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It seems like you should still be able to accomplish a lot with 100 million. Maybe the problem is that startups are wasting too much money and not being product

It seems like you should still be able to accomplish a lot with 100 million. Maybe the problem is that startups are wasting too much money and not being productive and / or efficient enough with finances. Now it takes the average startup more money to accomplish the same amount of progress.

j45 8y ago
Learning to spend effectively with your own money, before spending the money of others can be a valuable lesson to achieve many times return per dollar. Startups benefit from swinging above their weight, and this is one big way. Spending alone doesn't solve problems. It's similar to management by abdication and dumping the responsibility on someone else and wondering why it didn't turn out.
- davidgil 8y ago
  More money alone is never the solution, there's endless examples of huge companies with endless resources throwing money at some new project and it failing miserably. A good recent example is Verizon's attempt to compete with Netflix: https://www.thewrap.com/go90-failure-just-cost-verizon-658-million/ https://www.thewrap.com/go90-failure-just-cost-verizon-658-m...
madamelic 8y ago
>Maybe the problem is that startups are wasting too much money and not being productive and / or efficient enough with finances. Definitely. I was talking to one startup and they were on the 5th round and they started in ~2016. They bragged that they had raised $100MM, but no mention of profitability or why they were raising so much. Tons of people think "we raised $100MM" is impressive, what's more impressive is not blowing out your cap table and diluting everyone except investors.
- deleted 8y ago
  [deleted]
- syedkarim 8y ago
  I always see people get fixated on dilution. As a shareholder, the most important factor should be share price. More investment at greater valuations implies a higher share price. A greater number of shareholders also leads to opportunities for liquidity for earlier shareholders.
- adventured 8y ago
  I've been at the start-up game non-stop since the mid 1990s. You know what's really amazing today? What would have cost me $30,000 per year in infrastructure in 1999 or 2003, plus the obnoxious management of it all, is now $2k or $3k at DigitalOcean (and others) and rather easy to script and manage. After you adjust for the better hardware vs increased total Internet users scale and often increased resource demands, I also think that value proposition heavily tilts toward a greater than 10x gain versus eg 15 years ago. Most everyone here will fully understand that effect. I'm skeptical the NYTimes et al. understands what it has done to the start-up vs capital equation however. When Excite got started, you know what they needed? A $10,000, 10gb drive. Vinod Khosla had to provide it just so they could properly test out their search engine. Adjusting to today's scale, the equivalent might be three dozen virtual servers for tens of hours per month at a cost of $100. I don't need venture capital to scale to a large size. It's beautiful, the VC aspect has almost entirely become optional outside of a few niche scenarios. That has provided the large capital raising start-ups with a lot of sustained bargaining power that they have never had before. If nothing else, you can simply wait longer to deal with VCs, boosting your position. That's not going away with the next crash (it will deflate some of course), that cost edge is here to stay. The leverage point is: can you actually build the thing, can you execute, do you have the ability / persistence / etc to get it done. It really wasn't that long ago that infrastructure was the biggest cost in being able to prove out an Internet business and scale. Just to put on a good test of a product meant for scale you had to sink large sums of money in upfront. Today the people - their time - have become the biggest cost (unless you're in SF etc., then it's that and real-estate). If I want to start something today, my time is the (personal) red ink risk, rather than very large amounts of capital plowed into infrastructure.
puranjay 8y ago
Tech salaries, and tech valuations are both a little crazy right now. It's become very hard for non-funded startups to recruit talented engineers when Google and Facebook are happy paying six figures in stock options every year
- biohax2015 8y ago
  Praying these crazy tech salaries continue for years to come!
  - Jach 8y ago
    If anything they're not crazy enough for ICs, given the overall value the parent orgs generate from their efforts. Tech is likely to remain a key component of the next doubling of the worldwide economy (roughly every 15 years), make sure you capture some of that...
- sk5t 8y ago
  Non-funded startups can start by accepting that 1% of squat isn't a lot.
duxup 8y ago
Yeah it is hard to imagine what things you couldn't do with $100 million.
mbesto 8y ago
> Now it takes the average startup more money to accomplish the same amount of progress. Depends on exactly what you're referring to. Sales & Marketing - sure, but that's because it's a zero-sum game (advertising is at least). But I would argue the cost to technically accomplish reach scale is much cheaper today than it was 10 years ago when $100M wasn't the norm.

j45 8y ago

Learning to spend effectively with your own money, before spending the money of others can be a valuable lesson to achieve many times return per dollar. Startups benefit from swinging above their weight, and this is one big way. Spending alone doesn't solve problems. It's similar to management by abdication and dumping the responsibility on someone else and wondering why it didn't turn out.

davidgil 8y ago
More money alone is never the solution, there's endless examples of huge companies with endless resources throwing money at some new project and it failing miserably. A good recent example is Verizon's attempt to compete with Netflix: https://www.thewrap.com/go90-failure-just-cost-verizon-658-million/ https://www.thewrap.com/go90-failure-just-cost-verizon-658-m...

madamelic 8y ago

>Maybe the problem is that startups are wasting too much money and not being productive and / or efficient enough with finances. Definitely. I was talking to one startup and they were on the 5th round and they started in ~2016. They bragged that they had raised $100MM, but no mention of profitability or why they were raising so much. Tons of people think "we raised $100MM" is impressive, what's more impressive is not blowing out your cap table and diluting everyone except investors.

deleted 8y ago
[deleted]
syedkarim 8y ago
I always see people get fixated on dilution. As a shareholder, the most important factor should be share price. More investment at greater valuations implies a higher share price. A greater number of shareholders also leads to opportunities for liquidity for earlier shareholders.
adventured 8y ago
I've been at the start-up game non-stop since the mid 1990s. You know what's really amazing today? What would have cost me $30,000 per year in infrastructure in 1999 or 2003, plus the obnoxious management of it all, is now $2k or $3k at DigitalOcean (and others) and rather easy to script and manage. After you adjust for the better hardware vs increased total Internet users scale and often increased resource demands, I also think that value proposition heavily tilts toward a greater than 10x gain versus eg 15 years ago. Most everyone here will fully understand that effect. I'm skeptical the NYTimes et al. understands what it has done to the start-up vs capital equation however. When Excite got started, you know what they needed? A $10,000, 10gb drive. Vinod Khosla had to provide it just so they could properly test out their search engine. Adjusting to today's scale, the equivalent might be three dozen virtual servers for tens of hours per month at a cost of $100. I don't need venture capital to scale to a large size. It's beautiful, the VC aspect has almost entirely become optional outside of a few niche scenarios. That has provided the large capital raising start-ups with a lot of sustained bargaining power that they have never had before. If nothing else, you can simply wait longer to deal with VCs, boosting your position. That's not going away with the next crash (it will deflate some of course), that cost edge is here to stay. The leverage point is: can you actually build the thing, can you execute, do you have the ability / persistence / etc to get it done. It really wasn't that long ago that infrastructure was the biggest cost in being able to prove out an Internet business and scale. Just to put on a good test of a product meant for scale you had to sink large sums of money in upfront. Today the people - their time - have become the biggest cost (unless you're in SF etc., then it's that and real-estate). If I want to start something today, my time is the (personal) red ink risk, rather than very large amounts of capital plowed into infrastructure.

puranjay 8y ago

Tech salaries, and tech valuations are both a little crazy right now. It's become very hard for non-funded startups to recruit talented engineers when Google and Facebook are happy paying six figures in stock options every year

biohax2015 8y ago
Praying these crazy tech salaries continue for years to come!
- Jach 8y ago
  If anything they're not crazy enough for ICs, given the overall value the parent orgs generate from their efforts. Tech is likely to remain a key component of the next doubling of the worldwide economy (roughly every 15 years), make sure you capture some of that...
sk5t 8y ago
Non-funded startups can start by accepting that 1% of squat isn't a lot.

duxup 8y ago

Yeah it is hard to imagine what things you couldn't do with $100 million.

mbesto 8y ago

> Now it takes the average startup more money to accomplish the same amount of progress. Depends on exactly what you're referring to. Sales & Marketing - sure, but that's because it's a zero-sum game (advertising is at least). But I would argue the cost to technically accomplish reach scale is much cheaper today than it was 10 years ago when $100M wasn't the norm.