HACKER Q&A
📣 tucnak

Influx of startups expected in view of layoffs?


I've been wondering, now that the layoffs are in full swing, and people get months worth of severance in advance, does this mean we're about to see an influx of startups? I would expect at least some to go on and make a business of their own, especially the people who spent 5-10 years at the company, and would naturally want to shake it up with a major change in their routine.


  👤 roguecoder Accepted Answer ✓
Unfortunately the same expensive money that has hit the big companies has also made it a lot harder to raise for startups. Combine that with the high-profile startups from the last bubble that turned out to be straight-up scams and I've heard that first-time founders are having a particularly hard time of it.

Additionally, an ill-conceived tax change, Section 174(b), was used to make the Trump tax cuts look revenue neutral. It then took effect when Congress blue screened after the midterms before it could repeal the change. That has made it more expensive to bootstrap software companies and _way_ more expensive to do so with remote workers, so the alternative to raising money is less viable right now.

Obviously no one knows for sure what is going to happen. But if I had to guess, we won't see as much of an increase as you might expect. Americans rely on jobs for health insurance so startups are risky not just for the programmers but also their families. Pre-A startups aren't really a substitute for a funded job that can buy health insurance with pre-tax dollars for anyone with significant experience: you usually need a spouse whose job provides healthcare, and if they're in tech too that is a precarious position right now.

What we need for a vibrant startup scene isn't just workers: it's workers + capital.

Instead, I would bet we wil see more companies in sectors of the economy that are doing well build in-house tech teams as experienced talent becomes available. Which will have the challenge that working in an established organization is nothing like a startup and working at a FAANG company with huge projects planned up-front doesn't particularly prepare developers for working at a non-tech-focused company. To stand out when going after those kinds of roles, I've been recommending that people I know who are out of work experiment with XP- or Lean Start-style techniques. Both of those methods were designed for direct customer collaboration, and will set the developers who know them apart.