6 ms·

"Why do startups write announcements like these?" I've been at a bunch of companies with a bunch of raises. 100% of the time, the announcement was an excuse f

"Why do startups write announcements like these?" I've been at a bunch of companies with a bunch of raises. 100% of the time, the announcement was an excuse for press. If you can come up with any excuse to get an article published in a bunch of tech press (other than "CEO arrested for embezzlement + harassment at the same time"), you get a bunch of free advertising. Bonus points if your target customer tends to read tech press. There's nothing wrong with that, to be clear! I'm just surprised they acknowledged mercenary reasons without mentioning what I've seen as the most common one.

eduction 3y ago
Saying it's "for press" just kicks the can down the road, raising the question "why do startups want press on announcements like these?" They do it to get out a certain message and leave a certain impression, usually of the mercenary sort the post outlines. Although I see your point about it just being to get the name of the company out there, that's definitely one mercenary motivation that the post maybe did not mention.
- bearjaws 3y ago
  The math is pretty straight forward. Cost to make article = $2000 Article gets 100,000 views Fly.io converts 1% of views to paying customers 1,000 new customers. Revenue per customer = $10 monthly MRR goes up by $10,000 Obviously I am pulling these numbers out of my ass, but there a pretty direct path to value. This is way more efficient than Google ads in a competitive space, I can only imagine hosting related ads are $3-5 per click...
  - hgsgm 3y ago
    That math works for any old blog post. Advertising a raise specifically is to get attention from customers and the industry as a legitimized successful operation.
    - ryandrake 3y ago
      At the very least, it's marketing. I have no idea what they do, as I'm not in that particular web development niche and don't know what an "edgy app" is, but it made it to the top of HN, so people like me now know at least that there exists a company called fly.io.
  - xNeil 3y ago
    You're right - I also think (personal opinion) the trust gained in a company by reading their blog post is greater than the trust gained by seeing an ad. Because I saw this blogpost, I trust fly.io more than I would have had I seen a YouTube ad of them or something of the sorts.
- snowwrestler 3y ago
  Startups want press in general, and closing a funding round is reliably something that the press will cover. (Unlike, for example, product or feature releases.)
andrewingram 3y ago
Linear waited nearly a year to announce a round, presumably because they did two in quick succession and didn't want to waste the PR opportunity of the second one.
insanitybit 3y ago
> I've been at a bunch of companies with a bunch of raises. 100% of the time, the announcement was an excuse for press. If you can come up with any excuse to get an article published in a bunch of tech press (other than "CEO arrested for embezzlement + harassment at the same time"), you get a bunch of free advertising. Bonus points if your target customer tends to read tech press. It's less about "excuse for press" and more "controlling the narrative". Raising this amount will mean that other news outlets will pick up on it. Technically, as I recall, it's public information (I founded a company and this was all explained to me - but it was years ago). So if you don't publish they will. You're much better off publishing first so that people read your post, not theirs.
ultrasaurus 3y ago
They aren't wrong that there are some companies that feel more comfortable if you have more money in the bank BUT most companies wildly overestimate how much prospects care. Case studies in their industry & Gartner quadrant > $100MM in the bank. TL;DR: It's an appendix slide in your first meeting deck, don't put it up front :)
- devoutsalsa 3y ago
  After the SVB collapse, hopefully they have the $100MM as $250K in 4000 different bank accounts to duck under those FDIC insurance limits.
  - sebastiennight 3y ago
    That would be $1 billion :-) So I guess 400 bank accounts would be enough?
    - devoutsalsa 3y ago
      Whoopsie. I can haz calcul8tr?
hugs 3y ago
Yup. When I was deep in the VC-fueled startup game, tech press did not want to write about us at all, unless there was also some kind of funding news included, too.. (I interpreted this as the writers knowing their readers... and only stories with funding announcements got the clicks...) So guess what happened? We would raise money, then not talk about it for up to 6 months until we also had some new feature or product to launch. If people started clicking more on tech stories that didn't have funding announcements, maybe the cycle would change... But it feels like we're in some kind of Prisoner's Dilemma game now. Those stories don't written, so they don't get the clicks, so they don't get written...
- fishtoaster 3y ago
  Yeah, "hold off funding announcements until we've got something else we want to push into the news" was a pretty common thing in my experience as well. I'm somewhat sympathetic to both the press and the readers here - they want to report/read news. Events. "Company X continues to exist" isn't really news. And "Company X adds new feature Y" is rarely noteworthy news, no matter how big a deal it is in Company X. Sometimes new features are news if either the company is huge ("Amazon adds support for Foo to AWSBar") or it's strategically significant ("Company X adds feature Y, now putting it in direct competition with Company Z"), but I think those are the exceptions.
- snowwrestler 3y ago
  To reporters, funding is 3rd-party validation that a business is actually worth writing about. Just like press coverage is 3rd-party validation to potential customers that a company is actually worth considering.
cryptonector 3y ago
Free press == free advertising.

eduction 3y ago

Saying it's "for press" just kicks the can down the road, raising the question "why do startups want press on announcements like these?" They do it to get out a certain message and leave a certain impression, usually of the mercenary sort the post outlines. Although I see your point about it just being to get the name of the company out there, that's definitely one mercenary motivation that the post maybe did not mention.

bearjaws 3y ago
The math is pretty straight forward. Cost to make article = $2000 Article gets 100,000 views Fly.io converts 1% of views to paying customers 1,000 new customers. Revenue per customer = $10 monthly MRR goes up by $10,000 Obviously I am pulling these numbers out of my ass, but there a pretty direct path to value. This is way more efficient than Google ads in a competitive space, I can only imagine hosting related ads are $3-5 per click...
- hgsgm 3y ago
  That math works for any old blog post. Advertising a raise specifically is to get attention from customers and the industry as a legitimized successful operation.
  - ryandrake 3y ago
    At the very least, it's marketing. I have no idea what they do, as I'm not in that particular web development niche and don't know what an "edgy app" is, but it made it to the top of HN, so people like me now know at least that there exists a company called fly.io.
- xNeil 3y ago
  You're right - I also think (personal opinion) the trust gained in a company by reading their blog post is greater than the trust gained by seeing an ad. Because I saw this blogpost, I trust fly.io more than I would have had I seen a YouTube ad of them or something of the sorts.
snowwrestler 3y ago
Startups want press in general, and closing a funding round is reliably something that the press will cover. (Unlike, for example, product or feature releases.)

andrewingram 3y ago

Linear waited nearly a year to announce a round, presumably because they did two in quick succession and didn't want to waste the PR opportunity of the second one.

insanitybit 3y ago

> I've been at a bunch of companies with a bunch of raises. 100% of the time, the announcement was an excuse for press. If you can come up with any excuse to get an article published in a bunch of tech press (other than "CEO arrested for embezzlement + harassment at the same time"), you get a bunch of free advertising. Bonus points if your target customer tends to read tech press. It's less about "excuse for press" and more "controlling the narrative". Raising this amount will mean that other news outlets will pick up on it. Technically, as I recall, it's public information (I founded a company and this was all explained to me - but it was years ago). So if you don't publish they will. You're much better off publishing first so that people read your post, not theirs.

ultrasaurus 3y ago

They aren't wrong that there are some companies that feel more comfortable if you have more money in the bank BUT most companies wildly overestimate how much prospects care. Case studies in their industry & Gartner quadrant > $100MM in the bank. TL;DR: It's an appendix slide in your first meeting deck, don't put it up front :)

devoutsalsa 3y ago
After the SVB collapse, hopefully they have the $100MM as $250K in 4000 different bank accounts to duck under those FDIC insurance limits.
- sebastiennight 3y ago
  That would be $1 billion :-) So I guess 400 bank accounts would be enough?
  - devoutsalsa 3y ago
    Whoopsie. I can haz calcul8tr?

hugs 3y ago

Yup. When I was deep in the VC-fueled startup game, tech press did not want to write about us at all, unless there was also some kind of funding news included, too.. (I interpreted this as the writers knowing their readers... and only stories with funding announcements got the clicks...) So guess what happened? We would raise money, then not talk about it for up to 6 months until we also had some new feature or product to launch. If people started clicking more on tech stories that didn't have funding announcements, maybe the cycle would change... But it feels like we're in some kind of Prisoner's Dilemma game now. Those stories don't written, so they don't get the clicks, so they don't get written...

fishtoaster 3y ago
Yeah, "hold off funding announcements until we've got something else we want to push into the news" was a pretty common thing in my experience as well. I'm somewhat sympathetic to both the press and the readers here - they want to report/read news. Events. "Company X continues to exist" isn't really news. And "Company X adds new feature Y" is rarely noteworthy news, no matter how big a deal it is in Company X. Sometimes new features are news if either the company is huge ("Amazon adds support for Foo to AWSBar") or it's strategically significant ("Company X adds feature Y, now putting it in direct competition with Company Z"), but I think those are the exceptions.
snowwrestler 3y ago
To reporters, funding is 3rd-party validation that a business is actually worth writing about. Just like press coverage is 3rd-party validation to potential customers that a company is actually worth considering.

cryptonector 3y ago

Free press == free advertising.