For the first couple of years of my first bootstrapped company I tried to keep “cash in the bank” in excess of 3 months. Everybody knew. The one time (after the first six months of transient jitter) it dipped down close to two months everybody knew, and nobody quit (headcount at that point was about 60). So 9 months seems pretty good.
Though perhaps they are/were on the “don’t worry about the burn we can always get more” plan. In that case 9 months does sound perilous....though perhaps many people who couldn’t make car payments will become customers?
Well it's strong until it's not. Tons of businesses run on 1-month commercial paper and other stuff that they just plan to roll over and roll over until one day things change and they're completely fucked.
Market was already on the brink, COVID is going to be the excuse for many companies that are over the head with debt/investors money and still are running losses.
The economy hasn't made sense at all over the past 10 years. Companies have been hiring people just for show. Startups are all about putting up smoke and mirrors to appeal to a bunch of dumb investors.
Snap never made a profit in almost a decade yet its market cap is $17 billion. Uber hasn't made a profit in over a decade, market cap is $50 billion.
If you want to understand why things are like this, just look at how the Federal Reserve Bank of the United States is constantly injecting new fiat money into the economy and you will have all the answers.
Sounds like a pyramid scheme: invest in a startup first so that you find other investors for a subsequent round so that you can IPO and sell it all off to the next suckers who are hoping to do the same. Just don’t be the one left holding the bag.
I wonder what they do all day. Sounds like it might be the ultimate retirement plan: get paid 150+k and not do much all day because there just isn’t that much work to go around.
Wasn't this company already facing of running out of cash and other financial issues before COVID? I feel that, like many other companies, Bird is gonna use this pandemic as an excuse, when they had other big problems to deal with already
I wondered if the scooter only companies would be better off than ride sharing companies with small scooter revenue.
Anec-data: one of my relatives brokered a post lockdown lease in a large _redacted_ city for one of the two large ride sharing companies. It was for scooter storage.
But many American companies wouldn't have an issue borrowing money (at a reasonable interest rate) to continue operations since they're presumably profitable or at least approach break even.
Has Bird ever been profitable? Even excluding the cost of buying the scooters (e.g. only considering op. ex.)?
Plenty of companies will have trouble borrowing money, it's a financial crisis. Money market rates and rates on corporate paper were through the roof triggering a liquidity crisis. Looks like the fed is really stepping in agressively, and hopefully they'll succeed, but we already saw credit markets almost lock up. Doesn't matter if you're profitable if nobody is willing to lend.
So if people are broke, landlords are broke, stores are broke, companies are broke -- just who exactly has the keys to the kingdom here? Who isn't broke? Just banks?
Well, right now, we have a serious problem with cash flow—that is, there isn't much cash flowing through the economy, because people are staying in their homes.
So people who are still employed, but can't (or shouldn't) leave their homes still have some money, probably more than usual.
But the primary answer to that question is the same as it's been for the past couple decades: the people with the money are, well, the people hoarding all the money. The owners, the (big) employers, the people at the top.
As has been reported various places, just as an example, the airline industry spent the last decade spending something like 80-90% of every dollar they made buying back stock to enrich their executives. That's why they don't have anything saved for a crisis like this, and that's who has all the money now.
Not all of any of these are broke. Many companies have plenty of demand. Many companies have much greater than usual demand, or are shifting production to meet changed demand (for example, it looks like GM is going to be manufacturing ventilators). Those companies and their employees aren't broke--far from it.
Not to minimize the impact on companies and people who are seeing drastically reduced demand, but it's a serious overstatement to say that all companies and people are.
All the essentials who don't get locked and people are stocking on: health, supermarkets and their providers. Also those who are online or can be easily adapted: streaming, communication, online markets, education, soft development.
Any company that sells to people inside their homes is doing great. Games and content providers, video conferencing software, restaurants that do food delivery, Amazon.
Companies with large capital reserves, e.g. Apple, Google, Berkshire Hathaway. With startup valuations low, those three could go on a discounted M&A spree.
Especially because a lot of those major American companies have spent the past decade loading up on debt and buying back their shares at historically high prices.
Isn't a stock buyback exactly the same as paying a dividend, but taxed at a lower rate? I don't see why these companies are being demonized, the government should just let them go bankrupt and let the public buy their assets for pennies on the dollar.
Somewhere out there must be a few firms with massive cash positions. Every time a company buys back stock, they're giving cash to the investor who sold the stock. Assuming the government doesn't inflate the currency to nothing, those firms are going to absolutely clean up now, with so much cash to deploy while everyone else is getting force-liquidated.
Sure but the fun part about these insanely well funded moonshot startups that lose money on every transaction is that all these shutdowns improve their gross margins and cashflow positions.
Parked being the operative word. You don't see abandoned cars littering the pavement/sidewalks, left lying around in parks etc. (at least not in most neighbourhoods).
I'm no fan of cars but the idea that a company can just dump junk like this all over public spaces as an intrinsic part of its business model is bizarre to me.
Readit News
Edit: more: https://twitter.com/coryweinberg/status/1243685675137781762?...
> According to a source, Bird’s balance sheet is strong but it needed to reduce burn in order to extend its runway into 2021.
I would not describe a ~9 month runway as "strong".
Though perhaps they are/were on the “don’t worry about the burn we can always get more” plan. In that case 9 months does sound perilous....though perhaps many people who couldn’t make car payments will become customers?
(Not to mention that Bird is specifically a startup, which is a company meant to run on investments at this stage.)
I’m pretty sure this 30% figure also doesn’t take into account their legions of gig workers recharging the scooters.
If you want to understand why things are like this, just look at how the Federal Reserve Bank of the United States is constantly injecting new fiat money into the economy and you will have all the answers.
Yet, all my highly educated friends think Federal Reserve has been doing a great job at "stabilizing the economy".
Ignorance is strength, after all.
I haven't looked at their 10-Ks in awhile, but aren't at least one of them cash flow positive already?
Look at AirBnb - they don’t need thousands to operate their business, but they have them and they continue to hire
Anec-data: one of my relatives brokered a post lockdown lease in a large _redacted_ city for one of the two large ride sharing companies. It was for scooter storage.
No business projects revenue dropping by almost 100% overnight.
Has Bird ever been profitable? Even excluding the cost of buying the scooters (e.g. only considering op. ex.)?
So people who are still employed, but can't (or shouldn't) leave their homes still have some money, probably more than usual.
But the primary answer to that question is the same as it's been for the past couple decades: the people with the money are, well, the people hoarding all the money. The owners, the (big) employers, the people at the top.
As has been reported various places, just as an example, the airline industry spent the last decade spending something like 80-90% of every dollar they made buying back stock to enrich their executives. That's why they don't have anything saved for a crisis like this, and that's who has all the money now.
Not to minimize the impact on companies and people who are seeing drastically reduced demand, but it's a serious overstatement to say that all companies and people are.
Banks manage money but that’s not the same as having that money on their own balance sheet. Banks can and do go bankrupt.
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https://www.bloomberg.com/opinion/articles/2020-03-17/the-go...
I sympathize and wish all the best to its employees, however.
I'm no fan of cars but the idea that a company can just dump junk like this all over public spaces as an intrinsic part of its business model is bizarre to me.