      Tomasz Tunguz Blog / Theory Ventures · 2020-04-26
      · 2230d
    

Bullwhip Effect and Base Rate Uncertainty: Dual Forces Reshaping Startup Growth in Q2 2020

The article examines how the Bullwhip Effect and uncertain base rates are impacting startup valuations and growth projections during economic volatility. Small demand shocks amplify across supply chains while startups face difficulty projecting future growth rates amid unprecedented market swings. Public market data suggests faster-growing software companies are weathering valuation declines better than slower growers.

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Metrics in this report

Electricity Price France

-20€ per megawatt hour

spot price

French electricity market during lockdown

High-Growth Software Valuation Multiple Decline

6%

median

30%+ annual growth software companies in public markets

Netflix Subscriber Addition

16000000subscribers

Q2 2020 actual

Netflix quarterly net additions vs. projection

Oil Price

-7$

spot price

WTI crude oil barrel price during demand collapse

Slow-Growth Software Valuation Multiple Decline

30-45%

range

Below-30% growth software companies in public markets

Startup Employee Job Losses

30000employees

cumulative

Startup sector layoffs in Q2 2020

Zoom Monthly Active Users

300000000users

point-in-time

Zoom platform scale in Q2 2020