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Silicon Valley's Tech Employees Are Getting Nervous (vanityfair.com)

Posted by msmash on from the impending-future dept.

An anonymous reader quotes an article on Vanity Fair: Private tech companies are feeling a contraction in Silicon Valley. The funding that venture capitalists have thrown at start-ups is dwindling, in small seed rounds and mega-rounds alike. There's a new postmortem written weekly about a start-up that's run out of cash and shut its doors. Start-up executives are sobering up, realizing that their companies actually need a path to profitability. Now, not wanting to be stuck on a sinking ship, tech employees are thinking about the bubble, too, as they plan their career moves.

8 of 255 comments (clear)

  1. GOOD. by Thud457 · · Score: 5, Insightful

    Give those special little snowflakes a taste of what everybody else has been living with for the last eight years.

    --

    the preceding comment is my own and in no way reflects the opinion of the Joint Chiefs of Staff

    1. Re:GOOD. by Aighearach · · Score: 5, Insightful

      I think it is funny people automatically assume that it takes a "bubble" to cause this.

      Venture Capital management strategy is to run each startup so that it has a less than 1 in 10 chance of surviving. They usually target 1/14th or so. They want to maximize the size of the ones that succeed, not the percentage that succeed.

      People go to work for a startup but don't know that, they should learn about who they work for before taking a job IMO. They just figure they're special and the world should be fair to them, even if fairness would call on them to understand their own part in it.

      There is no bubble, because there isn't extra money getting invested. Duh. And most startups are supposed to fail. It is the system. What a dumb story. Also true: if you work experience is just at failed startups, you get harder to hire because those companies are seen in the market as having different culture than the more traditional businesses that care about surviving. And most tech jobs are in other places, not just in one small part of California. For people with non-startup skills, there is even still usually a worker shortage.

    2. Re:GOOD. by bluefoxlucid · · Score: 5, Interesting

      Most people don't know anything about economics. Even economists don't really know that much about economics--something I realized when I started looking at actual modern economic theory and found only naive observations and general rules with no understanding of mechanism.

      Take a look at the job creation narrative. We've seen all kinds of talk about things like trickle-down economics (which actual economists know is bullshit--let's be fair: it's pundits and politicians who believe that crap), leading to this ideal where you give businesses income tax cuts and they create jobs. ... How? Even a cursory examination of market economics in a macroeconomic context says that's nonsense--enough nonsense that you can check for the fallacy of common sense and verify that, yes, the sensible conclusion *is* sensible and the one about trickle-down is ludicrous.

      Businesses aren't charities and don't create jobs out of excess profits just so some bloke can get by. Common sense; but this is not sufficient because common sense is often wrong and stupid.

      Businesses don't pay wages.

      Every product has a cost, which ultimately comes down to wage-labor: in aggregate, the shelf price of a product is its wage-labor cost plus some profit margin. You pay your employees's wages, plus payroll tax, plus benefits; if you charge less than the fraction of these wage-labor costs involved in making a product, you run at a net loss, and go insolvent. That means the minimum sustainable price--the price the consumer must pay--is wages. When GM negotiates for 100 million tonnes of steel per year for 10 years to make cars, the steelmaker goes back to multiple coal and ore suppliers and does the same, and everyone starts competing by lowering big profit margins closer to *and* *never* *less* *than* their costs--which, down the whole supply chain, comes down to squeezing out the aggregate profit margins and bringing the price of steel closer to the cost to a vertical monopoly owning the mines, fuel supplies, and all production mills. It can't go any lower.

      You can't supply a product consumers can't afford, which means the consumer base making up the product's market has to be able to pay all of the wages involved in making, moving, and selling the product. The manufacturing wages have to be paid; the transportation wages have to be paid; the logistics wages have to be paid; the retail wages have to be paid. All kinds of taxes are involved. After that, you slap on some mark-up that a sufficiently-sized consumer market will tolerate (and can afford) and you make a profit. If the consumer can't afford it, none of those jobs come into existence.

      So we have senators talking out one side of their mouths about "Job Creation", and out the other side they're talking about levying sales taxes (a particularly destructive way to artificially raise the cost-basis of a product to the consumer). We have Social Security OASDI applied to the broad consumer base as a 12.4% income tax--6.2% levied on your paycheck and 6.2% levied on PAYROLL (holy shit that's daft)--rather than as a dedicated flat or progressive income tax. They find every way to destroy jobs while talking about the need to create new jobs.

      These same people start talking about how they'll get us all free college so we have the ability to go find or *make* jobs for ourselves. They talk about small businesses and the American Dream, and draw up a narrative about how jobs come from hard work and dedication, and not from capturing the limited supply of consumer money.

      It's not that they're all evil conspirators trying to distort and manipulate our economy; it's that they don't know, they don't understand. They think they have it right; they're just wrong.

      When someone tells you small businesses are failing like crazy, think about where jobs come from.

      --
      Support my political activism on Patreon.
    3. Re:GOOD. by ShanghaiBill · · Score: 5, Funny

      its just that they were so smug and self important about it

      I am sorry to disappoint you, but I live and work in the valley, and I have seen no signs of the contraction described in TFA. My smugness has not diminished.

  2. Tried the startup culture, hated it by Anonymous Coward · · Score: 5, Insightful

    Never again. I value my personal time with my wife and children too much to devote it to a mere job, no matter how "good" that job may be. I'm interested in working with interesting tech, primarily things relating to command line tools, regexp, pattern matching, you get the picture. I left the startup culture for good and went to non-profits. Why? Because I have more latitude with how I work and what I work with than I ever did following some young, inexperienced founder(s) hellbent on getting rich. I work 40 hours a week, 8-5, Monday-Friday. These are normal, healthy hours. Anything else is for monkeys and those foolish enough to believe working 70 hours makes a difference.

    You have one life. The time you have is precious. There is no rewind button. Do what you love, but do it largely for yourself or your family if you are married and have children.

  3. What is old is new again by Anonymous Coward · · Score: 5, Insightful

    They're all too young to remember the dot-com bubble bursting 15 years ago. We're living in the same times.

    1. Re:What is old is new again by Virtucon · · Score: 5, Interesting

      I worked at a start up that was actually *close* to profitability. One Friday the board had a meeting to raise what was assumed to be the last round of funding before going public. The funds would be just to support operations until the IPO. Anyway, the company was already carved up so the board agreed to dillute the class A holders, the ones who started the whole thing. They forgot that one of those holders still had more interest in the company, he owned all the office furniture. So over the weekend he came in with movers and took all of the desks, chairs and filing cabinets. Of course they left all the contents, computers, books etc on the floor. It was a surreal Monday. I had 10 developers quit on me that day..

      --
      Harrison's Postulate - "For every action there is an equal and opposite criticism"
  4. Slowdown? Wha Slowdown?! by __aaclcg7560 · · Score: 5, Informative

    For those of you who don't read The Wall Street Journal in the morning, companies are hiring in San Francisco.

    More companies in San Francisco plan to add new jobs in the next six months than in the last half year, according to a new report, bucking concerns about a tech slowdown and its impact on the region's economy.

    http://blogs.wsj.com/digits/2016/03/17/what-slowdown-san-francisco-execs-plan-more-new-hiring/