What Is ZIRP And How Did It Poison Startups?
ฝัง
- เผยแพร่เมื่อ 27 ก.ค. 2024
- ZIRP stands for “Zero Interest Rate Policy,” and it refers to a stretch of time - most recently throughout the pandemic - in which the Federal Reserve sets interest rates around 0% and commercial banks are able to borrow money for next-to-nothing.
In this episode of Dalton & Michael, we’ll talk about some of the downstream side effects we saw during this stretch of time: an explosion of unicorns, a surge of new investors, and the impact it had on the way founders think. We’ll share the advice we gave YC founders to brace them for the future, and how some companies made the right move in the middle of an unusual/unsustainable moment. Join us as we look back at how it all played out.
Apply to Y Combinator: yc.link/DandM-apply
Work at a Startup: yc.link/DandM-jobs
Chapters (Powered by bit.ly/chapterme-yc) -
00:00 - Intro
00:12 - What is ZIRP?
01:51 - Why ZIRP
03:39 - The Corn Analogy
04:20 - Startups & Stocks
06:06 - Money ≠ Success
07:53 - Unicorns
09:55 - Winter Was Coming
11:15 - Lucrative Lending
12:56 - 3 Types of VCs
14:09 - Build for Endurance
15:24 - The Aftermath
17:45 - Outro - วิทยาศาสตร์และเทคโนโลยี
Chapters (Powered by ChapterMe) -
00:00 - Coming Up
00:12 - Intro: What is ZIRP?
01:51 - Why ZIRP
03:39 - The Corn Analogy
04:20 - Startups & Stocks
06:06 - Money ≠ Success
07:53 - Unicorns
09:55 - Winter Was Coming
11:15 - Lucrative Lending
12:56 - 3 Types of VCs
14:09 - YC Was Part of the Problem: Build for Endurance
15:24 - The Aftermath
17:45 - Outro
😢
1 minute summary of the video: ZERP, Zero Interest Rate Phenomenon, affected the startup world by flooding it with cheap money from the Federal Reserve and Banks. This led to an increase in VC funding, with investors eager to pour money into startups without much knowledge or experience in the field. Startups started focusing on scaling quickly and raising huge amounts of money, leading to inflated valuations and unrealistic expectations. Many companies struggled when interest rates went back up, causing the cost of capital to rise. Some founders built enduring businesses by focusing on building a great product, while others spent money unwisely and faced challenges when trying to raise more funds. The key takeaway is to balance optimism with realism and build a business that can withstand different economic climates. By being optimistic but realistic, founders can navigate through hype industries and create sustainable businesses.
💯
Thank you for this. Google recommended it, and I thought it was an article read. Thanks again
thanks dude
Thats great idea, u can build startup around it and Get funded 10M.
A summary: a lot of easy money is poison because it kills creativity, the Zero Interest Rate Phenomenon (ZERP) created easy money, most startups were taking that poison in industrial doses without having the antidote, now they are dying in flocks ..
6:06 "during this time it was fuc-... it was amazing" lmaoo
I love the wisdom that these guys share over the years, but tbh, even the vibe alone is worth the time. Best advisor duo ever!
This gotta be the funniest episode you've made, guys 😂
Great topic, it's great to occasionally step back and observe the broader cosmic forces that influence us all, reminding us to stay grounded and focused on creating genuine value rather than getting caught up in valuation hype.
I imagine a lot of startups, scale-ups, and the likes are essentially worthless to the founders and employees after raising massive rounds during the ZIRP. Maybe some founders were smart enough to negotiate less stringent liquidation preferences, but I think the vast majority are sitting on worthless shares.
The other thing to talk about in b2c is how much money is spend by the average person on software vs other stuff. The numbers scream that software b2c IS WAY overrated
When he said revenue to valuation multiple, that's how public markets work
5:43 the 'YES' of Jian Yang from the silicon valley show 😂
its a WATER animal
Dalton: why do people laugh when i speak?
Michael: YES
today's talk is so goofy I love it
They guys who made money where the ones who Exited their businesses during ZIRP
These two always got me laughing by myself in not normal-to-laugh places by yourself.
Hey @Ycombinator , I’m in the early steps in creating my startup and eventually applying to yc. Im in desperate need ,or more so curious, to know YC’s thoughts of creating a business plan for a startup. Im aware the likelihood for a pivot or change to happen is high but in my instance I feel as though creating a business plan could better outline my vision as well as gaining me , or increasing the probability, of early investments. Thank you (also loved the video on startup websites , would love similar more in depth/focused videos on the topic)
So true ) we are doing more now with $15k/mo more than we did with twice as more, with higher automation and better software, instead of hiring 5 assistants like a big company.
Thank you!
Very nice video: interesting topic and good vibes :-)
Really enjoyed this episode 👌✅
Love listening to you two
The (un)ironic thing is, the message here is broadly the same thing people like Warren Buffet say: "Ignore the ups and downs, don't time the market, focus on the intrinsic value."
I was thinking "This sounds terrible. Why are these guys laughing about it?"
Recommended reading "What has government done to our money" by Murray Rothbard.
1:38 you don’t have to shout out your missing knowledge that proudly.😂
great commentary here
this is a funny one, love it.
oh god it got funnier
I just commented something similar lol
the corollary to this is now is actually a great time to start and build a business.
It's platform risk-on the fed. Haha
I'm rejected by YC and now I want to start a VC fund 😂 0 management fee. The interest until deployment should take care of my expenses
I self-finance periodically with ZAPR 12s and 18s... zero APR credit card promos for 12 or 18 months..... also not a good idea haha
Don't think it poisoned startups - just created bad habits for a while.
But it also made startups possible that would otherwise not have been possible.
It's sad that the startup world's VC return on investment is apparently not high enough to attract money vs the federal interest rate.
lol. Its crazy how everyone blames the lay offs on AI but it really is about money not being thrown into software money pits anymore
Takeaway from this episode, ZIRP means slow economic growth. YC can 'poison' us, they have infinite amount of it, can be useful if used wisely for business growth. Some business only worked when there was nowhere else to invest in the world, they are lucky to be funded but on the other hand it is sad that they didn't create stunning product or they dropped it.
“Turns out money always has product market fit, especially cheap money”
The time in the 2000’s when startups got money - and all of them bought that one type of “tech-bro” chair. 😂
"Money has product market fit" 🤯
Zero interest rate policy
Can I get some those you got on the back my business really needs it 😂
You want poison?
Giddy from the recent NQ moves lol
If herstory repeats, we've got another 40%
It’s zero interest rate policy
Thank you. This was the prescriptive policy of the Fed (and other CBs), not a “phenomenon” like a hurricane. 😅
I wish I tried to raise during ZIRP 😢
The sad thing is there were a bunch of smug dumbasses who thought because their dogwalking startup got VC money that they were some kind of smart person. So glad Powell is discplining the market right now and all these companies are finally going bust so that real businesses can thrive.
I look forward to working with you guys; I'm optimistic but not overly optimistic... "Now, let's upcycle 500K homeless & poverty-stricken people!"
♡Darrell (Human-Upcycle)
A lot of people want this money thing 🤣
You have to wonder why they needed a sinkhole for money. You have to ask that question.
me no understand, gonna get back to coding now
It’s Zero Interest Rate Policy.
It’s not a phenomenon. It’s clear why it happens/happened.
sounds like tiger global....
❤
Sounds like laundering
Are the two lads stoned? Spent the whole podcast giggling like little girls whenever the other finishes a sentence
There should be a separate YC channel just for you two… or even better your own Netflix show.
¹1¹st !
And ... we're at the gate . . .
Michael can you please stop fucking saying "Yes" whenever Dalton says anything?? It's like you are trying to assert your dominance over him. Let him say what he's saying without you feeling that you have to approve it all piece by piece.