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Silicon Valley Startups Are Buying Fewer High-End Bikes as Bonuses as They Seek to Cut Expenses

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February 29
8:40 AM 2016

Employees at Silicon Valley startups have been enjoying a lot of special perks. From snacks, acupuncture, special holidays, to cash, one of the most popular perks in Silicon Valley are custom high-end bikes used as signing bonuses.

However, Business Insider confirmed that there has been a decline in these types of custom bicycles recently. Palo Alto Bicycles, a specialty bike store stated that over the past couple of years, the sales of these types of high-end bikes have dropped. Palo Alto's general manager Jeff Selzer also described that he's seen a shift in all of his sales from more "disposable income purchases" to utilitarian purchases.

The decline in sales of the expensive custom bikes by startups might be an indicator that startups are tightening their belts in doing business. It's likely that startups are looking to spend their investors' money more responsibly as more companies are facing anxiety over an impending market downturn. Some tech companies have undergone employee layoffs while others cut up operational expenses as more investors demanded that companies focus on reaching profitability instead of growth.

According to The Kernel, startups have focused heavily on company culture and perks in the last 10 years. These companies channel Google's culture and providing various perks from foods, facilities, and special celebrations. However, the perks don't come cheap for companies. In December, The Bureau of Labor Statistics reports that those benefits account for at least 30 percent of employer expenditure on workers.

While all the perks and comfortable workspace is argued to have positively impacted productivity, recent studies also revealed that what workers actually want is to be left alone and do their job. A recent study concluded that 83 percent reported that their company is overly focused on trivial activities and that people actually would rather be paid more that get more time off.

Silicon Valley startups have been facing challenging conditions as valuations are being slashed and investors tighten their budgets. Some startups have even shut down, as bigger companies reported challenging markets mostly due to global economic concerns. The Wall Street Journal described it as a hangover when the go-go Silicon Valley party mood faces sobering realities and more startups are cutting back on projects and expenses to save costs.

A decline in Palo Alto's sales of luxurious custom bikes might be a sign that Silicon Valley startups are cutting expenses to focus more on profitability. Due to challenging markets and global economic concerns, investors are being more careful with their capitals, leading startups to reevaluate their budgets. 

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