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State of Startups
- demonshalo 10y agosigh... Europe does not stand a fucking chance!
- cbcoutinho 10y agoWhat does this article have to do with Europe? I know First Round is based in SF, but they don't state where the startups are located - the only mention of the US is when comparing demographics of the workforce with the US itself.
- demonshalo 10y agoWhat I mean is, Europe generally does not even come close to that level of pay/compensation. So I assumed that these are US based startups. I could be wrong though.
- shanwang 10y agoI guess the salary figures are largely influenced by US figures, $101k-$150k for mid-level engineer is definitely not the norm in europe.
- trymas 10y agoSomehow I do not think that US and European salaries are comparable.
- perseiden 10y agoLooks like there are only US based startupts. At least 39 % of the start ups were located in the Bay area, so that must distort the figure quite a bit I guess.
- jdavis703 10y agoYes but you (generally) get other things like universal healthcare, free or cheap university, retirement plans, no need for a car due to proper urban planning, etc. In the US you have to shell out for all these things, paying into a private 401(k) for retirement, paying back student loan debt, paying for your health insurance etc. And these are at well funded tech firms.
- taneq 10y agoSo basically, a mid-range profession in the US is comparable to a mid-range profession in the EU, a high-end profession in the US earns heaps more, and a low-end profession (or unskilled job) in the US means you're screwed?
- discordianfish 10y agoWhile true, that doesn't even come close to filling the gap. In Berlin "the silicon valley of Europe", as people here like to say, there are pretty much zero engineering jobs paying >$100k/year. There is some magical ceiling of around $90k/year, no matter how senior you are. This isn't only true for startups but pretty much any company. That's one of the reasons I work remote for Silicon Valley.
- Mahn 10y agoThere's also the fact that US in general has higher living costs, even if they are not immediately evident. Take for instance the price of renting a shitty one person flat in Berlin vs San Francisco. Not to mention that in most European countries you don't have to tip 30% over the price of a meal because waiter salaries here are actually enough to cover living costs.
- zoidb 10y agoI live and work in Berlin and have been thinking about doing the same. Mind if I ask you some questions over mail?
- dx034 10y agoOn the other hand, costs in SV are way higher than Berlin. Berlin has very low living costs, even compared to other European (and German) cities. With $90k/yr you probably have the same living standard as in SV with twice as much. Probably even a higher standard, with $90k/year in Germany you can afford a large appartment, eat out regularly, don't have to worry about retirement or health care. Of course living in a cheap area and being paid the salary of the high cost area is always better. But that's not specific to Berlin.
- tedmiston 10y agoKeep in mind how heavily we are taxed at higher income brackets, higher living expenses, and also that "US salary" is a huge overgeneralization. Startups in third and fourth tier startup cities might pay 1/3-1/2 of what's in SF, etc. Comp varies a lot.
- dmark3 10y agoSo 10% of startups give out more than 1% of equity to a mid-level engineer ? Perhaps this is a small sample, but it sounds odd.
- pyb 10y agoIs it odd that so few of them do ?
- dmark3 10y agoI would have thought that 1% is only for a first engineer, or an R&D manager and such. But perhaps things are changing, as candidates know how to ask the right questions.
- nevdka 10y ago44% of these startups had only Angel or Seed money. With strong technical founders, their first engineering hire could be considered mid-level.
- brianwawok 10y agoWhat should first and second hire get? 1 or 2% doesn't seem crazy after a seed round.
- Dowwie 10y agoThis is a duplicate post. First post: https://news.ycombinator.com/item?id=13080477 https://news.ycombinator.com/item?id=13080477
- ValG 10y agoDidn't see that when I posted. Usually HN catches dupes, but I posted this on mobile on the go. My bad.
- Dowwie 10y agoIt's not on you. :) HN ought to match on dupes like this.
- sctb 10y agoThe software allows resubmissions of stories that didn't get significant attention after enough time has past and there's no longer any hope for them. It does this so that those stories have more than one chance, which is often needed before they catch on. Sorry that it wasn't yours that did! Community members have analyzed the submission data to see if there's any way for submitters to do better than random here and it seems like there isn't.
- greenspot 10y agotl;dr because the presentation is super long. I just picked data which I find interesting and not obvious, there's much more information which I don't cover. Data is in chronological order and often aggregated to less numbers. 700 founders inside and outside of FirstRound were surveyed. - 7 of 10 say bitcoin is overhyped - cofounder relationship: 5% fired their cofounder, 5% are strained, 40% collegial, 28% best friends - 13% sold secondaries - 61% optimise on growth, rest on profitability - 52% want to fire up to 10 people, 32% up to 50, 10% more than 50 the next 12 months - Hardest people to hire: tech, sales and marketing leader - 90% of mid-level engineers get <1% equity, 64% <0.4% - Most (55%) of mid-level engineers get between $100K and $150K - Primary drivers of company culture are tech, sales and design - Most (43%) people leave between 6-7pm, 10% work longer than 8pm - 75% could close a round in 4 months or less - 78% pitched less than 20 investors - 76% raise exactly or more compared to what they planned - 55% expect that raising gets harder the next 12 months - 22% of investors didn’t meet expectations - 20% <= 30yrs, 32% older than 40yrs, rest inbetween - Most popular sectors are enterprise, consumer, fin-tech - 43% web, 29% mobile, 1% VR
- wmblaettler 10y agoI think you have a typo with "52% want to fire up to 10 people...", "hire" perhaps?
- greenspot 10y agoyou are right (I can't edit my original post anymore)
- spyspy 10y agoWhat defines a mid-level engineer?
- deleted 10y ago[deleted]
- mi100hael 10y agoI'd say someone who's not in a senior position like team lead but more than 3 years removed from college.
- nedsma 10y agoI love this one: How confident are you that you're building a billion dollar company? Answers: 1. I'm certain that we will - 18% 2. I'm confident we have a decent shot at it - 42% Thumbs up for the optimism!
- porter 10y agoWell, they are telling this to VCs afterall...
- kornish 10y agoRecently on a John Oliver segment, Oliver was speculating on how Trump University received 98% excellent approval ratings from current students. Turns out that the students were asked to give feedback while still enrolled in the course, meaning that giving a bad review could negatively influence their grade or relationship with the teachers, and thus the students were motivated to give more positive answers than they otherwise might have. I wonder if founders giving answers here had names attached to their answers or if they were anonymous at submission-time.
- tedmiston 10y agoThat's how every university course evaluation I've ever done has worked. Though they say data is shielded from the instructor until after final grades are submitted. Not sure if that applies to the Trump thing.
- jdavis703 10y agoI think this is a very interesting question to ask when interviewing at a startup: "If you're not successful, why do you think that will be?" And also "what leads the culture" (engineering, sales, design etc).
- countryqt30 10y agoAnd I also think the majority answer "Because we can't raise capital" is probably one of the dumbest answers you can give.
- aedron 10y agoInteresting answers on lack of gender diversity in IT: Most of the men believe the reason is that there just aren't that many women entering the field, while almost all the women blame bias at various stages of education, hiring and promotion. Someone has a cognitive dissonance.
- ohyoutravel 10y agoI don't think it's cognitive dissonance if two different groups believe separate things. Only if one group believes two conflicting things. Being wrong (whichever side that may be) isn't cognitive dissonance.
- bkanber 10y agoMore likely both sides are right to varying degrees. It doesn't have to be black and white, nor are those two issues mutually exclusive.
- jklinger410 10y agoThis is too rational to be correct.
- whoops1122 10y agothere were less than 5 girls on my computer science class, so unless woman are claim that they should have the job without education. I can totally see the reason why there is a gender diversity in IT?
- beat 10y agoWhy is a computer science background necessary for an IT career? I know many, many IT professionals who did not study CS in college.
- kerbalspacepro 10y agoNo, but also yes.
- benmarten 10y agoAre we in a bubble answered yes is declining from 73% -> 57%. That means the real probability of being in a bubble just increased ;P Remember the 2008 crisis was only seen by very few in advance...
- countryqt30 10y ago"Founders’ top concerns are talent and customer acquisition." Most important thing missing! In my opinion, the only thing that really matters for investors is MISSING: growing profit. This is the only thing that counts for me as an investor and should for a founder. The way of achieving so is by delivering superior product and make clients happy.
- coldcode 10y agoDid anyone else find the constant shifting colors irritating?
- codingdave 10y agoState of Venture-backed Startups. Just to be clear. It is a specific subset of the larger startup picture.
- tedmiston 10y agoThis really depends on your definition of a "startup" vs small business, lifestyle business, etc.
- codingdave 10y agoI guess that is technically true, but if anyone who is NOT a VC is buying into the idea that VC backing is the only valid definition of a startup... you have drunk too much of the kool-aid.
- tedmiston 10y agoI would say they more just look at it as an easy filter. While there will be some false negatives, you have very few to none false positives i.e., venture-backed companies that turn out to be non-startups but don't close or exit. The example that comes to mind that breaks this is the failing startup turned dev shop in attempt to revive the startup pattern.
- sgustard 10y agoIt's not the "startup" label that's a problem, it's that VCs breed a monoculture. There are lots of startups that don't secure funding because they don't fit the VC mindset. This is a survey of "what VCs want in their portfolios", not "what entrepreneurs choose to do", which are very different things.
- a13n 10y agoSome of them were bootstrapped
- EduardoBautista 10y ago> 9. Are you optimizing for growth or profitability? > Profitability - 39% > Growth - 61% This is what happens when your business goal is to get acquired and not to have a business sustained by paying customers.
- pc86 10y agoWell this is one of the few but key differences between a "startup" and a "business." A business that isn't profitable is either a hobby or a bad idea. A startup that isn't growing is dead. Personally I'd rather make $5/10/15/25k a month with a business than kill myself trying to get millions in funding, pay myself a $10k/mo in salary and leave with nothing through either failure, dilution or some combination thereof.
- monkmartinez 10y ago> A business that isn't profitable is either a hobby or a bad idea. A startup that isn't growing is dead. Time will tell, but I think this is the line of thinking that we'll look back on with disdain in years to come.
- rsp1984 10y agoGiven that you can make $5/10/15/25k a month with a cushy 9-5 corporate job where everything's taken care of for you, in most cases the choice is not small-business vs. startup, it's corporate job vs. startup. The "lifestyle" self-running company that spits out a comfortable amount of cash and is easier to handle than a corporate job is somewhere between a myth and a unicorn. It's very rare. If you want to stay on the legal side of things it takes a great amount of connections, experience, time and effort to build such a company. You might as well invest that time in a "proper" startup and get some funding. Chances of success will be similar in the end.
- WhitneyLand 10y agoI don't notice that many people making 15/25k a month that think their jobs are cushy. There are usually high expectations at that level.
- GrumpyNl 10y ago“One of the problems with raising money is it teaches you bad habits from the start,” said Jason Fried, the co-founder of the software company Basecamp, who has written frequently on the perversions of the venture capital industry. “If you’re an entrepreneur and you have a bunch of money in the bank, you get good at spending money.” But if companies are forced to generate revenue from the beginning, “what you get really good at is making money,” Mr. Fried said. “And that’s a much better habit for a business to work on early on, to survive on their own rather than be dependent on money people.”
- robhunter 10y agoI think there's a happy medium. Getting to the point of being sustainable by building what n customers want today gives you both the (infinite) runway, as well as hopefully some insight, into what 100n customers will want tomorrow.
- justinzollars 10y agoI've worked at startups that have taken no money (0) and those that have taken boat loads (Hundreds of Millions). I made much more money from the former situation.
- deleted 10y ago[deleted]
- misiti3780 10y ago1 out of 5 founders thinks they are raising a unicorn ?
- almostarockstar 10y ago1 out of 5 founders want you to think that they think they are raising a unicorn.
- traviswingo 10y agoOh yeah, startup founders with venture backing aren't biased about this topic...
- vsloo 10y agoThere's a disconnect between founders who want to build a startup and founders who want to build a business. They think the two are the same but they're really not and this study clearly shows that. There are situations where startups turn into businesses but I'd rather build a profitable business for myself from the start and our team than to build a startup purely focused on "growth".
- monkmartinez 10y agoI am very disconnected from the "startup" world, and something in your comment has me asking: What is the difference between a startup and a business? To me, they ought to be one in the same...
- GFischer 10y agoPaul Graham (and Y Combinator I guess) believe that the difference is the goals. A startup is a company designed to grow fast. PG, 2012 http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html http://www.forbes.com/sites/natalierobehmed/2013/12/16/what-is-a-startup/#6b2321f14c63 http://www.forbes.com/sites/natalierobehmed/2013/12/16/what-... a startup is a company designed to scale very quickly Steve Blank believes a startup is determined by the search of a business model. If you have a business model, then you have a small or new company, not a startup. https://steveblank.com/2014/03/04/why-companies-are-not-startups/ https://steveblank.com/2014/03/04/why-companies-are-not-star...
- angersock 10y agoQuite right. Another distinction worth making, almost its own axis really, is the difference between "a tech business" and "a business that uses tech". Companies like Cisco, Facebook, Apple, Google, Canonical, and so forth are companies that are tech companies--without their technology, they wouldn't be in business at all. They provide a service or product that is IP in its own right. Companies like Chipotle, Subway, Uber, Lyft, AirBNB, DoorDash, Dollar Shave Club, and so forth are companies that use tech to achieve economies of scale and growth that wouldn't be as easy otherwise but could still be done. You can imagine a way of making something that to the user is substantially like the Uber today without a complicated backend, even just using call centers and massive dispatch. The key part of their business is part-time contractor drivers, which is a business and not tech innovation. It's easy to assume that all startups are tech startups, but that's not quite true and it also can limit and slow developing a good business model.
- gnicholas 10y ago> And it only gets less balanced with time. Among respondents' companies, the boards of later-stage startups are almost three times less likely to have a woman on their board. If later-stage companies are older (probably correlated, but not perfectly), then this could be a function of the year in which the boards were created. There's more of a push for diverse boards now than there was 3 years ago, so if a company got funding and formed a board back then, it's not surprising their board would look different.
- personjerry 10y ago> Now’s the time to launch companies and set sail. > Though the majority of founders say we’re in a bubble, 9 out of 10 founders believe that it’s a good time to be starting a company. All aboard! Wow that's the worst example of sample bias I've ever seen. It betrays the fund's motives behind this post, I suppose.
- pascalxus 10y agoThe 2 biggest reasons start ups fail are: 1. No/not enough market demand for what your building 2. User acquisition costs exceed LTV. Those 2 things should be the very top concern of any software entrepreneur/founders. I don't understand why the survey doesn't reflect that. They say hiring good talent is a primary concern, but if that were really the case, wouldn't start ups be moving to cities where the labor supply was greater than the labor demand? And wouldn't there be a corresponding willingness to hire remote workers (as this greatly increases the pool of candidates)? Moving to an area where labor is 1/2 as cheap, could double your runway, assuming there aren't other timed restraints. >Nearly 1 in 5 founders say they're raising a unicorn This is not necessarily optimism. some companies require that kind of scale in order to get the economies of scale required for profitability.
- Urbanxassassin 10y ago1. It only asked why they think they would fail. This is not a survey for those that already have failed, it's a report of where the current mindset is. So of course it's not at the forefront of their minds, raising money is first and then reading the market better. That's why "We couldn't raise enough capital" and "Growth stagnated" are above market demand being a reason why they think they will fail. 2. Going to places like the bay where demand is high and supply is meh, is behind the notorious idea that better engineers are there to compete for and/or other engineers will eventually come to the market from another city for the hunting. Sometimes it pays off, sometimes this doesn't. I rather play it safe too and go to a place with potentially good engineers and less demand, also offering remote work (But many think non-face-to-face interaction slows productivity).
- Urbanxassassin 10y agoFor: "32. How many firms did you pitch when raising your last round?" You put "6-0" instead of "6-10" Good job putting this all together!
- contingencies 10y agoSector spread (Q51) is very biased; perhaps the method of sourcing respondents was insufficiently broad or random.