Shouldn't startups' leanness be a big advantage in the current market?

Turns out systems are complex, and things that can be advantageous can become disadvantageous and vice versa as circumstances change.

One of the premises for startups having an advantage over big firms is their ability to pivot. But they still need money to ride out lean times and get through the pivot. A startup making X, when X revenue drops, has to pivot fast or cut spending or fold. Layoffs are one way to buy time (through reduced spending) to allow the pivot to succeed. A large firm making A through Z, when half of them start becoming unprofitable can either carry them through (from profits in other divisions) or make cuts. They don't have to fold, and if they make cuts it will be a smaller percentage of their total workforce because it's from a subset of all their offerings, not their entire product portfolio.

Maybe that large firm can't pivot, but if it's got a few billion in revenue still and is still profitable (or has a large bank account or credit line) then it can ride through much better than a leaner company (potentially).

You also have to determine when a company is lean or "lean". Lean as in healthy? Or lean as in they cut off their own arm and spend 5- or 6-figures a month on infrastructure hosted by Amazon and have no in-house IT expertise, but sure, they know their customers.

They may be lean, but the problem is the easy money they run on is not so easy now. Having profits (or continued funding) is more important in this environment, even if there is some dead weight. I would think small business and startups are going to be hit harder in this environment - they certainly aren't immune.

Yes. And seed round valuations are still high enough to get off the ground with a solid group of a dozen people. Some have no chance at PMF and can't raise because investor confidence is low. As always, good companies with conservative spend will be most likely to survive.

Startups are also not profitable yet and are reliant on fundraising in order to continue to operate. The fundraising market is bleak currently, so there's pressure to reduce burn.

Yes. It depends on a few factors but there are a number of startups that raised at peak of market and have now pulled the reins in for winter and have 20+ years of VC runway.

yes