5 ms·

Yeah, probably the worst thing about the valley culture is that organic growth has lost it's charm. There was value in bootstrapping, making revenue, then profi

by educar 10y ago

Yeah, probably the worst thing about the valley culture is that organic growth has lost it's charm. There was value in bootstrapping, making revenue, then profits and then seeking funding as a way of increasing profits by growing. My understanding is that silicon valley VC culture started out because people were building hardware and this required some investment to get started. Software is totally different and with AWS and the like, building software is so cheap. But no, now it's basically: take money, give out stuff for free and take more money showing the free customers and get even more free questions and take even more money and so on. In the end, nobody knows the true value of the company - the founders, the VCs or the customers. True money is made by either ads, selling customer data or lock-in by making migrations to another service very expensive. What irks me is that this scheme overly favours VCs and to some part the founders. The thing is the stream of founders who are willing to do this is never ending (same thing about privacy. the number of people willing to give up their privacy consciously is never ending). Even YC thinks of the whole thing as a game (if you followed the snapchat thing). I am cynical but this is really about rich people having fun and everyone else (customers, employees) is getting suckered. None of these companies are being built to last.

traviswingo 10y ago
You hit the nail on the head!
freyr 10y ago
> with AWS and the like, building software is so cheap. Yes and no. Developers aren't cheap. Lobbyists and lawyers (e.g., Uber) even less so. AWS makes it cheap to get started, but it's not so cheap once people actually start using your service. If I were starting a business, I'd aim for organic growth. But admittedly, in hyper-competitive spaces or businesses that involve scaling a user base fast and cashing in on ad revenue after you have a lot of eyeballs, there can be a lot of legitimate up front costs.
Taniwha 10y ago
I think it's more "the web" rather than "software", before the first dotcom boom the rule of thumb (for software and hardware companies) was that you had to have 5 profitable quarters before you went public (5, count them, 5!). The original dotcom boom threw all that out the window, companies were going public on the smell of an oily rag and no product just because people wanted to buy a piece oif the web, we've forgotten what it takes to make a real company that lasts
pj_mukh 10y ago
You left out the "flywheel" companies. Granted there are probably too many companies calling themselves "flywheel" companies to explain away zero profits. However, in this last boom we have seen some non-hardware companies that use huge amounts of capital to spin a heavy wheel they believe will carry over. Uber (now profitable in NA) is a classic case. There have also been failures in this regard, there is no objective measure of what is and isn't a flywheel company. But we can't deny that there have been companies that have successfully executed on this strategy.
lukebp 10y ago
> Even YC thinks of the whole thing as a game (if you followed the snapchat thing) I don't understand this line of thinking. Snapchat is emerging as one of the largest content platforms out there. The Snapchat pitch competition is simply a way to reach a broader audience. I have been watching the pitches daily and a large number of them have turned out to be substantive, high quality pitches. It's also a great way for young founders to learn about pitching a startup.
- forgetsusername 10y ago
  >It's also a great way for young founders to learn about pitching a startup. In the grand scheme of things, I'm not sure pitching a startup is all that valuable of a skill, outside of Silicon Valley.
  - im_down_w_otp 10y ago
    Good prep for TED talks? ;-)
  - contingencies 10y ago
    Arguable. I am observing my wife pitching a business to local mainland Chinese investors at the moment. It's not all that different, though I would argue less polished and critically the VC does not take the attitude "Compress thy worth in to the revealed number of minutes, or forever wallow in thy toils". Instead, the VC is approached through a series of interactions over time: mediated concept pitch, document submission, then culminating in face to face meetings.
readams 10y ago
Capital costs for software are low, but labor costs are huge. Once you try to scale past the "you and a couple of buddies from college" stage good people become extremely expensive.
arbuge 10y ago
>> Yeah, probably the worst thing about the valley culture is that organic growth has lost it's charm. With the cost of living there, particularly the real estate component, you could also argue it's lost alot of its feasibility. Getting started there isn't cheap if any part of your plan requires hiring people or finding space to accomodate them early.
- sinak 10y ago
  I'm currently faced with this. We have a bootstrapped company with offices in SF and Southern California. Office space in SoCal is easy and cheap, but trying to find just 3 desks for our new SF office has been a nightmare. Places like WeWork are asking $2500 for a tiny office with 4 desks. (Obvious plug: If you happen to have a few desks or a small office spare, please email me.)
  - x0x0 10y ago
    wework is shit, btw I work in one of their offices and it's horrid. One of two elevators in a 15 floor building was left broken for 6 weeks at the end of last year. The second elevator still breaks for a couple days every month. I hope you enjoy a 15 minute wait to get in or out of the building. Alex is the smarmy liar who runs it, and all he can say is, "So sorry! Not my problem!" while declining to have WeWork give a damn about the building's terrible maintenance. These morons can't get the lock on the floor to work reliably; you badge in, the reader turns green, and the door lock doesn't unlock. This has been going on for probably 5 months. We now just leave the door to the whole floor unlocked all day, which is awesome, since there's street trash all over and eventually we're going to have stuff stolen. They can't make the A/C work; I hope you like wearing blankets at work in the winter and working in 75+ degree weather in the summer. These idiots built a bathroom with no exhaust fan. Since our floor is full of men, imagine how it smells by the end of the day. I'm surprised there's still paint on the walls. The only thing WeWork is competent at is cashing your rent checks. Oh, and the offices themselves are ludicrously loud. They are giant square boxes with no sound insulation, so enjoy a total lack of productivity the second your officemates, or people in offices near you, start talking. ps -- those phone booths they talk about? Busy most of the day. Avoid them at all costs.

by educar 10y ago

traviswingo 10y ago

You hit the nail on the head!

freyr 10y ago

> with AWS and the like, building software is so cheap. Yes and no. Developers aren't cheap. Lobbyists and lawyers (e.g., Uber) even less so. AWS makes it cheap to get started, but it's not so cheap once people actually start using your service. If I were starting a business, I'd aim for organic growth. But admittedly, in hyper-competitive spaces or businesses that involve scaling a user base fast and cashing in on ad revenue after you have a lot of eyeballs, there can be a lot of legitimate up front costs.

Taniwha 10y ago

I think it's more "the web" rather than "software", before the first dotcom boom the rule of thumb (for software and hardware companies) was that you had to have 5 profitable quarters before you went public (5, count them, 5!). The original dotcom boom threw all that out the window, companies were going public on the smell of an oily rag and no product just because people wanted to buy a piece oif the web, we've forgotten what it takes to make a real company that lasts

pj_mukh 10y ago

You left out the "flywheel" companies. Granted there are probably too many companies calling themselves "flywheel" companies to explain away zero profits. However, in this last boom we have seen some non-hardware companies that use huge amounts of capital to spin a heavy wheel they believe will carry over. Uber (now profitable in NA) is a classic case. There have also been failures in this regard, there is no objective measure of what is and isn't a flywheel company. But we can't deny that there have been companies that have successfully executed on this strategy.

lukebp 10y ago

> Even YC thinks of the whole thing as a game (if you followed the snapchat thing) I don't understand this line of thinking. Snapchat is emerging as one of the largest content platforms out there. The Snapchat pitch competition is simply a way to reach a broader audience. I have been watching the pitches daily and a large number of them have turned out to be substantive, high quality pitches. It's also a great way for young founders to learn about pitching a startup.

forgetsusername 10y ago
>It's also a great way for young founders to learn about pitching a startup. In the grand scheme of things, I'm not sure pitching a startup is all that valuable of a skill, outside of Silicon Valley.
- im_down_w_otp 10y ago
  Good prep for TED talks? ;-)
- contingencies 10y ago
  Arguable. I am observing my wife pitching a business to local mainland Chinese investors at the moment. It's not all that different, though I would argue less polished and critically the VC does not take the attitude "Compress thy worth in to the revealed number of minutes, or forever wallow in thy toils". Instead, the VC is approached through a series of interactions over time: mediated concept pitch, document submission, then culminating in face to face meetings.

readams 10y ago

Capital costs for software are low, but labor costs are huge. Once you try to scale past the "you and a couple of buddies from college" stage good people become extremely expensive.

arbuge 10y ago

>> Yeah, probably the worst thing about the valley culture is that organic growth has lost it's charm. With the cost of living there, particularly the real estate component, you could also argue it's lost alot of its feasibility. Getting started there isn't cheap if any part of your plan requires hiring people or finding space to accomodate them early.

sinak 10y ago
I'm currently faced with this. We have a bootstrapped company with offices in SF and Southern California. Office space in SoCal is easy and cheap, but trying to find just 3 desks for our new SF office has been a nightmare. Places like WeWork are asking $2500 for a tiny office with 4 desks. (Obvious plug: If you happen to have a few desks or a small office spare, please email me.)
- x0x0 10y ago
  wework is shit, btw I work in one of their offices and it's horrid. One of two elevators in a 15 floor building was left broken for 6 weeks at the end of last year. The second elevator still breaks for a couple days every month. I hope you enjoy a 15 minute wait to get in or out of the building. Alex is the smarmy liar who runs it, and all he can say is, "So sorry! Not my problem!" while declining to have WeWork give a damn about the building's terrible maintenance. These morons can't get the lock on the floor to work reliably; you badge in, the reader turns green, and the door lock doesn't unlock. This has been going on for probably 5 months. We now just leave the door to the whole floor unlocked all day, which is awesome, since there's street trash all over and eventually we're going to have stuff stolen. They can't make the A/C work; I hope you like wearing blankets at work in the winter and working in 75+ degree weather in the summer. These idiots built a bathroom with no exhaust fan. Since our floor is full of men, imagine how it smells by the end of the day. I'm surprised there's still paint on the walls. The only thing WeWork is competent at is cashing your rent checks. Oh, and the offices themselves are ludicrously loud. They are giant square boxes with no sound insulation, so enjoy a total lack of productivity the second your officemates, or people in offices near you, start talking. ps -- those phone booths they talk about? Busy most of the day. Avoid them at all costs.