COVID-19 has negatively affected tech startups big and small, leading to layoffs, halted IPOs and hiring, slashed prices for products, and bankruptcies
a volume 3 or 4 times the highest he had ever seen' @eringriffith https://www.nytimes.com/... @nytimes : The coronavirus is causing a sudden shake-up that has defied comparison for start-ups. Employees are learning of furloughs or cuts via video calls, plans for IPO are on hold and funding is drying up for many young tech companies. https://www.nytimes.com/... Kate Conger / @kateconger : here comes the pop https://www.nytimes.com/... Erin Griffith / @eringriffith : I hope companies *don't* follow Bird's lead on other aspects of their layoffs... https://www.nytimes.com/... https://twitter.com/... Erin Griffith / @eringriffith : One issue I didn't get into in this story: Startup employees may face steep tax bills if they're laid off and only get 90 days to exercise their stock options. I hope companies extend the exercise window. (Bird for example, extended it to 1 year.) https://twitter.com/... @nytimesbusiness : Start-ups have always been risky, designed to grow fast or die, but the coronavirus pandemic is turbocharging Silicon Valley's natural selection and causing a shake-up so sudden it has defied comparison https://www.nytimes.com/... Erin Griffith / @eringriffith : In the dotcom era, Fucked Company caustically documented startup failures. This time around the layoff sites are more earnest. https://www.nytimes.com/... https://twitter.com/... Pui-Wing Tam / @puiwingtam : Inside the startup bloodbath, with more than 50 cos cutting/furloughing roughly 6,000 people, funding drying up and layoff horror stories. https://twitter.com/...
New York TimesErin Griffith
Context & Ripple Effects
This April 2020 report was the opening shock of the pandemic's hit to venture-backed tech: more than 50 startups had already cut or furloughed roughly 6,000 employees, IPO plans were shelved, and Bird moved to extend its employee stock-option exercise window as valuations wobbled. The weeks that followed confirmed it was a wave, not noise — Silicon Valley startups announced job cuts and spending freezes specifically to show cost discipline to would-be investors ([[a:953264]]), and by July a tally put nearly 70K startup layoffs worldwide since March, over 25.5K of them in the San Francisco region ([[a:955475]]).
First-order effects
Over 50 startups have cut or furloughed about 6,000 employees, with workers learning their fate over video calls, while IPO plans and hiring sit frozen at companies that expected 2020 to be their breakout year.
Second-order effects
Startups are slashing product prices to retain customers through the downturn, and cutting burn to prove discipline to investors whose funding is drying up — a dynamic that later resurfaced when VCs renegotiated deals and cut valuations after weak IPO performance ([[a:975607]]).
Third-order effects
If the pattern holds, each capital crunch pushes the startup sector further from 'gee-whiz' bets like self-driving cars toward products that make money — the same pivot visible in the 2022 downturn ([[a:984328]]) — structurally rewarding profitable, disciplined operators over growth-at-all-costs ones.
The trend: Venture-backed tech moves through recurring boom-bust capital cycles in which each downturn — 2020's pandemic, then 2022's funding crunch — forces startups from growth spending toward layoffs, price cuts, and revenue discipline.
Thinking of the 417 people who were affected by cuts at this company, whose CEO told a major newspaper that “it's energizing” and then dropped phrases like “high adversity quotient.” https://www.nytimes.com/... https://twitter.com/...
A time of reckoning for startups like #adtech in a great @nytimes article by @eringriffith...The startups that are shining now are those that have been quietly thriving by challenging the “grow fast or die"hyperbole that fails on all levels https://www.nytimes.com/... @engageSimp…
“the situation facing start-ups now was worse than in downturns like the dot-com bust in the early 2000s and the financial crisis of 2008” https://www.nytimes.com/...
this is a class move from a person w. a big heart: “If their companies fail because of the coronavirus, it will give them $25,000 for their next company.” 👏🏻 @runvc https://www.nytimes.com/...
“People that are looking for a really coddled environment should not be in start-up land,” @FDavidsonT @sonderstays said. “You need to have thick skin and a high adversity quotient.” @eringriffith https://www.nytimes.com/... Good thing we've got plenty of that at @makelovenotporn
“If what you're doing now is just not a viable solution in this new world and in a different economy,” @alexisohanian @Initialized said, “then find something that is.” @eringriffith https://www.nytimes.com/... Like @makelovenotporn. Time for the great winding of #sextech
“This is the great unwinding,” said @shrwood head of a Silicon Valley advisory firm that restructures failed startups. In recent weeks, he said, his firm has fielded a “firestorm” of calls — a volume 3 or 4 times the highest he had ever seen' @eringriffith https://www.nytimes.com…
The coronavirus is causing a sudden shake-up that has defied comparison for start-ups. Employees are learning of furloughs or cuts via video calls, plans for IPO are on hold and funding is drying up for many young tech companies. https://www.nytimes.com/...
One issue I didn't get into in this story: Startup employees may face steep tax bills if they're laid off and only get 90 days to exercise their stock options. I hope companies extend the exercise window. (Bird for example, extended it to 1 year.) https://twitter.com/...
Start-ups have always been risky, designed to grow fast or die, but the coronavirus pandemic is turbocharging Silicon Valley's natural selection and causing a shake-up so sudden it has defied comparison https://www.nytimes.com/...
In the dotcom era, Fucked Company caustically documented startup failures. This time around the layoff sites are more earnest. https://www.nytimes.com/... https://twitter.com/...
Inside the startup bloodbath, with more than 50 cos cutting/furloughing roughly 6,000 people, funding drying up and layoff horror stories. https://twitter.com/...