• Make a sufficiently shiny, yet imminently disposable product.
• Hoard employees (each one bumps your valuation by ~$1.5 million), be loud, get acquired.
• Kill product. (You never cared about it anyway -- it was just a vehicle for ego and attention. Now that you've got your $5 million, you don't need the validation of all those silly pawns/customers anymore.)
There's a certain amount of hypocrisy you have to accept. We do this to ourselves. No one on HN would think worse of themselves for achieving a $5M exit, yet we are happy to vilify those who do.
Where are the founders of the next GE? The next IBM? Those who seek to solve the fundamental problems society faces? I'm not asking about space ships and world hunger. I'm just talking about solving real, concrete, long term business problems. The ultimate filter on this is simple: If your product were to disappear, would your customers' quality of life significantly decrease?
It seems to be similar to the Zed Shaw talk-within-a-talk . Instead of working for BigCo for a paycheck and going home to work on your own things, you use a lesser idea and work for a VC via their investments while developing your master idea. The difference is the level of risk and the size of the payout.
The other part that isn't mentioned here is this is a commentary on the most visible portion of the tech industry, namely web/app based social startups. I can't help thinking of Sturgeon's Law. In a way, that makes me cautiously optimistic. You have a bunch of people tackling hard problems in computing as well as society. When Facebook changes it's privacy settings, or Path collecting our address books, we all freak out. It forces us to confront things we as a society never had to think about before. Fifteen years ago, who was thinking this seriously about mass privacy concerns that didn't involve the government?
I also look around and think about what cool things happened in the last decade. I can look up anything from a black monolith sitting in my pocket. I can connect with people I haven't seen physically in years. I can read about events as they happen in real time. I can buy just about anything without ever leaving my house, and it will arrive a couple of days later. I can learn about any subject from very respectable institutions for free.
In a few years, we will have a (more or less) unified communication system for health records, cheap 3D printers and fabricators, a mass market for self driving cars, and privately funded space travel. Right now people are seriously considering space mining of all things.
All of these things were born alongside purely self-interested companies that have since failed or were acquired. If it takes many short term companies to get a few gems, then let the VCs, GooBooks, and hustlers knock themselves out. I highly doubt we can optimize for more success, so I don't see a point in fighting it. Maybe it's that very culture that allows for such gems to be formed in the first place. Even if you are involved with such a company, the talent and knowledge you come away with is invaluable and will follow you wherever you go.
I would say you should try to make your ideas a reality. You should try to make money, build companies, and commit yourself. You just might be involved with something great.
</reality distortion field>
Not doing startups.
The parent is wondering why don't we see more entrepreneurs founding companies that look like they could become the next titans of industry. It seems to me that their companies either don't exist, or are currently invisible because they haven't begun gobbling up market share.
The only sane approach is open data. Leave everything available for export so some other feature company can pick up where you left off.
You could venture into an insane realm where startups enter into a Startup Insurance™ league. When a company gets acquihired, instead of shutting down the product, a separate foundation runs the product (or figures out a way to open all the data for export).
In a sense the promise is a "non-credible threat" in game-theoretic terms. It would attract users if they carried it out, but because acquisition happens after the user-attraction stage they don't have an incentive to carry it out. This means they won't rationally carry it out, which means they don't attract rational users. This situation can be avoided if they "tie their own hands".
Joe and Wayne work on building something they know GooBook could acquire without looking stupid. Something they might be able to do in-house, except their most talented engineers are desperately working on ways to extract more money out of ads, or to reduce the costs of their gargantuan infrastructure. Some are stationed in Antarctica building a self-cooling datacenter; others are diverted from creative projects into the new 99.9999999999% uptime initiative: one second of downtime costs a million dollars. Forget that stupid 18% free-time web app project, and come help make some mon-ay. The quarterly report must look good. Shareholders demand it!
Working on self-cooling data centers sounds awesome to me, & also penguins. But more importantly: the 99.9999999999% uptime initiative that saves a million dollars for every second rescued sounds awesome to me. Developers are rarely so privileged as to work on problems that are simultaneously hard, well capitalized, and easily quantifiable.
"Mon-nay"? This paragraph reminds me painfully of how mouthy I was when I was 24 and had just had the company where I was an early employee be acquired by a BigCo.
He means world hunger, building spaceships, developing new sources of clean energy, etc.
I'd rather have spaceships AND spam than no spaceships and no spam.
I don't see lack of spaceships causing hardship, so that's really more of a definition #1 type of thing. Society built spaceships in the 60's, contrast that against the effectiveness of a spam filtering system built with hardware, software, algorithms and statistical inference techniques available in the 1960's.
While I appreciate and admire the work put into into accomplishing space fight, the existence of manned spaceships really doesn't contribute much to my existence, whereas spam sucks away a bit of my life, every day.
To Stephensons point, which he makes in the video in the link, he really means dreaming up and solving big problems. The example he gave was building the worlds tallest building. I'm paraphrasing him here: <paraphrase> Typically accomplishing the goal of building the worlds tallest building is measured only in contrast to the current record holder. So when people aim to set this record, it's only incrementally bigger. If you actually do the research you'll find that it's possible to build a building 20x taller than the tallest existing building. Why aren't we thinking on that scale?</paraphrase>
In the '60s, the best and the brightest were being lured by NASA, to put a man on the Moon. 50 years later, the best and the brightest are being lured by the Silicon Valley, to sell ads on social media. Biggest anticlimax ever.
Not to mention stuff that's useful in space and at home. http://en.wikipedia.org/wiki/File:PVeff(rev120404).jpg
EDIT: Should have googled it myself. For reference http://web.mac.com/nealstephenson/Neal_Stephensons_Site/Inte...
how mouthy I was when I was 24
Welcome to The Bay Area: where self worth is measured by frat-like posturing and manipulation to level up at any cost.
Anti-success or "insiders manipulating the system" rants tend to bring the love. It's all Method. I'm just another SV washout.
Building a company and walking away with 6 million is life changing. Too many people seem to think selling your company means you should never need to work again. What it means, is that you're freer to continue to pursue the projects you want. Seems like a huge inflection point to me.
Also, our Bay Area apartments cost $2M.
That's a different post, though.
I suppose I could move to somewhere like Kansas and retire, and live an upper-middle class life, but I don't see the point in that. (The "official" recommended spending rate of 4% would yield a high but not enormous income. Expecting 6-8% income is crazy talk.) The obvious HN answer is to start a company, but a) I'd be bad at it, b) I wouldn't enjoy it, c) I'd probably end up losing a pile of money, d) large opportunity cost, and e) health care.
Trying to summarize: the people who say a few million doesn't go far in Silicon Valley are right. It eliminates various problems (and I do sympathize with those with financial difficulties), but otherwise hasn't changed much for me. (Or maybe I'm just using it wrong.)
i was trying to overestimate taxes (so that the reported annual income, if anything, would be less than actual annual income) and use a nice round number so i didn't have to use a calculator.
i know it's (15,30), but i can't rememeber if it's just 18% or something more like 25%. and since i am efficient (read: lazy :), i just overestimated to 30% instead of wikipedia-ing.
Berkshire Hathaway is willing to guarantee you a $205,000 annual income from that sum in an annuity, which is not a bad deal at all, but it's not 'never worry about money again', it's just a really nice salary, and would be substantially depleted in the case of any inflation at all.
I'll put it another way: Maybe it's not 'never worry about money again'—people are prone to worrying, after all—but $6MM is more than the lifetime earnings of the vast majority of Americans.
If you can't make it on more than what nearly everyone else will ever see in their entire lives, that's your problem.
You'd be 37 years older and making less than 1/4 of the income, adjusted for inflation.
BH annuity is not a bad deal, but losing 2% of your income a year will sound tolerable until about year 5... =)
If you retire mid-twenties on $5M, there's no way you'd make it through 70 on that, if you did nothing else active (read: risky) to increase your income.
Follow the thread UP, and you'll see it's the core of the conversation - as to whether one can live off of 6MM for the rest of your life. I call "ceasing working and living on the money you made previously" retirement, you can call it what you like.
If you can earn more, great. But the chances are exceedingly low to begin with.
I don't think people understand how to not waste money any more.
$18k/yr in most major US cities probably implies:
* Subsistence diet
* Dependence on small selection of rental properties
* Extremely poor access to health care
* Dependence on informal "gratis" child care
* Near perfect job attendance
I call these out not to make the boring "gnash our teeth about the lives of the poor" case, but rather the suggest that your ability to care for a family on 18k/yr in a US metro is counterfeit: you can do it until you:
* Are ever hospitalized
* Lose your free child care
* &c ...
... at which point bang you're bankrupt. I think a lot of people who think they are getting by with low incomes are actually playing a kind of sick inverted Martingale betting strategy against life.
I think with wise spending and decent investments I could easily make that amount last my entire life and have quite a bit to give away at the end.
I wonder what percentage of users are generally fake and how much some startups goose this number. Maybe adding in 5% worth of fake users increases an acquisition price. I'd imagine it varies by the type of app (CRM, social, etc) but that you'd probably have to get your next funding from the Salvation Army if/when you get caught.
CEOs have been invited to conferences to speak about their "sudden rapid growth." They never admit they are cheating. You can usually tell who does it because their traffic will abruptly stop once they realize the 100,000 one-time-login users in Singapore aren't virally spreading or clicking on ads.
Flaptor (the name of the company, IndexTank was the product) was a search consulting company five years before becoming a startup. I know, I was there.
But honestly, that sort of stuff rarely gets transcribed into Internet ink.
As soon as the smart money that's currently focused on VC finds decent returns in other, less risky investment vehicles, the VC money train will stop. It's just a matter of time.
I disagree completely on Facebook becoming a billion dollar company without VC. VC funding is what allowed Facebook to monetize much later and gain huge cash reserves by selling tiny portions of equity at extremely high valuations.
Having been through this exact process, I can assure you that this is how it really works.