Having noticed that the mostly male artists, developers, and designers they were working with took their sweet time to respond to requests and were often slightly rude and condescending in email— “They’d say things like ‘Listen, girls…,’” Dwyer tells Quartz—they decided to bring in a male co-founder named Keith Mann to make communication easier.
Pre-Keith, Dwyer explains, “it was very clear no one took us seriously and everybody thought we were just idiots.” When “Keith” contacted collaborators, Gazin says, “they’d be like ‘Okay, bro, yeah, let’s brainstorm!’”
Keith only lasted six months, but, by then, being Keith had taught them to stop being communicating “like a girl.”
Neither the approach nor the result is unique; women have been obscuring their sex to get ahead for centuries. But…
In era that touts gender equality, even school-age children are still absorbing warped messages about the sexes. A recent study published in the journal Science revealed that by the time most girls are six, they believe that only males can be geniuses.
That means by the time a female hits first grade she’s already convinced she’s second best.
I was having a conversation this week about Silicon Valley companies. Some of them are doing amazing things.
When I was job hunting I would look at several and imagine myself there changing the world.
There were several though that also had great funding, great people, but I could not understand for the life of me what they did. They had a great list of customers, but I could not understand the value they brought.
There are two possible solutions to that conundrum.
One, I am just not savvy enough to understand (a very real possibility).
Two, they were full of hype and energy, but not substance. I can imagine that both statements are true when you look at the vast array of companies in the valley.
With that said, have we lost the forest for the trees? Have some companies been so hyped that people continue to pour money into them hoping for a huge payday that may never come to fruition?
Uber is in the news for a variety of reasons, some good, some bad. I recently read an article that Uber and Google are working on flying cars. While the concept of flying cars seems cool… I guess, I am more concerned with the participating companies.
Google provides value, products and that elusive quality, profit. They are well established, have multiple streams of income and could fail at this endeavor and live another day. It’s exciting to see them using their money for grand ideas, but it won’t decimate them either.
Uber provides value and services, but zero profit.
In fact, if Uber was run like a traditional company or household, they would have never even gone to market.
They operate more like a country that can print its own money. They take on debt, lose billions every year, yet keep on trucking.
Venture capital and perhaps greed are what allow this to occur. If they fail at the flying car concept what does it mean for the rest of the business?
I know there are very smart folks who are there and who are invested. I often wonder what their long game is. Do they believe they will become profitable at some point if they hang on long enough?
Another thing to consider is the economy. We have easy money right now with very low rates of interest.
For an investor it makes more sense to go with a high risk investment versus storing it in savings, because they essentially lose money due to inflation.
When the markets tighten does that mean Uber cannot seek out another round of funding?
My point is this.
Have we lost sight of the incremental steps it takes for us to achieve greatness by thinking we can accelerate the whole process with enough capital or am I the Luddite here?
I am a believer that debt can be good when there is a viable business model. I am less impressed though when a company has never turned a profit and had no projections to do so at any point soon, but can be valued so highly. What makes Uber so unique?
I say we need to keep dreaming the big dreams, but also look at the foundation.
Penny Kim is a marketing professional who relocated from Dallas in July to work for WrkRiot (formerly known as 1for.one and apparently also known as JobSonic) for $135,000 a year plus equity and a $10,000 signing bonus for relocation expenses,
It ended with her dismissal in August after she filed a complaint with the Division of Labor Standards Enforcement over failure to properly pay her
If you wonder whether she’s just another disgruntled employee, she’s not.
Not when the CEO gives everyone faked documentation of wage payment.
“Thursday, August 4th was D-Day … That afternoon in the office, Michael emailed each employee a personalized PDF receipt of a Wells Fargo wire transfer with the message: ‘Here is the receipt. It has been calculated for the taxes on your semi-monthly salary and signing bonus. The money is arriving either today or tomorrow. I am sorry about the delay.'”
But the receipts were fake.
Al Brown, former CTO and one of the founders, confirmed much of her account, even the most outrageous accusation: The CEO she dubbed “Michael,” whose LinkedIn profile identifies him as Isaac Choi, gave employees fake receipts for money wire transfers to convince them the company had paid their back wages when in fact it hadn’t.
Not even a good fake, since the photoshopped receipts said 2014.
Even after that two employees lent the company an additional $65K.
All told, Choi burned through $695,000 (his own initial $400,000, Brown’s $230,000 and the borrowed $65,000) in less than a year.
A comment on Hacker News should serve as a bona fide caveat emptor for everyone in the global startup world, not just in Silicon Valley.
“Welcome to the club. It’s pretty much a rite of passage here to spend some time with a psychopath VC, a completely self absorbed CTO with a rich investor dad that fuels his fantasies, or an idiotic CEO with an ego problem, and to pay the price for it (just time if you’re lucky, time+money if you’re not).”
This isn’t a warning not to join, just a note to do so with your eyes open.
There’s a reason it’s called “due diligence” and it’s as much for employees as it is for founders and investors.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here
As an entrepreneur, the constant stress around money in vs. money can at times be overwhelming and deeply emotional. Anxiety/angst/anguish/fear-and-loathing, and all synonyms thereof, best describe the feelings swirling in and around the entrepreneurial community these days when the subject of money, AKA funding, comes up — although not so much if you are one of the “chosen”, i.e. connected/entitled.
Bambi Roizen, Vator Founder and Managing Partner of Vator Investment Club, actually sees more money available. (Here is the video and full transcript of her talk at Splash one year ago. The quote is edited for clarity.)
There were about 20 post seed venture funds; now my friend Paul Martino counts probably 200 and there’re going to be a lot more funds. If you think that there’s going to be a crunch, don’t worry about it. I have a feeling there’s going to be a lot more funds coming to fill that void. I think there’s going to be a lot more specialized funds. (…) I think that’s we’re actually going to see local funds. Local funds investing in local businesses.
Because remember, this is the opening up of title 3 to the average investor. (…) It’s so hard sometimes to look at companies, because they’re so good at telling stories these days. I knew that was going to happen — you’re such great storytellers, you have to be, because you have to sell your vision. But it makes it really hard for investors to know what to invest in, so they’re going to invest in everyone, right? Money is available.
I asked KG what he thought from his perch as a serial entrepreneur who has raised funds in very different economies and attitudes over the years.
“What she says is interesting. However, what we’re seeing is the financialization of the startup/entrepreneurship industry, with the consequence that financial investors will get involved earlier, take larger stakes and leave less for the entrepreneur and the team.
One could say that it is good that capital may become easier to access (if this is true), but the cost of that capital is also increasing since there are now two layers of return that has to be provided much earlier than before — that to the VC and also to the VC’s LPs.
In other words, entrepreneurs are coming earlier into the VC model where only a few outsized returns matter and the majority of companies are pushed/allowed to fail.”
Many VCs treat startups the same way commercial agriculture treats seedlings — once they get to a certain size they are thinned in order to concentrate resources on fewer plants that will yield a larger harvest.
“This may actually be negative for a whole host of companies that have no way of maturing before being put under the pressure of the VC return machine.”
However, newly emergent investors may bring change to the game. Kobe Bryant and Jeff Stibel have invested together since 2013 and have started a new fund with their own money.
Our team issues rankings of the most active investors in an industry or geography pretty regularly and occasionally, an investor reaches out and the conversation goes a bit like this.
Investor – “We should be on your ranking.”
Me – “Ok cool. Let’s ensure your data is updated and we’ll edit the rankings as need be.”
Investor – “I can’t tell you the deals. They’re stealth.”
Me – “We can’t put you on the ranking unless we know the deals. We’re a data company so the rankings are based on data.”
Investor – “I can’t tell you the deals. They’re stealth. But we should be on that ranking.”
Me – silence
If a VC won’t answer a valid question from an impeccable source, one that’s privy to more business secrets than any five (ten?) Wall Street firms combined, why would they answer yours — or be truthful if they do?
And thanks, Anand, it’s nice to see a VC on the receiving end for a change.
And that favoritism usually results in more money, more introductions, more involvement, in fact, more everything, which results in substantially more innovation.
The data showed that companies tied to a competitor by at least one VC firm in common were indeed less innovative than those unencumbered by such ties; in fact, they were 30 percent less likely to introduce a new product in any given year.
It gets worse.
The UNfavored startups were 55 percent less likely to introduce a product.
Proximity mattered, too; those farther away from a shared investor were 56 percent less likely to introduce a new product.
What if your VC is part of the “golden circle?”
Companies tied to VCs in the top 25 percent of reputation indexes were significantly less likely to introduce new products in any given year.
And I’m willing to bet similar stats apply to super angels, regular angels, incubators and the rest of the funding world.
“Most VC firms say we give you more than money. That’s complete hogwash.”
The same holds true for angels.
So, how do you do dudil on an angel or VC?
Search their name along with words, such as ‘sucks’, that are commonly used for complaints.
Ask your peers; not just the portfolio CEOs, but any who have been raising funds or been around for awhile.
And when you ask, shut up; don’t disagree and don’t argue. Just listen.
Plenty of time later to sort out what you’ve been told.
All relationships are based on trust; if an investor says what you want to hear, or what’s convenient, just to get the deal, then you should have a pretty good idea of just how much help they’ll be down the line.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here.
As most of you know, I subscribe to CB Insights (you should, too). It’s written by co-founder Anand Sanwal — good info and he has a great sense of humor.
Yesterday, I learned that founders are sometimes described as “blue flame.” I’ve never heard this term since we founded CB Insights so it could be that (1) It’s not really a thing or (2) I’m not blue flame.
Basically, blue flame is defined as below:
It refers to young people, preferably in their 20s, with lots of energy and no kids.
A blue flame is a fire that is burning at its brightest. A blue flame founder is willing to do nothing but work, forgoing all else but the company.
Per Twitter, no VCs seem to have ever heard this phrase (or won’t admit it –Miki).
Hilariously, it also refers to people who are too old to invest in. I wonder how they know the difference without seeing them.
While a founder may be “willing to do nothing but work, forgoing all else but the company” it is the height of either lunacy or stupidity for founders to expect their people to do the same.
“For employees and investors they are SOL [s— out of luck]. That is, unless these companies wise up and start going public … The VC attitude of not going public is crushing the dreams of tens of thousands of employees with options.”
It was different in the first boom, when it was investors who got the shaft.
“In ’01/’02 most of these companies were public, so it played out in the public market. You had companies that went public and then lost 90% of their value or went bankrupt. But in the interim, the employees got something out in the public markets. … Here, there’s no liquidity.” —Alfred Lin, Sequoia
It’s called liquidity and it’s what unicorns like Uber not only don’t offer, but can’t because the public markets won’t support their valuation — public markets have an old-fashioned focus on sustainable business models and profit. (For a detailed look read this from Mckinsey.)
All this just goes to show that whether you’re a six-figure knowledge worker or minimum wage slave, you are cannon fodder to your bosses and the money men.
A Friday series exploring Startups and the people who make them go. Read allIf the Shoe Fits posts here
Zenefits founder Parker Conrad traded over-the-top growth predictions for the kind of excessive funding that gooses valuation and earns the company unicorn status.
In doing so he did exactly what Sam Altman warns against, “If a company is profitable, the founder is in control. If it’s not, investors are in control.”
Investors brought pressure (it’s what they do), so corners were cut.
Zenefits never was and still isn’t profitable and, worse still, was cutting corners when those corners are highly regulated.
Now Conrad is out and new management will pick up the pieces.
Conrad could have learned from serial entrepreneur Xenios Thrasyvoulou, who warns, “sanity is more important than vanity” when it comes to fundraising and Andrew Wilkinson’s belief that revenue-based horses have it all over funding-based unicorns.