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What Hasn’t Changed: The Internet Keeps Getting Bigger

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Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#11

Post by tomasien »

For background: Dave believes in companies with straightforward revenue strategies with measurable traction that could hockey-stick but haven't yet. He believes in a lage and talented mentor pool to find the design, data, and/or distribution problems standing in the way of accelerated customer/user growth to add the value needed to get to the next level. He looks for companies that could exit 20mm-500mm but wants MORE exits rather than larger ones. Kind of the opposite of how YC seeks to grow it's portfolio through a few huge winners.

THEN he believes in doubling down when the signs of that "next leveling" emerge.

I feel like there's a lot of misunderstanding of 500 Startups on HN so I wanted to try to get that out of the way. In my opinion there is room for 500 and YC to both grow without getting in each other's way, perhaps actually helping each other on the few companies they agree strongly on.

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#13

Post by kapilkale »

sbierwagen wrote: post #4
callmevlad wrote: post #3

Earlier quoted context omitted.

YCombinator invested in 9gag as well. That has absolutely no bearing on Paul Graham's insight into the current investment climate.

I didn't know that. This significantly alters my opinion of YC.

Why does it alter your opinion of YC?

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#14

Post by sami36 »

The enterprise market wil be a tougher nut to crack for startups for simple reasons :

1- Inelasticity of demand : Just look at windows, Word,...etc many companies "waste" hundred of millions of $ in software that's loathed by their employees, yet they still force feed it in the name of standardization. The users don't get to vote on the products they use unlike their consumer mkt counterparts (with their wallets or attention.) so change is very very slow.

2- procurement process lack of transparency : Yup, it's still an old boys club out there & the company that gets a signature on the dotted line is not always the one with the best products. Relationships & brand name matter enormously, esp if you're a clueless CIO who's climbed to the top mostly on your corporate politicking talents.

I stil think that the best way to approach the enterprise market is to have an acqhire exit in mind. grow big enough to attract the attention of IBM, Oracle & Microsoft. (Yammer stands as a recent example, but IBM made dozens of acquisitions in the 100~500 Mil $ range.)

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#15

Post by rizzom5000 »

Pinterest, Instagram, Groupon, Zynga, and "in some cases billions of revenue"? Unless I'm looking in the wrong places, that is a factual error.

While getting hundreds of millions of users is great, it's not quite the same as getting to profitability. If you're using Zynga and Groupon as success stories, your business model might very well consist of, "looking for the next big fad and hoping to find a way to monetize before it fizzles".

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#16

Post by AndrewKemendo »

Perhaps I am mistaken however no one is calling anything dead, they are simply switching strategies. In my opinion B2B wins hands down when the product could be used equally by businesses and consumers at a minimum.

When I started VisiDraft a year and a half ago, my strategy was B2B because my clientele would be using the product for work. I could as easily have structured my plan to have a consumer facing application but based on what I encountered it was a no brainer.

Microsoft, Apple, HP, IBM all of these name makers started as B2B companies. Why? Several reasons. You only have to sell to a few people, making your traction and revenues immediately positive. In addition, it allows a much more intimate feedback loop for iterations when you actually work hand in hand with another business designing solutions for them. you are basically getting another partner with domain expertise - you don't get that with B2C. It allows you to grow without losing a huge chunk of your business - in my experience most companies don't want anything to do with owning a chunk of a start up.

I am quite confident that no one is saying that B2C is over, and in fact a good number of software developments don't fit into a B2B model. Where there is equal ability to face consumers or other businesses, I will always opt to the business.

The last thing I will say is: Businesses around the world are sitting on +2T in cash right now. VC's aren't anywhere close to that and they rely on consumers to go buy things, which is looking pretty flat currently at least in the US. Go where the money is.

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#17

Post by rohamg »

rizzom5000 wrote: post #15

Pinterest, Instagram, Groupon, Zynga, and "in some cases billions of revenue"? Unless I'm looking in the wrong places, that is a factual error. While getting hundreds of millions of users is great, it's not quite the same as getting to profitability. If you're using Zynga and Groupon as success stories, your business model might very well consist of, "looking for the next big fad and hoping to find a way to monetize…

Which, let's be honest, all worked out very well for the early investors.

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#18

Post by davemc500hats »

rizzom5000 wrote: post #15

Pinterest, Instagram, Groupon, Zynga, and "in some cases billions of revenue"? Unless I'm looking in the wrong places, that is a factual error. While getting hundreds of millions of users is great, it's not quite the same as getting to profitability. If you're using Zynga and Groupon as success stories, your business model might very well consist of, "looking for the next big fad and hoping to find a way to monetize…

"some" in this case was Groupon & Zynga, not Pinterest or Instagram. while perhaps not the best cases of getting to sustainable profitability, nevertheless both Groupon & Zynga did phenomenally well in customer acquisition and revenue... what they have failed at is long-term retention.

regardless, the argument Fred seemed to be making was that distribution and customer acquisition is getting "harder"... this is not the case.

Re: What Hasn’t Changed: The Internet Keeps Getting Bigger

#19

Post by davemc500hats »

sami36 wrote: post #14

The enterprise market wil be a tougher nut to crack for startups for simple reasons : 1- Inelasticity of demand : Just look at windows, Word,...etc many companies "waste" hundred of millions of $ in software that's loathed by their employees, yet they still force feed it in the name of standardization. The users don't get to vote on the products they use unlike their consumer mkt counterparts (with their wallets or a…

while there are recent examples of large-scale adoption of enterprise solutions (Yammer, Box), most enterprise sw requires well-trained expensive people to do direct sales. this is certainly doable with the right people, but they are not in limitless supply. scaling enterprise sales is usually people-bound, and hard. this is often the limiting factor in scaling enterprise business, and requires experienced and well-financed teams.
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