Bulletins

Y Combinator to portfolio founders: 'Plan for the worst.'

YC sent a letter to its portfolio founders to "plan for the worst" in the middle of market unrest.

A laptop on an orange background with Y Combinator typed on the scre

Y Combinator sent a letter to founders advising them to plan for the worst

Image: Visuals/Protocol

The apocalypse is coming, at least according to one of the world's biggest startup accelerators.

Y Combinator sent an email to portfolio founders this week, obtained by TechCrunch, advising the startups to "plan for the worst" as the market turbulence has prompted many companies to initiate layoffs, cost-cutting measures and hiring slowdowns.


“If your plan is to raise money in the next 6-12 months, you might be raising at the peak of the downturn," said the email, which was titled "Economic Downturn." "Remember that your chances of success are extremely low even if your company is doing well. We recommend you change your plan."

The note advised founders to "cut costs and extend your runway within the next 30 days."

The famed startup accelerator is falling squarely into the camp that believes the hot funding environment of the last couple of years is decidedly over, and early-stage startups will have to prepare to hunker down and live off of "lower valuations, lower round sizes and many fewer deals completed."

They also predicted that the downturn will disproportionately impact "international companies, asset heavy companies, low margin companies, hardtech, and other companies with high burn and long time to revenue."

Finally, the note ended with a link to a 35-minute YouTube video from Y Combinator called, "Save Your Startup during an Economic Downturn."

This month has seen a slew of privately backed startups announcing layoffs, most notably Cameo and Mural.

Even the big tech giants are feeling the cost-cutting pressure amid rising inflation, rising interest rates and a looming bear market. Netflix laid off 150 employees this week amid stalled growth, a month after laying off Tudum staff. Meta, Robinhood, Salesforce and Uber all initiated hiring freezes or layoffs as well.

PSA: If you're going to do a mass layoff, don't do it like Carvana.

Latest Bulletins

Niantic is reportedly cutting between 85 and 90 staff members, or 8% of its workforce.

Keep Reading Show less

Crypto hedge fund Three Arrows Capital has reportedly received a court order to liquidate after creditors sued the company over unpaid debts.

Keep Reading Show less

Just months after committing to spend $925 million on carbon dioxide removal, a collection of major tech companies has announced its first purchases. The group, operating under the banner of Frontier, announced it had purchased nearly 2,000 tons of CDR services from five companies. It's a small ripple in the CDR pond, but one Frontier hopes will turn into a wave to bring down the costs of removing carbon.

Keep Reading Show less

The Federal Trade Commission has sued Walmart, alleging the retail giant "turned a blind eye" to fraud worth hundreds of millions on its money transfer services.

Keep Reading Show less

Eric Schmidt described his first five years at Google as "pure, naive techno-optimism," in that the company believed that applying American values like free speech is good for the world. But Google hit a brick wall when it bought YouTube.

Keep Reading Show less

The Biden administration's hot electric vehicle summer continues to zip along. On Tuesday, the White House announced $700 million in commitments for EV charging from private companies. The cash will up U.S. charging manufacturing capacity to 250,000 chargers a year and increase the number of chargers out in the wild. Not too bad!

Keep Reading Show less

Meta said it's working to correct enforcement errors that led to the removal of Facebook posts related to abortion pills and suspensions of user accounts behind the posts. The clarification came after Motherboard discovered that Facebook was instantly removing posts that said "abortion pills can be mailed," which the FDA legalized in 2021.

"Content that attempts to buy, sell, trade, gift, request or donate pharmaceuticals is not allowed. Content that discusses the affordability and accessibility of prescription medication is allowed," Meta spokesperson Andy Stone tweeted in response to the story. "We've discovered some instances of incorrect enforcement and are correcting these."

Keep Reading Show less

Option Impact, a benchmark compensation product from Advanced-HR, has a new owner.

Keep Reading Show less

FTX is reportedly exploring the possibility of buying Robinhood. The crypto exchange led by CEO Sam Bankman-Fried is looking into whether it could acquire the online brokerage, according to a Bloomberg report that cited unnamed sources.

Keep Reading Show less

Backstage Capital, which invests in underrepresented founders, has cut all of its operational staff after it ran into fundraising challenges, according to founder Arlan Hamilton.

Keep Reading Show less

Crypto hedge fund Three Arrows Capital has defaulted on a loan of cryptocurrencies worth $666 million from Voyager Digital, the broker said Monday.

Keep Reading Show less

Goldman Sachs has joined efforts to assist the ailing crypto lending company Celsius, in what would be the biggest effort yet by a traditional financial institution to jump in amid a broad crypto crash. Several large crypto hedge funds, lending companies and brokerages have sought funding or credit amid a liquidity crunch in recent days.

Keep Reading Show less

Los Angeles could become the first major city in the country to ban the construction of new gas stations because of the climate crisis.

Keep Reading Show less

Six of Sony's internal game development studios have issued public messages of support for abortion rights and condemnations of the U.S. Supreme Court's overturning of Roe v. Wade on Friday. It's a notable shift for PlayStation, after Sony Interactive Entertainment CEO Jim Ryan told staff in May to "respect differences of opinion" on reproductive rights following POLITICO's disclosure of details from a leaked draft opinion in early May.

Keep Reading Show less

Yelp is closing its New York, Chicago and Washington, D.C., offices as the company embraces remote work.

Keep Reading Show less

Netflix is laying off hundreds of workers in its second round of layoffs in roughly a month, according to a report from CNBC on Thursday.

Keep Reading Show less

Instagram is testing using facial analysis tools to verify age on the platform, Meta announced in a blog post Thursday.

Keep Reading Show less

EBay was once known as a marketplace for trendy collectibles like Beanie Babies. Now it’s going deep into the new world of NFT digital collectibles.

Keep Reading Show less

TikTok made several new commitments to its advertising and consumer practices, promising to better protect children from hidden ads and inappropriate content. The platform's new pledges come after a complaint filed in February 2021 from the European Consumer Organisation that alleged TikTok broke EU consumer rules.

Keep Reading Show less

Meta has agreed to settle a long-standing lawsuit filed by the Department of Housing and Urban Development alleging discrimination in Facebook's housing ad system. As part of the settlement, Meta vowed to change the way ads for housing, as well as employment and credit opportunities, are delivered on its platforms, and to pay a $115,054 fine.

"Discrimination in housing, employment and credit is a deep-rooted problem with a long history in the US, and we are committed to broadening opportunities for marginalized communities in these spaces and others," Roy Austin Jr., Meta's vice president of civil rights, wrote in a blog post.

Keep Reading Show less

Crypto lender BlockFi has secured a $250 million revolving credit line from FTX, a deal that comes as a broader market meltdown has forced other lenders to freeze withdrawals.

Keep Reading Show less

The solar panel market is a mess. An ill-timed Commerce Department probe has wrought uncertainty beyond the already-fraught supply chain, but at least some U.S. developers are trying to right the ship a bit.

Keep Reading Show less

Microsoft will remove controversial automated tools that predict a person’s age, gender and emotional state from its Azure Face API artificial intelligence service that analyzes faces in images, according to a report published by The New York Times on Tuesday.

Keep Reading Show less

Copilot, GitHub's AI code suggestion tool, is now available for everyone, the company announced on Tuesday. Anyone can use the pair programmer for $10 a month or $100 a year. It will be free for students and organizers of popular open source projects.

Keep Reading Show less

DocuSign CEO Dan Springer is stepping down, the company's board of directors announced Tuesday, and Chairman of the Board Maggie Wilderotter will fill in as interim CEO during the executive search process. Springer's resignation comes on the heels of slowing growth for the e-signature giant.

Keep Reading Show less
Bulletins