5 ms·

How sad that they only listed companies that got funding. It is not a good culture to look at funding as success, how about growth, revenue or even profit.

• pclark 15y ago
  raising funding is a reasonable indicator of being in vaguely the right direction of success (defined by your metrics) at an early stage, do you not think?
  • gyardley 15y ago
    Hmmm. Honestly, no - it's quite possible to raise a decent amount of seed funding today before you've got any metrics to share at all, based off of the team and how well the team presents the idea.
    • symptic 15y ago
      See: Color
• pg 15y ago
  It's true that funding is only a step toward success. I'm constantly reminding founders of that. But as of now, at least, it is empirically a necessary one. Construct a list of the most successful technology startups however you like (by revenues, market cap, number of users), and you'll find the number that didn't take outside funding is zero or near it. It's an interesting phenomenon that all the biggest successes take outside funding. Perhaps the reason is that the better you are, the better terms you can get money on, and for any given startup, there are terms so good you'd be stupid not to take money at them.
  • rimantas 15y ago
    What about making a list of unsucessfull startups? I bet there be a lot of them with funding too. I am with 37signals on this one — funding only teaches you to spend money. Even if funding is the first step to success it is still wrong to pronounce startups most sucessfull based only on that. How about waiting till they start to to make money?
    • tlrobinson 15y ago
      If you read the comment again you'll notice pg doesn't claim the best companies are successful because they took funding, in fact the opposite, perhaps they took funding because they were so successful that they were offered terms they'd be crazy to turn down. Bottom line is some companies may be well suited to take outside funding early on, some might be better off bootstrapping to profitability, but it seems most successful companies in our industry do end up taking funding at some point in their lifetime for one reason or another. Much of the 37signals/anti-VC/whatever crowd fails to recognize that not all companies are created equal. Just because 37signals has done phenomenally well without outside funding (with the exception of Jeff Bezos' investment) doesn't mean that's the right path for all companies. Ditto for Google/Microsoft/etc which did take funding. It's slightly ironic because I don't think the 37signals themselves believe no company should ever take funding, rather they're fighting the perception that you must take funding to start your company.
  • Alex3917 15y ago
    "Construct a list of the most successful technology startups however you like (by revenues, market cap, number of users), and you'll find the number that didn't take outside funding is zero or near it." I think looking at how much money the founders made would be the most objective measure. Of course you're going to be able to create a bigger company if you go out and raise a few million bucks, but that doesn't necessarily mean that you'll personally be better off in five years.
    • tewks 15y ago
      Interesting, but pg's set of measures is also necessary to evaluate impact upon society and the world at large.
  • truthseeker 15y ago
    I think the key is 'When did they take the money?' is it before traction or after traction. Yes, it would be stupid to not take money when it is cheap and you have traction. If majority got funding before traction, that would indicate that VCs/angels are really good at evaluating teams.
  • rhizome 15y ago
    I'm inclined to think that the management help (or "help" depending on one's attitude) that typically accompanies funding plays a significant role here. Funded companies usually get access to market(ing) expertise that solo people don't. I don't think that's an absolute rubric, but it can help companies penetrate.
  • replicatorblog 15y ago
    You are right that any truly transformative tech company has raised outside money. However, it seems like there is a shadow tech scene comprised of substantial companies that have self funded. e.g. CSN Stores - $300MM+ annual revenue/ bootstrapped MailChimp - Approaching $100MM/ bootstrapped Club Penguin - $350MM acquisition, heard they had a little angel money, but no VC Ganz/Webkinz - Kind of a startup within a small manufacturing biz, but they have mid 9 figures in revenue. SparkFun/iFixit - Both $20+MM in revenue with no outside investment. Provocraft has $100MM+ in virtual good sales Granted, most of these aren't household names in the tech world, but all thrive based on web tech. I'm sure there are others beyond the ones I know, but there seems to be a playbook that can get a company to $100MM+ without VC. In closing, I agree with your thesis, and Sequoia's old homepage would back you up 100%, but do you think companies like the ones above are just outliers or are not successful enough?
    • tonystubblebine 15y ago
      Two more for your list. SAS - Would be in the Fortune 500, I think, if it wasn't privately owned. 37signals - Bezos investment aside, they certainly behave like a privately owned tech company.
    • pg 15y ago
      A combination of both. If you constructed a list of the top technology companies, few to zero of these would appear on it.
      • robg 15y ago
        Do you wish you had raised VC for Viaweb and grown it to be "bigger"? How much bigger would you have had to grow it to get a better exit personally? Bose is at least one counterexample, it seems. However, don't the most successful private companies have little incentive to release the information you say is necessary for the comparison?
        • pg 15y ago
          Actually I wish I had raised less. But I wasn't trying to make Viaweb into one of the top technology companies.
  • davidw 15y ago
    > Construct a list of the most successful technology startups however you like At this stage in my life, I'm not so interested in most, but in average, meaning: sure all of the really huge companies took funding, but are people who took funding, on average, more successful? In other words, I'm more interested to a surer path to a million dollars than an outside shot at 100 million. I don't know the answer, but it's an interesting question.
    • johnrob 15y ago
      Given the recent trend of founders partially cashing out during larger rounds, there's a chance that the funding event alone could guarantee a million dollars (or something relatively close).
  • dh 15y ago
    I think you are very wrong in this case. The list is not looking for the largest companies in any of those categories. Clearly those that are huge companies took funding along the way to grow, but the list is of young founders and you can easily generate a list of young founders with huge success that did not take funding. I think the problem with lists like this is it creates a culture of celebrating the funding part only, not the hard work that comes later and the true success that the investor wants.
• nhangen 15y ago
  Yeah, I thought the same thing. I recognize the need for funding (for some, not all), but I hate using it as the primary barometer for success. How about revenue, or users, or even active users? It's just damn disappointing to see that the mantra being spread is "raise a ton of cash or bust," and that people not raising money are often ignored.