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Silicon Valley’s Biggest Con

Tuesday, January 7th, 2020

https://www.flickr.com/photos/theilr/5091351124/

A couple of years ago I wrote about a stupid, soul-gutting Silicon Valley myth about work and people’s value.

It spelled out the idiocy of believing that only the best were hired by startups, let alone unicorns, and everyone else was second caliber. As I said then, what a crock.

Throughout a long career as a recruiter and since I’ve said the same thing and it hasn’t changed.

The right place for you to work is the one that satisfies what you want — whether that’s the opportunity to work on bleeding edge technology, build a network, upgrade your resume or even plain, old curiosity.

The wrong place is the one you join with an eye to getting rich quick or for bragging rights.

For some people those reasons still stand, but a lot has changed.

For many Silicon Valley engineers money has taken a front seat to most considerations and it’s startups that are suffering, since they can’t compete salary-wise with giant companies and unicorns (which are nothing more than giant companies that haven’t gone public — often because they aren’t profitable and likely never will be.)

That’s understandable, considering the cost of living, but when you add the aspirations so many consider “necessities” then salary becomes even more important.

The problem, for both employers and employees is the same.

Money is not and never has been a source of loyalty — in either direction.

When companies feel the necessity to lower their burn rate the highly paid are often the first to go.

And my old adage that people who join for money/stock/perks will leave for more money/stock/perks still holds true.

Loyalty is the result of managers and companies giving a damn and employees invested in a mission that has meaning beyond money.

Silicon Valley is big on smoke and mirrors; the two biggest are

Image credit:  theilr

If The Shoe Fits: Jerks and Brilliance

Friday, March 8th, 2019

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

A couple of years ago Dick Costolo explained why startups needed to hire “brilliant jerks” in order to succeed.

It’s stuff like that, especially from people like Costolo, that gives people permission to act like jerks.

Why?

Because people who tend to be jerks are usually delusional enough to believe that they’re brilliant.

But what about those who are brilliant (or what passes as such these days) and act like jerks?

Well, why not?

All they are doing is living up to expectations and, like Pavlov’s dog, the more free passes they get the more they will believe their actions/attitudes are OK.

In my life I’ve been around a lot of real brilliance and they had certain traits in common.

Without exception, they loved sharing their knowledge, building up those around them and helping them grow — no matter who.

That’s what truly brilliant people do; that’s why they are remembered.

The same goes for everyone who does the same.

Whereas the jerks are ephemeral and soon forgotten.

If they are remembered, it’s for what they did, as opposed to how they acted.

Steve Jobs is a good example, as is Jeff Bezos.

Think about it; what’s the likelihood that the brilliant jerks in your world are in the same league?

Image credit: HikingArtist

If The Shoe Fits: Startups, Millennials and the Future

Friday, December 14th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

For years the media has been proclaiming that the great majority of young people want to be entrepreneurs or work for a startup, as opposed to a larger/older company, because startups were “cool.”

Now it looks like their ardor is what’s cool, as in cooled off.

Research suggests entrepreneurial activity has declined among Millennials. The share of people under 30 who own a business has fallen to almost a quarter-century low, according to a 2015 Wall Street Journal analysis of Federal Reserve data. (…) Two years ago, EIG’s president and co-founder, John Lettieri, testified before the U.S. Senate, “Millennials are on track to be the least entrepreneurial generation in recent history.”

What changed?

Maybe they learned that wanting to and doing it are very different. That they will work far harder for themselves, even if they are well-funded, or that startups fail  far more often than they succeed (90% vs 10%).

A survey of 1,200 Millennials conducted in 2016 by the Economic Innovation Group found that more Millennials believed they could have a successful career by staying at one company and attempting to climb the ladder than by founding a new one.

But maybe there is something else going on.

Maybe they have figured out that the world doesn’t need another social network / dating app / review site / etc.

Maybe investors have realized that monetizing through ads isn’t a good road to sustainable profitability, considering the push for more European-style privacy.

Or maybe, just maybe, reality has reared its ugly head and they’ve figured out they don’t have enough experience or know enough to create enterprise solutions for real-world needs.

Matt Krisiloff, the former Y Combinator executive, added that the opportunities “to start compelling start-ups,” for college students without industry-specific knowledge, “has vastly shrunk.”

Maybe they aren’t all looking for a safe harbor in the next downturn (there aren’t any), but for the experience that will ground their startup in their 40s, 50s and beyond.

What they found is that the average age of a startup founder is about 41.9 years of age among all startups that hire at least one employee, and among the top 0.1 percent of highest-growth startups, that average age moves up to 45 years old. Those ages are taken from the time of the founding of the company.

Maybe our media-inspired view of entrepreneurs is a reflection of the warped views of Silicon Valley as engendered by VCs.

VCs believe they have “pattern recognition” abilities that they simply don’t have. Instead, they rely on suppositions and stereotypes that don’t match the underlying data on startup success. The same reason why older founders are ignored by the ecosystem is the same reason why women and other minorities struggle in the Valley: It’s really not about what you build, but what you look like while building it.

Maybe the entrepreneurs of the future will look more like our real world in all its diverse, messy glory.

And a final “maybe.”

Maybe there is room to hope.

Image credit: HikingArtist

If The Shoe Fits: NOT Changing the World

Friday, October 26th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

The mantra of startups is “change the world.”

That slogan seems to be the one thing that startups have in common; they all claim their product/service will do it.

No matter how silly, invasive, unnecessary, or just plain creepy.

One of the creepiest (say the comments) is MobiLimb.

MobiLimb is a robotic finger attachment that plugs in through a smartphone’s Micro USB port, moves using five servo motors, and is powered by an Arduino microcontroller. It can tap the user’s hand in response to phone notifications, be used as a joystick controller, or, with the addition of a little fuzzy sheath accessory, it can turn into a cat tail.

Creativity should be celebrated and innovation can be a wonderful thing — when it isn’t just plain stupid.

Image credit: HikingArtist

If The Shoe Fits: Profit. What Profit?

Friday, October 12th, 2018

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

Meet your target audience — no matter their age.

https://hikingartist.com/2014/05/26/the-web-generation-wants-it-all/

Image credit: Frits Ahlefeldt, AKA, HikingArtist

If The Shoe Fits: Too Much Money?

Friday, August 17th, 2018

 

Mega rounds of funding are creating a frenzy in the startup world.

Start-ups raising $100 million or more from investors — known as a mega-round in Silicon Valley — used to be a rarity. But now, they are practically routine, producing a frenzy around tech companies with enough scale and momentum to absorb a large check.

But are they smart?

It may be great for ego and bragging rights, but does it make you richer?

Probably not.

Consider Zappos and Wayfair.

EACH ONE of Wayfair’s two co-founders made as much money as ALL of Zappos’ shareholders combined. (…)  Put another way, Wayfair co-founders made at nearly 10X as much as Hsieh.

Mega rounds hurt employees by substantially diluting their stock and forces you to grow, often at an unreasonable rate.

In these days of frenzied money, some founders, such as Gusto’s founder/CEO Joshua Reeves choose to say no to excessive funding.

Gusto, a payroll and benefits software company, raised $140 million in July, but could have done five times that, according to Joshua Reeves, its chief executive and founder.

Startups seem to have forgotten that the purpose of a company is to make money, not raise it.

Mr. Reeves, of software start-up Gusto, acknowledged that founders who obtain outsize sums of capital can get caught up in a “growth at any cost” mentality. That is why he chose not to maximize his funding round despite the intense interest. “It’s up to the founder to realize that’s a distraction,” he said. “Success is not having more money or a bigger team, but having more customers or revenue.”

Think about it.

Image credit: HikingArtist

 

If The Shoe Fits: Founder Compensation

Friday, November 17th, 2017

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

5726760809_bf0bf0f558_mKG Charles-Harris, who has written here in the past, shared a Medium post from Brandon Evans explaining how/why startups are mostly minimum wage (or less) jobs.

For instance, 50% of founders are making less than $6 an hour.

After raising $15 million Evans company reached a million in revenue the first year and tripled that each of the next three, but when Evans wasn’t interested in raising another $20 million he was fired.

Our investors are great guys and were doing their job. But that job is to maximize the returns for their investors. Homan Yuen in his VC Math post clearly shows why VCs are almost exclusively focused on unicorns (or those rare $1B+ exits). For them to generate an acceptable financial return, they typically require 2 to 3 of them per fund. “Small” $50 million or $100 million dollar exits do little for keeping their investors happy.

What those “small” companies do do is drive the economy and create jobs, obviously a goal of little-to-no interest to VCs and those who invest in their funds — despite their talk to the contrary.

Even an IPO isn’t a guarantee for enormous founder wealth, as shown in the recent SendGrid IPO.

On the other hand, two of the three cofounders no longer own as much as 5% of the company: Tim Jenkins, and Jose Lopez. Both are still listed on the company’s website as engineers who work there. The biggest winner in this IPO among the three cofounders is Isaac Saldana. He still owns 4% of the company and, at $18, his stake is worth $33 million.

Not that $33 million is anything to sneeze at, but Foundry Group was the big winner walking away with $171 million.

It’s interesting to note that SendGrid seems to have put as much effort into its culture, via its four pillars, known as the four H’s: honest, hungry, humble and happy, as its growth.

“We’re so ridiculously over the top with it, it would absolutely scare you away. If these things didn’t resonate with you, you wouldn’t come to SendGrid because you’re like, ‘OK, these guys are like a cult with those four values. That’s not for me, I’m out,” CEO Sameer Dholakia said.

“I’ve been in software and high-tech for 22 years. I know a lot of absurdly talented professionals who would hate SendGrid. It would literally be their seventh Hell because there is nothing humble about them,” he said. “And that’s OK. They’re absurdly talented and in other cultures they can thrive where it’s a star-centered culture. Great! But they would hate us.”

Any one of those values, let alone all of them together, seem to be in short supply at most of the recently headlined unicorns.

And contrary to many in the startup world, values do scale if the focus goes all the way to the top. This is how you do it, according to Sameer Dholakia, SendGrid CEO

  • Keep values simple so employees will remember.
  • Make them distinctive to attract people who support them. Not everyone will or should fit.
  • Be conscious of behaviors that impact the values and reinforce them.

The second is where most founders fail, because they aren’t willing to walk away from stars, AKA brilliant jerks.

Of course, many founders are members in good standing of the brilliant jerks club, but SendGrid is proof that you neither have to hire them  nor be one.

Image credit: HikingArtist

If The Shoe Fits: Tech R People

Friday, August 18th, 2017

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

5726760809_bf0bf0f558_mThe top stories currently engaging the tech world and spilling over to the real world are the Google memo and Uber.

A major underlying point of the memo is how unnecessary soft skills, such as empathy are in tech, which has been soundly refuted.  

Tech is an umbrella term embraced by a wide range of industries; hence there is fintech, medtech, legaltech, etc.

The inclusion of the word indicates that companies within that industry, frequently startups, are revamping/revolutionizing the business using various kinds of technology.

But none of it happens in a vacuum.

No matter how large or small or how disruptive — from Uber to a solitary founder — they are still part of a larger community.

Consider Uber.

It’s ideal because it is a perfect microcosm of a disruptive startup, with the machinations, interactions and effects on its industry and society in general, since it includes all the elements — positive and negative.

Founders take note.

Uber’s storyline hasn’t moved in a straight line, nor will it in the future, because it involves people.

Companies are people.

Societies are people.

People are messy.

Technology is not an end in itself, but a means to many ends.

One way or another, all those ends are people.

Successfully navigating people requires empathy (keyword: successfully).

Image credit: HikingArtist

If The Shoe Fits: Another Silicon Valley Myth

Friday, July 21st, 2017

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

5726760809_bf0bf0f558_mDo you believe that Silicon Valley is the best (only?) place to start a company? That there is some almost magical ingredient that isn’t duplicated anywhere else?

Many people do and more did back in 2010.

Demis Hassabis, co-founder of high-flying DeepMind didn’t believe the myth.

“I was born in London and I’m a proud born and bred Londoner. I obviously visited Silicon Valley and knew people out there and also I’d been to MIT and Harvard and seen the East Coast. There is this view over there that these kind of deep technology companies can only be created in Silicon Valley. Certainly back in 2010 that was definitely the prevailing view. I felt that that just wasn’t true.”

Investor Peter Thiel was one of the true believers.

“At that time he’d never invested outside of the US, maybe not even outside of the West Coast. He felt the power of Silicon Valley was sort of mythical, that you couldn’t create a successful big technology company anywhere else. Eventually we convinced him that there were good reasons to be in London.”

Hassabis convinced Thiel to invest; Google acquired it for $400 million, and DeepMind is still making AI history.

One of the major reasons Hassabis wanted to stay in London was the availability of incredible talent.

“One of the things was I thought it [staying in London] was going to be a competitive advantage in terms of talent acquisition,” said Hassabis. He went on to claim that there weren’t that many intellectually stimulating jobs for physics PhDs out of Cambridge at the time that didn’t want to work for a hedge fund in the city.

Unlike Silicon Valley which, in addition to its normal talent shortage, suffers a severe talent crunch in whatever tech is hottest.

Silicon Valley may be a great place to start a company if you are connected, but for the majority who aren’t there are plenty of locations that are just as good, if not better.

Of course, that depends on whether your goal is to found a company valued for funds raised, which is best done in Silicon Valley, or to found a company that is valued on actual revenue, which can be done anywhere.

In fact, for the latter, anywhere could even be preferable to Silicon Valley.

Image credit: HikingArtist

If The Shoe Fits: Your Survival vs. Their Hyperbole

Friday, June 2nd, 2017

A Friday series exploring Startups and the people who make them go. Read all If the Shoe Fits posts here.

5726760809_bf0bf0f558_mThe words and images people share through social media have enormous spin.

This is especially true in the startup world where image is everything and perception is key to the next round of funding or investment.

The purpose is to tell the world how world-changing the tech, amazing the team, great the opportunity and how perfectly they are executing.

In other words, they are ‘crushing their goals’, ‘wowing the world’ and ‘killing it’.

Not only that, they are doing it with nary a bump or pothole along the way.

(If you believe that I have a great deal on a lovely orange bridge that would look great in your backyard after you IPO.)

Lee Hower, Co-founder & Partner of NextView Ventures and former entrepreneur at LinkedIn and PayPal, wrote a very needed commentary regarding the hyperbole that irrigates the startup ecosystem.

As he says, “not everybody is killing it and certainly not all the time.”

If anything, the constant social media barrage claiming to be ‘killing it’ is increasing denial, making it harder to admit the challenges, let alone actual problems, and further limiting entrepreneurs ability to talk about it.

Two years ago I wrote about the high incidence of depression and suicide among entrepreneurs and it hasn’t improved.

Entrepreneurs who go public do so after the fact offering useful insights on how they overcame. While this is valuable, it can make it even more difficult for those in the throes, with no one to talk to.

Entrepreneurship is a double-edged sword; while it can be enormously rewarding, it can also destroy and even kill you — or all of the above.

There are two important take-aways in all this.

  1. Don’t believe everything you see/hear about how others are doing.
  2. Never forget that your pursuits won’t thrive unless you survive.

Ttake care of yourself.

Image credit: HikingArtist

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