By breaking down the old system. When an innovative competitor enters the field and grabs a large amount of "market share" by meeting the demands of the users (students, parents, etc..) then the education system will crumble.
Problem is - the education system is no longer about learning. It's about institutional recognition. Any innovation for learning will be dismissed unless it caters to institutional recognition.
He doesn't have to pay Google wage rates. He also doesn't have to wait it out for a bigger candidate pool so he can 'negotiate' lower baselines.
Business owner is using a turtle strategy. Opportunistic yes but also seeing people as numbers on a spreadsheet.
OP stated that he feels fear. Fear is a reasonable reaction when a Business Owner closes doors for conversation to wait out catching google 'talent' at a bargain.
Some people are in a situation where they need work now or very soon.
>but also seeing people as numbers on a spreadsheet.
Looking at numbers in spreadsheets is how you stay in business.
>Some people are in a situation where they need work now or very soon.
Then they should lower their rates until they find a market clearing salary.
I'm flabbergasted at the argument that a business should pay a potential employee whatever they demand, because that person "needs work". It flies in the face of all logic.
> I'm flabbergasted at the argument that a business should pay a potential employee whatever they demand, because that person "needs work". It flies in the face of all logic.
I think the general issue with my post is that the moderators want this to be a "place of ideas". So that tends towards the appearance of decorum being more important here than actually treating people better in the current crisis.
"launched in 2006 by New Zealander Michael Pratt and operated by Ruben Garcia and Matthew Wolfe. Filmed in homes, hotels and trailer parks"
"During the course of the civil trial, Pratt, Garcia and Wolfe were criminally indicted for sex trafficking, among other charges. Garcia and Wolfe are currently in federal custody. Pratt is a fugitive."
Disgusting criminal, manipulative behavior that harmed a lot of people.
This is very real. A friend of mine started a company with over a million in seed funding with what basically amounts to just an idea. Years later, the company isn't doing that well in terms of sales/revenue, but they still manage to raise money because they have a couple obvious acquisition targets. It seems crazy to me to throw millions of dollars at a company with the hopes that one of maybe three or four megacorps in the industry will acquire them, but investors buy into that, and that's all that matters.
Seed and Series A is investment in the people always. They assume if the product doesn't work the team will pivot until they find something that does. It sounds to me like your friend failed to pivot when needed.
Not even. I'm seeing seed and series As/Bs on unproven teams of recent graduates with no experience in the field where the "start up" operates. No business plan, no prototype, huge regulatory walls to climb.
Funds make money on failed investments too. I'd be happy to throw away someone else's money, if I got to keep 20% as a management fee - and a slice of the profits in case one of my lottery tickets is a winner.
What's changed is that debt is almost free. That allows VCs to take (very!) speculative bets for relatively low risk. They know that if each of their portfolio companies has a 10% chance to reach 30x returns, investing in 10 companies should pay off.
Well, yes, but not in the way you mean. If you want $100K for a dry cleaners you get a bank loan, the same way people have been doing it for a century.
Equity capital is solely interested in business models that either wow people or fail outright. The reason has to do with risk: most such business ideas have various things that can go wrong, and those risks are generally manageable but not really quantifiable. Basically a VC wants to see "These are the assumptions in our model, and if we build this it will revolutionize X industry, which is currently worth $50B but could be worth a lot more with our product, and that will give you a 50% annualized return on your fund." And they're giving you money to prove out whether those assumptions are actually true, with the expectations that for a good number of startups they won't be and their whole investment will be wasted.
You'd finance your dry cleaners with debt rather than equity because (unless you are starting a chain) you are not shooting for the massive, near-zero marginal cost scaling that the venture capital model focuses on. Instead, the bank looks for a modest, predictable return through interest payments.
Yah, but re:wework, throw in a dry cleaning app that schedules a dirty laundry pickup and suddenly the valuation goes from marginal to billions. Especially if you get some machine learning in there to detect spots (or something).
If you put the sarcasm aside (it does make a good joke), a laundry pickup app has in fact orders of magnitude more potential to scale and make money, as dumb as it sounds.
Does centralizing many small dry cleaning places have significant economic advantages assuming that each location has to negotiate independently for it's space and (to parallel wework) items like cleaning supplies and staff management necessarily vary from location to location due to local regulations?
WeWork is sort of the golden example of a business being sold as something that works at scale... except the business doesn't actually work at scale.
It seems in a lot of places (where I live, Austin TX) all the little mom/pop dry cleaning shops are actually shipping the dry cleaning off to a central location. The EPA/etc regulations apparently have forced that part of the cycle to converge.
That is part of why it costs more/takes longer than simple laundry which is frequently still done at the mom and pop location. Although, I think the larger chains (Jack Brown) are entirely just storefronts sending the laundry and dry cleaning off to some centralized location.
So, I doubt there is much advantage to further centralization that hasn't already happened.
Also, I'm not even sure about the hotel bits, most hotel's I've stayed in recently _DO_ their own laundry. They have a couple giant commercial machines sitting in the basement for the sheets/towels. I know this because I always take the stairs and often take a wrong turn and end up in the basement/etc.
The advantage could be in eliminating the jobs of the mom & pop drycleaners and the rent they pay for the space. That's surplus that could be captured by a dry-cleaning app delivery service, assuming that the cost of transportation isn't greater than the cost of rent. In dense urban areas, where rent is expensive but you could hit up several customers on one trip, that might be a valid assumption. Particularly if you have someone good at logistics programming the app's backend, and a pool of inexpensive labor for drivers.
That's a great business plan and differs from WeWork's because WeWork's business plan assumes that the cost of leasing office space in high rent areas is never going to be removable.
When looking at a potential business as something that can be economically scaled you always need to find the saving factor, for WeWork the saving factors are Administration efficiency (to administer 10 properties individually you need 10 administrator labour units, maybe for grouped properties you can get away with 6), rent leverage (being well established might lower the apparent risk of your lease being canceled early, so you may have some savings there) and maintenance (this is a significant one, I bet you could really scale down the expense of janitors and the like if you have multiple properties in a dense area). But none of the costs I listed above are seriously impacting your cost per sale, they're all quite marginal savings, so you'd really need high volume to reap that benefit and it's likely that the cost of marketing, building an app, having a crazy CEO etc... will outweigh the savings you could eek out.
No, because the mania for throwing money at tech startups is specifically because of tech's unique promise of both worldwide scale and zero marginal costs after the initial Big Spend on capex, and hence potentially gigantic returns for investors.
Now, how well the current crop of startups is delivering on that promise is an exercise left to the reader, but it's there in theory. A dry cleaner has marginal costs and no economy of scale, and so can't attract unicorn valuations.
much like wework - all you gotta do is convince 1 person who controls vast sums of money that it will work. I'm very convinced by your WeDryClean idea! (Sadly no vast sums of money, though)
As long as your product is perfectly scalable and generates a profit for money spent that way, it makes perfect sense to take a loan, spend a fortune, make a fortune, then pay off the loan and take in profits. Then turn around and do it again.
It isn't the absolute size of the numbers that matters. It is the ability to rapidly scale the business once you have the right business model and product.
And in particular, if you sell low churn saas (like we do), you can comfortably spend the first year's annual contract value on customer acquisition and have an extremely profitable business. Just huge initial marketing costs.
And quite possibly huge ongoing marketing costs! But if churn is low, or even negative, you can assume something like 10 year customer lifetimes, with a comfortable 5-ish percent cost increase per year, on sale for the first year's contract value. If you have cheap-ish money available, you should buy as many of those as the world is willing to sell.
Once you make money, it's much harder to come up with outlandish numbers. A dry cleaners has a well-established range for revenue and profit, so it's hard to justify why it would be worth $100 billion.
>Once you make money, it's much harder to come up with outlandish numbers. A dry cleaners has a well-established range for revenue and profit, so it's hard to justify why it would be worth $100 billion.
Well, not everyone does that. I applied to YC with my side project [1] and got rejected. I didn't expect to get in, but if I would have, then I would be full-time on it.
Now I can't, which is a shame. So in that sense, I wish someone would fund me. I have a lot of "doodling the internet" type of ideas. I use digital note taking extensively myself, so I know what's missing.
I'll give you a hint. You should pivot to a collaborative design app. There are a couple around, but very few that have that "doodle feeling". You should be able to pick up a pen, sketch something quickly and then have someone else be able to modify/review it.
I'll give you another hint. Add shape recognition and move from capturing and storing pen strokes and generating bitmaps to capturing pen strokes and generating shapes. Add rudimentary grouping and ungrouping functionality, ability to move, stretch, rotate, etc. Allow pasting clip art and letting it grow/shrink/rotate when grouped with other objects, but just with a rough scaling, etc -- it doesn't have to look pretty. It's just for sketching things out.
Practically every software/design team needs an application like this and there will be money to pay for it.
P.S. I was on a team that built this as a windows application about 20 years ago, but we were ahead of our time. A SaaS webapp would be the bomb here.
Indeed. The flip-side to this is that speculative investment on unprofitable moonshots seems to be where ALL the equity-finance money is.
My company reliably earns low-7-figures on high-7-figures revenue, with respectable but not amazing growth, but the only capital "market" open to us is bank loans and merchant financing.
Serious question -- why would you want something besides a bank loan? Because a loan at a couple of percent is way cheaper than VC, who will typically want at least 20% of your company?
What makes this different from the other solutions out there?
I'm very concerned about the "test." Coding tests are unprofessional IMO. They demand one sided value and reduce the candidate pool diversity to only those who are willing to tolerate unfair exchanges/relationships.
What I am gathering from this is that hiring as it should be involves removing the majority of human contact, test for skills, and blast into public digital channels.
There are so many other competitors out there that are actually innovating with DISCOVERY tools not TEST tools.
Still think that tests have a role, but there's room to improve them. While human contact is nice, it's also costly, so improving testing would still be a great way to innovate.
For example, I received a great coding test from Vertica, a database company. Their test was a 2-hour timed exercise involving improving a ~200 LoC data querying program. This is nicer for the following reasons:
- It doesn't require me to bootcamp with LeetCode because you have a bunch of people out there who train and "overperform" on such coding Qs.
- It's specific enough to the domain but still fairly generic. The test covers techniques covered in a standard intro sequence.
- It's timed, so it doesn't waste time like most take-home assessments.
- It's predictive power of t skiechnical ability is better (my opinion). People like to say that such tests don't test enough for problem solving. However, if you are missing 6 months-1 year worth of domain knowledge, you won't be able to contribute for a while no matter how good your problem solving ability is. An average candidate stays for <<10 years so you want the person who can start contributing sooner even if they have a lower "peak" potential. (Also, I believe generic problem solving is kinda BS. I was good at math and coding contests years ago, but now I would consider myself to be an average interviewer. Even though I'm an good problem-solver for certain systems problems, I don't consider myself one for ML ones or people-heavy problems.)
To summarize, I would love to see better tests than the ones we have now and think there's clear room to improve.
Problem is - the education system is no longer about learning. It's about institutional recognition. Any innovation for learning will be dismissed unless it caters to institutional recognition.