[HN Gopher] My $0->$100M->$0 in 5 years story
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My $0->$100M->$0 in 5 years story
Author : bsmth
Score : 146 points
Date : 2023-08-12 17:37 UTC (5 hours ago)
(HTM) web link (old.reddit.com)
(TXT) w3m dump (old.reddit.com)
| powera wrote:
| A riddle: how do you know that an anonymous Reddit post is
| exaggerated?
| malablaster wrote:
| Yeah, it's about as reliable as the claim that it's unreliable.
| coldtea wrote:
| Another riddle:
|
| Does it matter if the company in the post didn't even exist, as
| long as the story is similar to what actually happened to many
| others?
| colemannugent wrote:
| Seriously, ~120 comments and this is the first one to question
| the posts legitimacy?
|
| The reddit poster goes on to comment:
|
| >15 minutes phone call to decide to file for bankruptcy and for
| them to take their money back (and then some) and shut down my
| company
|
| What? In no world would that happen. Even a mostly failed
| company has quite a bit more value than $0.
|
| No mention of the name of the company or even the vertical.
| 100% BS.
| coldtea wrote:
| Not everything is meant literally. When he says they ended up
| with $0 doesn't have to be $0, just hugely down and nearly
| worthless compared to before that was doing well.
|
| In the same way $100M could just have been $99M or even $80M,
| and then $0 they started with could just as well have been
| $20K in savings he invested.
| lijok wrote:
| Many such cases
| djoldman wrote:
| Honest question: if you sell <50% of your company to VCs or
| anyone else and your articles of incorporation state that you can
| do whatever you want if you own >50%, then why do what the VCs
| tell you to do?
|
| Beyond gaining some sort of reputation for not doing what your
| investors want, is there anything else?
| lijok wrote:
| Term sheets, tranched funds
| ohgodplsno wrote:
| > your articles of incorporation state that you can do whatever
| you want if you own >50%
|
| Then VCs won't invest in you, put a bunch of cash into a
| competitor, bleed you dry and either let you die or force you
| to reincorporate in a way they can have ownership.
|
| VCs are a cancer. They want to spread and grow, at any cost.
| Guvante wrote:
| If you assume you can outsmart a VC who has worked with
| hundreds of startups with an idea you just had you are exactly
| the schmuck they want to work with.
|
| The actual deals are very complex and the details are hard to
| understand but it isn't as simple as "here is $10m go make me
| rich".
| benjaminwootton wrote:
| It's not worth taking VC if you aren't going to put it to work.
|
| And if you put it to work to any degree, you start growing and
| accruing costs.
|
| You are then in a race against time for the next raise and you
| are off to the races.
| [deleted]
| streblo wrote:
| You have a fiduciary duty to the shareholders. But that doesn't
| equate to 'do everything you possibly can to achieve
| exponential growth'.
| t0mas88 wrote:
| As part of that < 50% investment the articles of incorporation
| are going to change to give them at least some control. Unless
| you're an outlier like Wework and we all know how that ended:
| https://finance.yahoo.com/news/wework-downward-spiral-could-...
| seizethecheese wrote:
| I'm a VC backed founder. The VCs will give you lots of advice,
| but generally are removed enough from the business that it's
| obviously up to you to make final strategic decisions.
|
| This story is remarkable in one sense: the founder removes all of
| his own agency from the story. The vast majority of initial
| financing rounds leave the founders in control of companies these
| days...
|
| Finally, a VC backed company is always likely to die. If you want
| to run a nice, small SaaS, don't take VC. Whether financing comes
| from a bank loan, an angel, private equity or VC, one job of
| entrepreneurs is to align incentives with capital sources.
| xwdv wrote:
| A nice small SaaS will also almost always die quick.
|
| IMO, it is foolish to hinge the decision of taking VC money or
| not based on potential lifespan alone.
|
| VC money could kill your startup quickly, but you could
| potentially make a lot of stable money in that short period of
| time, and end up better off than collecting smaller profit from
| your small SaaS that lives for a longer period of time.
|
| And yea most of the time you are reinvesting profits but you
| should hopefully be paying yourself too along the way. Not to
| mention you are also paying a lot of other people as well and
| creating value for them.
|
| Ultimately VC money isn't destroyed, it's just reabsorbed into
| a wider economy.
| Aurornis wrote:
| > Ultimately I ended up with a bunch of highly paid employees who
| don't know how to do anything but to "build and lead amazing
| teams."
|
| I've worked at a lot of startups. The worst of them were led by
| people who list things like "organization design" and "build and
| lead amazing teams" on their LinkedIn.
|
| At the most dysfunctional company, the ex-FAANG CTO would take
| key job descriptions and add the requirement that they must have
| FAANG experience. This created a glass ceiling where the early
| employees, non of whom had FAANG backgrounds, were unable to be
| promoted. Instead, we got a lot of ex-FAANG VPs and Directors who
| didn't know how to function at a startup. They were told to lead
| teams of people who knew the business inside and out (because
| they built it!) yet they could barely function outside of a big
| company themselves. Every meeting would be a competition of
| stories about "At Microsoft we did this..." or "At Facebook we
| did that..." because playing the FAANG card was the only thing
| the CTO liked to hear.
|
| The only non-FAANG person who thrived at that company was the
| single worst leader I've ever reported to. He is a LinkedIn
| influencer with his own newsletter where he talks about, among
| other things, his expertise in "Organizational Design". Yet the
| organization he designed was completely dysfunctional because he
| ignored how the business worked and instead hired arbitrary
| numbers of people according to some book he read. Half of the
| people at that company were 90% idle, while the other half were
| working 80 hour weeks because the "organizational design" person
| had strictly assigned responsibilities to arbitrary teams in a
| way that didn't account for how the business actually worked.
|
| The next line from this post is exactly how he responded to every
| problem:
|
| > Imagine you hire someone to scale an area and their solution is
| to divide that area into 5 sub areas and hire someone for each of
| them to figure it out, etc. that's their solution.
|
| He was never accountable for anything because he always had
| someone under him to blame.
| ethbr0 wrote:
| I interviewed a guy the other day.
|
| CS degree.
|
| "I have a proven track record of building and leading amazing
| engineering teams."
|
| "Okay. What's the difference between a character and a string?"
|
| *crickets*
|
| We all have our specialities, but jesus C/@&#ing christ: if
| you're interviewing for an engineering role, of any sort, you
| should be able to answer basic questions.
| yieldcrv wrote:
| The bytes it takes up and how it can be cast? What answer
| would you be looking for
| F-W-M wrote:
| "Strings are sequences of characters" or sth. like that.
| ethbr0 wrote:
| It's a grab bag, tell-me-something-interesting icebreaker
| question. I'm looking for some evidence of the fact that
| you can differentiate the two in some meaningful way.
|
| Not intended to be a gotcha question! Just a quick test
| of basic CS knowledge to get the candidate comfortable.
| yieldcrv wrote:
| oh ok, I tend to overthink irrelevant questions in
| interviews
| somestag wrote:
| Presumably something like "a string is a sequence of
| characters" would be a good first answer, though it might
| prompt some follow-up questions.
|
| I love how questions like this suddenly become more
| complicated when you have a deeper understanding of the
| internals. Your first instinct of an answer might not be
| 100% correct. If I were asked this question unexpectedly,
| I'd probably trip over myself a few times as I thought
| through it out loud.
| ethbr0 wrote:
| My high water mark was the basics... and then the
| candidate drawing an analogy between char as primitive
| and char-array-based-strings as object oriented classes
| that offered additional functionality on top of chars.
| janstice wrote:
| That sounds like someone who will make a four-page
| fizzbuzz solution, which was at one stage a highlight for
| us.
|
| What I try to get candidates to do in interviews is find
| the project they are most proud of, and get them to talk
| about it at a technical level - the constraints,
| challenges & solutions. That's much harder to fake than
| pretty much anything else, and works at any technical
| level. My theory is that if they can communicate
| technical things in enough detail, and show that they
| have sufficient depth in at least one area they should be
| able to move sideways into our stack and context.
| euroderf wrote:
| "Why is this interview like a string?
|
| Because it is terminated with A ZERO."
| t0mas88 wrote:
| What role were you interviewing for? Sure anyone with a
| serious CS degree at some point knew the difference between a
| char and a string. But if you're hiring a VP or product in a
| larger org, it doesn't matter whether they remember because
| the people they'd be managing wouldn't even need to know.
| ethbr0 wrote:
| Customer-facing implementation engineer, more or less.
| lumost wrote:
| It's quite possible to avoid learning this. A trivial way
| is to do all of your coding in python, and then never do
| anything more advanced than a todo MVC app. Do this for 3
| years then get promoted to management and stop coding.
|
| When money was cheap, delivery didn't matter for a while.
| matrix_overload wrote:
| In their defence, many companies advertise various
| "leadership positions", but once you get to an interview
| stage, you see they are looking for another JavaScript monkey
| in the team, and the whole leadership thing is a pie in the
| sky in lieu of a competitive salary.
| zo1 wrote:
| Maybe this is a reverse fizz-buzz filtering test. I.e. they
| want to self-select themselves out of positions that require
| them knowing such basics.
|
| Either that or they're completely incompetent. Likewise it
| takes a special kind of stupid to think they could wing it.
| yieldcrv wrote:
| "...and now I bootstrap!"
|
| because you paid yourself $300k for 5 years despite having such
| low performance
| blobbers wrote:
| This post looks like a LARPer.
| laurent123456 wrote:
| It was making 7 figures and now it's worth $0? If the investments
| from VC didn't lead to anything, wouldn't the company still make
| 7 figures anyway and shouldn't it be possible to continue as it
| is?
| swyx wrote:
| yeah def not the whole story being told. this wouldve at least
| been a nice acquihire for somebody if it were a valuable
| business. if this founder ran a 7 figure business into the
| ground with no cash shortage pressure he cant blame VCs for
| that.
| kasdi wrote:
| Seems like it was an aqui-hire
| https://news.ycombinator.com/item?id=37103910
| ipaddr wrote:
| Not when your employee costs grow larger than your profits.
| Making a million a year turns into -250k if you hire 5 extra
| VPs who offer no value.
| spaceman_2020 wrote:
| Are all VCs like this or did OP strike out with some bad apples?
| jacquesm wrote:
| I don't think the VCs are to blame at all. This is a one sided
| story but that side already gives off so many signals of not
| being cut out for the job that it isn't surprising to see them
| heaping the blame on another party. If you're the CEO and you
| are looking for capital you don't do that whilst giving the
| capital providers a mandate to run your company by proxy.
| That's on him. If VCs tell you to do 'X' and you don't agree
| you're well within your rights as CTO to tell them to shove it.
| (But more politely, of course.)
| Dylan16807 wrote:
| It seems fair to assign a lot of blame to the person that
| told you to do it and paid for you to do it as the owner of a
| good chunk of it.
|
| You don't think that should have any blame _at all_?
| jacquesm wrote:
| The 'C' in CEO used to stand for something.
| kasdi wrote:
| Clever Elephant Operator?
| Dylan16807 wrote:
| It certainly isn't "takes _all_ the blame no matter what
| happens ".
|
| Especially when they're up against the people that own
| the company!
| kasdi wrote:
| ChatGPT: How can I tell my VC to shove it, but politely?
| raincom wrote:
| Lessons learned from that post:
|
| (1) "I was told to hire a lot of people. Put fuel on the fire
| they said. Bring industry experts who can move the needle. All
| this BS you hear all day. All failed. I hired VPs and bloated my
| payroll. Ultimately I ended up with a bunch of highly paid
| employees who don't know how to do anything but to "build and
| lead amazing teams." Imagine you hire someone to scale an area
| and their solution is to divide that area into 5 sub areas and
| hire someone for each of them to figure it out, etc. that's their
| solution."
|
| (2) "I ended up focusing my efforts on hiring and ramping up
| those VPs and dealing with their dumb ideas instead of focusing
| on my 3 core tenants: build, sell, and deliver."
| booleandilemma wrote:
| That's how it works in a nutshell. Lots of talkers out there.
| The people I know who do the real work are the ones at the
| bottom, and you don't know them because they keep their heads
| down and focus on writing code. The people that self-promote
| the most are the ones least capable.
| therealdrag0 wrote:
| Time spent coding is a zero sum. Leaders are needed to
| identify how to do use that energy and time. In terms of
| business success. This might be the #1 thing (granted I'm
| entirely speculating). Are your priorities correct and do the
| engineers know them? This is not that easy. People will argue
| endlessly over when to address tech debt, how much security
| is enough security, how much to deliver early vs fully
| formed, what features to build, When to bail on a half made
| feature, etc etc.
| ionwake wrote:
| Nah I disagree 20 years in the industry across fields and
| most management was just incompetent. I concur with the
| earlier poster.
| game_the0ry wrote:
| This is too real in big corp as well as the VC funded start up
| world.
|
| A bunch of bourgeoisie over-educated idiots, usually with MBAs,
| who don't know how to do anything except take credit for work
| that other people do.
| Xeoncross wrote:
| The solutions presented great.
|
| The made sense.
|
| They smelled good.
|
| They made great leadership stories.
|
| ...but none of it actually mattered to the customer.
| fuzztester wrote:
| Yeah!
|
| Reminds me of a project life cycle cartoon I first saw in a
| software book early in my career.
|
| Just now searched for "systems analysis tyre cartoon" and
| selected this page, which seems the best, on a brief look,
| since it has both some history and multiple versions of the
| cartoon:
|
| https://www.businessballs.com/amusement-stress-
| relief/tree-s...
| thih9 wrote:
| There are more modern versions too, with additional
| panels, like: https://pmac-
| agpc.ca/sites/default/files/Tree.jpg
|
| I especially like "how the customer was billed".
| fuzztester wrote:
| My link actually includes yours and many more, even non-
| computer ones.
| matrix_overload wrote:
| You are supposed to do all that with other people's money,
| dummy.
| raincole wrote:
| He took VC funding so he did it perfectly right (well,
| depending on how much his previous job made).
| matrix_overload wrote:
| Then I sincerely hope he played the kickbacks-and-favors
| game correctly and the reddit post is just for optics.
| optymizer wrote:
| I'm not in the know. What's the kickbacks-and-favors
| game? I understand the words, but how does it work?
| matrix_overload wrote:
| You hire useless people and pay them bloated salaries
| using investors' money. Then they order something from a
| consulting firm ran by your wife, or just remember the
| favor, and hire you into an overpaid useless role next
| time they secure a round.
|
| On paper it looks like money is being spent on product
| development. In practice, it's a network of friends using
| buzzwords to direct VC money into their pockets.
|
| Investors don't mind it too much. Fund managers are not
| investing their own money either (and are part of the
| game) and angels hope that a chance of owning 1% of the
| next Uber justifies all the financial shenanigans.
| dig1 wrote:
| The OP should hire someone to handle VC requests (better say to
| send most of those requests to /dev/null with a nice chocolate
| & flowers wrap) and keep customers happy with his productive
| five employees. Growth would come naturally over time.
| axpy906 wrote:
| > Imagine you hire someone to scale an area and their solution is
| to divide that area into 5 sub areas and hire someone for each of
| them to figure it out, etc. that's their solution.
|
| FANNG hires?
| mdorazio wrote:
| 1) How can you be in an "executive job at a FAANG" and not know
| this is how the VC model works?
|
| 2) > I hope this part is clear because it's the crux of the
| misalignment between founders and VCs.
|
| This is the crux of the misalignment between _small business
| owners_ and VCs. The large majority of the _startup founders_ I
| 've met all have dreams of building a rocket ship, not of
| building a happy small business. If you're in the latter camp, as
| I have been several times, you usually know better than to take
| VC money.
| Waterluvian wrote:
| Why would someone doing executive work at a massive and well-
| established corporation be expected to know how VC works?
| ghaff wrote:
| That seems obvious? At least in the tech industry, I'd expect
| someone in an executive role to have some understanding of VC
| given how it influences so much that happens in the space. If
| you hired someone from a traditional manufacturing company,
| maybe not.
| Waterluvian wrote:
| I think more than anything this demonstrates the "my
| context must be everyone's context" fallacy.
|
| The VC world is a little slice of the tech world. Hacker
| News is a wee little slice of the tech community.
| ghaff wrote:
| If you're in a senior management position in a company
| which has _any_ M &A activity, I'd expect you to have at
| least some understanding of VC basics.
| Waterluvian wrote:
| "I'd expect"
|
| That's my point. People think their context is everyone's
| context. You expect the world to be a certain way. Is it?
| ghaff wrote:
| I'd expect a senior executive who doesn't know anything
| about basic accounting, M&A, or other skills associated
| with managing a large company to basically be a bad hire
| in most cases unless it's some specific skill kept off to
| the side.
| ilyt wrote:
| > 1) How can you be in an "executive job at a FAANG" and not
| know this is how the VC model works?
|
| I'd imagine by doing actually useful job there
| counterpartyrsk wrote:
| At least your numbers are positive, doing much better than me.
| paxys wrote:
| What I got out of the post is - "My business was on a path to
| success because of my own efforts, and failed only because of
| those pesky VCs and their money". With an attitude like that no
| wonder they lost what they had.
| version_five wrote:
| I would have preferred to see this written as a blog post,
| there's nothing that requires anonymity imo if presented the
| right way, and it would make it more credible. As is it's
| believable and certainly reinforces stereotypes I have but it's
| not super helpful, as in it's just an outline of stuff people
| already think.
| kcsavvy wrote:
| Elements of this story indicate a founder who simply lost control
| of their company, which is their job as a founder. I don't think
| the VC is the villain here.
|
| They raised at an inflated valuation and seemingly received a
| favorable multiple (100-10x "7-figure" revenue). The fact that
| they rode out the company to 0 means they had board control and
| were never fired. So they are ultimately responsible for every
| decision they made. Including over-hiring and not firing their
| clueless VPs.
|
| I say this as a founder of a yc-backed company that was acquired.
| I know the pressures of short-sided VCs. I also know that the job
| of a founder is to pick which advice you follow.
| jacquesm wrote:
| Exactly that's the big takeaway: he didn't learn what he should
| have learned: that it was his horse to lead. A CEO that
| slavishly follows the VCs has abdicated.
| ooterness wrote:
| TL;DR: Founder had healthy startup, accepts VC money, acts
| surprised when VC wants rapid growth and returns.
|
| Who could have predicted this?
| thih9 wrote:
| Hindsight is always 20/20. I'm sure there are founders standing
| before a similar route at this very moment. Hopefully they're
| reading this post too.
| jacquesm wrote:
| I can condense this to 'I thought CEO was a nice title but I
| failed at taking it seriously and allowed others to lead my
| company whilst I held the title'.
|
| The results are predictable. Note how there is no acceptance of
| personal responsibility.
|
| I also note that there isn't a shred of evidence for this whole
| story, and $100M to $0 does not seem like a believable trajectory
| (nor does $0 to $100M, but the other is much less believable).
| master_crab wrote:
| I'm willing to accept the 0 to 100M to 0 plot line. But I
| agree, if this was a truly productive post the poster would
| have also admitted some level of personal culpability. They are
| the founder after all and the VC is just another stakeholder.
| The founder hired those VPs, not the VCs.
|
| A key requirement of any company is managing your equity
| holders.
| t0mas88 wrote:
| $100M to 0 sounds plausible for a founder with common stock in
| a VC led company with little success. You can raise a lot of
| money without much revenue or track record, but it will come
| with all kinds of liquidation preferences leaving common stock
| at 0 if things don't go like a rocket ship.
| morkalork wrote:
| At the point right before taking VC money, what's the safer
| alternative sources for cash? This is a serious question. The
| alternative I've seen work is another company in the same field
| make the investment with an option to further invest or acquire
| the company later on. Their expectations for growth were a lot
| more "down to earth".
| sosodev wrote:
| You could take traditional small business loans or other types
| of simple credit, try crowd sourced funding (kickstarter), or
| just build shit without much or any funding (bootstrap).
|
| That's not an exhaustive list of course.
| Guvante wrote:
| Some VC firms are willing to work with less growth potential.
|
| The problem is those VC firms are much harder to get started
| with.
|
| After all the whole schtick of the VCs complained about in OP
| is to fund tons companies and make so much money off the
| unicorns that it doesn't matter how many fail.
|
| Honestly though there is one upside to VC money: it also caps
| your losses. Most forms of debt for a small company rely on you
| being a creditor meaning you can be in the hole if your company
| fails.
|
| Overall getting money is hard and nuanced which makes sense
| given there is nearly infinite demand for it.
| mustafa_pasi wrote:
| All I'm thinking is, you Americans are really fucking lucky. Yeah
| OK, VCs are greedy and difficult to work with, but at least they
| give you a chance and literally give you startup capital in the
| millions to build your own thing. That is mind blowing to me and
| definitely what sets America apart from everywhere else.
| swyx wrote:
| i mean, it exists in europe and asia too (i'm not familiar with
| latam/africa so less willing to make this kind of statement
| there). and if you pass some kind of socioeconomic bar you can
| be based anywhere but "effectively part of the US startup
| scene" if you hustle into the right circles. step 1 is
| incorporate thru stripe atlas imo.
| jamesaurichs wrote:
| The built-in culture of risk taking in US can't be
| underestimated. Yes, we joke about Florida man and lament about
| the excess funding for startups. But with great risk comes
| great reward, and chances for inexperienced founders to prove
| themselves. Nowhere else on the planet are you able to do that
| with such magnitude, not in Japan, not in Europe, not in China
| (now that they're broke and in a Great Depression, and Xi is
| killing off entrepreneurs).
| Zetice wrote:
| It's not actually "great" risk, is the secret.
|
| The advantage is not in American recklessness, it's in
| American shamelessness. The only risk made is in the money,
| someone's "honor" doesn't play into it, for the most part.
| croes wrote:
| With great risk, like Lehman brothers mortgage bundling,
| comes great reward, government bailout.
|
| > Nowhere else on the planet are you able to do that with
| such magnitude, not in Japan, not in Europe, not in China
|
| Europe had that too, rich nobles sponsored scientists and
| artists.
|
| We are back in aristocratic society
| PaulDavisThe1st wrote:
| And in what sense are we better off for this?
|
| Is the claim that innovation only happens in the USA? That
| the only good companies are US companies? What are the
| specific benefits, other than merely indulging the startup
| fantasies of a relatively small number of founders, that come
| from this "high risk, high reward" environment?
| jamesaurichs wrote:
| We get more rockets (literally), faster.
|
| We get Tesla, SpaceX, Google, Facebook, AirBnB, Stripe,
| etc...
| AndrewKemendo wrote:
| Said another way, America is the sandbox for the rich to
| experiment on the poor, with technology that may or may
| not be good for the poor but ultimately doesn't matter
| because the ultimate winner is always the one funding
| them.
|
| It's the test and staging servers for global capitalism
| jamesaurichs wrote:
| Tesla creates American jobs for the poor to work in
| manufacturing
|
| SpaceX creates aspiration for the poor
|
| Google allows the poor to advertise their product to
| anyone in the world cheaply
|
| Facebook allows the poor to market their product to
| anyone in the world cheaply
|
| AirBnB allows the poor to live in an expensive city,
| cheaply
|
| Stripe allows the poor to sell their product to anyone in
| the world cheaply
| ipaddr wrote:
| What poor person works for Telsa?
|
| What poor person gets aspiration because of Spacex. A
| basketball player is cheaper and does a better job
| inspiring.
|
| The poor cannot afford to run adwords campaigns and can't
| even get a credit card.
|
| Facebooks ads even more expensive.
|
| The poor are not looking for short term rentals and
| cannot afford to live in the most expensive cities using
| airbnb. They live in rundown rent controlled places.
|
| Paypal allows the poor to buy/sell.
| croes wrote:
| And still people can't afford to buy house like their
| parents did.
|
| Maybe the problem isn't jobs but wealth distribution.
| opportune wrote:
| Those companies have generated hundreds of thousands of
| extremely high paying jobs because hundreds of millions
| of consumers/many businesses chose to give them money.
| AndrewKemendo wrote:
| "Sure we destroyed the earth, but a lot of shareholder
| value was created for a moment there"
| opportune wrote:
| Tell me exactly how these companies are destroying the
| earth. Snark isn't an argument
|
| My point isn't even about shareholder value. Both
| consumers and very many employees have benefitted from
| these companies' existence.
| refulgentis wrote:
| That's a cute little quip but it's about climate change,
| not a complaint about the US having a relatively high
| amount of venture capital funding.
| lotsofmoney wrote:
| An insane amount of money, world hegemony, and a very high
| standard of living. I'm not sure the average European
| appreciates just how comfortable life in the US is. And the
| average American doesn't know that things they take fir
| granted are luxuries even to Western Europeans. Outside of
| a handful of small countries with specialized economies,
| European income per capita is at or below per capita income
| in even the poorest US state. Even the vast majority of
| poor people here have iPhones and cars and can afford to
| run their air conditioners at 68F all day.
| PaulDavisThe1st wrote:
| Insane amount of money: Of the 10 countries with the
| highest median income, 7 of them are European. By some
| measures, the USA is-midpack, with Norway/Canada very
| similar to us, but missing most of the entrepeneurial/VC
| culture of the USA.
|
| World hegemony: mostly a function of the post-WWII
| situation, combined with our willingness to spend
| absolutely insane amounts on our military _and use it_ to
| impose or at minimum encourage US interests globally.
|
| Very high standard of living: the US has one of the
| highest GINI coefficients world wide, so only a median
| comparison (which is quite hard to develop) really
| conveys the differences accurately. Large swaths of the
| USA (notably Appalachia and also the desert southwest)
| have a substantially lower median standard of living than
| most of Europe.
|
| Anyway, even if your claims about the USA were true, that
| by itself doesn't connect them to the VC risk/reward
| culture under discussion.
| adwn wrote:
| > * And the average American doesn't know that things
| they take fir granted are luxuries even to Western
| Europeans.*
|
| Such as? Name three examples, please. "smartphones and
| cars" doesn't cut it, those are pretty common even for
| low income citizens here in Germany at least, and we
| don't really need air conditioners on account of being
| located in higher latitudes - everyone has heating,
| though.
| sneak wrote:
| High quality food delivery (at any time, but especially
| after 22:00). 24 hour pharmacies. 24 hour grocery stores.
| Air conditioning. Cheap gas. Road trips where you have a
| personal vehicle when you arrive. Hot water in 100% of
| all handwashing sinks. Urgent care centers. Whole Foods.
|
| You're 100% wrong about not needing air conditioning in
| Germany. Many of the last 45 days here have been above
| 24C. You're just used to being sweaty and uncomfortable.
|
| A doctor who worked at Charite in Berlin told me last
| month that the whole summer he worked there he struggled
| to not drip sweat directly into patients as he leaned
| over them to work.
| allarm wrote:
| > High quality food delivery...
|
| Funny thing is that you've described Moscow here.
|
| > You're 100% wrong about not needing air conditioning in
| Germany.
|
| I realize that for an average American Germany is just a
| point on the map, but here in the north we had only a
| couple of hot days this summer. Otherwise - a truly
| horrifying story.
| PaulDavisThe1st wrote:
| > High quality food delivery (at any time...)
|
| In the largest cities, perhaps. Don't try that in Santa
| Fe. For that matter, don't try it in Philadelphia, at
| least not after 23:00)
|
| > 24 hour [...]
|
| An unusual feature of western US grocery stores (not
| generally replicated in the midwest or east coast as a
| whole, though it is spreading). Not common in smaller
| cities or towns. 24 pharmacies are useful, but many large
| cities in western Europe have a few, and many small
| cities and towns in the USA do not.
|
| > Cheap gas
|
| A function of US vs. EU tax policy, nothing more (or
| less)
|
| > Road trips etc.
|
| Entirely possible in the EU and eminently common. The
| difference is that for many trips, you have the _choice_
| to do it the other way too, which is not feasible in the
| USA for most destinations.
|
| Not only that, but if you choose to travel in a camper,
| in EU you have a plethora of dirt cheap places to legally
| pull in overnight that have bathrooms and if you need it
| water & electric. Essentially absent from the US.
|
| > Hot water in sinks.
|
| Not present in many gas station and campsite handwashing
| sinks.
|
| > Whole Foods
|
| Present in several cities across the UK. But you cannot
| be serious. I mean, I shop more or less 100% at WFM, but
| I can shop just as well, if not better, in the UK or
| Germany or France.
|
| _AGAIN_ , I ask: what is the evidence that any of this
| is connected the high risk/high reward entrepeneurial/VC
| culture of the USA? You seem to just be listing a set of
| things you like about the USA and waving your hands as if
| to say "it's all because of the entrepeneurial culture".
| wlesieutre wrote:
| 24 hour grocery stores aren't that common. Walmart used
| to be known for being open all the time but they mostly
| close at 11:00 now.
|
| For the Americans, 24C means "many days have been above
| 75F" which I don't think is going to get a lot of
| sympathy.
| atleastoptimal wrote:
| [flagged]
| hattmall wrote:
| The people getting the millions aren't generally from the
| same pool as those who have no healthcare and experience gun
| violence. Two entirely different worlds.
| atleastoptimal wrote:
| I was being facetious, a commentary on people who ardently
| defend the US on the merit of its economic strength over
| everything else, including many basic amenities much poorer
| countries take for granted.
| firefoxd wrote:
| This sounds like the start up I left a couple years ago. I was
| employee number 3. I took a deep pay cut to join them. I shared a
| cubicle with the ceo and cto, the two cofounders. Tight nit
| group.
|
| A year later, we had our first round of vc fund. I had a slight
| bump in salary, but owned stocks so all is good. My role was,
| make-things-work-at-all-cost. I'd be on calls with customers and
| their engineers to make things work. I'd generate specialized
| reports by merging data locally, I'd get a calls on my personal
| phone from customers. We did the things that don't scale.
|
| Year 2, we are 30 employees getting ready for another round of
| funding, the ceo and cto spent all their time in vc meetings. I
| worked in all my waking hours, it was unsustainable. I told them
| I needed a break, the way they responded showed me that I was
| just another replaceable employee.
|
| I packed my stuff and left, they tried to screw with my stocks,
| but i fought back and got it all. They got their second funding.
| They never replaced me. Instead of hiring 2 or 3 people to do my
| job in a scalable manner, they stopped offering the service all
| together. Instead they went with buzzwords in AI.
|
| Fast forward 3 years. The company was acquired, the stocks are
| worth 0 dollars, and most employees got fired. Though the
| linkedin post sounds like a success story.
| pyrophane wrote:
| How did your stock wind up being worth $0? Down round or a
| "practically an acqui-hire" type of acquisition?
| firefoxd wrote:
| It was an acqui-hire, so former employees got nothing.
| apodolny wrote:
| A little frustrated by the ambiguity of the $100M in the post. Is
| that capital raised, ARR, GMV? Makes a big difference in terms of
| understanding what kind of business they built.
| mdorazio wrote:
| Almost certainly that was $100M valuation.
| necubi wrote:
| It must be valuation (if there's a SaaS company that's ever
| gone from $0 -> $100MM ARR -> $0 within five years I would be
| very surprised).
|
| But that makes this whole thing pretty circular--they only
| would have $100MM valuation because they sold a story of
| growth to investors. Assuming that the round at $100M
| valuation was during the boom times of 2019-2021, that could
| have been with as little as $3-5M annual revenue (20-25x
| multiplier).
|
| Assuming slow or no growth, a company with $3M in revenue
| would be worth <$15M.
| raincom wrote:
| In that reddit post, he says "I had over $10m in the bank
| for a startup of 5 people making low 7 figures from well
| established and extremely happy customers."
|
| You are right: low 7 figures = $3-$5M annual revenue
| renewiltord wrote:
| I'd guess it's valuation. He raised once at $1M (F&F probably).
| Then raised. Then some time post-raise low 7-figs in revenue =>
| $3-4M, and $10M in the bank. Raised $20M at $100M perhaps?
| Seems reasonable, 25x-30x revenue.
|
| It makes sense. If he got there quick, his product was working,
| and it had a chance at gold. Ultimately, lots of ways for
| startup to fail and failing-to-scale is one of them.
|
| Well, he knows there's PMF at a small market now. He can try
| again without the large raise if he wants to run a lifestyle
| business.
| Gud wrote:
| Go with proven people. Whoever is already proven to meet your
| requirements, use them. Grow slowly, but steadily.
| charcircuit wrote:
| >All in all we went from $0 to $100m to $0 because I followed the
| advice of the VCs.
|
| It's not the VCs' fault that OP failed at scaling his business.
| If you are getting VC funding you will need to be able to scale
| up.
| monero-xmr wrote:
| There's a lot of information missing. All of his problems were
| caused by VC? Why did he raise VC if he had 7 figure revenue? 5
| years explained in 6 paragraphs. I agree that hiring bigco people
| for a startup is a mistake, but otherwise you can't learn
| anything here.
| benjaminwootton wrote:
| It's a very common mistake in funded startups.
|
| You think you need to bring the tenured exec in with all of the
| industry contacts, but they are often a terrible cultural fit
| or experienced in the last iteration of your industry. They
| also want to hire under them rather than work the tools
| themselves and do this bait and switch after you've hired them.
|
| You are then stuck with high salaries for ineffective people or
| an expensive and disruptive exit.
|
| VCs also seem to push these people onto you as they think that
| is what constitutes a real company and/or they want a nice gig
| for their friends.
| gopher_space wrote:
| > otherwise you can't learn anything here
|
| Some times your money printer won't scale, but other people
| will try to convince you that it's full of golden eggs?
|
| If you're cash-positive you should see VC as supplicants
| begging for scraps?
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