The article really lost me with the line "Unsurprisingly, venture capital firms – an equal victim of this culture"
In what way is a VC firm a "victim" of investing millions in a startup to try to get in at the ground level of the next unicorn?
The whole thing is this weird self-fulfilling prophecy cycle. I don't blame either side of the equation, per se. But it sorta kills me how people think of this standardized rite of passage now for launching a startup, getting a ton of money before you've made any, and then exiting. I wouldn't take any of that for granted.
It's cheaper for them to buy "startups" while they're smaller and in a fledgling state. Once in a while you hear of the startup founders making off with millions, but that's like a 3% lottery.
In reality, doing the math, startups are major bargains since the teams are working for near zero and their work and health, etc... may not even come into play when a VC or another company purchases. Had the companies or VCs used their own professional teams, they would have had to have paid more to account for working conditions, health-care, salaries, equipment, insurances, etc...
edit: In a tldr; sense, the VCs and major companies can reap the benefits of the "startup" while having to pay nothing to little in the initial cost. This is why ZUckerberg and the rest of the SV hustlers tout "youth" over "experience" because the youth are far more likely to fall into their traps and scheming.
From what I've seen, a lot of early-stage employees are aware of the game, or at least that they can only count on the salary they're receiving (and only for now). This is why you often find that the employees at startups are mediocre (outside of the founding team) - those who can get a job at a more established, respected company are doing exactly that.
I was a shitty startup founder in my 20s. Despite my failings all of my employees went on to be incredibly successful. The chaos and hustle is an invaluable education.
Twice, when I was much younger, I was suckered by the stock option scam, that's enough for me to know that it is systemic. I was immature then, relatively, and I experienced the downsides of believing that because you are young and everyone tells you you are talented, you are invincible and going to be rich...
Now I advise others, salary is THE most important thing, in fact working for a startup should carry a salary premium, because of the uncertainty and pressure. Crunch time happens but if it is always crunch time, something is going wrong, and you should look at what your hourly rate actually is. The VCs won't burn out or get carpal tunnel. The founders will swan into their next round of funding. No-one cares about you, so you have to care about yourself.
When people talk about a shortage of people in tech, they specifically mean, a shortage of people experienced enough to be useful but not so experienced that they understand the game...
Cloud computing makes bootstrapping cheaper too. I don't understand the rush to get funding, unless you see it as a mark of status and a temporary means to a lifestyle.
Many people want to work in startups for the wrong reasons. A desire for social cachet or the lure of quick riches are bad reasons to work for startups. You can make more money for less work working at an established corporation. And who cares about what twentysomethings think of you.
Good reasons for working in startups include wanting to build, rather than maintain, products, learning faster, gaining experience faster, working on the cutting edge, and dealing with less bureaucracy. There is also a contrarian or rebellious streak in some startups that can suit certain people.
That said, all these good things can be had, and had more of, in a bootstrapped company rather than a funded company.
They might even find perfectly fundable companies that were forced to bootstrap through no choice of their own because this culture in this article is not actual startup culture, it is Silicon Valley culture.
And because they operate in a small market, just big enough so they can be very profitable, but don't want other people to know about it and compete with them...
Or they spend their marketing budget efficiently targeting their potential customers. The reason that you don't hear about most bootstrapped companies is you are almost certainly not in their market.
Nobody is a very vague term. Bootstrapping is great in the beginning, but it is extremely hard to run a company off of your savings. Using other people's money to make money is not a new concept.
Burning countless VC money is the new standing on the shoulders of giants. Why read books and learn the history if you can eat sushi and furnish a fancy office instead?
> A whole generation is being trained to sell their companies as quickly as possible - rather than doing any actual work to nurture them
Reads like a 'knee-jerk' reaction rant to a changing world. The (financial) rewards are going from 'build it to last' to 'work your connections to get funding and work your other connections to sell and exit ASAP'.
Neither approach is the 'right way' or 'wrong way', but I see this situation more as something in the lines of 'this is how the tech / startup landscape has turned into, so go with the flow or get burned'.
I see "build it to last" as better for society at large. Steve Jobs, for example, believed in the importance of putting things back into the stream of human consciousness and built Apple. They didn't build it to sell.
people and businesses had no intention of actually pulling paper-based systems into computational ones, and thus all Steve Jobs had to do was reproduce office-quality typography and document presentation on a screen, selling 1870s typewriter workflows as innovation well enough to convince the world they were revolutionary
Love this. Just saw the video. So is it true that real monkeys in the jungle stepped on the typewriter keys and this genius quote came out of 1 of them??? Fascinating!!!
I don't think entrepreneurs can be expected to have much consideration for society at large except as legally required. Why would they do somebody else's job? Their job is so dang hard as it is.
I think this article vastly underestimates how hard many of the successful startups worked to get there. And arguably there are more startups nowadays with long term ambitious goals (nuclear fusion, energy storage, immunotherapy, drones/robotics) than we've had in the past. A decline in startup culture would also lead to less of these ambitious startups as well.
I sometimes wonder though if the pendulum has swung too far from the big corporate, big science model that dominated when Silicon Valley was born. I don't know if a decline in startup quantity or even quality would lead to fewer innovations. Maybe national or corporate labs could pick up the slack. I think the low rates of entrepreneurship among young people these days (it's true, startups are flashy but entrepreneurship is declining on the whole) speaks to something being broken with the current model.
This article assumes that companies do best when they are captained by their founders for as long as possible. I think what we are seeing here is a more economical solution. Innovators make new things, if the public wants or needs the new things larger companies with the resources to hire larger teams to maintain and expand the service acquire them.
Innovators are free to innovate and services eventually get the backing of established companies.
"larger companies with the resources to hire larger teams to maintain and expand the service acquire them"
But in many cases, the acquiring companies have no interest in the acquired product and shut it down immediately. They're only interested in acqui-hiring the people, who have demonstrated a certain degree of talent in creating a new product. (In some cases, they also buy the company to eliminate a potential competitor.)
I am also surprised by the rise in the popularity of the term "serial entrepreneur". I find it amazing that people want to tell the world of all their previous business failures as though it is something to be proud about. I haven't failed with my first venture yet I am not proud of all the business mistakes I have made along the way.
I see the author is attacking people for selling their startups. But I dont think he has considered that, people do have alot of ideas in their head. And when one idea gets traction does that mean you should forget all the other ideas you had and focus rest of your life on the one?
I think the world will benefit from people presenting their ideas rather than not.
It's hard for me to criticize a business model that makes money. If VC is willing to fund Acqui-hires As a Saleable Service, and then pay top dollar for its figurative prom queens, then why shouldn't people create and pursue them?
Sure, it's more mating display/beauty contest than entrepeneurialism, but are we not entertained? In the meantime, how else is one supposed to get the cash to bootstrap their big idea in the first place?
It's kind of like how John Williams wrote the theme to _Lost in Space_ long before he wrote the soundtrack to _Star Wars_, no? Or, ya know, Paypal before Tesla and SpaceX.
While I agree with you there can still be externalities from this ecosystem. Only a very small percentage of people are able to succeed using this model and for the other 99.99% it would have been better if they built a business focused on something a little more long term.
This rip-and-flip startup model is really just a poorly disguised form of gambling. Sure every week someone wins a massive payout, but for society as a whole it is a negative.
In my experience, the success rate is a lot higher than 0.01%, I'd guess it to be more in the 5-10% range with a little due diligence applied to the idea and its founders. That's a pretty good bet/gamble for three-letter-title founders and anyone with equity north of 1% for the remainder of this boom cycle.
But I agree that startups are a terrible proposition for those with 0.5% or less, which is a matter of choice for the employee who could go get a higher expected return from any of the big tech companies for equivalent (and maybe even much less) time and work. This subject has been rehashed many times on HN.
As for society, um, the US (at least) is a "society" composed of many people who treat buying state lottery tickets as a retirement plan. MVP startups IMO are far less toxic than that. That said, when I made a little $$$, the most toxic thing I encountered was several supposed friends suddenly begging me to fund their ideas because VC wouldn't. @#%$ that, I have plenty of my own ideas to bootstrap with my hard-earned cash.
Is your 5-10% range based on VC funded startups? My number was more across the entire pool of wantrapenuers and on that basis I am probably being generous.
Yes it is amazing how people react once they realise you have money.
Many people are doing startups or "startups" because that's what they are being told to do (as opposed to being encouraged to do). Nothing wrong with that. Many of these businesses are really just making a feature. So the seed investor who cashes out soon via an acquihire is really more of an agent. So what? And of course many businesses are just retail shops like people have always started; but when they are started online and not funded by a bank loan (which young people have trouble getting anyway) they are called "startups". But they are simply small businesses (hence my startup and "startup" distinction above).
Folks are still starting more traditional startups all the time, both bootstrapped and externally funded. Encouraging more people to do this is hardly bad news.
This isn't an article, it's an opinion piece with a bunch of anecdotal evidence and random quotes to support the author's case.
The caption "Nor are they Zuckerberg" is outrageously condescending and judgmental. "None of these people are smart enough to become successful entrepreneurs," judges the author, "and they shouldn't even bother trying."
Is it a surprise that lots of people have the wrong idea about what it takes to be successful with a startup? No, and it shouldn't be a surprise.
Just like any profession that pop culture heaps praise upon, there will be many who have an unrealistic view about what it takes to gain success. It's the same as starting a rock band - some people are going to be outrageously successful and most won't, but most who fail will gain experience and will not regret having tried.
For those who think that this is a problem, try to fix it - go give a talk to some young entrepreneurs about how hard it is. Let them know what the risks are and how much work it's going to take. Try to help them be better equipped for the challenges ahead.
If you replace entrepreneurs with journalist, you get the same picture. You have some top tier, and then you get every hack that writes a web column that "shouldn't even bother trying".
There really is only one myth that needs to be busted for the universe to retain order.
"they rush out of university to start companies regardless of having no experience of working in the private sector, thus increasing the chances of failure."
These successful entrepreneurs never rushed out of university to become entrepreneurs. They were successful entrepreneurs already. When you're so successful, staying in school stops making sense. And if you're at that point, you aren't taking a risk by quitting school. The risk is with staying there.
Bill Microsoft, Steve Apple, Mark Facebook, Larry and Sergey Google, Elon Tesla. They all tried to stay in school. They were good students with no intentions of leaving.
So just like any other college student trying to balance school and work and play, replace the work and play with entrepreneurship, and when you are successful, do what makes the most sense. If you graduate, then get a job and do the same. Now replace school and play with entrepreneurship.
These kids who quit school just want to quit and are using entrepreneurship as an excuse. Good for them. No one can say if it's better or worse for them. But if anyone thinks they're mimicking successful entrepreneurship behavior, they're misinformed, be it the students dropping out or the media portraying it as such.
Good entrepreneurs quit their day job when they have to. Not when they want to. And they have to because they're successful already.
> Bill Microsoft, Steve Apple, Mark Facebook, Larry and Sergey Google, Elon Tesla. They all tried to stay in school. They were good students with no intentions of leaving.
This is false for Jobs and Musk. It wasn't until 4 years after Jobs dropped out from Reed that Woz showed him the Apple I, and Musk started Zip2 with $28K of his dad's money after dropping out of a Stanford physics PhD with no specific plans.
It's only semi-true for Gates (Gates and Allen had obtained a deal with MITS over the summer when he chose not to return to Harvard in the fall), but Harvard allows students to take indefinite leaves of absence, so he took a risk-free path.
It was only after the rise of the internet made exponential growth in the space of a few months a real possibility that you saw Page, Brin, and Zuckerberg leave college with very clear evidence of growth to point to.
"If I had never dropped in on that single calligraphy course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts."
Also I looked up Larry Oracle, and for him he quit school because of a family tragedy.
Elon also quit his phd at a new school after 2 days, which seems more like he changed his mind than "dropped out".
Of course, life is complex. But the point is, none of these people were anti-academic or anti-school. They were anti-wasting time and pro-opportunity, but they were never for dropping out.
I think this shift towards early liquidity is really good for 2 reasons:
1) Society benefits when people work on what they love and do best. Founders, with rare exception, are best at innovating and building new things -- not running large organizations. If we allow founders to exit early, they can work on their next idea, which maximizes the amount of time they spend doing what they love (innovating). This is a net good.
2) Liquidity in the form of early exits attracts more founders, which leads to more overall innovation. I think there's a social judgement against trying to "make a quick buck" which should be discounted. Real value was created whenever an acquisition takes place, and this value isn't destroyed when founders sell -- it just exchanges hands (and sometimes gets transformed).
57 comments
[ 2.2 ms ] story [ 116 ms ] threadI'm starting to think startups are a meme pushed by the VC industry.
In what way is a VC firm a "victim" of investing millions in a startup to try to get in at the ground level of the next unicorn?
The whole thing is this weird self-fulfilling prophecy cycle. I don't blame either side of the equation, per se. But it sorta kills me how people think of this standardized rite of passage now for launching a startup, getting a ton of money before you've made any, and then exiting. I wouldn't take any of that for granted.
In reality, doing the math, startups are major bargains since the teams are working for near zero and their work and health, etc... may not even come into play when a VC or another company purchases. Had the companies or VCs used their own professional teams, they would have had to have paid more to account for working conditions, health-care, salaries, equipment, insurances, etc...
edit: In a tldr; sense, the VCs and major companies can reap the benefits of the "startup" while having to pay nothing to little in the initial cost. This is why ZUckerberg and the rest of the SV hustlers tout "youth" over "experience" because the youth are far more likely to fall into their traps and scheming.
Now I advise others, salary is THE most important thing, in fact working for a startup should carry a salary premium, because of the uncertainty and pressure. Crunch time happens but if it is always crunch time, something is going wrong, and you should look at what your hourly rate actually is. The VCs won't burn out or get carpal tunnel. The founders will swan into their next round of funding. No-one cares about you, so you have to care about yourself.
When people talk about a shortage of people in tech, they specifically mean, a shortage of people experienced enough to be useful but not so experienced that they understand the game...
VC funding is all about eating the world. That's a high bar.
But a burning passion, persistence, a virtual server - and some luck - should be enough for anyone to take a bite out of it.
Many people want to work in startups for the wrong reasons. A desire for social cachet or the lure of quick riches are bad reasons to work for startups. You can make more money for less work working at an established corporation. And who cares about what twentysomethings think of you.
Good reasons for working in startups include wanting to build, rather than maintain, products, learning faster, gaining experience faster, working on the cutting edge, and dealing with less bureaucracy. There is also a contrarian or rebellious streak in some startups that can suit certain people.
That said, all these good things can be had, and had more of, in a bootstrapped company rather than a funded company.
See Y Combinator now. Which people go to for the name and the network - not the money.
Reads like a 'knee-jerk' reaction rant to a changing world. The (financial) rewards are going from 'build it to last' to 'work your connections to get funding and work your other connections to sell and exit ASAP'.
Neither approach is the 'right way' or 'wrong way', but I see this situation more as something in the lines of 'this is how the tech / startup landscape has turned into, so go with the flow or get burned'.
Thoughts anyone?
except they totally did
people and businesses had no intention of actually pulling paper-based systems into computational ones, and thus all Steve Jobs had to do was reproduce office-quality typography and document presentation on a screen, selling 1870s typewriter workflows as innovation well enough to convince the world they were revolutionary
MEVSGP MPIZ JBKQSI DBAPH TLUM XFEA HRBH CNUDNT PZIZDK VZOPZW DX. TO BE OR NOT TO BE THAT IS THE GZINCLE FLORTEN GLOFFLE.
* * * * * * * * * * * * * * * * * * * * * *
SO CLOSE.... SO VERY CLOSE....
PERHAPS WITH JUST A FEW MORE MONKEYS........
[1] https://www.youtube.com/watch?v=IfMDWhc_ohU
Innovators are free to innovate and services eventually get the backing of established companies.
But in many cases, the acquiring companies have no interest in the acquired product and shut it down immediately. They're only interested in acqui-hiring the people, who have demonstrated a certain degree of talent in creating a new product. (In some cases, they also buy the company to eliminate a potential competitor.)
I think the world will benefit from people presenting their ideas rather than not.
Sure, it's more mating display/beauty contest than entrepeneurialism, but are we not entertained? In the meantime, how else is one supposed to get the cash to bootstrap their big idea in the first place?
It's kind of like how John Williams wrote the theme to _Lost in Space_ long before he wrote the soundtrack to _Star Wars_, no? Or, ya know, Paypal before Tesla and SpaceX.
This rip-and-flip startup model is really just a poorly disguised form of gambling. Sure every week someone wins a massive payout, but for society as a whole it is a negative.
But I agree that startups are a terrible proposition for those with 0.5% or less, which is a matter of choice for the employee who could go get a higher expected return from any of the big tech companies for equivalent (and maybe even much less) time and work. This subject has been rehashed many times on HN.
As for society, um, the US (at least) is a "society" composed of many people who treat buying state lottery tickets as a retirement plan. MVP startups IMO are far less toxic than that. That said, when I made a little $$$, the most toxic thing I encountered was several supposed friends suddenly begging me to fund their ideas because VC wouldn't. @#%$ that, I have plenty of my own ideas to bootstrap with my hard-earned cash.
Yes it is amazing how people react once they realise you have money.
Many people are doing startups or "startups" because that's what they are being told to do (as opposed to being encouraged to do). Nothing wrong with that. Many of these businesses are really just making a feature. So the seed investor who cashes out soon via an acquihire is really more of an agent. So what? And of course many businesses are just retail shops like people have always started; but when they are started online and not funded by a bank loan (which young people have trouble getting anyway) they are called "startups". But they are simply small businesses (hence my startup and "startup" distinction above).
Folks are still starting more traditional startups all the time, both bootstrapped and externally funded. Encouraging more people to do this is hardly bad news.
The caption "Nor are they Zuckerberg" is outrageously condescending and judgmental. "None of these people are smart enough to become successful entrepreneurs," judges the author, "and they shouldn't even bother trying."
Is it a surprise that lots of people have the wrong idea about what it takes to be successful with a startup? No, and it shouldn't be a surprise.
Just like any profession that pop culture heaps praise upon, there will be many who have an unrealistic view about what it takes to gain success. It's the same as starting a rock band - some people are going to be outrageously successful and most won't, but most who fail will gain experience and will not regret having tried.
For those who think that this is a problem, try to fix it - go give a talk to some young entrepreneurs about how hard it is. Let them know what the risks are and how much work it's going to take. Try to help them be better equipped for the challenges ahead.
"they rush out of university to start companies regardless of having no experience of working in the private sector, thus increasing the chances of failure."
These successful entrepreneurs never rushed out of university to become entrepreneurs. They were successful entrepreneurs already. When you're so successful, staying in school stops making sense. And if you're at that point, you aren't taking a risk by quitting school. The risk is with staying there.
Bill Microsoft, Steve Apple, Mark Facebook, Larry and Sergey Google, Elon Tesla. They all tried to stay in school. They were good students with no intentions of leaving.
So just like any other college student trying to balance school and work and play, replace the work and play with entrepreneurship, and when you are successful, do what makes the most sense. If you graduate, then get a job and do the same. Now replace school and play with entrepreneurship.
These kids who quit school just want to quit and are using entrepreneurship as an excuse. Good for them. No one can say if it's better or worse for them. But if anyone thinks they're mimicking successful entrepreneurship behavior, they're misinformed, be it the students dropping out or the media portraying it as such.
Good entrepreneurs quit their day job when they have to. Not when they want to. And they have to because they're successful already.
This is false for Jobs and Musk. It wasn't until 4 years after Jobs dropped out from Reed that Woz showed him the Apple I, and Musk started Zip2 with $28K of his dad's money after dropping out of a Stanford physics PhD with no specific plans.
It's only semi-true for Gates (Gates and Allen had obtained a deal with MITS over the summer when he chose not to return to Harvard in the fall), but Harvard allows students to take indefinite leaves of absence, so he took a risk-free path.
It was only after the rise of the internet made exponential growth in the space of a few months a real possibility that you saw Page, Brin, and Zuckerberg leave college with very clear evidence of growth to point to.
For Steve Jobs:
"If I had never dropped in on that single calligraphy course in college, the Mac would have never had multiple typefaces or proportionally spaced fonts."
Also I looked up Larry Oracle, and for him he quit school because of a family tragedy.
Elon also quit his phd at a new school after 2 days, which seems more like he changed his mind than "dropped out".
Of course, life is complex. But the point is, none of these people were anti-academic or anti-school. They were anti-wasting time and pro-opportunity, but they were never for dropping out.
1) Society benefits when people work on what they love and do best. Founders, with rare exception, are best at innovating and building new things -- not running large organizations. If we allow founders to exit early, they can work on their next idea, which maximizes the amount of time they spend doing what they love (innovating). This is a net good.
2) Liquidity in the form of early exits attracts more founders, which leads to more overall innovation. I think there's a social judgement against trying to "make a quick buck" which should be discounted. Real value was created whenever an acquisition takes place, and this value isn't destroyed when founders sell -- it just exchanges hands (and sometimes gets transformed).