If you ask the average entrepreneur what his wet dream is, he would answer; "Being qualified for a triple A Silicon Valley VC firm". Little does he...
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Amazing post & very helpfull.
i want to build my software startup. but idk how do i start n get funds & feeling lost. if u cn tell me wt 2 do will b greatful. Thanks.
You don't need funding, you need a roof over your head, and food for yourself and your family, until you're making money from your startup.
I went that route with OST (Mountainview). Banks refused to let us bank with them because we didn't have an "approved" owner or investors they knew, including that one that recently collapsed (SVB). Who you know is now far more important than what you can do in Silly cons Valley.
😂
Do something that does not require "approval" would be my advice ...
We did, even had a building for awhile on Hope near Castro street...seemed fitting. Got plenty of death threats for "not" doing things the VC "way", too.
Might be controversial in some circles, but having full ownership and getting to focus on the things you want to (for example quality) is definitely worth struggling a bit more with funds at the start
Indeed, it is pointless to even try to do anything new in the US now. I find it far easier to raise capital as a foreigner in Europe (highly recommend Norway) or Latin American.
US is infested with these ideas, due to thousands of VC firms having made mountains of money following these ideas ...
That is what the bunko squad and prisons should be for...
Hehehehe :D
What a great post man. Learned some things. For instance I always had the question why some startups are hiring so much and why do they even need so many people... I know the answer now😂
Hehe, I'm glad you like it. Please share it, and maybe at-reply YCombinator as you do ...? 😂
I've got "an itch to scratch" ... 😉
This very much tracks with my own experiences.
You completely miss the point of the new platform economy of tech companies, where the winner gets all.
That you call bullshit indicators (virtual measurements like growth/users/etc) - are things invented to measure the success of the new reality of platform-tech companies.
Tech companies - do not sell physical goods, but a virtual good that is completely detached from the physical reality and is very hard to measure / reason about (how do put a dollar-price tag on a thought? or some lines of code?)
Tech companies - scale incredible well with nearly zero cost (1-10 developer salaries are nothing if you get 10-100 millions in revenue). This is very new and counter-intuitive compared to how traditional manufacturing works, where more workers + more/bigger factories -> more production.
VC-based investors (very smartly) found out, that investing in tech startups that grow big and get to be a monopoly is a very lucrative business.
VC 15 years ago was a completely different thing than VC today. And yes, there do exist legitimate VC firms that do their due diligence, and actually study the technology, and invests in real companies. However, if you find 100 random companies that are currently going through their A or B rounds I can guarantee you that at least 95 of these have rubbish value propositions exclusively based upon hype.
I suspect the reasons for this is that it's simply too hard to study technology for people not having a technological background, so at some point they realised it's easier to earn money selling hype than to earn money selling real product ...
I created a unicorn in 24 months, with 750,000 in VC. Once the VC firm realised there was actual value in it though, the manager of the firm tried to steal the whole company, something that resulted in that I got a 6 month setback, and I ended up with everything of value, while my old Unicorn slowly died. It's now a shadow company being used for "dubious and shady business deals" - The Schmuck thought he could run it without me 😂
You can see the new stuff here. It's 4 months since the split happened. Today the old company would have been worth 240 million dollars. Before the end of the year it would have been worth a billion. These figures are from extrapolating the existing revenue growth, that was real revenue, and not hyped up revenue artificially created by having friends, fools, and family pay for services - For then to apply a 1,000 PE, which is usual for companies in hyper growth. So yes, I do have some experiences here ... 😉
I never called this bullshit indicators, I just insinuated that most are increasing these figures using "dubious methods". If you've got 100,000 real users, that's obviously worth a lot. Most don't have 100,000 real users, they've got 100,000 Indian students whom they bribed to like their GitHub profile ... 😉
Psst, here's an example of how a trillion dollar company is delivering useless tech next to a zero funding startup - If funding and VC is such a great idea, feel free to explain the difference in quality ... 😉