This is probably why your country does not have a thriving startup ecosystem. SV runs on naive young 'uns who believe the "you own 0.5% of the company" bullshit.
So are you making money now? I think you are missing the point, a lot of startups in SV are not necessary started to "make money" in the traditional sense. There is a huge amount of startups who just try to build something cool (technology wise), and either hope to find out how to monetize, or hope a larger company will buy them, and figure out how to monetize their technology.
SV is the best place to be, if what you are building doesn't have a clear market, or the market requires larger company's muscles.
SV's emphasis is about bootstrapping on the cheap.
Much of the startup culture is not about researching new involved technical solutions, or crafting something complex and intricate, but getting a simple social idea backed by stock tech out the door quickly & cheaply to effectively pull the slot machine lever.
It is stupid and self-defeating beyond the immediate short term. But you can see where they come from, and they knowingly take the risk of patching up later once they have some success.
And yet oddly enough SV is where most of the most profitable startups have been. Focusing too much on revenue at the expense of strategic vision is not sound business sense, but premature optimization: you ride a greedy algorithm to the top of whatever local maximum is nearest, and you're done.
The title of the article is mostly clickbait. Anyone who's lived in SV for a decade or so knows this well. Startups are a scam unless you are a founder. They are a meat grinder that runs on naive young new college grads who buy into the bullshit that their options are worth anything.
You create value, you get paid. You don't need any rich person to fund you and many who are rich today got there without a dime invested by anyone else.
The article is talking about entrepreneurs, which are people who start businesses. The amount of people starting SV startups is insignificant compared to business owners around the world. You seem to be assuming something about economic growth and some connection to SV, but I see no such statement in the article itself.
Note that almost 90% didn't raise funding at all. And of those who did raise, 70% raised less than $500K. About 70% also had 4 or fewer employees including themselves. In other words, these are mostly pretty small operations.
Look at the hours worked as well. 80% work less than 50 hours a week. And the businesses are very geographically dispersed. Net Net. These are not anything like typical SV startups.
The feeling I get is that it's more about being distant from the "startup" world of SV, which is something of a religion. Investors here are more interested in businesses. A startup is a particular kind of small business - and if you are going to invest in a business, you want it to be sound.
Just a guess. I work for a 'startup', but I'm nowhere near the money machines. I've just always been amused at watching people discuss startups like they're completely unrelated to the more mundane world of small businesses. :)
there's a big gulf between "lifestyle" and "SV big startup", like startups that aims for 1.25-2x growth per annum, has taken fewer rounds of funding. There's several of them in SV, too.
I could not agree more. I wonder how much of the SV environment is created from the trickle down investments of legitimately good ideas --- that is, a Facebook spawning thousands of millionaires, some of which happen to invest in their brother's friend's silly idea not out of any rational analysis, but from just being young and stupid and lucky enough to grab up a few early FB shares.
Furthermore, consider the difference in building a startup and building a typical brick and mortar business. Think of how simple the thought was to create a social network where users choose friends to create a distinct social circle. Or Drew Houston allegedly conceiving of Dropbox by repeatedly forgetting his USB drive in college. Very many SV startups build themselves off of some eureka moment that, being based on the internet, requires minimal investment, effort, connections, and reputation to establish early stage. Then, as long as it is a good idea, investment and employees flood in. Compare this to the enormous barriers of entry extant in a traditional brick and mortar with the bank loans and industry connections and disparate business resources, and combined with a barely-out-of-college aged potential CEO with or without good ideas. You get two entirely different standards of discrimination. It almost seems sometimes like SV considers bad ideas as a normal state of affairs, as a "learning experience" to future brilliance. Fail to succeed? Most successful startup founders hit it right on their debut--- why? Because they have a mentality of, "Should I do this?", and not merely, "Can I do this?".
I'm not saying low barriers to entry are necessarily a bad thing. It just seems like either there are one, a lot of fools with grand visions or two, ulterior-minded entrepreneurs looking to pad their resume or impress their friends with some social networking rip-off that only cost them $10k to build. Bustling, metropolitan environments often offer that billion dollar jackpot or Hollywood walk of fame, but require in turn a more demanding degree of discrimination to tell that shiny metal from mere fool's gold.
Lying about your progress and metrics is extremely rampant in the startup world of SV... but IMO SV's biggest lie is that you need to be in SV and you need SV money to build a successful company. This flat out isn't true, especially if you're building a web service where your customers can be anywhere in the world and services / platforms that allow you to scale up incrementally exist. Most of what goes into building a startup is time-consuming trial-and-error grunt-work (e.g. reading documentation, editing boiler-plate code, answering emails / phone) that can be done much more cheaply and less stressful-ly from your mom's basement than hemorrhaging $10k to $100k / month in a downtown SF office while the scaffold of a 4 month deadline looms ominously before you. (There's a case to be made for the value of mentorship, but that value is always multiplicative and never additive - as in, if you don't have a business, your value of 0 is still 0 after multiplying it by the value of your mentor. So for mentors, the later the better.)
SV's second biggest lie is that you need the so-called "hockey-stick" growth curve to be competitive in order to be successful. This lie is clever because you're so caught on hockey-stick that you forget to question the premise of competitive. In the beginning of founding your startup, knowing about your competition might help you build your own product, but worrying about your competition is worthless because the world is more than big enough for the both of you (especially considering you don't exist yet). And if you don't have overhead (i.e. you didn't take SV money and hire a ton of SV's cleverest and most paid engineers), the world will always be biggest enough for you to survive.
SV's third biggest lie is coffee can replace sleep. That's not true, and one of your organs (usually your liver, but I've heard stories of kidneys, lymph nodes, beards, and even ovaries) will let you know after a bit.
Not sure why you're being so hard on yourself when some of SV's top serial-entrepreneurs and engineers with $41 million in venture capital and huge tech blog coverage to aid with their launch had the same problem launching a similar geolocated app.
We cannot have an honest conversation since whatever I say is pigeon-holed to a stereotype. You might as well live in the mid west for a while and find out for yourself vs SV.
In life, no one hands you a bunch of money for nothing. No startup guarantees anything, I assume most people are fully grown adults who are able to make rational choices fit for them. You can make your own choices in life and live with it and take responsibility.
Not to mention the finance chops required to make money, manage physical inventory (which most 'startups' don't really have to worry about), buy/hedge commodities and currencies, etc...
Most of the SV 'startups' I read about are just glorified websites, maybe with a mobile app as well. There are plenty of real, physical problems which can't simply be solved with a website. That's not to say there isn't opportunity for disruption and improvement, but your typical 'startup' is simply in the wrong domain.
I don't think this is true anymore. I think this is one of those funny vestigial things that evolved in a different era.
If you think of a startup as a true "garage venture" with a few people toiling away trying to ship a product, maybe that's the right model.
That isn't really the model for SV entrepreneurship anymore, though, even though we kinda pretend it is. How it works today is, $8 million-dollar "seed" rounds, downtown office space, early-stage companies paying $150k or more for talent, incubators and signaling, etc.
Maybe one of those cases where the game has changed, but our mythos hasn't.
reply