Okay folks... i am getting really fucking tired of all your
yeah, i know it's gonna be tough. and the credit crunch / downturn / whatchamacallit has already changed the balance of power from entrepreneur to investor in less than a month. if you are lucky enough to *GET* financing, your term sheets are gonna suck ass (learn about liquidation preferences & protective provisions). if you are running an existing startup, you are probably going to have to cut spending, cut hiring, and you may even end up firing people / doing layoffs. and then you pay taxes and then you die.
sorry, life's a bitch.
but listen up:
- Silicon Valley isn't Wall Street.
- Internet Startups are not mortgage finance companies.
- and... Entrepreneurs are not supposed to be Clark Kent.
in other words... WAKE. the FUCK. UP.
if you came to Silicon Valley to do a startup (or to join one), it ain't always fun & games. this isn't Disneyland, or a Harlequin romance novel (unless of course you're Tom Perkins). you don't always win every hand of poker, you don't always get a free lunch, an Aeron chair, or free child care.
the popular [mis]conception of startups being free rides to a pile of cash and/or stock options is just so much horse shit.
twenty years ago, i moved out to Silicon Valley after graduating from college. i did not do so with the intent to get rich quick, but neither to live among sheep. i came here for geeks & technology, ultimate frisbee, and a free-wheeling, entrepreneurial spirit that has electrified the valley since The Traitorous Eight walked out of Shockley Semiconductor over 50 years ago and started a Revolution.
while i don't profess to understand credit or capital markets, i do know that internet startups cost less money than ever to get started. and unless i missed something, there are more people online now than ever, spending more money online than ever. and i doubt any of these trends will likely reverse in the long-term -- lower costs, more people online, more e-commerce. doesn't that seem like a pretty good environment for building new online businesses? if not, then what the fuck are you doing here? go back home & get a safe job in insurance or mortgage appraisals (oh, wait a sec...)
the long-term macro trend of growing global internet e-commerce has been the foundation of my own personal startup bets, and why i plan to continue to invest going forward. the companies and people i bet on HAVE to be both optimistic & opportunistic, if only because THE ODDS AGAINST STARTUPS SUCK ***ALL*** THE TIME, not just in downturns. you damn well *better* have a positive attitude, or you're just never going to get out of bed in the morning.
try making payroll on credit card advances when you're carrying over $100K in personal debt (been there). try dealing with your servers being stolen on new year's day while you're in the middle of trying to close an acquisition (yeah, that sucked too). try looking yourself in the face every morning, knowing 10-20 people depend on you for their jobs & families & kids, and feeling like you're completely inadequate to the task and can't hide it (every day for 3 years).
being an entrepreneur is a friggin' FEAR FACTORY, and a living nightmare every day of the week. this is nothing new. 4 out of 5 small businesses fail within the first few years, and the odds aren't that much different for startups. you are going to be embarrassed, ashamed, labeled as an idiot, shunned, ridiculed, and occasionally driven from the village with pitchforks. on average, YOU ARE GOING TO FAIL. MULTIPLE TIMES, in NEW & INTERESTING ways.
GET USED TO IT.
in fact, the more you are used to failing -- and failing fast, with data on how you fail -- the better off you will be. for a great presentation on how to use speed & fast failure as the ultimate startup weapon, check out mike cassidy's presentation on SPEED: The Ultimate Startup Weapon.
and while we're at it, let me take on this issue of "conserving cash". personally, i think it's the wrong message. the point is not to spend less cash. the point is to FIND YOUR FRIGGIN' BUSINESS MODEL. if you know which direction you're going, it's ok to RUN... on the other hand, if you have no friggin clue where you going, it doesn't matter how slow you crawl you ain't gonna get there. you can slow down your spend until you figure out your business, but once you DO understand it, then by all means STEP ON THE GAS! use your cash effectively to build product features, expand marketing, and hopefully use cash-flow positive arbitrage to MAKE MONEY.
to put it more succinctly: in a down market, it's even more important for you to understand the fundamental metrics of your startup, how activation & retention work, how customer acquisition & referral work, and how to make money. these were always important, just more so now when people are looking harder at #'s.
Silicon Valley has never been without risk or fear. in fact, quite the opposite -- Silicon Valley is rife with fear & paranoia. and yet GOOD entrepreneurs somehow manage to overcome their fear, somehow make their hopes & dreams bigger than their fear, somehow manage to find imaginative solutions to problems whilst being backed into a corner by a guy with a .44 Magnum who outweighs you by 75 lbs, and nothing in your pockets but a butter knife and a paper clip. it doesn't matter.
and so i leave you with this:
the true Silicon Valley entrepreneur will find a way around these obstacles. the true Silicon Valley entrepreneur is not frightened by a "down market". they are not daunted by VCs who now have massive leverage. and they are not going to back down. the true Silicon Valley entrepreneur is full of optimism, and sees the world as his or her oyster.
you are MacGyver.
you are Jeanne d'Arc.
you are Luke Skywalker.
you are Paul FUCKING Atreides, and the SPICE must FLOW, motherfucker.