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> While we gained some traction with some startups, we ultimately weren't able to build a hyper-growth business. […] We then decided to pivot into a vertical B2
by Hendrikto 2y ago
> While we gained some traction with some startups, we ultimately weren't able to build a hyper-growth business. […] We then decided to pivot into a vertical B2B SaaS AI product […, but] we haven't been able to find enough traction to make us believe that we were on the right track to build a huge business.
American startup culture is so weird. Not everything needs to be a hyper-scaler, not everything needs to be huge. Businesses should focus more on sustainability, and not shut down after 2–3 years after pivoting three times.
- herbturbo 2y agoThank VCs who only exist to find a unicorn to keep their LPs investing so they can charge their 2 and 20.
- jf22 2y agoI don't understand this criticism. Most businesses aren't hyperscale. Some businesses are hyperscale because that's what people want to invest in.
- dagw 2y agoAmerican startup culture is so weird On the one hand, sure. On the other hand this relentless focus on "hyper-scale" or bust is what has pushed the US startup scene to where it is and probably why it is so far ahead of the rest of the world. If you told most European startup founders that in 5 years you'll have plateaued at 15-20 employees, a steady income flow, and you'll be paying yourself $200-250k a year, they'd think of that has a big success. In the US they may very well think of that as failure, especially if they are VC funded. I remember hearing a SV VC straight up say that if you consider selling your company for $50 million a win, the you don't have the right mindset and he doesn't want to do business with you. If you never take big swings and big risks and are happy with small wins and stable growth you'll never win the big prize. And while this might be healthier for you as an individual, it's bad for the Economy.
- thisisabore 2y agoYes, but SV VC are not known for being wise people you look to for life advice. It's a bit like asking for forest safety advice from drunk hunters.
- result2vino 2y ago[dead]
- chiefalchemist 2y agoSwinging big or not, the odds of (by definition of startup) "failure" are high. Therefore, you might as well swing big. A swing small experiment that doesn't connect is still a "failure". Put another way, there is an endless supply of noise (read: competition for attention). If you're not swinging big enough to cut through that clutter odds are good you're just adding to the clutter. That's going to be an endless struggle. Less risk is actually more risk.
- kristofferg 2y ago“Less risk is actually more risk.” - Maybe the title of Nassim Talebs next book?
- brabel 2y ago> If you never take big swings and big risks and are happy with small wins and stable growth you'll never win the big prize. If you do, you still won't win the big prize. The people who do win the big prize are so few, even in the US, that it's an almost certainty you won't do it. Perhaps you're right that there must be thousands of losers for even a single winner to come up, but that seems so inefficient I doubt that's really true.
- redeux 2y agoI’m not going to look for stats but as someone who’s been in the startup scene for a long time, it’s true and the stats are probably even worse than that. It’s totally inefficient for the entrepreneur but very efficient for the VC. One of my other observations is that the ones who do make it often come from families that have already made it and are able to leverage those connections and experiences.
- technotony 2y agoThis has not been my experience at all. I moved to the bay area in 2012 and 5 people I met living there have built unicorns/have net worth now around > $1BN. None of them leveraged family connections. this might be true in Europe but the best folks figure out how to move to america.
- confidantlake 2y agoI would argue it is less healthy for the economy. Large companies are very good at extracting value, not necessarily producing it.
- fourseventy 2y agoDid you use an iPhone to type this?
- ccppurcell 2y agoEverything apart from the look of the iPhone is value created by publicly funded organisations, with the exception of the transistor which was developed by at&t. And at&t were effectively a government sponsored monopoly at the time. So apple extracted value, I would argue.
- robertlagrant 2y agoPublically funded means "paid for out of taxes skimmed off value created by private citizens and private corporations". The value was extracted from people by taxes. It was reused into something useful for people by Apple.
- modriano 2y agoWild. I can't think of any companies that were more product-focused than Steve Jobs' Apple. They created so much value across so many industries. They created so many transformational products. Their machines in the 1980s revolutionized personal computing (eg they brought GUIs and the mouse to the world). The iPod let us carry thousands of songs, audiobooks, or podcasts in our pocket. iTunes changed the music industry, giving us an easy way to get the music we wanted without piracy. The iPhone put the Internet in every pocket. Honorable tangential mention: Pixar transformed kids movies and dethroned Disney. Apple made a ton of money making products that were delightful to use that users happily pay a massive premium for. They made things that were so much more than the sum of their parts.
- throw__away7391 2y ago
- vjk800 2y ago> If you never take big swings and big risks and are happy with small wins and stable growth you'll never win the big prize. You don't win the big price either by taking the big swings. I mean, some people do, but they are so few that they can be considered a rounding error. Maybe the economy wins when one-in-a-million business unicorn appears, but I don't make any of my other life choices by considering the global economy either, so why would consider it here?
- motorest 2y ago> On the one hand, sure. On the other hand this relentless focus on "hyper-scale" or bust is what has pushed the US startup scene to where it is and probably why it is so far ahead of the rest of the world. I don't agree. I think this is specious reasoning fueled by a mix of cargo cult mentality and survivorship bias. Just because a hand full of startups made it all the way through to a unicorn status, and some where bought out for undisclosed reasons,that means nothing on whether an idea is or can be hiper-scalable. To make matters worse, this reeks of short-term mentality that serves no purpose whatsoever other than find yet another angle to put together a kind of pump and dump scam.
- robertlagrant 2y agoI don't think any of this is the case, and you haven't really said why. Focusing on winning big is absolutely not survivorship bias. Everyone in the 100m is aiming to be the fastest human on earth, but only one will win. That's not survivorship bias. Throwing fallacy names as insults is still just insults.
- realce 2y agoThe 100m is not a sustainable model for a nation or world's economy. Everyone needs to eat, not just the single individual who runs fastest.
- robertlagrant 2y agoThat doesn't seem in any way relevant to the point about survivorship bias. Nor to the US, whose system has if anything produced far too much food for its citizens.
- cushychicken 2y ago> In the US they may very well think of that as failure, especially if they are VC funded Man, if anything, this is the part that’s weird. There’s this very weird undercurrent of keeping track of who is “winning” in the US. Is it not possible that someone who shepherds a hypergrowth startup to IPO, is just as of much a winner as the bootstrapped founder who has a profitable, sustainable business with a handful of employees? I get it - everyone wants to win. But in hyper focusing on winning, you may lose sight of the fact that there’s lots of ways to win. The last part of this comment is the last part of Jerry Maguire, because I think Jerry’s mentor Dicky Fox has the right idea about this: ”Hey, I don't have all the answers. In life, to be honest, I failed as much as I have succeeded. But I love my wife. I love my life. And I wish you my kind of success.”
- jajko 2y agoPeople chasing such carrots on sticks are not healthy, happy nor balanced individuals. Every single one of them has something fundamentally broken deep inside, unquenchable thirst to over-compensate for that itch, which can manifest ie as greed. In most cases in fact its just broken childhood mostly via broken father figure, source of eternal income for most psychologists since those issues are not actually fully fixable, at best they can be tamed a bit and folks brought into acceptance. Add some lower intensity mental issues and voila. Of course neither money nor power work for such issue, but if one surrounds themselves with enough people repeating such mantras, it may eventually feel like they are right. At least for some time. Nothing for regular folks here, unless one specifically says and feels that pursuit of happiness is not really on their agenda. Also, would be nice if somebody compared mental issues drug consumptions US vs Europe say split by jobs. I literally know 0 people, peers, IT colleagues nor friends who take anything on mental health, we are just bunch of relatively happy balanced folks here who are not in frequent dread over some bigger protracted health issue that can wipe one out, don't have to worry about saving up a million or two for out kids universities, have enough time to relax on vacations, fully paid sick days etc. Once one is not desperately poor, this is how proper quality of life looks like, not some numbers on accounts.
- cushychicken 2y ago
- anoother 2y agoWere "the Economy" comprised broadly of 15-20 employee companies with a few £million turnover each per year, I think that could be good for it...
- result2vino 2y ago[dead]
- bigfudge 2y agoWorth pointing out that something being bad for the economy, from this perspective, isn’t necessarily the same as being bad for the population. Median incomes are stagnant and quality of life is declining in the US. In part, I’d argue this is because hyper scaling and overoptimising are squeezing the humanity out of most economic life, and most people are not benefitting from these trends. There are exception: we need big companies to make GPUs, probably. But it’s not clear to me that this logic applies universally. Some inefficiency is probably going to be good for public wellbeing.
- meiraleal 2y ago> we need big companies to make GPUs, probably. we definitely don't need trillion dollar companies selling ads.
- lotsofpulp 2y agoBut we do want them considering our hesitation at paying for things without ads, especially when a free gmail, google maps, google drive, etc is available.
- therealdrag0 2y agoA lot of those ads support startups and small businesses.
- kandesbunzler 2y ago>Median incomes are stagnant and quality of life is declining in the US You think it's better in Europe? Here in germany everything is going downhill fast
- deleted 2y ago[deleted]
- jefftk 2y ago> Median incomes are stagnant But they're not? Adjusted for inflation, median US household income is 18% higher than fifteen years ago and 32% higher than it was thirty years ago: https://fred.stlouisfed.org/series/MEHOINUSA672N https://fred.stlouisfed.org/series/MEHOINUSA672N You could say it was stagnant from 1999 to 2015, though.
- xyst 2y agoThis is what’s wrong with this country. We are run by a ruling class that only sees a profit. Screw sustainability, I (“SV VC”) just want 100X off my $1M initial investment, bro. Either hYpErScAlE or fuck off. Taking VC money is a poison pill.
- palmfacehn 2y agoSometimes the priority appears to be hitting all of the latest buzzwords. Customers and long term revenue may not be as important as dumping on retail with an IPO or tokens. The promise of "hyperscale" performance becomes more valuable than tangibles. Which is the same as saying, demonstrating tangible performance is undesirable, if it detracts from the narrative of "hyperscale".
- jedrek 2y agoThis is the problem with VC culture: it's not funding good, sustainable ideas, it's basically betting.
- robertlagrant 2y agoIf you can see the future you can become the best VC ever. If you can't, you're no better than VCs.
- meiraleal 2y ago> On the one hand, sure. On the other hand this relentless focus on "hyper-scale" or bust is what has pushed the US startup scene to where it is and probably why it is so far ahead of the rest of the world. was it? Or the inability of other countries to block US startups (because the US government will never let them) makes it impossible for local startups to compete leading to monopolies? If every country went US way of blocking TikTok, the hyper-scale growth would cease to exist fast.
- robertlagrant 2y agoYour statement seems to assume that non-US startups are intrinsically worse than US ones. Why is that?
- meiraleal 2y agoMoney from customers of all non-US countries is the biggest reason. Where US tech companies can't grow, local alternatives grow to the same level (China, Russia).
- robertlagrant 2y agoWhy should the presence of US tech companies mean local tech companies can't compete? What's special about US companies?
- meiraleal 2y ago> Why should the presence of US tech companies mean local tech companies can't compete? That's not the right question. The correct question is: Why DOES the presence of US tech companies mean local tech companies can't compete? And that's the beginning of the discussion. If there is no money to be made, no market will be developed. Block US companies and in a few years you have a booming ecosystem.
- robertlagrant 2y ago
- bowsamic 2y agoWhat big prize? Having way more money than I know what to do with? I genuinely don't get what the reward even means to me as a human here
- freehorse 2y ago> a SV VC straight up say that if you consider selling your company for $50 million a win, the you don't have the right mindset This makes sense from a VC perspective, but not from a founder perspective (for most). > it's bad for the Economy Economy != VCs' pockets
- badpun 2y ago> And while this might be healthier for you as an individual, it's bad for the Economy. ... an while it's bad for the economy, it may be good for the country. Notice how Europe doesn't have regular school shootings, rampant crime or 100k people a year killing themselves with Fentanyl. It may have something to do with culture that prioritizes other things besides the economy.
- tivert 2y ago> If you never take big swings and big risks and are happy with small wins and stable growth you'll never win the big prize. And while this might be healthier for you as an individual, it's bad for the Economy. Correction: it's not bad for the economy, it's bad for the investors (the only people who matter in the whole world). I'm sure a tremendous amount of actual value in the economy has been destroyed by VCs demanding a binary result of either total failure or exponential growth.
- NoGravitas 2y agoI've learned to mentally replace "the economy" with "rich people's yacht money" whenever I read it in an online article. Make that substitution in this article, and it makes a lot more sense.
- emodendroket 2y agoWell to be honest, you could be earning that much money somewhere else with a lot less stress and insecurity.
- rdedev 2y agoDoesn't this thinking also lead to the eventual enshittification of their product? Hyperscalar growth will eventually stop. At that point to justify your valuation you need to start screwing over customers
- pdntspa 2y agoIt also means that, as a customer, you are utterly fucked because almost everyone you want to do business with or buy things from could potentially disappear in a few years because bootstrapping isn't exciting enough for the VC fucks. "Enshittification" runs rampant because literally EVERYONE is swinging for the fences, even when they shouldnt be.
- taco_emoji 2y agohow is that bad for the economy?
- gtech1 2y agoI'm actually 'stuck' in this situation right now. Make about 350-400k/year with no prospect to clear (much) more or exit. I mean, why should I exit ? To risk doing something else and 0.1% chance of making millions, or go along this way a few more years while building my investment portfolio.
- tmcdos 2y agoThe person who you should expect (or look for) to buy your startup for $50M will reasonably expect to meet someone else in the future who will then buy the "startup" (probably at that time an established company) for $100M or maybe $200M - otherwise why would he want to buy your startup? People rarely buy startups just to extend their collection of statups ... If you build a staryup with the mindset of selling it to someone bigger - you will never grow to be the next BIG among the Big Guys. And if you are not looking to be one of the Big Guys (which implies you do not plan to sell your startup) - you can live happily on the plateau with 20 employees and a satisfying income.
- ToDougie 2y ago> I remember hearing a SV VC straight up say that if you consider selling your company for $50 million a win, the you don't have the right mindset and he doesn't want to do business with you. Is there someone out there focused on selling ten $50m companies at the same rate that this guy is focused on being part of, I assume one $.5bn company?
- dig1 2y agoMy impression is that many profitable small businesses (small teams, long-term goals, which can be considered even boring) don't make it to the front page of HN because they don't aim (unrealistically) high. I find it fascinating how this culture embraces a "move fast, break things" mentality, which seems to apply (only) to the tech industry, where someone with multiple failed businesses is often labeled a "serial entrepreneur" (selling unsustainable company I don't consider a success). It's amusing to think about what it would be like if someone failed in multiple sports and referred to themselves as a "serial sportsman."
- danjac 2y agoThe problem is that once you take the VC coin, you are pushed towards hyper-scale. If you don't take the VC coin it's a much harder and longer path to self-sustainability, unless you have some way to fund yourself e.g. consulting. 37 Signals is the model here, but they are super-exceptional (they created Rails, after all). Then having got there, a VC-funded competitor will just roll over you as they'll have better connections and funding.
- result2vino 2y ago[flagged]
- deleted 2y ago[deleted]
- vanillaicesquad 2y ago[dead]
- ozim 2y agoI am in Europe and I work for a company that has exactly the same struggles. Sales cycles for B2B for big players are insane - price points to offer our stuff to small/medium businesses are not enough. Even if we provide value and save time for customers it still is hard work all the times to explain the value. Well the grass is greener on the other side - but I can see how having B2B business where for years you have the same struggles just to keep the lights on and every month is the same and you have the same conversations but with different customers explaining 10x a year exactly the same thing - why you provide the value —— is just something people don’t want to get stuck into and can lead to burnout rather quickly. So I can see how someone would like to land business idea where the value is obvious and people scream „take my money”.
- chrisandchris 2y agoI agree with you, but look at it this way: Life is hard, and most of us need to work hard to keep it going. It's never going the other way for most of us. Some minority will have it easy/have luck. Many will fail. Sure I want to win the big prize, that's why I'm playing the lottery from time to time. But in my $dayjob, it is and it will stay hard work. If it actually would be easy, everyone would do it.
- petesergeant 2y ago> Not everything needs to be a hyper-scaler It does if you want to take a few $m of someone else’s cash, pre-revenue, which is what these startup founders want.
- draw_down 2y ago[dead]
- Oras 2y agoWhat's weird is wasting your time and life on something not worth your time.
- gwbas1c 2y ago> and not shut down after 2–3 years after pivoting three times. An important part of running a business is taking a risk. Furthermore, plenty of businesses fail for reasons that have little to do with the economic value / needed functionality of the product. In some cases, it takes a similar company with subtle differences (or even timing) to really understand why one business failed and a different succeeded. (One very bad example could be the difference between Sega and Nintendo in the 1980s and 1990s. Compare the NES to the Master System, the SNES to the genisis, and the Game Boy to the Game Gear.) (Another example can come from comparing Tesla to the dozens of other electric car startups.)
- anonu 2y ago> American startup culture American VC-backed startup culture, you mean. And yeah, that makes sense. If you put money into something you expect to get paid back in 5 years. You need growth to do that. If you want to go slow, then you bootstrap your startup.
- lysecret 2y agoIf you take vc money that’s the deal.
- rs999gti 2y ago> American startup culture is so weird. But it works for the USA. Most, if not all the start ups that matter, originate in the US and a lot of them are the unicorns we all use daily like TSLA, GOOG, NFLX, MSFT, META, etc. And the founders are natives and immigrants, so it is not a demographics issue. It is more of a process issue for the rest of the world. > Not everything needs to be a hyper-scaler, not everything needs to be huge. Businesses should focus more on sustainability, and not shut down after 2–3 years after pivoting three times. How do you get the moon, if you don't aim for the moon? Risk == Reward. When you don't risk, you end up with startups like in DE e.g. Auctionata, Moped, etc.
- gspencley 2y agoThere's a couple of factors that play into why companies in the west tend to scale vertically rather than horizontally. The first is looking for a return on investment. If you're going to attract other peoples' money, those "other people" are obviously looking for companies that are going to provide a return. And since a wise investor diversifies their portfolios, they know that a lot of their investments are going to fail, so one way to hedge that is by encouraging all of their investments to grow as much as possible. That way a small number of hyper-performers will make up for the losses. But we also see vertical growth happen with major corporations as well. Not just startups. And I suspect this has a lot of to do with red tape, over-regulation and bureaucracy. When you need to jump through tons of hoops including getting licensing and permits, setting up tax and payroll accounts... not to mention if you want your company to be publicly traded and the hoops you need to jump through for that ... it can be way cheaper and lower-risk to expand the activities of an existing, already established company than to spin off a new one.
- burnte 2y ago> American startup culture is so weird. Not everything needs to be a hyper-scaler, not everything needs to be huge. Businesses should focus more on sustainability, and not shut down after 2–3 years after pivoting three times. This is just the culture in unreasonable VC scenarios. Most new companies are not VC backed and have realistic expectations on the new business.
- tpoacher 2y agoThis has become a thing in academia too. Small projects asking interesting questions will be laughed out of the room, labelled as lack of "ambition". The fact that not all interesting questions require 4-5 years and millions of dollars to be answered seems to not bother people paying the bills.