Silicon Valley Booms but Worries About a New Bust | Hacker News Reader

Silicon Valley Booms but Worries About a New Bust

nytimes.com

60 pointsjedwhite18 comments

And for anyone with a decent idea and the drive to start a company, $100,000 to get it off the ground is easy to come by.

Bullshit. Out of the thousands of people that come to Hackers & Founders on any given month, I know exactly one person who has been able to raise money on an idea alone. And, that young woman is an absolutely an exceptional sales person.

I should know. Hackers & Founders _is_ early stage in Silicon Valley.

We boot strapped an incubator at Hackers & Founders because it is so friggin hard to get funded. Myself, my co founders and everyone in the incubator worked their assess off to get our 6 startups funded. The companies that we were working with all had polished products, had been working on their projects for at least a year or two.

And, yeah, 7 weeks after we were done, all 6 of our companies have raised a total of $1.5M. But, it took these companies at least 6 months of pitching and hard work to raise a round.

And, in that same time, we've gained 800 members at Hackers and Founders. How long to you think it's going to take those people to raise?

edit

We aren't raising money from Limited Partners because being mini-VC's isn't interesting at all to us. What's interesting to us is helping the thousands of our members globally learn how to start kick ass startups. And, we want to give them the tools to do just that. And, when they're ready, we'll connect them with the investment community.

So, we've talked with perhaps 30 VC's over the past 6 months about sponsoring what we're doing... Every single one has passed.

Bubble? If this was the bubble that the NYT is talking about, VC's and angels would be throwing money at us.

The tone sounds like a fluff piece. Someone at 35 is "old"? Last I saw, statistics said the average successful founder is 42. Wish I could remember where it was, though -- I know how useless data without a cited source is. (Yes, that's a sly dig at the article, disguised as self-depecation :-)

It was the best of times (Silicon Valley). It was the worse of times (rest of country).

I think it's just that everything that people once thought valuable has become a commodity, so only intelligent people prosper ;)

Thanks, iamelgringo, for the kind words.

Yes, I do disagree with the core thesis of this article and am disappointed to see my quote out of context, but I believe Claire's intentions are good.

In response, here are 3 reasons Silicon Valley is NOT imploding and a bit of context around the Founder Showcase: http://wp.me/p7Wfu-8f

"And for anyone with a decent idea and the drive to start a company, $100,000 to get it off the ground is easy to come by."

What? Seriously? Well I have a decent idea that is being worked on right now and I have the drive. Anyone want to fund it to a guy that lives in VA instead of in Silicon Valley?

I'm in Silicon Valley and this is nonsense. Sure, it's possible to raise $100K, but it's by no means easy.

Don't take the words at the face value. That's just a typical way to make an article sound more appealing that it is.

That is properly compared with the rest of the country.

Bubble or not, since the money are available, perhaps this is a good time to start building companies that solve real problems. Not that Groupon isn't cool, but the unfortunate thing is that gamification startups or group deals or 4sqr+photos+nonsense are popular, and the money is being thrown their way. Investing in those companies makes financial sense, but it would be great if more health-care or education related startups were not just funded, but also bragged about. In a long run, they could have a great impact on the society at large, even if they don't make investors into bagillionairs.

Companies that solve real problems are presently unfundable based on my experience.

http://www.thinkcomputer.com/corporate/whitepapers/heldhosta...

Take a look at the Appendix to see how VCs react to serious work.

I wouldn't say unfundable, but perhaps they are facing different challenges. I've got a few friends who raised money for a good-cause startup, but the problem is they got that money as a grant from a charitable foundation - terrible idea! The founders now have enough cash to pay themselves and to hire people, but because the money won't run dry for a few years, the market forces aren't kicking them in the ars. The result? The team's pretty smart, but they've been in "stealth" for as long as I've known them because there is absolutely no motivator for them to release and iterate.

The article says that young valley millionaires see investing into startups as a game, as a badge of honor. If that is so, I hope more of them could re-invest the proceeds into smarter causes. Maybe if there was enough of competition between them, as to whose educational startup is the coolest, then founders would be reluctant to eat taco-bell and work 80 hrs/week.

As per the rejections you got from the VCs, sorry to hear; the first batch tho had very legitimate concerns.

Weren't the VCs right in this case, though? The regulatory issues were exactly the problem.

Wouldn't a decent measure of boom vs. bubble consist of looking at the number of companies that become profitable and self sustaining? The article talks a lot about companies looking for money, but how many made the transition from money consumer to self sustaining?

If the current crop of start ups has a decent percentage of companies becoming profitable and remaining in business 5-10 years down the line, it's boom.

Mr. Moore went to a start-up event to learn about 'quick exits' - valley talk for cashing out of your company while you still can - where executives from large tech companies coached young entrepreneurs on how to sell their nascent start-ups.

Is this info posted anywhere online?

That was really the only interesting part of the article. They should have done a whole article on quick exit tutoring rather than the same old fluff we've all heard before because it's more insightful of where things are headed. Just wait until we see a high profile implosion like Groupon probably will.

I just read the rest of the article. I stumbled across this little gem:

Soon came VidCaster, a service for Web sites to add video; it was started by Kieran Farr, a taxi driver turned chief executive. He said his service had absolute stickiness — meaning that it lures Internet users to stick around for a long time.

“What’s the gross margin of the business look like?” asked George Zachary of Charles River Ventures.

“What does that mean?” Mr. Farr said.

“That’s a problem.”

Average score: 2.8.

I happen to know Kieran Farr quite well. http://www.vidcaster.com/ was one of the first companies in our Co-op incubator. And, I have no doubt, that Kieran is going to be far richer than some reporter who still makes his living writing for a company that think that selling yesterday's news written on pieces of dead tree is a viable business model.

Kieran, and his co founders moved to Silicon Valley 2 years ago and the bottom of the economic bust. They've been doing corporate video for years together, and saw a huge problem in the market. They would get paid thousands of dollars to shoot corporate videos, and then have to upload it to YouTube for streaming, rather than on a company branded web site. So, they created a product around a big problem they found companies having.

Kieran is a self taught hacker, and he chose to drive cab for a living while boot strapping his company because it paid fairly well, and allowed him the flexibility to boot strap and take a few hours off in the afternoon for investor / client meetings when he needed to.

Kieran was the chief back end engineer, and shortly after they joined the our boot strapped incubator ( we didn't have any money to invest), and we were trying to figure out how to convince investors to fund VicCaster.

Hackers & Founders hosted a presentation by Naval entitled, Hacking your funding process: http://hackersandfounders.tv/T7F/naval-ravikant-hack-your-fu...

And, we decided to set up a VidCaster site called http://Hackersandfounders.tv, push the Naval presentation onto that site, try to get as many views as possible, and use that to showcase what VidCaster does.

VidCaster (while broke, driving cab and eating ramen noodles) handled 1TB of bandwidth in the 7 days after we put Naval's presentation online. They arranged for a sponsorship contract with Microsoft BizSpark, and handled everything from picking up the video from the AV guy at the presentation, to the uploading to the encoding. And, they did an amazing job.

Damn straight, their service has "stickiness". Imagine the pain in the ass it would be for me to get the videos that VidCaster is hosting at http://hackersandfounders.tv moved elsewhere? And, really... how the fuck do you calculate a gross margin when you have a boot strapped startup with 10 paying clients?

Shortly thereafter, we introduced VidCaster to 500 startups, and they got funded. Their paying clients at the time included AirBnb, ZendDesk, Twilio and Microsoft. They just presented at 500 Startups demo day, and another VC after seeing Kieran's Demo said, "VidCaster's amazing. All my portfolio companies need to be using their service".

Pretty soon, they are going to be rolling out a service that allows a customer to have any of their uploaded videos automatically transcribed, so that transcript can be downloaded and indexed by search engines.

Not bad technical chops for someone who is just a "cab driver".

VidCaster knows the online video market cold. They run an amazing business. They help other companies make money, and they had revenue before even getting funded.

It's companies like VidCaster that made me put my own startup aside, boot strap an incubator with no money of my own, and do whatever we could to get them funded. Bubble, my ass.

It's going to be entrepreneurs like Kieran, Ray and Steve (the VidCaster founders) that lead this country out of the economic mess it's in. They've been work their assess off on their startup for years, and they do whatever it takes to keep their company going. Even, if that means driving a cab while coding. These guys are fucking heroes if you ask me.

But then again, I moonlight as an ER Nurse. What do I know? Must be a bubble.

Fuck the New York Times. </rant>

Would love to ban NYTimes from this site.

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