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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

#181

Post by lmm »

morgante wrote: post #38
roymurdock wrote: post #4

You know what kind of companies generally survive? Companies that make more money than they spend. I know, duh, right? If you make more than you spend, you get to stay alive for a long time. If you don’t, you have to get money from someone else to keep going. And, as I just said, that’s going to be way harder now. I’m embarrassed writing this because it is so flipping simple, yet it is amazing to me how many entrepre…

Can you really not tell the difference between the corner laundromat (a profitable small business) and Atlassian (a startup which was profitable for most of its history)? Startups are companies designed to grow fast. [1] Frequently, that means spending more than comes in but it's definitely not a prerequisite. Likewise, there are plenty of small businesses which take years to reach profitability (some never do)—that…

Words are tools for communication. A word will always be a simplification of reality (and will always have edge cases), but the best words are labels for clusters of similar things. When a word describes a group of things that really do form their own cluster then it's a good word; when it describes a group that really splits into two or more distinct groups, or describes part of a group but not other equally similar things, then it's a bard work.

In many real-world aspects I'd argue that Atlassian is more similar to the corner laundromat than it is to e.g. Snapchat. How would you evaluate them when considering making a business loan? How would you consider the prospect of working for them? How would you sell services to them? What do you think their HR plans look like? Their client relationships? Their regulatory situation?

Wherever you draw the line there will be companies that straddle it. But in my book there is a relatively clean distinction between companies that operate in a way that's sustainable in the short term and companies that operate at a high burn rate, and it is well worth reserving the term "startup" for the latter.

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

#182

Post by cperciva »

dsugarman wrote: post #57

> If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. That's the most beautifully I've heard this thought articulated. I constantly hear people in SV talk publically talk about how they're living years in the future due to getting services from startups that haven't yet hit other markets. These people are very wealth…

The reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service

I'm not sure that "cheaper than a cab" had anything to do with it. You're the first person I've ever heard to cite pricing as a reason why people use Uber; everybody I've spoken to has cited the quality of service as the reason.

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

#183

Post by conanbatt »

cperciva wrote: post #182
dsugarman wrote: post #57

> If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. That's the most beautifully I've heard this thought articulated. I constantly hear people in SV talk publically talk about how they're living years in the future due to getting services from startups that haven't yet hit other markets. These people are very wealth…

The reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service I'm not sure that "cheaper than a cab" had anything to do with it. You're the first person I've ever heard to cite pricing as a reason why people use Uber; everybody I've spoken to has cited the quality of service as the reason.

Price is definitely the dominant factor for Uber's Growth.

They achieved 2 things, the appearance of being cheaper(by putting a lower price, but making "surge pricing" look like a special thing), and eliminated price sensitivity from the customer.

In a cab you are constantly reminded how much its costing, so you suffer the price every second. In Uber/Lyft you dont even know until you left the car, so you are willing to pay more. I think this is an unfair advantage to UBER, in detriment of the consumer.

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

#185

Post by cubano »

malisper wrote: post #68
cubano wrote: post #64

Earlier quoted context omitted.

This seems pretty objective, to me at least. [1] "The latest data from PitchBook show that VC investing in U.S. companies dipped to $9.3 billion in the first quarter of 2016, down from $17.6 billion in the fourth quarter. "There's significant uncertainty in the market right now and (we) would advise companies looking to raise capital to close quick and — while financing is available — maybe close on more capital than…

> VC investing in U.S. companies dipped to $9.3 billion in the first quarter of 2016, down from $17.6 billion in the fourth quarter. How is the first quarter of 2016 measured? We're only half way through it.

That is an excellent point, and of course you are correct.

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

#186

Post by jedicoffee »

mindcrime wrote: post #59
jedicoffee wrote: post #45

Found the problem! "It is going to be hard (or impossible) for many of today’s startups to raise funds." You don't need to take on millions in debt to start a company.

Strictly speaking, raising VC money isn't taking on debt. You're selling equity and if the company fails you don't - as a general rule - repay the investors anything. That said, I agree with your overall point about not needing to raise millions of dollars to start a company. That's one way of doing things, but hardly the only way. Another choice would be to just take a regular job and start your company as a nights…

I agree, I may have been a bit open ended with my previous statement.

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

#187

Post by pgwhalen »

cperciva wrote: post #182
dsugarman wrote: post #57

> If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. That's the most beautifully I've heard this thought articulated. I constantly hear people in SV talk publically talk about how they're living years in the future due to getting services from startups that haven't yet hit other markets. These people are very wealth…

The reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service I'm not sure that "cheaper than a cab" had anything to do with it. You're the first person I've ever heard to cite pricing as a reason why people use Uber; everybody I've spoken to has cited the quality of service as the reason.

Everyone live talked to feels the inverse. Perhaps its appeal is regional.

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

#188

Post by joe_fishfish »

cperciva wrote: post #182
dsugarman wrote: post #57

> If you are in Silicon Valley and your customers are mostly well-paid consumers with no free time, or other venture-backed startups, well, I’d be worried. That's the most beautifully I've heard this thought articulated. I constantly hear people in SV talk publically talk about how they're living years in the future due to getting services from startups that haven't yet hit other markets. These people are very wealth…

The reason Uber became so successful was because it became cheaper than a cab in most major markets with world class service I'm not sure that "cheaper than a cab" had anything to do with it. You're the first person I've ever heard to cite pricing as a reason why people use Uber; everybody I've spoken to has cited the quality of service as the reason.

In London Uber is far cheaper than black cabs as well as having much, much better service. The better service probably guaranteed them some sort of market share there, but the price has given them a shot at permanent market dominance there too.

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

#189

Post by 20years »

mmaunder wrote: post #114
20years wrote: post #103

Earlier quoted context omitted.

Lots of valuable stuff in this comment. It kind of deserves a post of its own. I would love to read more about your experiences. I bet a lot of entrepreneurs can learn a thing or two from them.

Thanks. I almost posted it on my blog instead. I really need to start blogging again. I stopped about 6 years ago because I realized that I was writing a lot of posts and doing talks and mentoring in the Seattle startup community, but I had a startup that was losing money and I had no idea what I was doing. So I didn't really have any right to try and give others advice. So I stopped doing that. The more I learn the…

Please post a link to your blog here when you and your wife get it going. I would love to follow your journey.

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

#190

Post by AstralStorm »

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.

It's the thing about startups - everybody talks like they actually succeed. It should be "if", not "when".

The actual measure of success is both size and revenue. Without the former it's a small company, without the latter it's going to get bankrupt unless it changes - with implosion proportional to size.

"An instant" is a huge hyperbole, let's start with verification, legislation, distribution, certification and all other kinds of legal nightmare to get a treatment on the market. Not to mention politics if it's (not) affordable.

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