I see this weird pattern on Shark Tank (which to be fair is definitely not generally representative of tech startup culture) where the 'Sharks' turn down founders by glibly saying, "Oh you've been working on this for X years without any sales? Pass." It doesn't seem right to me. I get the idea of proving your idea through sales, but a product that's ready right now is a product whether it was made overnight or through tinkering over time...
I've noticed they really don't like to take risks on that show, they want to invest in sure things that already have a proven market and tons of sales. It seems kind of silly, like if you already have all that you probably can easily raise money, so it often becomes a situation where the biggest reason to go on the show is just the publicity from it.
> "Oh you've been working on this for X years without any sales? Pass."
NO sales after years, as opposed to a few, is a really big red flag. It generally suggests that the person is enjoying playing and being an entrepreneur and head-wanking about "business", while lacking the mental toughness to put him/herself out in the marketplace.
There are 2 things:
1) If you've been doing it for many years without any success - it's a signal for them that you're not willing to go all in or you're not ambitious enough.
2) Sales and/or number of users will be the ONLY way to prove your idea for a majority of investors. They understand that it does not really matter what they think about your idea - what matters more is what the customers think about it.
The whole point of a business is to make money, and it does that through sales. Someone seeing themselves as having a business worth pitching to investors for significant chunks of money, yet without a focus on the most critical validating piece is what prompts the glib response.
Different strokes for different folks, I guess. I run an asset-management fintech company and a lot of our clients (particularly institutional investors) are looking for a strong track record. For them, seeing we've been around for a few years adds credibility and confidence in management.
A company's origin story is simply a "get to know you" story same as at a cocktail party. Everything gets fudged because it's just a marketing statement.
eBay wasn't really started due to Omidyar's girlfriend's desire to sell her Pez dispenser collection, but that story explains the use case very simply and personalizes what (at the time) was a peer-to-peer, or C2C, model.
Tesla wasn't actually started by Musk but by saying so on their web site it drives home that the original founders are long gone and that Musk wants to be seen as the singular genius.
GE no longer says anything about Edison since saying so wouldn't add to its credibility.
A company age can be a first clue to whether they know what they are doing or not. But only a first clue.
It makes perfect sense that they would want to show some kind of saleable momentum. Isn't the rule of thumb that investors want out and want their money back within a certain number of years, and they're not going to lend money to companies they think will take too long to show returns? (I use the term "lend" loosely, btw, since many of the investment term sheets carry terms that make the investment closer to a loan than a string-free donation of funds.)
I'm sure the counterpoint is that that's a short-sighted view of industries that have long lead times to even develop a working product (or service, what have you), but it doesn't seem all that surprising.
I lived in London UK from 2008 through 2013, and worked at two self-described start-ups.
One had been operating since 2006 (so ~5 years when I was with them), and the other had been a struggling (sans profit) business for just over 15 years. The MD of the latter would occasionally try to tidy up the truth by saying things like 'we're starting up a new exciting branch of the business', but mostly just used the s-word outright at recruitment fairs and in job ads.
I'm not entirely sure the practice worked in anyone's favour.
This is everything that's wrong about Silicon Valley: we perpetuate the false virtue of overnight success, a flash of brilliance and youthful vision when, in reality, it comes down to years of slogging along, many nights of crying dry tears and adapting to the changing environment continuously.
It's sad because every operator I know knows this yet succumbs to the myth-making "hack" because that's how you tell a "good story" that attracts much needed attention among media and the investment community. Traction, hockey stick curve, growth and all that jazz.
And to be fair, it's not entirely VCs's fault either. They have to deliver on their investment promises within a certain timeline. What's really terrible is that there's not enough discussion about this in the VC-backed entrepreneurship community to accept that this is the "game" that everyone has to play.
I wish the game was talked about more. It became painfully clear to me during my first round of pitches to traditional VCs. We ended up going with a strategic investor whose goals were actually aligned with ours.
Arguably, you're committing no wrongdoing by changing the date your startup is founded. After all, the date itself is rather ambiguous. Is it the first time you get a user? Push a line of code? Etc.
[+] [-] kapauldo|8 years ago|reply
[+] [-] WalterGR|8 years ago|reply
[+] [-] firasd|8 years ago|reply
[+] [-] droidist2|8 years ago|reply
[+] [-] maehwasu|8 years ago|reply
NO sales after years, as opposed to a few, is a really big red flag. It generally suggests that the person is enjoying playing and being an entrepreneur and head-wanking about "business", while lacking the mental toughness to put him/herself out in the marketplace.
[+] [-] isalmon|8 years ago|reply
[+] [-] dustingetz|8 years ago|reply
The founder's response is: "That would be a mistake, because ..."
[+] [-] moduspwnens14|8 years ago|reply
[+] [-] sethbannon|8 years ago|reply
[+] [-] propter_hoc|8 years ago|reply
[+] [-] rhizome|8 years ago|reply
[+] [-] charlesdm|8 years ago|reply
[+] [-] gumby|8 years ago|reply
A company's origin story is simply a "get to know you" story same as at a cocktail party. Everything gets fudged because it's just a marketing statement.
eBay wasn't really started due to Omidyar's girlfriend's desire to sell her Pez dispenser collection, but that story explains the use case very simply and personalizes what (at the time) was a peer-to-peer, or C2C, model.
Tesla wasn't actually started by Musk but by saying so on their web site it drives home that the original founders are long gone and that Musk wants to be seen as the singular genius.
GE no longer says anything about Edison since saying so wouldn't add to its credibility.
A company age can be a first clue to whether they know what they are doing or not. But only a first clue.
[+] [-] zebraflask|8 years ago|reply
I'm sure the counterpoint is that that's a short-sighted view of industries that have long lead times to even develop a working product (or service, what have you), but it doesn't seem all that surprising.
[+] [-] Jedd|8 years ago|reply
I lived in London UK from 2008 through 2013, and worked at two self-described start-ups.
One had been operating since 2006 (so ~5 years when I was with them), and the other had been a struggling (sans profit) business for just over 15 years. The MD of the latter would occasionally try to tidy up the truth by saying things like 'we're starting up a new exciting branch of the business', but mostly just used the s-word outright at recruitment fairs and in job ads.
I'm not entirely sure the practice worked in anyone's favour.
[+] [-] btrautsc|8 years ago|reply
[+] [-] ktamura|8 years ago|reply
It's sad because every operator I know knows this yet succumbs to the myth-making "hack" because that's how you tell a "good story" that attracts much needed attention among media and the investment community. Traction, hockey stick curve, growth and all that jazz.
And to be fair, it's not entirely VCs's fault either. They have to deliver on their investment promises within a certain timeline. What's really terrible is that there's not enough discussion about this in the VC-backed entrepreneurship community to accept that this is the "game" that everyone has to play.
[+] [-] leesalminen|8 years ago|reply
[+] [-] frozenport|8 years ago|reply
[+] [-] lappa|8 years ago|reply
[+] [-] hoodoof|8 years ago|reply
[+] [-] 0x8BADF00D|8 years ago|reply
Arguably, you're committing no wrongdoing by changing the date your startup is founded. After all, the date itself is rather ambiguous. Is it the first time you get a user? Push a line of code? Etc.
[+] [-] dang|8 years ago|reply
[+] [-] lallysingh|8 years ago|reply
[+] [-] hn_throwaway_99|8 years ago|reply
[+] [-] idle_processor|8 years ago|reply
[+] [-] mikeyouse|8 years ago|reply
https://twitter.com/search?f=tweets&q=The%20Secret%20to%20St...
Then just click through via one of the links that shows up.
[+] [-] revicon|8 years ago|reply
[+] [-] mixedCase|8 years ago|reply
Firefox: https://addons.mozilla.org/en-US/firefox/addon/bypasspaywall...
Chromium-based browsers: http://bypasspaywalls.weebly.com/ Used to be on the store but Google took it down.
[+] [-] lgats|8 years ago|reply
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