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Which startups are going to get vaporized in @pmarca’s “market turn” scenario?

Andreesen, Gurley et. al. are foreboding doom for companies with high burn rates. 

Which startups are they talking about?

  • Any company that isn’t actually cashflow positive AND has a clean captable (able to survive a halving valuation). You can talk about cutting expenses but that cuts growth and therefore valuation: if your last round had preferences, rachets, etc then you can’t cut growth without annihilating the employee/founder ownership.

    The good news: in a real market downturn, your can play hardball with investors (threaten to quit, since unless they recap the equity to motivating for employees) and employees (who have fewer employment options).

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  • Judging by the sheer volume of bullshit out there, most of them. Most startup investments are high-risk high-reward plays to investors, which is another way of saying that they most likely have little confidence in your company.

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  • Over hired and staffed companies.

    Beyond the burn levels, this reflects on founder level business judgement.

    Not all markets are winner take all + access to capital is no sure thing.

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