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Dear Startups: Here’s How to Stay Alive

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Re: Dear Startups: Here’s How to Stay Alive

#171

Post by mindcrime »

rokhayakebe wrote: post #131
mindcrime wrote: post #50

Earlier quoted context omitted.

Startups are companies designed to grow fast. I would disagree with this terminology. I posit that a "startup" is a company designed to grow big . How fast it gets there is an implementation detail. Many startups aim for fast growth, but not all do. To me, the distinction between "the corner laundromat" and a slow-growing startup is that the startup still intends to be a Really Big Company.

I agree. It's more about getting big than growing fast. A startup could spend years perfecting its model and technology before going full force. Perfect example: YC funds startups only. YC funded a company working to cure HIV. That is going to take a decade probably. When they are ready they will be big in an instant.

A startup could spend years perfecting its model and technology before going full force.

Yeah, that's really exactly it. The way I've put it before is that you choose the model that fits where you are in your lifecycle. Or you grow slow, until you choose to (try to) grow fast. I'm not opposed to VC per-se or anything, but our mindset has always been "do it when the time is right". We get a handful of paying customers, real revenue and feel convinced that we've nailed the whole "product /market fit" thing, then we might decide it's time to turn on the afterburners or whatever. But right now, while more money would make some things easier, I wouldn't feel good about taking that on.

Re: Dear Startups: Here’s How to Stay Alive

#172

Post by selvan »

During late nineties, my startup was providing technology consulting/development service to other dot-com startups. Demand for our consulting service was so high that our company resort to auction kind of process to select customers. Then dot-com bust happened, 97% of our customers had gone out of business, quickly, very quickly. Obviously, our company fortunes dwindled and never recovered from that.

Re: Dear Startups: Here’s How to Stay Alive

#173

Post by LoSboccacc »

debacle wrote: post #150
poof131 wrote: post #130

Earlier quoted context omitted.

I’m not sure I agree 100% with your thesis on the B2B side. I’ve seen a few companies recently that seem to be getting strangled by the long tail. They have large numbers of low paying, price conscious customers draining resources. They can’t raise prices to a level that enterprises would be happy to pay since this would kill their established customers. Enterprises don’t want to pay a different higher price, why wou…

> Enterprises don’t want to pay a different higher price, why would they. If you can't convince an "enterprise" why they should pay more than a standard customer you're bad at sales. It's simple math.

good article on topic:

https://training.kalzumeus.com/newsletters/archive/enterpris...

it's not just that they are price insensitive, but you can use trigger words (auditing, apis, slas) to segment them into a higher tier since they have to have certain services provided.

Re: Dear Startups: Here’s How to Stay Alive

#174

Post by tragic »

mindcrime wrote: post #44
tarr11 wrote: post #3

The cynical side of me wonders if all this is "helpful advice" from VCs is just designed to bring valuations down to earth.

The cynical side of me wonders if all this is "helpful advice" from VCs is just designed to bring valuations down to earth. I'm not really into conspiracy theories as a rule, but I will admit to having a similar thought. At the last, I find myself wondering if advice from VC's - especially regarding something like valuation - doesn't inherently tend to be self-serving on their part. Remember, the objectives of a VC a…

> I'm not really into conspiracy theories as a rule, but I will admit to having a similar thought.

Though I agree with the substance of your comment, I don't think it's a 'conspiracy theory' to expect a VC to have her percentage in mind. That's just capitalism.

Re: Dear Startups: Here’s How to Stay Alive

#175

Post by tragic »

nostrademons wrote: post #43
tdaltonc wrote: post #27

Earlier quoted context omitted.

Is there no objective way to tell if things are really cooling? Or for what types of startups things cooling?

There is no "objective way" when it comes markets, there is only what the market will give you. If the market will give you $450M for 5% of a product that doesn't work (a la Theranos), then objectively you're worth $9B, at least until you go bankrupt and then you're worth nothing. If the market is dead but you somehow manage to IPO anyway, save the company, and sell for $1.5B, you're worth $1.5B (a la LoudCloud/Opswa…

I don't really buy this, simply because actual investors do not think this way. On public markets at least, there is some expectation that a stock price will have some relationship to expected future earnings. When the price is out of whack with those future earnings, the stock is under- or over-valued - and I would say that this is objectively true even when there is no way of knowing. Of course, there very often is a way of at least taking an intelligent guess, which is why Warren Buffett is so goddamn rich, for one.

Otherwise, we are left believing obvious absurdities: for example, somebody who bought Bear Stearns at $60 on March 13 2008 got just as good a deal as somebody who bought Bear at $3 on March 17; Bernie Madoff's fund management services were worth every penny until his arrest; etc. There is nothing 'subjective' about either Bear's hiding of the worthlessness of its subprime books or the fraudulence of Madoff's scheme.

Re: Dear Startups: Here’s How to Stay Alive

#176

Post by cmdkeen »

LoSboccacc wrote: post #173
debacle wrote: post #150

Earlier quoted context omitted.

> Enterprises don’t want to pay a different higher price, why would they. If you can't convince an "enterprise" why they should pay more than a standard customer you're bad at sales. It's simple math.

good article on topic: https://training.kalzumeus.com/newsletters/archive/enterpris... it's not just that they are price insensitive, but you can use trigger words (auditing, apis, slas) to segment them into a higher tier since they have to have certain services provided.

Pro tip - along with auditing add permissions and security. For example Github charge twice as much for 50 repositories on the Organisation plan as the personal.

One of the downsides of many startup types never having worked in a traditional enterprise place is they don't appreciate the features that will move you from the "small team in the company using" plan to the "whole department / company" custom plan where you're charging hundreds of dollars per user.

Re: Dear Startups: Here’s How to Stay Alive

#177

Post by gizi »

"The sky is falling ..." No, it isn't. All there is, is that there seems to be less appetite for endlessly unprofitable ventures that get away with dismissing the idea that they should be bringing in more cash than they spend within a reasonable time frame. Furthermore, is the entire VC scene actually needed? Lots of startups do not make use of their services and are doing absolutely fine ...

Re: Dear Startups: Here’s How to Stay Alive

#178

Post by lmm »

jacalata wrote: post #146
georgemcbay wrote: post #115

Earlier quoted context omitted.

The market for smartphones is only about mid-60% of all Americans, though, from what I've read. So still not 10%, but more like 25%-ish.

Well, the original comment was "10% of earners" and I'd bet that smartphone penetration is higher among earners (eg 20% of Americans are under 14, 0% of them are earners and ??~10% of them have a smartphone). So you could perhaps push it up to more like 1/3 earners use iOS, which is starting to be a healthy potential market share.

> 20% of Americans are under 14, 0% of them are earners and ??~10% of them have a smartphone

OT but 10%? I'd've guessed at least twice that.

Re: Dear Startups: Here’s How to Stay Alive

#179

Post by lmm »

dlandis wrote: post #169
timr wrote: post #106

Earlier quoted context omitted.

Google has ~60,000 employees worldwide . From various online sources, they have +/- a few thousand who live in San Francisco. Twitter and Yelp and Square and Dropbox and AirBnB and the other unicorns each employ somewhere in the mid hundreds to low thousands (e.g. 500-2,000) -- again, worldwide. The local numbers are lower. I don't know reliable this [1] is, but it suggests that there are ~50,000 tech employees total…

But even if a full 50% of the people working at small tech companies moved out of the city (10k by your count), how would that have any effect whatsoever on the economy? It would bring the population back to where it was about a year ago and employees of smaller companies aren't even among the highest paid.

Prices are determined by marginal buyers/sellers. And a lot of the economy is driven by expectation.

Re: Dear Startups: Here’s How to Stay Alive

#180

Post by lmm »

mindcrime wrote: post #44
tarr11 wrote: post #3

The cynical side of me wonders if all this is "helpful advice" from VCs is just designed to bring valuations down to earth.

The cynical side of me wonders if all this is "helpful advice" from VCs is just designed to bring valuations down to earth. I'm not really into conspiracy theories as a rule, but I will admit to having a similar thought. At the last, I find myself wondering if advice from VC's - especially regarding something like valuation - doesn't inherently tend to be self-serving on their part. Remember, the objectives of a VC a…

That kind of company has no business taking VC money in the first place. A VC shouldn't want to invest in a company that doesn't need VC money, and I'm kind of surprised that they would want to encourage their portfolio to transition into that kind of company - such a company isn't going to be the "home run" that VCs make their money off.
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