Official thread

The Dance is Nearly Over 🪦

We are 6 months away from a massive crash in tech startups.

Silicon Valley Bank exposed that the average startup had 11-14 months of runway left in Q3 last year.

That means, today, they have 6-9 months.

There are 3 possible outcomes here, in ascending order of likelihood:

3. Market bounces back - Defying all expectations, stock market turns it around and multiples go up to 15-20x ARR. Recession is over! VC funding returns in earnest and these startups get the cash they need.

2. Mass layoffs and cuts preserve runway - Seeing the end nearing, companies make drastic moves. Cutting 50-80% of staff and leaving only the skeleton behind. These businesses become profitable or lower burn close to zero.

1. 🪦 - The graveyard is littered with thousands of companies who run out of money, or get acqui-hired for less than they raised (IE - all stock options worth zero).VC funding shifts to powering new AI powered startups, who are built cash flow positive from Day 1, leaving the unprofitable ones out to patch.

The music is slowing down.

Lights are coming up.

The dance is nearly over. 🪦

-SM

22

22 comments

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CadenceCombat

Tycoon

15

Account Executive

.

DungeonsNDemos

Big Shot

2

Rolling 20's all day

You have captured my essence. How can I be in sales if there isn't a chance???

poweredbycaffeine

WR Lieutenant

6

☕️

Heh heh…69.

CuriousFox

WR Officer

4

🦊

Nice 😎

boredAnti

Tycoon

2

That One Guy

Really flipped on that one.

Pachacuti

Politicker

4

They call me Daddy, Sales Daddy

IMO, unless interest rates go way down (which isn’t likely) the economy is going to go through hell.
Biden = Carter, except when Biden leave he’s not going to go build house for poor people.

aenima

Celebrated Contributor

0

Principal Account Manager

Yeah this isn’t Biden — this is the Fed.

They are increasing rates intentionally to cause unemployment to cool the economy down. Unemployment is too low — and it’s a major contributor to inflation.

aenima

Celebrated Contributor

4

Principal Account Manager

Gasty, I think you’re looking at this solely from the tech sector and only from a jobs perspective. That’s fairly isolated. You’ve left out inflation — which is not isolated, it’s impacting everyone.

There are a few ways to lower inflation — chief among them rate increases to slow money supply. In this case the intended consequence is also to cause unemployment to rise - workers have had WAY too much leverage and insanely high salaries, all of which drives consumer demand which rises prices.

It’s the hard truth: tech is bloated with tons over overpaid and entitled workers, and it makes up way more of thr S&P than it should.

I do t see this as doom and gloom. I see this as the soft underbelly of tech getting gouged for the better good of the economy as a whole.

Beans

Big Shot

3

Enterprise Account Executive

We're about to finally do our slice.

Pray for ya boy.

Enterprise second place last year, but it's a new day now.

activity

Politicker

2

VP, Business Development

I think the peak fed funds rate is now projected to be 6%. I don’t see any way where our economy doesn’t see massive pain before coming out the other side.

aenima

Celebrated Contributor

2

Principal Account Manager

I don’t entirely agree. What’s worse, nation wide inflation that hurts everyone, or isolated layoffs that hit bloated sectors?

Rates are going to go up until the Fed achieves ~6% unemployment.

TennisandSales

Politicker

2

Head Of Sales

damn....well.......last time I doubted you, it didnt go well so ill trust you. will you give us a graveyard doc to follow like the lay off grid? @sahil

braintank

Politicker

2

Enterprise Account Executive

So you're saying we should cash out our war room commission ASAP?

Diablo

Politicker

2

Sr. AE

To the point 😀

Nairobi

Politicker

2

AE

Damn alright and I thought things couldn’t get worse than the last few months lol

HVACexpert

Politicker

2

sales engineer

I mean are these really the only two options? The economy is growing in some sectors, I know my customers and industry is hiring and has a lot of job openings. Can these start-ups pivot the way they do business ? Who they attack from a customer and industry standpoint? Maybe it’s the optimist in me but I have a hard time swallowing that my two choices are 1) hope things change or 2)cut spending so we can hope for the best longer.

DalJigsaw

Contributor

1

Business Development and Account Manager

I am in SaaS, Tech and it’s not fun in staffing and recruiting but good in corporate as usual. Until it isn’t.

GingerBarbarian

Opinionated

1

Lead Sales

Do you have a link for this? I totally believe it. Cash has been too cheap for too long and VC made more bets than it can handle.

kneehigh

Politicker

1

Senior Enterprise AE

Working at a SAAS start-up in the renewable energy sector. We have a mix of SAAS revenue and advisory/consulting (60/40 split currently). Currently doing our Series C and hoping to close it in Q2. We have alot of interest mainly because we are in a good "ESG friendly" sector and our company is doing something generally different but it will still be interested to see what we are valued in this fundraising round in terms of multiples of sales, previously we got 12x probably more like 10x this time.

Armageddon

Opinionated

1

Enterprise Account Executive

Im terrified

Gasty

Notable Contributor

0

War Room Community Manager

understandable

btw, welcome back to the war room !

Gasty

Notable Contributor

0

War Room Community Manager

and as always, they did

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