Billion-Dollar Start-Ups Face Problems With Valuation and Acquisitions Zef Nikolla/FacebookFor start-up companies, going public isn’t very appealing considering what happened with Facebook’s lackluster initial public offering. Congratulations! Your start-up is now valued at over $1 billion! This might seem exciting, as though you’ve won a lottery. You see, being in the Billion-Dollar Start-Up Club limits how, and if, a company can get out of the Billion-Dollar Start-Up Club — at least safely. The Club is growing quickly. Dozens more companies are within arms’ reach, including Foursquare, WordPress, GitHub, Quora and Fab. They have a lot to worry about. Given that Apple rarely makes acquisitions, that leaves Google, Microsoft and possibly Facebook. And speaking of Facebook: after its lackluster initial public offering, when its stock dropped by half, going public isn’t very appealing. “As a start-up valuation increases, the options definitely decrease,” said Jon Callaghan, a partner with True Ventures who has been investing since the early 1990s.
Are You An Alcoholic Yet? Or, The Great Startup Rollercoaster This post has appeared as a guest blog on FounderDating, which brings together entrepreneurs with different skill sets to start innovative new companies. Startups are by their nature extremely stressful. At a large company, the company itself has momentum. With a few exceptions, if one person (or team of people) were to suddenly disappear, the company will continue to coast for (potentially) multiple years before the effects may become evident Thought experiment - imagine if the (multi hundred person (?)) In contrast, at a startup as the entrepreneur if you stop pushing, everything immediately comes to a halt. There are times when you need to push much harder then others to get over a hump that reminds me of activation energy from chemistry. Hiring the first employeeRaising moneyGetting the first N usersAcquisition talksGetting suedPivotingGetting N users for the new pivot productFiguring out a business modelEtc. etc. So how to deal with all the stress? Make it fun for everyone.
Why Startup Founders are Always Unhappy — jessblog Startups are incredibly stressful. I know many founders whose companies are doing great, but they are still stressed and unhappy. Polyvore is doing great (growing fast and cash-flow positive!) The trajectory of a successful startup looks something like this, up and to the right: It’s not a smooth, straight ride though. If you’re lucky enough to have gotten from point A to point B on this graph, you should be happy, right? Unfortunately, humans are terrible at understanding absolute values. My theory is that a founder’s happiness is tied to the rate of change of their startup’s success. Even though point B is 2x better than point A in terms of success, it is a deceleration from the moment before. Some tips to keep from drowning when your happiness is below the line — 1) Remember where you came from. 2) Great culture and great people are your glue. 3) Don’t let your self-worth be completely defined by your startup. Strangely, this comforts me :-)
Frighteningly Ambitious Startup Ideas March 2012 One of the more surprising things I've noticed while working on Y Combinator is how frightening the most ambitious startup ideas are. In this essay I'm going to demonstrate this phenomenon by describing some. Don't worry, it's not a sign of weakness. There's a scene in Being John Malkovich where the nerdy hero encounters a very attractive, sophisticated woman. Here's the thing: If you ever got me, you wouldn't have a clue what to do with me. That's what these ideas say to us. This phenomenon is one of the most important things you can understand about startups. [1] You'd expect big startup ideas to be attractive, but actually they tend to repel you. 1. The best ideas are just on the right side of impossible. The point when it became clear to me that Microsoft had lost their way was when they decided to get into the search business. Microsoft : Google :: Google : Facebook. The way to win here is to build the search engine all the hackers use. 2. Whatever you build, make it fast.
Four African Girls Created Urine-Powered Generator 7 November '12, 04:58pm Follow What have you built lately? 14-year-olds Duro-Aina Adebola, Akindele Abiola, Faleke Oluwatoyin, and 15-year-old Bello Eniola have created a urine powered generator. All over Africa, young men and women have missioned across the country and arrived in Lagos, Nigeria. All they want to do is show off what they have made. These four girls may not end up doing that either, but their efforts definitely stand more of a chance than yet another hyper local social cloud app. Here’s how it works: Urine is put into an electrolytic cell, which cracks the urea into nitrogen, water, and hydrogen.The hydrogen goes into a water filter for purification, which then gets pushed into the gas cylinder.The gas cylinder pushes hydrogen into a cylinder of liquid borax, which is used to remove the moisture from the hydrogen gas.This purified hydrogen gas is pushed into the generator.1 Liter of urine gives you 6 hours of electricity. More great finds from around the Web: TNW Shareables
For A Stranger In Silicon Valley, Success Isn’t Only About Who You Know Editor’s note: Cherian Thomas is founder and CEO of Cucumbertown, a recipe-publishing platform. Follow him on his blog and Twitter. For entrepreneurs, it is now both easier and harder to raise capital: easier because of powerful platforms like AngelList; harder if you’re not part of an accelerator or don’t have a strong network. Silicon Valley has more startups than ever before. My startup, Cucumbertown, raised its first round a month ago, and during the course of this journey, I realized that, as a first-time entrepreneur without any solid Valley footing, my run toward raising funds as a non-American co-founder was somewhat unique. Valley funding used to be an impenetrable fortress that opened up only by way of introductions. So here’s how my month of experience as a non-accelerator, non-American fundraiser translates into advice. Make Friends Fast I was scheduled to meet 500Startups Partner Paul Singh on the second day of fundraising. Meet With Companies Who Have Raised Get On AngelList
Instagram Co-Founder Mike Krieger’s 8 Principles For Building Products People Want Mike Krieger, Instagram’s founder, thinks you can build apps that fit in the real world by watching what people want, not guessing. He presented his eight core product design insights today at 500 Startups’ Warm Gun conference. Here’s the cheat sheet to his talk. “Just because you’ve Googled something doesn’t mean you’ve learned,” Krieger explained in the intro to his design talk. You should come away with serious insights, not just random facts. And now, Mike Krieger’s Eight Principles Of Product Design: Draw On Previous Experience and Understanding – The biggest problem is startups in search of a problem.
Instagram's Mike Krieger Shares How To Do Better Product Design App and mobile design has come a long way in the past few years, with many popular services shifting their focus more towards to improving the way their apps look. At 500 Startups’ Warm Gun conference, an event focused on design problems in the tech industry, the theme that design and user experience are being treated as “second class citizens” in the community — if you’re not focusing on usability and response time, then “you suck”. “Do it for the puppies” Those words came from 500 Startups co-founder Dave McClure. In his opening remarks, he stated that most app designs suck — take a look at the most popular ones out there, like Twitter and Facebook: their mobile experience “sucks” and McClure questioned why that is. Refreshing the design process To show how a company can succeed in the design front, Instagram co-founder Mike Krieger, gave his thoughts about how the company got to a point where they managed to ship a product that they were proud of. Designing the right thing
Killing Your Startup on a Thursday Night Editor’s Note: Lucas Rayala was the cofounder of Altsie. This is what you do when you close down your startup: you call Rackspace and cancel the Windows SQL server plan. You email SendGrid and give them notice on your Silver SMTP Service Package. This is what I told them: “I’m folding up Altsie. I put three years of my life into building and running Altsie, a bootstrapped startup funded out of my back pocket. As we approached launch last May, I started to understand what buzz was. That’s the nice side of the story. Elon Musk said that running a startup was like eating glass and staring into the abyss. I was confronted with my own limitations and began to see myself in the harshest, most honest light ever directed on me. Two years building and eight months running Altsie took its toll. Then everything I actually wanted to say suddenly boiled up, and I started to talk — really talk. I talked about success and failure. And at the same time, was it possible I could say Altsie was a success?
Black Swan Farming September 2012 I've done several types of work over the years but I don't know another as counterintuitive as startup investing. The two most important things to understand about startup investing, as a business, are (1) that effectively all the returns are concentrated in a few big winners, and (2) that the best ideas look initially like bad ideas. The first rule I knew intellectually, but didn't really grasp till it happened to us. The total value of the companies we've funded is around 10 billion, give or take a few. But just two companies, Dropbox and Airbnb, account for about three quarters of it. In startups, the big winners are big to a degree that violates our expectations about variation. That yields all sorts of strange consequences. To succeed in a domain that violates your intuitions, you need to be able to turn them off the way a pilot does when flying through clouds. [2] You need to do what you know intellectually to be right, even though it feels wrong. Harder Harder Still
Screw the Black Swans: Ichiro is our role model, not Barry Bonds. | Dave McClure There are probably better things for me to do today, however i feel compelled to respond to the Black Swan Farming post by Paul Graham, founding partner of Y Combinator. Maybe you can call this post “Grooming for Ugly Ducklings”. While i respect YC & PG immensely – note that 500 Startups has invested in over 40+ YC startups, and we have generously borrowed (COUGH) many excellent & original ideas that YC developed – at the same time, it’s useful to grok the similarities vs. differences between 500 & YC. Put bluntly: we are both ambitious and we both play baseball, but YC is quite clearly the Yankees, while 500 is more like the Oakland A’s. Though i don’t profess to be Billy Beane (or Jerry Maguire), 500 is ideologically more focused on being an organization that teaches great hitting & fielding, rather than one that aims to find the best hitters & help them negotiate the best contracts. But before we describe our differences, let’s first review the similarities. But 500 Got Next. Kudos
How Airbnb Evolved To Focus On Social Rather Than Searches It’s good to be Joe Gebbia these days: A mere five years ago, his friend from RISD, Brian Chesky, arrived on his doorstep to rent a room in his loft. That same weekend, a flood of fellow designers were rushing to find hotels for an upcoming design conference. There weren’t any hotels left. Chesky didn’t have a job. So the two of them decided to put a handful of their itinerant peers up for the weekend, and made a quick $1,000. Airbnb was born. From A Star To A Heart That effort began with a total site redesign just four months ago, centering around "Wish Lists," which are lists of lust-worthy properties that users create themselves. For a couple years, registered Airbnb users have been able to star the properties they browse, and save them to a list. Probing the reasons why a heart was so different from a star, they eventually landed on the concept of Wish Lists. Partly, this is a functional improvement: You can use these lists to plan trips collaboratively.