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I think the problem is that funds like SoftBank have a very "winner take all" attitude about startups. They threatened my startup by basically saying that if yo

I think the problem is that funds like SoftBank have a very "winner take all" attitude about startups. They threatened my startup by basically saying that if you don't take the XXX millions of dollars, we'll be happy to give it your competitor who will out-fund you. These vcs want to pump a company so full of cash that they essentially take market domination of a vertical.

Alex3917 8y ago
> They threatened my startup by basically saying that if you don't take the XXX millions of dollars, we'll be happy to give it your competitor who will out-fund you. The reality though is that most of the companies who take the money end up just giving most of it to Google or whoever and then going bankrupt 18 months later. At this point I think society would probably be better off if raising VC funding was banned for early stage SaaS startups since it's really just a form of dumping, but at least much of the damage is eventually self correcting.
- repsilat 8y ago
  > giving most of it to Google or whoever More common to over-hire, I think. Server costs tend to scale well with your customer base.
  - akelly 8y ago
    I think most startups spend way more on advertising than servers.
    - usrusr 8y ago
      Depends on the nature of the service, the range goes from something that could be served globally from a single box to basically reselling an upstream cloud provider. But gp was talking about hiring persons, not servers. Advertising can be scaled back much easier than over-hiring. Even if almost everybody is fired again, the inefficiencies that established themselves during the headcount glut can usually not be unlearned again.
    - jgalt212 8y ago
      or PR. Good PR people are insanely expensive.
  - deleted 8y ago
    [deleted]
  - mmt 8y ago
    > Server costs tend to scale well with your customer base. They used to, when they were your servers. Now that they're AWS's server, there can be a 10x price premium, which amplifies the problem introduced by provisioning for scalability at all costs. When it's nobody's job to worry about costs, it's very easy for them to tend to balloon out of control. Of course, there's not much point in worrying about a $1M cloud bill with $100M in the bank.
- tluyben2 8y ago
  It is scary to see how some companies do marketing and PR... Shoveling 10s of millions into companies that do not deliver short term value at all... You need ads and press and whatever to sell product, but there are many ways to do that. The Coca Cola ‘we need to be a household brand’ way is the most expensive and is probably not what a startup should be spending on, yet they do, a lot.
  - shanghaiaway 8y ago
    Coca-Cola doesn't spend a lot of money on marketing by choice. Selling a commodity is expensive because your only differentiation is brand and possibly distribution. P&G is another example.
    - tluyben2 8y ago
      Sure, for Coca Cola, not for a 50 people startup in by far most cases.

Alex3917 8y ago

> They threatened my startup by basically saying that if you don't take the XXX millions of dollars, we'll be happy to give it your competitor who will out-fund you. The reality though is that most of the companies who take the money end up just giving most of it to Google or whoever and then going bankrupt 18 months later. At this point I think society would probably be better off if raising VC funding was banned for early stage SaaS startups since it's really just a form of dumping, but at least much of the damage is eventually self correcting.

repsilat 8y ago
> giving most of it to Google or whoever More common to over-hire, I think. Server costs tend to scale well with your customer base.
- akelly 8y ago
  I think most startups spend way more on advertising than servers.
  - usrusr 8y ago
    Depends on the nature of the service, the range goes from something that could be served globally from a single box to basically reselling an upstream cloud provider. But gp was talking about hiring persons, not servers. Advertising can be scaled back much easier than over-hiring. Even if almost everybody is fired again, the inefficiencies that established themselves during the headcount glut can usually not be unlearned again.
  - jgalt212 8y ago
    or PR. Good PR people are insanely expensive.
- deleted 8y ago
  [deleted]
- mmt 8y ago
  > Server costs tend to scale well with your customer base. They used to, when they were your servers. Now that they're AWS's server, there can be a 10x price premium, which amplifies the problem introduced by provisioning for scalability at all costs. When it's nobody's job to worry about costs, it's very easy for them to tend to balloon out of control. Of course, there's not much point in worrying about a $1M cloud bill with $100M in the bank.
tluyben2 8y ago
It is scary to see how some companies do marketing and PR... Shoveling 10s of millions into companies that do not deliver short term value at all... You need ads and press and whatever to sell product, but there are many ways to do that. The Coca Cola ‘we need to be a household brand’ way is the most expensive and is probably not what a startup should be spending on, yet they do, a lot.
- shanghaiaway 8y ago
  Coca-Cola doesn't spend a lot of money on marketing by choice. Selling a commodity is expensive because your only differentiation is brand and possibly distribution. P&G is another example.
  - tluyben2 8y ago
    Sure, for Coca Cola, not for a 50 people startup in by far most cases.