Anyone else interested in the Silicon Valley/Tech Start-Up arena?

[Sevenhelmets]

Right. It's been big for the last 3-4 years. We all got that part.

Silicon Valley started busting out in the 70s when NASA set up shop there, then little companies like Xerox and HP came in, and started "breeding" other little companies like Apple, Microsoft etc.
So if by "been big for 3-4 years" you mean "been big for at least 30 years", then yes.

All snarky-ness aside, presumably you are only referring to the craze of VCs going in like a pack of Hyenas and throwing money around like its water. There are definitely some big exits (Instagram is the poster-child for that), but guaranteed for every exit, there are hundreds of failures, and the amount of lost money is mind boggling.

Like an earlier poster mentioned - I'd rather build from scratch, bootstrap and scale/iterate, all the while retaining full control and exit with a MUCH bigger piece of the pie.

 

[dchuk]

Right. It's been big for the last 3-4 years. We all got that part.

My point is there are still companies getting tons of funding.

Take SnapChat for example...

When SnapChat grew from 3,000 users to 30,000 users in a month, they were able to raise $485,000 in funding. Most people here can easily do that in a month, right?

Snapchat Raises $13.5M Series A Led By Benchmark, Now Sees 60M Snaps Sent Per Day | TechCrunch

Now they're valued at up over $70 million and will likely go to IPO and cash out. Pretty good gig if you ask me.

I see everyone's complaint about not wanting to be some VC's bitch, but if you come to them with a track record and stats to back it up, you'll actually have some negotiating leverage (unlike some programming scrub that has no clue how a business works.)

$1000 says snapchat doesn't IPO

 

[CCarter]

$1000 says snapchat doesn't IPO

I completely agree. Their product is not something that a quick Apple or Android update con't take care of, or a competitor could not duplicate. Facebook would be their biggest competitor, since they can use Instagram to just duplicate what Snapchat does, not difficult. Facebook would easily whip them out since they already have the infrastructure and users in place. IPO, lol, they'd better be considering a buyout from a major versus IPO.

 

[Zsaleem]

I completely agree. Their product is not something that a quick Apple or Android update con't take care of, or a competitor could not duplicate. Facebook would be their biggest competitor, since they can use Instagram to just duplicate what Snapchat does, not difficult. Facebook would easily whip them out since they already have the infrastructure and users in place. IPO, lol, they'd better be considering a buyout from a major versus IPO.

Nice sig. Just texted that to my ex who was bugging me since few days. :conehead:

 

[shopdeal]

I completely agree. Their product is not something that a quick Apple or Android update con't take care of, or a competitor could not duplicate. Facebook would be their biggest competitor, since they can use Instagram to just duplicate what Snapchat does, not difficult. Facebook would easily whip them out since they already have the infrastructure and users in place. IPO, lol, they'd better be considering a buyout from a major versus IPO.

Facebook already duplicated it, but it seems snapchat users arent switching over.

 

[harrymouni]

yeah it's getting iron hot, have you guys heard about xerox parc and apple yet?

have you heard bill shockley moved out west? starting some company making transistors, what the fuck are they?!

Ever worked with a startup as a vendor? 2 of our largest contracts were (key word) with startups and from my experience they are so caught up in the greed, speed, IMAGE, and exit strategy that they miss the boat on building an incredible product or service. We parted ways with one and were fired by another as their ego's would get in the way of getting shit done right. Both companies had stodgy baby boomer board of directors that had unqualified gen Y CEO's. Both companies were wrought with narcissists, feminists, and beta's for management. Yeah I know, sounds like the old corporate job right, felt like it too.

great post. you got it in one word, it's all about the fucking image and playing the startup game. 'changing the world', that phrase really pisses me off. the most naive people actually believe this shit, kevin rose is the epitome of the type of person i'm talking about.

but then there's people there that know the game, they know they're rolling the dice looking to win the startup lottery. they play the game by doing interviews on techcrunch and attending conferences waiting for their name to brought up at a board meeting of some stodgy but cash-rich company scared that they're being 'left behind'. Autodesk buying Socialcam for $60 million, hello? Great synergy there.

I have respect for these founders but it's still a lottery, most don't win.

Take SnapChat for example...

When SnapChat grew from 3,000 users to 30,000 users in a month, they were able to raise $485,000 in funding. Most people here can easily do that in a month, right?

Well it's $485k in funding, not profit, they have to pay it back!

 

[imontie]

How did Facebook duplicate it..?

I don't know anyone that continued to use Snapchat past the first week or so

 

[Veritas]

I am indian, and I try to avoid silicon valley.

 

[NetMillion]

 

[BlokBlok]

I just got back from Launch Festival, I have never seen so many stupid fucking ideas trying to get funding. Having a startup in the San Fran area is like having a cool pair of shoes in middle school, people just do it because its the cool thing to do.

I will say there are a hand full of really cool ideas that will never get off the ground unless they get funding, thats where Angels and VCs have a place. Like anything you have to sift through the shit to get some gold sometimes.

 

[mituozo]

I'm not entirely familiar with the whole Silicon Valley aspect of things.. I know a bit about seed money and terms and what not..

But I don't think I could ever take an investment like that. Just doesn't feel right to be a business owner and give someone else power over what you've built..

A part of me feels foolish, the other half responsible.. I've turned down a few offers in the past.. Just never really wanted to understand the details, or take on any credit other than what I can handle..

I cringe when I see website start ups getting $xxx,xxx to over a million for projects.. While I sit here thinking if I could afford to shell out $20K cash myself, it would be more than enough to produce something 100x as profitable. For now, I'll just keep paying it myself slowly, spending $1-2K/month here and there. I know you're supposed to take advantage of other people's $$, but I'm not sure I could do that..

Leverage.

Facebook would not exist without venture capital. Neither would lots of the now huge tech start-ups.

People tremendously underestimate how much money it takes to do things, and how long it'll take to get where they want to go.

$20k is fuck all from a company's perspective. It's not even an engineer's salary + expenses for a couple months by the time you include office costs, computer costs, tax, etc.

Running things by yourself you can get by on a shoestring, but you can't grow quickly on your own in many cases. A start-ups goal is to find product market fit, then scale fast, then become profitable. Once you've found product-market fit, you're losing money fast by not taking on capital to grow in many cases, and may never be able to act fast enough to get the share of the market you need.

It all entirely depends on what your business is doing and what your personal goals are in life.

 

[Meatytreats]

Leverage.

Facebook would not exist without venture capital. Neither would lots of the now huge tech start-ups.

People tremendously underestimate how much money it takes to do things, and how long it'll take to get where they want to go.

$20k is fuck all from a company's perspective. It's not even an engineer's salary + expenses for a couple months by the time you include office costs, computer costs, tax, etc.

Running things by yourself you can get by on a shoestring, but you can't grow quickly on your own in many cases. A start-ups goal is to find product market fit, then scale fast, then become profitable. Once you've found product-market fit, you're losing money fast by not taking on capital to grow in many cases, and may never be able to act fast enough to get the share of the market you need.

It all entirely depends on what your business is doing and what your personal goals are in life.

Exactly! It's all about leverage and momentum... It's a dog eat dog world and if you aren't quick enough, someone with more coin then you will rip off your idea and market the fuck out of it while you and your 5 VA's from the Philippians are trying to figure out how to use basecamp!

Most big companies are in the red for years...

 

[EricVorheese]

Leverage.

Facebook would not exist without venture capital. Neither would lots of the now huge tech start-ups.

People tremendously underestimate how much money it takes to do things, and how long it'll take to get where they want to go.

$20k is fuck all from a company's perspective. It's not even an engineer's salary + expenses for a couple months by the time you include office costs, computer costs, tax, etc.

Running things by yourself you can get by on a shoestring, but you can't grow quickly on your own in many cases. A start-ups goal is to find product market fit, then scale fast, then become profitable. Once you've found product-market fit, you're losing money fast by not taking on capital to grow in many cases, and may never be able to act fast enough to get the share of the market you need.

It all entirely depends on what your business is doing and what your personal goals are in life.

This. A 1000x this. Every moron I ever heard talk about how taking money from VCs is bad, should read this.

I was in IM full-time and making decent dough, but now am running a startup (I do some client SEO work on the side to make ends meet, but the startup takes up 90% of my time). I'm dealing with all the headaches that come with a startup - making much less money (employees cost a lot, whoda thunkit?), keeping investors happy etc - but it's all with the goal of having a major 8+figure exit.

I wouldn't go back to IM full-time if you paid me.

P.S. Just to clarify, starting in IM was the best thing I ever did. While other startup founders worry about traction, generating traffic isn't high on my list of worries. So definitely not knocking IM, there's just more money to be made as a startup founder (if you know what you're doing).

 

[Kaedus]

I don't know anyone that continued to use Snapchat past the first week or so

Snapchat is for teenagers to send nude pics to each other without the consequences of being caught.

If you aren't hanging out with teenagers, you probably don't know anyone that keeps using it.

Snapchat: Sexting tool, or the next Instagram? - CNN.com
5 Ways Snapchat Improves Sexting - The Bold Italic - San Francisco
The sexting wars: The two Stanford students beating Facebook in the battle for 'self destructing' pictures | Mail Online

 

[blureach]

Just wondering if anyone here has or is planning to build a legit tech company with the potential to IPO or be bought out for 8-9+ figures.

yep.
Screw IPOs

 

[Unarmed Gunman]

Snapchat is for teenagers to send nude pics to each other without the consequences of being caught.

 

[Gambit]

$1000 says snapchat doesn't IPO

I'll take that bet. Though they have a decent shot at being acquired before they actually make it to IPO.

I completely agree. Their product is not something that a quick Apple or Android update con't take care of, or a competitor could not duplicate. Facebook would be their biggest competitor, since they can use Instagram to just duplicate what Snapchat does, not difficult. Facebook would easily whip them out since they already have the infrastructure and users in place. IPO, lol, they'd better be considering a buyout from a major versus IPO.

Facebook already tried to make an exact duplicate of Snapchat, didn't work out so well...

Facebook Poke fails to kill Snapchat: Facebook is too chaste to win at the sexting game.

Leverage.

Facebook would not exist without venture capital. Neither would lots of the now huge tech start-ups.

People tremendously underestimate how much money it takes to do things, and how long it'll take to get where they want to go.

$20k is fuck all from a company's perspective. It's not even an engineer's salary + expenses for a couple months by the time you include office costs, computer costs, tax, etc.

Running things by yourself you can get by on a shoestring, but you can't grow quickly on your own in many cases. A start-ups goal is to find product market fit, then scale fast, then become profitable. Once you've found product-market fit, you're losing money fast by not taking on capital to grow in many cases, and may never be able to act fast enough to get the share of the market you need.

It all entirely depends on what your business is doing and what your personal goals are in life.

Damn mitouzo! always making great points. Makes sense that it all comes down to what specific goals you have for your company/yourself and its not a one size fits all bill.

My ultimate goal is to build something huge, but to do it without losing autonomy.

It's a fine line to find that perfect balance, but it's getting there.

 

[Gambit]

LOL I fucking hate this show. Although I'm not against hiring the blonde one to bring to contract negotiations and get me a sweeter deal from investors with no self control.

 

[dchuk]

I'll take that bet. Though they have a decent shot at being acquired before they actually make it to IPO.



Facebook already tried to make an exact duplicate of Snapchat, didn't work out so well...

Facebook Poke fails to kill Snapchat: Facebook is too chaste to win at the sexting game.



Damn mitouzo! always making great points. Makes sense that it all comes down to what specific goals you have for your company/yourself and its not a one size fits all bill.

My ultimate goal is to build something huge, but to do it without losing autonomy.

It's a fine line to find that perfect balance, but it's getting there.

Sweet, easiest thousand bucks ever. Now go back to grossly overestimating how many tech startups actually IPO, especially social image sharing apps with no business model primarily used by teens.

 

[Dullspace]

I guess I'll take the bait on this thread. Silicon Valley is the best place in the world to start a startup, particularly in software. If you're excited by that, you should move here.

Venture capital is part of the reason The Valley is great, but it's far from the only reason. There is an entire ecosystem to support here. For example, there are lots of complaints about AdWords policies on this forum. Wouldn't it be useful to build a relationship with your AdWords rep by getting lunch at the Googleplex? A couple months ago, I had an issue with Heroku's routing and a day later I was sitting in front of a laptop with one of their infrastructure engineers. Those kinds of things are legitimately useful.

Also, there appears to be lots of misinformation in this thread about venture funding in general. High quality investors seem to correlate strongly with high quality deal terms. That is, if you have shitty terms, it's probably because you couldn't close a good investor. My company raised a small amount of seed money on extremely favorable terms (e.g., no board seats given up, no opportunity to fire me, ect) and the investors have been nothing but helpful. I'm so happy to be working with them and leveraging their experience to help me on this journey.

Moreover, the dollar size of these "seed" rounds where investors take very little control is only growing. For example, Virool, FundersClub, and ZenPayroll all recently raised more than $5 million in seed money. Having that kind of money in the bank gives a startup the freedom to experiment and try things that can eventually turn into a billion dollar IPO. It's a fundamentally different mindset than trying to turn $100 into $150 by arbitraging paid traffic.