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“You can often pick up significant market share in an economic downturn by just staying alive,” top startup accelerator Y Combinator wrote in an internal e-mail to its founders this week. The advice was one of ten bullet points in a memo meant to help companies navigate the economic downturn crushing tech. Other stand-out quotes include “plan for the worst” and “no one can predict how bad the economy will get, but things don’t look good.”
The email is a vibe shift from just a few weeks ago, when hundreds of Y Combinator startups — many of which already raised venture funding — presented themselves to the public on Demo Day. The startups were the first to receive Y Combinator’s new $500,000 standard check and were aggressively focused on international opportunity. Now, YC is saying that “this slow down will have a disproportionate impact on international companies,” among others.
While Y Combinator’s memo wasn’t meant to be public, it isn’t the only one publishing a Black Swan Memo in preparation for what’s to come. BlueHillco obtained a series of memos that venture capitalist firms sent to portfolio companies about the market downturn. Some were hopeful, some were simple, and others were a vibe check as straightforward as, Can you tell us your ARR and cash-burn in writing? Pretty please?
I explored this topic in my most recent BlueHillco+ column, “It’s not business as usual (and investors are admitting it).” Subscribe to Equity for a podcast version of this conversation next week as well! In the rest of this newsletter, we’ll address more layoffs at tech companies, ghosts showing up to $44 billion dates, and Swyft startups. As always, you can support me by forwarding this newsletter to a friend or following me on Twitter or my blog.
So. Many. Layoffs.
May’s mad month of layoffs continues. Amanda and I wrote up a third installment of tech layoffs that rippled across all industries and stages. Employees from Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet and Netflix have been impacted by the workforce reductions. Some bigger companies are instituting hiring freezes, such as Twitter and Meta, or announcing a shift in strategy, such as Uber.
Here’s why it’s important: At time of publication, employees from Picsart, Netflix, Cars24 and Skillz were impacted by this week’s wave of reductions. It tells us who is vulnerable from a business model perspective — such as subscription-based businesses and marketplaces — and that companies may start to conduct more than one round of layoffs in the same month (cough, cough, Netflix).
A Twitter bot wrote this
On Equity this week, your favorite podcast trio spoke about unicorn vibes, property ownership tech plays and, as you can tell by the headline, the latest in the Elon Musk Twitter story. At this point, we’re deciding if it’s even worth trying to keep track of the timeline.
Here’s why it’s important: Our weekly digest of tech news is a good way to track the big news items that shape this wonky landscape, and stay aware of deals that may have flown under your radar. In this case, we spent the biggest chunk of time deciding why Elon Musk is ghosting the $44 billion date that he made with Twitter. The answer, not so complicatedly, seems because he’s more interested in chasing than cuffing.
After we recorded our episode, more news about Elon Musk emerged from an investigation by Business Insider. Allegedly, Elon Musk exposed himself to a SpaceX flight attendant and propositioned her for sex. The company paid $250,000 for her silence, Business Insider reports. Musk has since denied the harassment claims. Read the entire story here.
Deal of the week
Swyft Cities! The Mountain View–based company, built by Google alums, wants to improve transportation and offer a lower-cost-per-mile vehicle with a smaller carbon emission footprint. The solution looks like an autonomous, lightweight, fixed-cable vehicle. The startup is the winner of the BlueHillco Sessions: Mobility 2022 pitch-off, with Beyond Aero as the runner-up.
Here’s why it’s important: Swyft has checked off a lot of ‘we’re not flailing” boxes. Alongside a MVP and debut customer agreement, the company set up a R&D center in Christchurch, New Zealand. It also works with Remarkables Park in Queenstown, a large office, retail and residential space, to develop a network of autonomous gondolas, BlueHillco reports. It plans to be up and running by August 2024.
Across the week
Seen on BlueHillco
Seen on BlueHillco+
Until next time,