
Seth Levine: Sick of start-up BS - cwan
http://finance.fortune.cnn.com/2012/03/05/sick-of-start-up-bs/
======
dustingetz
i work at a J2EE shop. We pivoted recently. We feel like a startup, we
engineer like a startup, we work as hard as a startup, but we also have
existing client relationships, existing revenue streams funding our pivot, and
we already have a team of domain experts and strong engineers.

When I give a talk and my bio says J2EE I'm a bit sheepish, and all the
twenty-somethings are like LOL you use java, but that's silly - I work for a
_better, stronger business_ than all the little startups[1] emailing me on
careers.stackoverflow. And the money is better. And we dodge the whole class
of issues that come with taking money[2], like being told by your VC to
collect and sell personal information.

That's why I'm still here. I _believe_ in this business, and when interviewees
ask the founder about the business model, the answer isn't "freemium" - its
how we've been paid to contract a product for a huge client but retain IP
rights so we can reinvest the profit to productize something that the entire
industry wants. and we have assets (domain experts, software, client
relationships, functional sales team) that a startup doesn't have - there are
tremendous barriers for competition to overcome. we're halfway through this,
and it's working, and when you look at it you're like, duh, of course its
working.

[1] i don't want to pick on anyone, and there are a few awesome startups out
there that I'd love to work for, and maybe yours is in this set, and maybe i'm
not good enough for the ones in this set. What I do see is that the startups
emailing me seem to need a decent rails guy to build their commodity webapp.
rails apps are important, and i'm sure they have all sorts of challenges which
i'm not aware of, but they aren't particularly interesting, to me. J2EE on a
good team is about building out < <http://c2.com/cgi/wiki?WhyIsPayrollHard> >,
which is in a whole new class of scale/complexity that is, well, the type of
hard which causes languages like Clojure and Scala to exist. [2]
[http://37signals.com/svn/posts/3107-99-problems-but-money-
ai...](http://37signals.com/svn/posts/3107-99-problems-but-money-aint-one)

edit: i'm getting lots of voting activity in both directions, it surprises me
that this is controversial, i'd love to hear criticism.

~~~
shafqat
I find it ridiculous that a significant percentage of the population here
equate raising VC money with selling your soul. I know you cite the SvN post,
but that is one opinion. Raising VC is good for some businesses, bad for
others. So is your hiring plan. So is your product choices. And a hundred
other things.

We struggled for a long time, and our business came perilously close to the
end a few times. But you know what got us out? Funding. VCs. Amazing investors
that were thoughtful, supportive and value accretive. The marketing that we
could invest in with our funding. We're doing millions of revenue now, and it
is all because we were able to light the rocketship with our VC fuel. And did
I say our VCs became great friends and mentors, even through the tough times?

It's not for everyone, and my experience may be an outlier. But let's stop
with the snarky ant-VC comments.

I agree with the rest of your points and good luck with the pivot!

~~~
tatsuke95
> _"I find it ridiculous that a significant percentage of the population here
> equate raising VC money with selling your soul."_

Really? I find the opposite. Every "we're hiring" thread brags about the
company being "VC funded" and people seem to fall all over themselves figuring
out the best pitching strategies or slide deck appearances.

I always find it odd, because being VC funded isn't good or bad in and of
itself. There we agree.

------
gavanwoolery
I'm sick of a different kind of BS. Generally speaking, creating startups has
become almost as "meaningless" as trading stocks. You used to buy a stock
because you believed in the long-term value of the company. Now you buy a
stock because people panic on that given day and you feel you can take brief
ownership of it to squeeze a few pennies out of it, before dumping it back on
the market.

Why do VCs love startups? Because you can create value where there is none.
Somehow 1,000,000 users capable of generating $200,000 in ad revenue per year
(never mind the startup is burning 2 million a year!) are able to create
valuations of $50 million. But hey, hot investors X, Y, and Z are in on this
deal so it must be good! And thus the creation of companies no one gives two
shits about continues.

How many startups are actually profitable - that is, genuinely creating more
cash than they are burning? I think I can count them on one hand.

~~~
bradhe
> How many startups are actually profitable - that is, genuinely creating more
> cash than they are burning? I think I can count them on one hand.

Surprisingly less true than you might think. I am friends with many founders
that are cash flow positive!

Also, I haven't yet seen many of these crazy valuations. I mean, I see a few
in TechCrunch every now and then, but the consistency of the valuations I'm
seeing seems to be rare compared to others' experiences.

------
melvinng
I blame it all on the Facebook movie, it over hyped startup world. People
don't understand that more then half the time, we are knee deep in code or
running out of cash.

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loveitbaby
Ah, this is material for a "captain hindsight" meme. "If you didn't want your
founders to party it up, you shouldn't have pointed a fire hose of money at
them"

There may be "hard work" going on in the start-up world, but you'll have to
seek it out. For every "serious" start-up you'll find 5-10
Zynga/foursquare/etc... clones.

~~~
dasil003
> _If you didn't want your founders to party it up, you shouldn't have pointed
> a fire hose of money at them_

Ah, but then they wouldn't be _your_ founders would they?

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joedev
The BS is not limited to start-ups. Check out the break-dance troupe kicking
off JavaOne. geez:
[http://www.tbray.org/ongoing/When/200x/2008/05/07/PS080733.p...](http://www.tbray.org/ongoing/When/200x/2008/05/07/PS080733.png)
(credit: <http://www.tbray.org/ongoing/When/200x/2008/05/07/J1D1>)

------
noobface
Sounds like he's sick of the deluge of marketing dollars into these events,
not necessarily the startup game.

Problem is, it's unavoidable. These guys have to get their name out there as
quickly and loudly as possible. It's unfortunate, but until everyone in your
target market has heard of you, you can't stop screaming "Look at me!"

~~~
killnine
To me it is one thing to be noticed ('get their name out there') for
remarkable products/services, that took either time, effort, genius or a
combination.

It is a complete separate thing when you either haven't produced anything, or
have produced, but it is far from remarkable, and you are being noticed by
running around screaming.

It is the latter that gets tiresome and old. Not to mention the former is so
much more honerable.

~~~
freshhawk
I agree completely.

But pragmatically this is how small companies make a lot of money now. Run
around screaming, "pivot" your non-business until it's the lowest common
denominator buzzword compliant non-product and get an exit.

It's like the Hollywood sitcom model. It's basically focus group driven and
hit based. Your agent and connections are more important than acting ability.
The market created around start-ups cares way way more about "connectors" than
introverted technical talent. And you can't blame them, web development tools
have gotten very good and there are all kinds of new niches to fill on the
web. You run the numbers and they are worth more.

In many other career paths there are various different cultural norms that
push back against this kind of pandering, with varying degrees of success.

If you think that the engineer personality type is well suited to push back
against extroverted suits promising popularity, wealth and calling them
"rockstar programmers" because "you geeks are cool now" in order to keep
working on big problems or doing something honorable then you have more faith
than I.

So I hope that we find a way to correct the perverse incentives in place but
the rest of the world would also love to hear a solution to this problem.

------
jpdoctor
> _I'm worried that in offering term sheets after a single 60 minute meeting,
> and in pricing early stage deals like they were already late-stage successes
> and most egregiously by constantly running around self promoting and self
> aggrandizing, VCs are falling prey to a cult of personality about themselves
> and forgetting that their jobs are to help companies be successful._

He's worried about this now?! 10-year returns are negative (and that includes
funds lucky enough to have google!)

It's been that way at least since the 90s internet bubble.

------
duncanj
Business guy discovers that business is often full of vapid jargon-filled
nothingness promoted by stuffed shirts. Film at 11.

~~~
bradhe
Post has less to do with business and more to do with the _lack_ of business
:)

------
joedev
Amen. I would think getting noticed based on the coolness of your parties
instead of getting noticed based on your product would be lame. Instead, it
seems to be what draws people to the game. "BS" is a good call.

------
colbyh
"Build products, not hype."

Not that I disagree with anything said, but it is really easy to put your head
down and build good products that eventually fail because no one knew about
them. Just a thought.

~~~
tomhoward
The counter to this is that good products are - by virtue of being good -
products that people use and talk about. Generating hype can accelerate
awareness and growth, but only after the product is proven to be good via
initial organic growth.

~~~
bradhe
> The counter to this is that good products are - by virtue of being good -
> products that people use and talk about.

This is so insanely untrue. There are tons of great products that don't see
the light of day because the people in charge of said product don't have the
skill set to find the people that would be interested in them.

~~~
tomhoward
Historically that may have been true (if you consider _making a product usable
and finding users for it_ distinct from the task of making a product _good_ ),
but the trend is very much in the opposite direction.

These days the difficulty in building a great product vastly outweighs the
difficulty in finding an audience to validate it. Both skills can - and must -
be learned, but these days, someone who is able to learn how to build a great
product will find it comparatively easy to learn how to find an early-adopter
audience for it.

This is what YC is talking about with their motto "make something people
want".

------
phzbOx
I feel you but networking is probably the most overlooked strategy with first-
time entrepreneurs. Party and startup events are a great way to meet seasoned
professionals.

~~~
amcintyre
Where do people go to find introverted, seasoned professionals? I'm going to
guess the next Woz won't be at those parties.

~~~
larrys
"introverted, seasoned professionals"

There's probably a fair amount of "introverted, seasoned professionals" that
stop by HN from time to time. But then they reply with something that pisses
the clique off, get down voted and never return.

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jcc80
Seth expands on his thoughts in this video:
<http://www.youtube.com/watch?v=SKArupEBE6Y>

Now in all seriousness, of course the focus should be on product. But having a
ton of relationships to leverage doesn't hurt if the end goal is the success
of the business. (and I love that video!)

------
johnrob
I'm surprised to see swear words in content from cnn.com.

------
shingen
He's describing the euphoria that always accompanies a bubble atmosphere. In
this case, it's a start-up bubble. The same exact atmosphere went on in the
late 1990s, just with bigger rounds and fewer micro companies.

Money is sloshing around, and nobody wants to earn 2% on long term junk
government paper.

$500,000 isn't what it used to be, literally, but it buys a lot in the way of
a web start-up now. If that $500k is now really $250k in 1999 terms, it's
buying more like $5 or 10 million in 1999 terms (when it comes to the
infrastructure needed to get a web start-up off the ground).

I'd normally say the start-up bubble would continue until the next economic
melt down dries up the funding, but the funding levels driving the start-up
bubble are so low, it's hard to see what will slow it down short of government
regulations (they're working on that).

~~~
stcredzero
_Money is sloshing around, and nobody wants to earn 2% on long term junk
government paper._

That's the most concise expression of this thing I've ever seen!

 _I'd normally say the start-up bubble would continue until the next economic
melt down dries up the funding, but the funding levels driving the start-up
bubble are so low, it's hard to see what will slow it down short of government
regulations (they're working on that)._

So, arc you thinking the Bay Area is in something like a perpetual bubble?
Sort of like Helium starting to move and "roil" weirdly near absolute zero,
once things have cooled enough to let quantum effects come into play?

