7 ms·

This echos my experience at a $100M startup that I worked for and that ultimately failed. HR would tell us we were extraordinary, we would have world-class cat

by belval 5y ago

This echos my experience at a $100M startup that I worked for and that ultimately failed. HR would tell us we were extraordinary, we would have world-class catering for lunch every day, and yet we had no customers, no contracts, and no money except the investors'. It was a sobering realisation on the damage that can happen when you are submerged in toxic positivity. You forget that companies still need to earn actual money, that it's not a party every day.

im_down_w_otp 5y ago
How on Earth did the company raise so much money with so few milestones of any kind being achieved?
- belval 5y ago
  A well known name was attached and it was at the peak of the AI craze.
  - im_down_w_otp 5y ago
    Ah, celebrity investing. Of course, of course.
- JumpCrisscross 5y ago
  > How on Earth did the company raise so much money with so few milestones of any kind being achieved? Fast pitched itself as taking the prudent path compared with e.g. Bolt. The latter went for big clients first. Fast started with small businesses. There were clearly other issues. But the closing era of cheap capital favoured the bold, and Bolt’s seizure of the fertile low grounds cut off Fast from its growth. Despite Fast taking the orthodox path.
  - b20000 5y ago
    this doesn't answer the question at all, it's just a bunch of bullshit words strung together. we never raised any money, and we had more to show than Fast although we were in a completely different industry. this goes to show that all that matters is knowing people, it doesn't actually matter whether you have a real business and have achieved anything at all.
    - enra 5y ago
      VCs sometimes follow "hot" companies. Companies become hot when several VCs think they are hot for whatever reason. When the company is hot and gets offers, other VCs will rush to give them more offers and at that point you might not even need a deck or any metrics anymore. The startup can then bid those offers against each and can end up raising even more they initially were trying to. Fast did great job hyping the company on Twitter, likely the founder also was a good storyteller. The old adage is that you raise with a story, team or traction. Sometimes the story actually pans out, like with YC Airbnb is often an example of company that struggled for a long time in the beginning and no-one could really predict how big they could become.
      - b20000 5y ago
        traction doesn’t matter. or we would have raised. story and team maybe. i think that VCs buy into a certain type of person. maybe a younger version of themselves. somebody they want or wanted to be. that rules out anyone who is nerdy or weird. and they like to go to parties to hear what others are investing in and then do the same.
      - hef19898 5y ago
        I'm all in if a founder can "sell" a company to raise money. It becomes a problem once people believe their own hype, so.
    - JumpCrisscross 5y ago
      > we never raised any money Who? (Also, given an open market, as was the case when the Amazon patent expired in 2017, the company fundraises to scale will beat its more timid competitor. This is basic strategy.) If you were in a different industry…great execution in the wrong industry is as good as a Ferrari in a swamp. > all that matters is knowing people Sounds like you’ve been through some shit. I’m sorry for that. The point I was making, summarily, is that Bolt ate Fast’s lunch. It went straight for the big customers. Fast wanted to grow towards them incrementally. In this story, if anyone had a fundraising connections advantage, it was Fast—they were Stripe backed. Bolt outmanoeuvred them (and was lucky). This is unorthodox strategy. Fast played it conservatively. Bolt swung for the fences. Curiously, Bolt landed the home run.
  - jokethrowaway 5y ago
    Going for bigger clients is the prudent path. Small clients require far more initial investments and the payoff will be much later. We failed to raise money exactly because we had a bunch of small clients and not enough revenue. It was a prudent decision for the potential investors - but the main failure on our side was not to network enough with our current investors in order to get another friendly round of investment. We had a competitor that was doing exactly the same thing (with worse metrics) that raised several millions a few months later, so it wasn't too far fetched. VCs invest in a lot of baseless crap - sometimes the crap turns into gold and sometimes in order to be the chosen crap you need to know the right people.
- tuyiown 5y ago
  Way too much VC money is not driven by business analysis, and influenced by FOMO, especially in big names circles. It's totally irresponsible.
  - nowherebeen 5y ago
    I think a lot of egos are running the VC business than actual investment analyst.
- sgerenser 5y ago
  Look at Theranos. That con lasted over 10 years and was valued at billions yet they never managed to actually DO anything.
john_moscow 5y ago
Well, they don't. The toxic positivity is the product and the investors are the customers.
brian_cunnie 5y ago
> we would have world-class catering for lunch every day I'd like to point out that this is not the case for every Silicon Valley start-up: the three start-ups I worked at (CollabNet, Aeluros, Ardatech) were incredibly frugal with money (exception: salaries were competitive). At one of the companies, the CEO and I took a trip to Safeway to buy soft drinks for customers. When we got back, I walked around the office telling everyone the soft drinks were _not_ for them, only for customers. At another company, I had to make a compelling presentation to the CTO to buy a $1.5k printer. "The Linux workstations need a PostScript printer!" We bought the printer, but he didn't like parting with the money. Being frugal doesn't guarantee success: my CollabNet stock was washed out in later rounds, Aeluros had a fair-to-middling exit to Broadcom, and Ardatech had a good exit to Google. But it's good to keep an eye on the money.
- BigJono 5y ago
  That sounds like way too far in the other direction at both places. Stuff like drinks and printers are basically noise compared to engineering payroll when you're paying people $250k a year. The lesson should be buy whatever the hell people want, just stop buying people until you need them. They're the expensive bit. 3 great devs can do about the same work as like 30 average ones. People massively underestimate communication overhead. As soon as you lose the 'startup feel', you lose the speed, and it's gone for good. The transition is probably inevitable, but there's a threshold of revenue you have to reach before you make it. If you don't reach it, you're cactus. 150 devs and 50 sales people to generate $600k yearly revenue is laughable.
  - userulluipeste 5y ago
    "just stop buying people until you need them. They're the expensive bit." If only they could be bought that easy right when you'd need them. At least in a corporation, the HR will tell you "50 engineers? That's going to take X monts, judging from the hiring rate we had so far."
  - brian_cunnie 5y ago
    > The lesson should be buy whatever the hell people want, just stop buying people until you need them. They're the expensive bit. Absolutely. We were frugal, but not to the point of self-sabotage. Our biggest expense was payroll, followed by the Cadence/Synopsys EDA software licenses. So, for example, no catered lunches or breakfasts, but if there was a customer or investor dinner, it would be expensed. We had good health insurance, but we didn't have gym memberships or (gasp!) an onsite gym. The workstations were powerful, but we shaved costs by buying "gamer rigs" instead of the more expensive "engineer workstations". We bought prosumer equipment (Netgear) instead of enterprise equipment (Cisco). If someone needed, say, a Wacom tablet to accommodate a wrist injury, we made that happen. We had a well-stocked lab, but some of the electrostatic benches we got at a good price secondhand. Our office was near the train station to accommodate the engineers who commuted from the city, but it wasn't expensive space (all glass & chrome); it was a "B" office. We shared a bathroom with the other tenants. It was a little run-down, but it was clean. We didn't have offices or cubes, just desks, and the CEO & President sat next to each other in the big room we all shared.

by belval 5y ago

im_down_w_otp 5y ago

How on Earth did the company raise so much money with so few milestones of any kind being achieved?

belval 5y ago
A well known name was attached and it was at the peak of the AI craze.
- im_down_w_otp 5y ago
  Ah, celebrity investing. Of course, of course.
JumpCrisscross 5y ago
> How on Earth did the company raise so much money with so few milestones of any kind being achieved? Fast pitched itself as taking the prudent path compared with e.g. Bolt. The latter went for big clients first. Fast started with small businesses. There were clearly other issues. But the closing era of cheap capital favoured the bold, and Bolt’s seizure of the fertile low grounds cut off Fast from its growth. Despite Fast taking the orthodox path.
- b20000 5y ago
  this doesn't answer the question at all, it's just a bunch of bullshit words strung together. we never raised any money, and we had more to show than Fast although we were in a completely different industry. this goes to show that all that matters is knowing people, it doesn't actually matter whether you have a real business and have achieved anything at all.
  - enra 5y ago
    VCs sometimes follow "hot" companies. Companies become hot when several VCs think they are hot for whatever reason. When the company is hot and gets offers, other VCs will rush to give them more offers and at that point you might not even need a deck or any metrics anymore. The startup can then bid those offers against each and can end up raising even more they initially were trying to. Fast did great job hyping the company on Twitter, likely the founder also was a good storyteller. The old adage is that you raise with a story, team or traction. Sometimes the story actually pans out, like with YC Airbnb is often an example of company that struggled for a long time in the beginning and no-one could really predict how big they could become.
    - b20000 5y ago
      traction doesn’t matter. or we would have raised. story and team maybe. i think that VCs buy into a certain type of person. maybe a younger version of themselves. somebody they want or wanted to be. that rules out anyone who is nerdy or weird. and they like to go to parties to hear what others are investing in and then do the same.
    - hef19898 5y ago
      I'm all in if a founder can "sell" a company to raise money. It becomes a problem once people believe their own hype, so.
  - JumpCrisscross 5y ago
    > we never raised any money Who? (Also, given an open market, as was the case when the Amazon patent expired in 2017, the company fundraises to scale will beat its more timid competitor. This is basic strategy.) If you were in a different industry…great execution in the wrong industry is as good as a Ferrari in a swamp. > all that matters is knowing people Sounds like you’ve been through some shit. I’m sorry for that. The point I was making, summarily, is that Bolt ate Fast’s lunch. It went straight for the big customers. Fast wanted to grow towards them incrementally. In this story, if anyone had a fundraising connections advantage, it was Fast—they were Stripe backed. Bolt outmanoeuvred them (and was lucky). This is unorthodox strategy. Fast played it conservatively. Bolt swung for the fences. Curiously, Bolt landed the home run.
- jokethrowaway 5y ago
  Going for bigger clients is the prudent path. Small clients require far more initial investments and the payoff will be much later. We failed to raise money exactly because we had a bunch of small clients and not enough revenue. It was a prudent decision for the potential investors - but the main failure on our side was not to network enough with our current investors in order to get another friendly round of investment. We had a competitor that was doing exactly the same thing (with worse metrics) that raised several millions a few months later, so it wasn't too far fetched. VCs invest in a lot of baseless crap - sometimes the crap turns into gold and sometimes in order to be the chosen crap you need to know the right people.
tuyiown 5y ago
Way too much VC money is not driven by business analysis, and influenced by FOMO, especially in big names circles. It's totally irresponsible.
- nowherebeen 5y ago
  I think a lot of egos are running the VC business than actual investment analyst.
sgerenser 5y ago
Look at Theranos. That con lasted over 10 years and was valued at billions yet they never managed to actually DO anything.

john_moscow 5y ago

Well, they don't. The toxic positivity is the product and the investors are the customers.

brian_cunnie 5y ago

> we would have world-class catering for lunch every day I'd like to point out that this is not the case for every Silicon Valley start-up: the three start-ups I worked at (CollabNet, Aeluros, Ardatech) were incredibly frugal with money (exception: salaries were competitive). At one of the companies, the CEO and I took a trip to Safeway to buy soft drinks for customers. When we got back, I walked around the office telling everyone the soft drinks were _not_ for them, only for customers. At another company, I had to make a compelling presentation to the CTO to buy a $1.5k printer. "The Linux workstations need a PostScript printer!" We bought the printer, but he didn't like parting with the money. Being frugal doesn't guarantee success: my CollabNet stock was washed out in later rounds, Aeluros had a fair-to-middling exit to Broadcom, and Ardatech had a good exit to Google. But it's good to keep an eye on the money.

BigJono 5y ago
That sounds like way too far in the other direction at both places. Stuff like drinks and printers are basically noise compared to engineering payroll when you're paying people $250k a year. The lesson should be buy whatever the hell people want, just stop buying people until you need them. They're the expensive bit. 3 great devs can do about the same work as like 30 average ones. People massively underestimate communication overhead. As soon as you lose the 'startup feel', you lose the speed, and it's gone for good. The transition is probably inevitable, but there's a threshold of revenue you have to reach before you make it. If you don't reach it, you're cactus. 150 devs and 50 sales people to generate $600k yearly revenue is laughable.
- userulluipeste 5y ago
  "just stop buying people until you need them. They're the expensive bit." If only they could be bought that easy right when you'd need them. At least in a corporation, the HR will tell you "50 engineers? That's going to take X monts, judging from the hiring rate we had so far."
- brian_cunnie 5y ago
  > The lesson should be buy whatever the hell people want, just stop buying people until you need them. They're the expensive bit. Absolutely. We were frugal, but not to the point of self-sabotage. Our biggest expense was payroll, followed by the Cadence/Synopsys EDA software licenses. So, for example, no catered lunches or breakfasts, but if there was a customer or investor dinner, it would be expensed. We had good health insurance, but we didn't have gym memberships or (gasp!) an onsite gym. The workstations were powerful, but we shaved costs by buying "gamer rigs" instead of the more expensive "engineer workstations". We bought prosumer equipment (Netgear) instead of enterprise equipment (Cisco). If someone needed, say, a Wacom tablet to accommodate a wrist injury, we made that happen. We had a well-stocked lab, but some of the electrostatic benches we got at a good price secondhand. Our office was near the train station to accommodate the engineers who commuted from the city, but it wasn't expensive space (all glass & chrome); it was a "B" office. We shared a bathroom with the other tenants. It was a little run-down, but it was clean. We didn't have offices or cubes, just desks, and the CEO & President sat next to each other in the big room we all shared.