than a small 1 person shop which needs to be in a smallish niche to be successful.

Re:Share Market =/ Economy

[Harlequin80]

No startup is going to get handed $50m on an idea and nothing else. And no startup is ever going to be a bank, not unless your definition of a startup is any new business. If you want to found a bank you need to pull together long term investors to come together to build a new venture.

And 500k for a restaurant?!?!?! You need 3 months of rent for the bond (10k-50k), 20k for fitout, 10k for inital consumables costs, then give yourself another 20-30k money to run with. And that is going to get you a hell flashy restaurant.

I built my business to 26 staff before divesting starting from a $60k overdraft secured against my house.
 

No.

[xxxJonBoyxxx]

>> Are we going to see money start drying up for startups?

No. Just say you're writing the next big data social media IoT app using 100% HTML5 and you'll be good to go.

Not dry up but right sizing

[Anonymous Coward]

Startups in Silicon Valley in particular are way overvalued, but fortunately that seems to be limited to the VCs and the big corporate ventures like Google and not so much to the public markets, so if there's a crash it hurts companies and VCs but not the economy.

What I think you will see is some rationality applied to startups. You probably won't see much in the way of over-valuations rather you'll see some more level heads in terms of funding.

And notably, it's not all startups, it's Silicon Valley. The biotech hubs of Boston and San Diego, the startup scene in New York, the tech boom in Austin and many other places aren't experiencing this high valuation craziness, it's really just Silicon Valley.

will an idiotic yet incendiary headline get hits?

[Anonymous Coward]

I hate /. more and more each day... #facepalm

How many startups are scams?

[Anonymous Coward]

And how do you report a startup that is a scam? Asking for a friend.

EA makes a lot of games

[Sycraft-fu]

Comparing EA and Rovio is silly. Rovio has one product and a couple of other tiny ones. An accurate comparison of Rovio would be to one of EA's development studios, not to all of EA itself.

260 people is a ton for a studio. Even if you look at the really big studios working on the really big titles for EA and Activision, it is usually only a couple hundred people at most. That's to produce things like Battlefield (and it's associated engine, which is quite advanced) not to produce a silly mobile game where you fling birds at pigs.

It sounds like Rovio had way more people than could be useful.

JOE BIDEN 2015!

[Anonymous Coward]

Joe Biden is a square shooter. Joe Biden 2016!

Literally yesterdays news

[Anonymous Coward]

The U.S. economy grew at a faster 3.7% annual pace in the second quarter, up from the initial estimate of growth at a 2.3% clip, the Commerce Department said Thursday. Economists polled by MarketWatch predicted gross domestic product would be revised up to 3.3%, but business investment was stronger than expected.
http://www.marketwatch.com/story/us-second-quarter-gdp-revised-to-show-larger-37-gain-2015-08-27?dist=beforebell

Any startup counting on sales in China

[Anonymous Coward]

was most likely going to fail anyway...

The dream of "if we can capture 1% of the Chinese market" is just that, a dream

Unicorn

[tehcyder]

Could someone please explain what exactly this means and why they chose such a fucking stupid name for it?

Not for "Real" but Unicorns need not apply

[servant]

Folks with REAL product/service ideas, not just 'me-too'ers that have solid business plans and financials should be OK. Others with more fictionalized efforts, will hopefully die early deaths.