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We've been having this same debate for 20 years.
Many technology startups do know how they will make money, but they need to make major upfront investments to get there. An enterprise software company may need a couple years to build a product then learn how to sell it. A consumer web or mobile company may need to time to build a product and build up a user base before they start to monetize.
And many other companies don't know exactly how they will make money at first. For example, although Google certainly knew that ads were a possibility when they were founded, they didn't roll out keyword-based advertising until several years later. It took time to develop, test, and optimize that model.
Steve Blank defines a startup as a "temporary organization designed to search for a scalable and repeatable business model." He is correct. Entrepreneurs and VCs know this, fund the companies accordingly, then work hard to bridge that gap quickly.
Oh sure, there are some clueless entrepreneurs out there who don't know that a "scalable and repeatable business model" means that revenue exceeds expenses, and maybe you have talked to some of them.
But to jump to "literally the entire ecosystem has lost sight of the basic math equation" is ludicrous. You think the industry is full of fools and you are one of the only smart ones left?
It is impossible to improve on Paul Graham, so I'll leave you with a quote from one of his best essays (http://www.paulgraham.com/growth.html):
"If they stepped back and looked at the whole picture they might be less indignant. The mistake they're making is that by basing their opinions on anecdotal evidence they're implicitly judging by the median rather than the average. If you judge by the median startup, the whole concept of a startup seems like a fraud. You have to invent a bubble to explain why founders want to start them or investors want to fund them. But it's a mistake to use the median in a domain with so much variation. If you look at the average outcome rather than the median, you can understand why investors like them, and why, if they aren't median people, it's a rational choice for founders to start them."
6 days, 9 hours ago on It always comes down to math
Google just did a $14B quarter.
2 weeks, 5 days ago on Is pretty good really good enough for Facebook?
Search advertising (Google) mints money. Display ads (Yahoo and Facebook) don't.
Facebook will keep growing, but it has not yet invented an Adwords-like product and may never.
@MitchSarch what does Obama have to do with a ruling coming out of the California courts?
1 month, 3 weeks ago on Because of asset seizures, I am starting my new company outside California
I'd rather make money then get taxed on it than not make it in the first place. And CA is still the place to build a big tech company.
That being said, I agree CA has terrible governance, and at some point the goose that layer the golden egg will be a corpse
This happened to my co-founders and me, too, even though we created over 100 jobs in California between 2002 and 2007 just as the tax exclusion encouraged us to. I'm not leaving though, simply because I believe the chance to grow a company is still better here - but who knows how much longer that will last.
@MsTaggart @MichaelWolfe those are extreme examples that would be outrageous no matter who did them. But bottom line is that, yes, the CEO's time is more important than others'
2 months, 2 weeks ago on Newsflash: Marissa Mayer isn’t a dictator. She runs one company. Shut up and let her
@MsTaggart she is the CEO. CEOs make more money, have multiple assistants, and fly first class or have corporate jets. Once again, is a man criticized for those things?
Agreed. Many folks on both sides of the debate are missing the point: management can't be done with one-size-fits-all solutions. If it were that easy, we wouldn't need folks like Meyer to run these companies. Anyone who has been in a position of leadership knows that these decisions are completely contextual.
The folks at Yahoo don't have the luxury to consider the "workplace of the future" nor simply copy what has worked at smaller, more innovative companies like GitHub or 37 Signals. They have problem they need to solve *now* and in the context of what is happening inside of Yahoo today. Let's look at the usual arguments in favor of telecommuting:
"Hire the best people from anywhere" - well, Yahoo doesn't need to add people, it needs to shrink.
"Save money on office space" - after Yahoo does the necessary layoffs, they'll have acres of unused cubes.
"This is a sign of weak management" - well, guess what? Yahoo has weak management. Meyer is also trying to fix that, too. She can walk and chew gum at the same time. But it will take time, so she has to work with what she has. And asking new managers to inherit and then layoff unproductive telecommuters adds a degree of difficulty to getting those new managers.
"They will lose some good employees" - definitely true, but management is all about doing what is right in the aggregate, not making decisions that have zero downsides and no risk.
"Some people will get upset" - whoever runs Yahoo had better make some decisions that upset people - long overdue. Any "easy" decisions would have already been made.
"Telecommuting is the future" - probably true, but it doesn't matter if Yahoo is out of business before the future comes. They can phase telecommuting back in in future years, but Yahoo only has several quarters to turn around, so this is about doing what is right for the company right now.
"It is risky. It might not work" - all decisions have risk. And what Yahoo is doing now is not working as is.
"Telecommuting worked at my company" - well, your company is not Yahoo in Q1 2013.
Yahoo has a series of difficult decisions to make. This is one of them. It may not be a good one, although I believe it is. Folks need to sit back and let this play out.
I always ask companies, "pitch me on why, even if you didn't start this company, somebody else would be a large company in this space"
2 months, 4 weeks ago on Pitching Sequoia? Here’s the big question you’ll need to answer
@Todd Dunning @MichaelWolfe @BadBeedi That is a narrow view borne out of spending time in only a few downtown neighborhoods. The city is more diverse than you think - you can find enclaves of east coast preppies, Catholic Republicans, Russian Immigrants, New York bankers, Irish carpenters retirees, multi-generational blue-bloods, newly arrived MBAs, and just about any demographic you can imagine. I'd also add that Ed Lee has been very good for the city, and Gavin Newsom was a positive influence before Ed. But yes, I do agree there are many political forces that are holding the city back from becoming truly world class.
4 months, 1 week ago on New York isn’t the next Silicon Valley, and San Francisco isn’t the new Manhattan
@Todd Dunning @BadBeedi SF residents definitely want adult supervision - common source of frustration. Common targets are Muni, public schools, payroll taxes, and homeless policies. Unfortunately high costs are probably a fact of life. All high density cities get more expensive over time (Mumbai, Hong Kong, New York, London, Moscow, etc). That being said, I think SF could handle quite a bit more density, back to the thesis of this piece.
@Todd Dunning SF is a great place to raise kids. I have two kids, and I know dozens of other families doing it, many that go back generations. The number of things to do is just amazing.
Yes, you can go downtown and see poverty, but that is not all a bad thing - kids need at least a little exposure to some difficult sights. Our school and our family also gets involved volunteering and supporting several social service organizations - invaluable lessons for the kids. Once you leave downtown, the neighborhoods get more residential and idyllic.
In terms of safety, I'm aware of nothing that says kids are in more danger in SF than comparable surrounding suburbs. In fact, given that car accidents are by far the #1 threat to kids' lives, being in an environment where you can minimize the miles in your car is a great way to keep your kids safe.
But what you do hear when you talk to SF families is the following:
Housing - as this article discusses, it is expensive, and anti-growth policies keep it expensive. I welcome the "Twitter apartments" since it reduces demand in some of the outlying neighborhoods, where the young hipsters probably don't want to live anyway.
Public schools - SF has the usual issues that most urban public schools have (very hard to reward good teachers or remove bad ones), but it is made worse by a byzantine lottery system, that completely disconnects neighborhoods from their schools can causes some kids to commute to schools all of the way across the city.
Virtually all families I know who left SF wanted to stay but could not because of one or both of these issues.
Agreed. BTW the Google building on a single square block of Manhattan is actually *larger* than the new Apple building will be (3M sq. ft. vs. 2.8M). But I cannot imagine the uproar if a company that size tried to move into SF. Between the NIMBYs and payroll taxes, they'd run screaming before they broke ground.
@jimritchiesf Whether you call a tablet a PC or not, it is still impacting PC sales, so for the purposes of this analysis, it is a PC.
In fact, once you can plug a smartphone into a keyboard and monitor and work effectively from it, you can call it a PC as well.
Either way, the conclusion is the same....Dell better get moving.
9 months, 1 week ago on Stick a Fork In It: Dell Is Done
@clayhebert I don't think Yahoo Mail grows by simply trying to be better than GMail in all of the places where GMail is strong. There are many other ways for them to innovate and at least maintain or even gain market share. Mobile is the most obvious place (ever seen the GMail mobile "app"?). Think a beautiful, Flipboard-style mobile app for Mail. They are also free to focus on consumer users, where GMail is trying to be a mashup of business and consumer features. Plus there are dozens of little email startups out there that are ripe for acquisition.
12 months ago on What Now… Yahoo?
*Popping some popcorn and getting ready for the show*
12 months ago on Jason Calacanis Joins PandoDaily As a Regular Columnist
@TimSparapani She certainly has a keen mind for what sells. So does Bravo. So do meth dealers.
Sarah travelled to Rwanda, India, and Brazil for a year to cover "real" entrepreneurs working in harsher conditions and taking way more risk than any of us in SV ever will. To compare that to a reality TV show is just laughable...you may as well compare "Waiting for Superman" to "Glee."
1 year, 1 month ago on An Open Letter To Randi Zuckerberg: How Could You Do This to Real Entrepreneurs?
@marksashton Some of us actually do believe that tech entrepreneurship matters and is vital to our economy and helping solve global problems. Millions of people watching a Jersey Shore version of it and believing it represents reality is actually quite damaging. And make no mistake...people do believe that reality TV is non-fiction, doubly so when someone with a name as recognizable as "Zuckerberg" is standing behind it.
It will be painful, agonizing, and horrible, and we will watch it.
1 year, 1 month ago on The Dumbing Down of Silicon Valley