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

dchuk said:
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.
Click to expand...

Most tech startups don't IPO, this is true. But most tech startups never reach 5 million+ users.

We'll have to revisit this post in 12 months, no doubt.

As for the "no business model" point, this has been said about nearly every tech startup that has reached 5 million+ users.

Facebook had "no business model..."
Youtube had "no business model..."
Twitter had "no business model..."

But they are profitable now. With 10-20 other similar companies (Pinterest, Tumblr, Instagram, etc.) looking to follow their same model.
 


Dullspace said:
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.
Click to expand...

Nice. I was hoping to hear from someone living in the Valley. Really good points.

I definitely would like to build a large, sustainable SaaS or enterprise app in the near future.

How long have you been living out there? I've been looking to move out there sometime around the end of 2013.

Sounds like being selective about partnering up with the right investors is one of the most important decisions.
 
It entirely depends on the lifestyle you want.

If you want a high risk, high stress, grow-like-crazy-business with an extremely high probability of failure (but the possibility of a huge payoff), go the VC route.

If you want a medium risk, less stress, grow slowly with only a medium probability of failure (and the likelihood of very nice money, but not billions), go the self-funded route.

Investment is essential if you have a business model that only works at a huge scale - Facebook or Google wouldn't work as 50-employees company ticking along. It's also needed if you are in a winner takes all market like Ebay or Amazon, because someone else will out-grow you otherwise.

On the other hand, if you have a business that can be nicely profitable with a few thousand users, it doesn't make as much sense.
 
[ame=http://www.youtube.com/watch?v=b-IiEgF0JiI]Uber San Francisco drivers on strike - YouTube[/ame]
 
Dullspace said:
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.
Click to expand...

Awesome point, there is also an insane amount of talented people in the bay area, I was there for 2 weeks recently and met tons a good people.
 
Gambit said:
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.)
Click to expand...

then what is stopping you from doing this?
 
onlinemoniez said:
Hate start-ups.

1)Build something that solves a problem with money you already have.

2)Sell product.

3)Grow organically.

4)Profit.

5)Lulz in the face of start-ups who have investors up their anal cavity all day.

6)Be more successful than 99% of start-ups.

7)Browse wickedfire for the rest of your life.
Click to expand...



I have mentored for some fairly well known VCs, and I actually agree 100% with this post. I'm on my third "start up" right now, and have never accepted funding.

Most of these startups end up with lackluster results, get acquired at a loss, or just dissipate.

The best way to raise money is to earn revenue.
 
Oh where to begin...

There are many concepts that are beneficial to being in the startup environment and many drawbacks. I own multiple business like most successful IM'ers on here. If you are looking to get funded your odds will be higher if you live in the bay area as opposed to Iowa City or anywhere outside of silicon valley (note Venice a beachtown in L.A. is growing rapidly as well as NYC & Boston for the top 3 spots outside of Silicon Valley for Funding).

Some of the reasons that the valley is so big is the BIG VC's are all based on Sand Hill Road in Santa Clara county. The talent is there. With UC Berkley and Stanford around the corner there is no shortage of smart engineers, designers, + a diverse population include the largest Asian population in the usa.

If you get funded your life needs to be eat, sleep, and breathe your business and nothing else. You have other peoples money and they are going to tell you what to do with it because they want to make sure the money comes back. On a positive side the thinking in the area is contrary to normalcy. You spend more than you are making and its okay because you can raise a second or third round with the hopes of getting bought out or going public.

All of this is extremely difficult. I have two businesses that could go the VC route. One is based in San Francisco and we have structured it from the get go to receive funding and grow it to a company that gets acquired by the 800 lb. gorrilla or to go public. It works because it is in an emerging field and in San Francisco.

My other company we talked about prospects of raising money and going public but I would lose my freedom and currently thats whats important to me. That and we have a 100% frivilous lawsuit pending that has stopped us from raising capital with the possibility of going public one day and cashing out form millions of dollars.

Scaling is difficult in some niches and our biggest competitor has done a miserable job of scaling and an excellent job of pissing off a lot of people. At the end of the day if you hire more people and expand your marketing budget it doesnt always translate to a bigger paycheck for yourself.

In the end do what you are passionate about. If you are great at what you do somebody is going to offer you funding to expand it. Concentrate on what you like not something that you think can attract VC funding.
 
You must log in or register to reply here.
Top Bottom