UK Needs An Acquisition Culture To Have a Sustainable Startup Culture • Hacker News Board

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#21

Post by pg » Mon, Jul 08, 2013, 6:07 PM UTC

anovikov wrote: post #14

My belief is that the focus on exits in startups is an American effect in nature - because it matches the VCs business model. Why not just building sustainable businesses and make VCs do with dividends on them? That will be way more beneficial to the economy than building Zynga-style bubbles.

That is a common misconception, but it's usually founders who are eager to sell, not VCs. There is a power law distribution of outcomes in startups. The big successes are so big that that's where all the returns are for investors.

VCs routinely reject startups because they worry that the founders are only interested in selling the company. We tell founders who are about to present to VCs never even to use the word "exit."

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#22

Post by pg » Mon, Jul 08, 2013, 6:17 PM UTC

Nursie wrote: post #18

The "successful exit" to me seems the antithesis of what the UK needs. Instead of flushing money down the pan on non-sustainable startups, we need people to build viable long-term businesses. Too often we see a hype-cycle in action as people build something with a slight spin on existing tech and/or services, hype it until it seems like its worth something then cash out. Half the time the acquiring company seems to i…

If by "viable long-term businesses" you mean ordinary slow-growing ones, people already do start lots of those in the UK.

But if you're talking about startups, meaning super fast growing companies like Google, Facebook, etc, what you seem to be claiming implicitly here is that there is a way for the UK to become like Silicon Valley in the sense of becoming a place where such companies are started, without also acquiring other qualities of Silicon Valley that you seem to dislike, like early acquisitions.

That seems pretty unlikely. Any other city that evolves into a big startup hub will have its own personality to some extent (e.g. NYC might be more focused on retail), but it seems unlikely that a new startup hub would be structurally different.

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#23

Post by freyfogle » Mon, Jul 08, 2013, 7:21 PM UTC

Wow that link to the Internet Peeps article brings back so many memories. It's true, the whole scene was basically one room full of people.

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#24

Post by apsec112 » Mon, Jul 08, 2013, 7:22 PM UTC

pg wrote: post #22

Nursie wrote: post #18

The "successful exit" to me seems the antithesis of what the UK needs. Instead of flushing money down the pan on non-sustainable startups, we need people to build viable long-term businesses. Too often we see a hype-cycle in action as people build something with a slight spin on existing tech and/or services, hype it until it seems like its worth something then cash out. Half the time the acquiring company seems to i…

If by "viable long-term businesses" you mean ordinary slow-growing ones, people already do start lots of those in the UK. But if you're talking about startups, meaning super fast growing companies like Google, Facebook, etc, what you seem to be claiming implicitly here is that there is a way for the UK to become like Silicon Valley in the sense of becoming a place where such companies are started, without also acquir…

The trouble so many have with the Valley isn't early acquisitions per se, it's that so many companies are basically fake. As you yourself explain, in "Hiring is Obsolete", many companies wind up being something the founders do to prove their worth as big company employees, rather than something that might someday make money. A huge fraction of acquisitions are shut down afterwards - pretty conclusive proof the "company" (the software, product, business model and sales channels) has negligible value.

Of course, as you've also pointed out, such "HR exits" are a small fraction of your and other VCs' returns. However, if they predominate numerically - if 80%, say, of YC companies are "acquihired" - this will inevitably affect the character of both YC and its applicants, making it more similar to just another recruiting agency. When our brains assess the character of a place, they weight by "number of people I've talked to", not "market value at exit".

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#25

Post by takluyver » Mon, Jul 08, 2013, 8:59 PM UTC

petenixey wrote: post #3

hobs wrote: post #2

I read the title and immediately thought to myself "What about a startup that just becomes a successful business, does that need an acquisition to breed more startups?"

Those businesses are awesome and I think more people should build them. The point I wanted to make in the article is that most startups are a high-risk experiment. A side effect of that is that most of them will fail and you need a lot of liquidity to fund that failure-level. I wish more developers would just create 1-5 man businesses that make $100k-$2M/year. It's exactly the right thing to do as an individual but i…

> but it doesn't sustain a startup culture it just sustains a set of solid, long-term businesses.

Who is that a bad thing for? Small, solid businesses sounds like a better option for customers and the country as a whole than frenetically building new things knowing most of them will fold. It doesn't give the founders the same chance at celebrity, but they get to do something reliable and potentially fulfilling.

I guess I'm not convinced that the UK wants a 'startup culture' at all. I'd like to think people could focus on building stuff that's useful or entertaining, rather than what sounds like desperate attempts to become a millionaire.

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#26

Post by g8oz » Mon, Jul 08, 2013, 9:13 PM UTC

pg wrote: post #22

Nursie wrote: post #18

The "successful exit" to me seems the antithesis of what the UK needs. Instead of flushing money down the pan on non-sustainable startups, we need people to build viable long-term businesses. Too often we see a hype-cycle in action as people build something with a slight spin on existing tech and/or services, hype it until it seems like its worth something then cash out. Half the time the acquiring company seems to i…

If by "viable long-term businesses" you mean ordinary slow-growing ones, people already do start lots of those in the UK. But if you're talking about startups, meaning super fast growing companies like Google, Facebook, etc, what you seem to be claiming implicitly here is that there is a way for the UK to become like Silicon Valley in the sense of becoming a place where such companies are started, without also acquir…

"viable long-term businesses" might mean ones that don't change hands at values based on increasingly speculative multiples. Can't a tech scene without a casino-like investment atmosphere succeed?

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#27

Post by pg » Mon, Jul 08, 2013, 9:52 PM UTC

apsec112 wrote: post #24

pg wrote: post #22

Earlier quoted context omitted.

If by "viable long-term businesses" you mean ordinary slow-growing ones, people already do start lots of those in the UK. But if you're talking about startups, meaning super fast growing companies like Google, Facebook, etc, what you seem to be claiming implicitly here is that there is a way for the UK to become like Silicon Valley in the sense of becoming a place where such companies are started, without also acquir…

The trouble so many have with the Valley isn't early acquisitions per se, it's that so many companies are basically fake. As you yourself explain, in "Hiring is Obsolete", many companies wind up being something the founders do to prove their worth as big company employees, rather than something that might someday make money. A huge fraction of acquisitions are shut down afterwards - pretty conclusive proof the "compa…

Actually very few startups are fake. Companies look fake in retrospect if they make something that flops and then get HR acquired, but very few founders I encounter are deliberately aiming for that path.

What I suggested in "Hiring is Obsolete" is not that founders build something random to get the attention of acquirers, but that they build the product the acquirer should have built. I'm advocating founders aim for product acquisitions, not HR acquisitions.

And no proportion of HR acquisitions would be enough to affect the character of YC. Not only are we not interested intellectually in funding companies that fail, we probably net lose money on them.

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#28

Post by Nursie » Mon, Jul 08, 2013, 10:15 PM UTC

pg wrote: post #22

Nursie wrote: post #18

The "successful exit" to me seems the antithesis of what the UK needs. Instead of flushing money down the pan on non-sustainable startups, we need people to build viable long-term businesses. Too often we see a hype-cycle in action as people build something with a slight spin on existing tech and/or services, hype it until it seems like its worth something then cash out. Half the time the acquiring company seems to i…

If by "viable long-term businesses" you mean ordinary slow-growing ones, people already do start lots of those in the UK. But if you're talking about startups, meaning super fast growing companies like Google, Facebook, etc, what you seem to be claiming implicitly here is that there is a way for the UK to become like Silicon Valley in the sense of becoming a place where such companies are started, without also acquir…

I'm afraid I'm not 100% convinced that Google and Facebook are great examples of these sorts of startups. Google was certainly disruptive to the established search industry at the time, which was drowning in poor results and nested portals. But it took years to take over and did so by being clearly better than everything else and sustaining that. FB was locked down to academia for years and even then played second fiddle to myspace as it grew almost in the background. Neither of these were acquired early (AFAIK).

I'm not suggesting there's a way for the UK to become like SV without early aquisitions. I'm not sure that I see the value proposition in the UK growing that sort of scene at all.

You can put this down to cynicism on my part. You can put this down to the British attitude to business. Or just to short sightedness. I'm not going to doubt your investment acumen or experience in this space, I certainly have nothing to compare to that and you clearly have the knowledge to make money out of what you do. And we could argue about what constitutes utility or value until the cows come home. But I'd still rather see tech firms establish themselves traditionally in silicon glen or silicon fen than I would see people get caught up in the hype cycle of silicon roundabout.

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#29

Post by mikebutcher » Mon, Jul 08, 2013, 10:32 PM UTC

Everyone here is welcome to look at a good selection of "Silicon Roundabout Web companies" and realise that there is a huge diversity, far beyond the stupid characterisation that they are built-to-flip app/web crap: http://www.builtinlondon.co/

Re: UK Needs An Acquisition Culture To Have a Sustainable Startup Culture

#30

Post by mikebutcher » Mon, Jul 08, 2013, 10:35 PM UTC

shubb wrote: post #16

KaiserPro wrote: post #13

I'm sorry, but being bought out as your only goal is not a business plan. I work in VFX so I see lots of startup companies. They start up to make a profit, not tread water until they are bought by a bigger company. The majority of the inhabitants of "silicon roundabout" are carbon copies of whats been before. whats more the service they provide is usually free. So there is no hope of long term success without a buyou…

I get these sense that the UK has a startup culture, but Silicon Roundabout isn't it. Several major exchanges (in energy, commodities) are recently ex-startups, and there is an ecosystem of innovative, fast growing companies servicing the city. Because finance is what London does. Outside Central London, often clustered around universities (Cambridge, Surrey, and the Thames Valley) are interesting non-internet start-…

Which shows how much you know about the area. Datasift is not even based in London, it's in Reading. Here's a list for you to peruse http://www.builtinlondon.co/