State of Startups
stateofstartups.firstround.com
stateofstartups.firstround.com
But if companies are forced to generate revenue from the beginning, “what you get really good at is making money,” Mr. Fried said. “And that’s a much better habit for a business to work on early on, to survive on their own rather than be dependent on money people.”
Getting to the point of being sustainable by building what n customers want today gives you both the (infinite) runway, as well as hopefully some insight, into what 100n customers will want tomorrow.
I made much more money from the former situation.
Those 2 things should be the very top concern of any software entrepreneur/founders. I don't understand why the survey doesn't reflect that.
They say hiring good talent is a primary concern, but if that were really the case, wouldn't start ups be moving to cities where the labor supply was greater than the labor demand? And wouldn't there be a corresponding willingness to hire remote workers (as this greatly increases the pool of candidates)?
Moving to an area where labor is 1/2 as cheap, could double your runway, assuming there aren't other timed restraints.
>Nearly 1 in 5 founders say they're raising a unicorn This is not necessarily optimism. some companies require that kind of scale in order to get the economies of scale required for profitability.
Thumbs up for the optimism!
I wonder if founders giving answers here had names attached to their answers or if they were anonymous at submission-time.
> Profitability - 39%
> Growth - 61%
This is what happens when your business goal is to get acquired and not to have a business sustained by paying customers.
A business that isn't profitable is either a hobby or a bad idea. A startup that isn't growing is dead. Personally I'd rather make $5/10/15/25k a month with a business than kill myself trying to get millions in funding, pay myself a $10k/mo in salary and leave with nothing through either failure, dilution or some combination thereof.
Time will tell, but I think this is the line of thinking that we'll look back on with disdain in years to come.
The "lifestyle" self-running company that spits out a comfortable amount of cash and is easier to handle than a corporate job is somewhere between a myth and a unicorn. It's very rare. If you want to stay on the legal side of things it takes a great amount of connections, experience, time and effort to build such a company. You might as well invest that time in a "proper" startup and get some funding. Chances of success will be similar in the end.
Maybe, when you start a business, instead of all this bickering about what is bad startup behavior, you just define whether or not you think you want to get bought or go on your own, and act accordingly.
A startup is a company designed to grow fast. PG, 2012
http://www.paulgraham.com/growth.html
http://www.forbes.com/sites/natalierobehmed/2013/12/16/what-...
a startup is a company designed to scale very quickly
Steve Blank believes a startup is determined by the search of a business model. If you have a business model, then you have a small or new company, not a startup.
https://steveblank.com/2014/03/04/why-companies-are-not-star...
Another distinction worth making, almost its own axis really, is the difference between "a tech business" and "a business that uses tech".
Companies like Cisco, Facebook, Apple, Google, Canonical, and so forth are companies that are tech companies--without their technology, they wouldn't be in business at all. They provide a service or product that is IP in its own right.
Companies like Chipotle, Subway, Uber, Lyft, AirBNB, DoorDash, Dollar Shave Club, and so forth are companies that use tech to achieve economies of scale and growth that wouldn't be as easy otherwise but could still be done. You can imagine a way of making something that to the user is substantially like the Uber today without a complicated backend, even just using call centers and massive dispatch. The key part of their business is part-time contractor drivers, which is a business and not tech innovation.
It's easy to assume that all startups are tech startups, but that's not quite true and it also can limit and slow developing a good business model.
I'm not sure there's such a strong distinction between a tech business and a business that uses tech nowadays.
Facebook was a tech company specifically, and not a company using tech, because the entire product was devoted to rapidly filling social profiles and spinning up the microsites that were user accounts, mining those accounts for information, and then integrating as a platform for advertisers and game developers. None of that tech is really stuff they could've outsourced and still had a business--they couldn't have just white-labeled MySpace for example and gotten away with it.
It means quite different cultures, quite different "correct answers" to similar situations, and has mostly opposite requirements for many business factors and people involved.
Secondly, if you hear "startup" and think "developers" then you're ignoring at least 50% of the work necessary to make the business a success, all of which can (and often should) be done by someone without a CS degree. There's a lot more to tech than writing code.
Their tl;dr answer is that video games happened, and they were marketed exclusively to boys; that's what created and drove the cultural rift.
The example that comes to mind that breaks this is the failing startup turned dev shop in attempt to revive the startup pattern.
If later-stage companies are older (probably correlated, but not perfectly), then this could be a function of the year in which the boards were created.
There's more of a push for diverse boards now than there was 3 years ago, so if a company got funding and formed a board back then, it's not surprising their board would look different.
> Though the majority of founders say we’re in a bubble, 9 out of 10 founders believe that it’s a good time to be starting a company. All aboard!
Wow that's the worst example of sample bias I've ever seen. It betrays the fund's motives behind this post, I suppose.
Perhaps this is a small sample, but it sounds odd.
But perhaps things are changing, as candidates know how to ask the right questions.
If you join AFTER seed money, and get something like a market salary, you are an engineer.
The gray area is the in-between places. If you join before seed money, but only work 1 hour a week (say to help out a buddy), are you a cofounder? I would likely vote no.
Or if you join AFTER seed money, but work for 75% of market rate. Or 50%. At what pay do you appear to be a cofounder vs engineer?
As for the grey area, it seems as if common-sense should prevail but sadly that doesn't always happen so you always need a contract laying out exactly what each side gets, even for volunteer work. I seem to recall a story earlier this year (can't remember the company involved) where one of the founders' friends had helped out occasionally before they got funded, then the company got funded, ended up with a fairly large valuation, and the 'friend' reappeared and claimed that they were owed a significant share of the company.
In Berlin "the silicon valley of Europe", as people here like to say, there are pretty much zero engineering jobs paying >$100k/year. There is some magical ceiling of around $90k/year, no matter how senior you are. This isn't only true for startups but pretty much any company.
That's one of the reasons I work remote for Silicon Valley.
Of course living in a cheap area and being paid the salary of the high cost area is always better. But that's not specific to Berlin.
"Proper urban planning?" Hah. In Paris you pay San Franscico housing prices or you spend over an hour on strike-prone un-air conditioned buses or trains.
As far as retirement plans, pay me more and I'll invest it myself. If I make $150k per year, that's almost triple a French salary -- plenty of extra money to start my own damned retirement fund without depending on the government.
On top of that in Europe the small salary you do get is subject to confiscatory tax rates. Then (in France at least, you have a 20% VAT, high fuel costs and higher costs for basic utilities.) Food costs more, services cost more -- everything costs more. At the end of the day your net income is far far less than the US, even factoring in all of the 'free' stuff. But hey at least you can get employer sponsored 'free' lunch cheques and mandatory vacation time.
I live in France and I like living here, but I pay dearly for that benefit. I am not here because it's a good value. Financially and socially and well as entrepreneurially I would be better off in Houston, but I love the Provençal weather, the wine and the laid back feel of living in the countryside -- but a good value? Definitely not. If I had to survive on a French salary, there'd be no way I would choose to live here.
Here's some data to support: https://mises.org/blog/poor-us-are-richer-middle-class-much-...
Based on this, apparently not.
If you have to go to Paris, it is one of the worst place for tech talent (relative to the other major EU cities). Higher costs of living, lower income, limited competition for talents.
here in London a mid-level engineer, which I assume is the bottom half of senior software engineers, are typically paid £50-£60k/year in startups, which usually have poor pension schemes. £50k is about $60k and you already start paying for 40% tax for the top £10k of your salary.
You can get more if you go to big companies but then so can you in the US.
If you plan to run a start-up, and you can have remote first organisation (physical co-location is not required by say client attendance or manufacturing process) then do so!
And if you do stay in London, compete with banks for best talent with your wallets, not ping-pong tables.
I don't know the details of the costs of living and all the expenses. Maybe SV is better but I just want to say that it is not twice as better, contrary to what some comments would have you think.
The cost of living in SF is 1.4 times higher but the wage is 1.75 times higher. Note this number is assuming you are renting, and not considering electronics which is a lot cheaper in the US.
The house price in London is still more expensive, and if you are a senior developer in your 30s that's probably more relevant than renting price.
Factor those in, as a software developer, in SV you are easily 30-50% better off than London, the best paid city in Europe. The pay gap between Europe and US do exist, Silicon Valley is the technology centre of the world, Europe isn't.
Public health insurance also covers your spouse and children for free, along with any pre-existing medical conditions. Having to cover my wife's minor pre-existing condition basically ruled out ever living in the USA for us.
Take into account what will insurance be if you have kids, not to mention that even with insurance you will usually still get an invoice after visit to the doctor/hospital (correct me if I am wrong), which may be substantial amount of money (even after insurance negotiations, etc.).
Don't know how it's in US but in EU you have around 20-30 days of payed holidays, payed sick leave, payed _sick child_ leave (!). For example my coworker's 2 kids and wife had severe pneumonia, full treatment took around 2 or 3 months and he could help his family on paid sick leave that whole time. I do not know how much it would've cost in US but it would be a significant amount of money, not to mention that you would still needed either to work, to take unpaid leave or to quit.
It's all about averages. You maybe healthy (now) and do not pay much, but what if some serious illness hits you or your family member? What if you will get some chronic illness/condition? On those cases your insurance price may be adjusted.
To be fair, I want social health care to be more efficient and economical, i.e. not to pay 1/3 of my earned money for it, but I am treating it as a cost for my sanity and not needing to worry about some shit luck hitting me and insurance twisting their ass out of the situation, as insurance's goal is to pay you out as little money as possible.
if it's still there when you retire... good luck!
Most European cities were built before urban planning was a thing.
In contrast, many cities in the U.S. and Canada grew very rapidly from the 1960s to the present, so you'll often see big cities with a nice (but relatively small) walkable downtown surrounded by vast stretches of generic, car-friendly, pedestrian-hostile suburbs.
In the Toronto area, at least, there are plenty of suburban areas that are nominally served by transit, but it is so inadequate that you'll usually need a car to get anywhere in a reasonable amount of time.
I just picked data which I find interesting and not obvious, there's much more information which I don't cover. Data is in chronological order and often aggregated to less numbers. 700 founders inside and outside of FirstRound were surveyed.
- 7 of 10 say bitcoin is overhyped
- cofounder relationship: 5% fired their cofounder, 5% are strained, 40% collegial, 28% best friends
- 13% sold secondaries
- 61% optimise on growth, rest on profitability
- 52% want to fire up to 10 people, 32% up to 50, 10% more than 50 the next 12 months
- Hardest people to hire: tech, sales and marketing leader
- 90% of mid-level engineers get <1% equity, 64% <0.4%
- Most (55%) of mid-level engineers get between $100K and $150K
- Primary drivers of company culture are tech, sales and design
- Most (43%) people leave between 6-7pm, 10% work longer than 8pm
- 75% could close a round in 4 months or less
- 78% pitched less than 20 investors
- 76% raise exactly or more compared to what they planned
- 55% expect that raising gets harder the next 12 months
- 22% of investors didn’t meet expectations
- 20% <= 30yrs, 32% older than 40yrs, rest inbetween
- Most popular sectors are enterprise, consumer, fin-tech
- 43% web, 29% mobile, 1% VR
First post: