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“You can often gain significant market share in an economic downturn simply by staying alive,” leading startup accelerator Y Combinator wrote in an internal email to its founders this week. The advice was one of 10 bullet points in a memo aimed at helping businesses navigate the technology-crushing economic downturn. Other notable quotes include “plan for the worst” and “no one can predict how bad the economy will get, but things don’t look good.”
Email is a change of scenery from just a few weeks ago, when hundreds of Y Combinator startups, many of which have already raised venture funds, showed up to the public on Demo Day. The startups were the first to receive Y Combinator’s new standard $500,000 check and aggressively focused on the international opportunity. Now, YC says that “this slowdown will have a disproportionate impact on international companies,” among others.
While Y Combinator’s memo wasn’t meant to be public, it’s not the only one posting a Black Swan memo in preparation for what’s to come. TechCrunch obtained a series of memos that venture capital firms sent to portfolio companies about the market downturn. Some were hopeful, some were simple, and some were mood checks as simple as: Can you tell us your ARR and cash usage in writing? Enough please?
I explored this topic in my most recent TechCrunch+ column, “It’s Not Business As Usual (And Investors Admit It).” Subscribe to Equity for a podcast version of this conversation next week too! In the rest of this newsletter, we’ll tackle more tech company layoffs, 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. A lots of. Layoffs.
The crazy layoff month of May continues. Amanda and I wrote a third installment of tech layoffs that spanned all industries and stages. Employees at Section4, Carvana, DataRobot, Mural, Robinhood, On Deck, Thrasio, MainStreet, and Netflix have all been affected by downsizing. Some larger companies are freezing hiring, like Twitter and Meta, or announcing a change in strategy, like Uber.
Here’s why it’s important: At the time of publishing, employees at Picsart, Netflix, Cars24 and Skillz have been affected by this week’s wave of downsizing. It tells us who is vulnerable from a business model perspective, such as companies and subscription-based marketplaces, and that companies can start doing 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 discussed unicorn vibes, real estate tech games, and, as you can see from the headline, the latest in Elon Musk’s Twitter story. At this point, we’re deciding if it’s worth trying to track the timeline.
Here’s why it’s important: Our weekly tech news roundup is a great way to track the big news shaping this volatile landscape and stay on top of deals that may have gone unnoticed. In this case, we spent most of the time deciding why Elon Musk is hiding the $44 billion quote he made with Twitter. The not-so-complicated answer seems to be because he’s more interested in chasing than slapping.
After we taped our episode, more news about Elon Musk emerged from an investigation by Business Insider. Elon Musk allegedly exposed himself to a SpaceX flight attendant and propositioned her for sex. The company paid $250,000 for his silence, reports Business Insider. Musk has since denied the harassment allegations. Read the full story here.
deal of the week
Swift Cities! The Mountain View-based company, created by Google alumni, wants to improve transportation and offer a lower cost-per-mile vehicle with a smaller carbon footprint. The solution looks like a self-driving, lightweight, fixed cable vehicle. The startup is the winner of the TechCrunch Sessions: Mobility 2022 launch, with Beyond Aero as a finalist.
Here’s why it’s important: Swyft has checked a lot of “we’re not getting agitated” boxes. Along with an MVP and debut customer agreement, the company established an R&D center in Christchurch, New Zealand. It is also working with Remarkables Park in Queenstown, a large residential, retail and office space, to develop a network of autonomous gondolas, TechCrunch reports. It is scheduled to be operational in August 2024.
Spotted on TechCrunch
Spotted on TechCrunch+
Until next time,