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Zombie Startups in Europe

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Re: Zombie Startups in Europe

#21

Post by mmjaa »

shokunin wrote: post #18

This is cargo culting, is it not? Going for the form, but not the essence.

All startups go through a cargo cult phase. What differentiates the successful ones from the non-successful/zombie ones is that it is recognised as a phase, and people work damn hard to get out of the cargo-cult zone.

When you have a handout to keep you fat, this isn't really conducive to recognising the cargo cult fallacy. It 'feels' like you're successful at your cult, because after all: money is there, and people have given it to you, i.e. the planes arrived and cargo fell out of the sky.

But this is so deceptive. The only way to escape the cargo cult phase is to actually build the real things which real people - strangers, beyond the horizon - actually want. Not, those things your local government bureaucrat wants but rather the things that non-native, out-of-scope real customers want.

Recognising the cargo cultism takes real balls. Not a lot of people have the balls for it, alas.

Re: Zombie Startups in Europe

#23

Post by antpls »

Hey ! I live in Paris and I went to some presentations at The Family some years ago. I heard Sam Altman speaking there, thanks for organizing it.

Regarding the state of software startups in France, how could you compare it to the Silicon Valley? I guess the same phenomenon is happening in the USA.

Startups arent only about softwares, entrepreneurship already existed in other sectors. Correct me if I'm wrong, but The Family is exclusively about softwares.

Re: Zombie Startups in Europe

#25

Post by lingz »

imAsking9836 wrote: post #24

This seems like a good place to ask: What does it mean for a startup to go into a Series A, B ,C? Is it like some kind of IPO? I have never understood how all the finances around startups work

It usually means that they raised a new significant round of investment from a new group of investors at a new valuation.

Re: Zombie Startups in Europe

#26

Post by guicho271828 »

DoreenMichele wrote: post #19

[Note that nobody has paid for a product yet.] If you don't have "paying customers" in some fashion, you aren't really in business. The rest is just window dressing, basically. An even longer runway! There's your "Universal Basic Income" right there: Money for nothing (and your chicks for free, no doubt). See, also, Duke Nukem Forever, where they basically didn't ship until they had to because they were running out o…

Ended up spending 30 minutes of my life for reading https://en.wikipedia.org/wiki/Development_of_Duke_Nukem_Fore...

Re: Zombie Startups in Europe

#28

Post by raulgalera »

"The first step is inevitably to raise money from dumb/ignorant investors who couldn't care less about your startup: that would be the government / unemployment benefits in France / tax-incentivized angel investors in the UK."

I have seen many entrepreneurs who just kept repeating step #1 for years. They would hop from one startup accelerator to another, joining as many government grant programs as possible (Startup Chile et al.) without ever really building an actual business.

There's one particular case I know of someone who managed to get more than $300,000 in grants in just a couple of years.

Re: Zombie Startups in Europe

#29

Post by stickfigure »

charlesdm wrote: post #14
tumetab1 wrote: post #12

Earlier quoted context omitted.

Unsuccessful startups, for me, are not the problem. The problem is: a) venture capital coming from government which have very low incentives to not waste money (their goal is usually only to have X amount of start ups) - which leads that capital and talent is diverted to this bad startups b) since they are zombies, they don't die quickly enough, the resources waste keeps going on (capital, talent, office space, bandw…

Governments have secondary returns -- VC coming from government generally has restrictions (i.e. the money has to be spent on employees). Employees pay taxes. Those people spend their money mostly locally. Even if every euro invested is lost, it'll still be profitable in most cases (because everything eventually flows back into the local economy).

This sounds eerily like the broken windows fallacy.

Re: Zombie Startups in Europe

#30

Post by charlesdm »

stickfigure wrote: post #29
charlesdm wrote: post #14

Earlier quoted context omitted.

Governments have secondary returns -- VC coming from government generally has restrictions (i.e. the money has to be spent on employees). Employees pay taxes. Those people spend their money mostly locally. Even if every euro invested is lost, it'll still be profitable in most cases (because everything eventually flows back into the local economy).

This sounds eerily like the broken windows fallacy.

Yet this is how these things are set up. I know a VC fund manager solo managing a €50m fund, of which €20m came from the European Investment Bank, and €20m came from the local government. He put in €200k. Just €9.8m came from HNWIs.

So he's getting 2% on €50m for 7 years, to invest €40m government money with pretty much no expectation of any return. Not bad, not bad at all. I'm sure "the people" would be outraged if they knew. But they don't.

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