This is...so not true. My co-founder and I had hardly any network in SV. We applied to YC through the website, raised seed money after demo day. We ran on seed + revenue up to about 60 employees and we recently did a series A.
If you don’t have a network, don’t be dissuaded. Silicon Valley is the least credentialist, most open community I’ve ever been a part of.
Some describe tech as a perfect meritocracy, which of course it is not. The overreaction to that is to claim startup success merely comes down to who you know. Of course that's not true either. As far as industries go -- especially industries capable of producing millionaires, billionaires, and world-changing phenomena -- tech is absurdly high on the meritocratic scale.
While I generally agree with this, I think the reason is that success is mainly determined by how much customers like something. It's certainly not due to a lack of folks waiting around to try to take advantage of founders at every conceivable opportunity.
And with respect to VC firms, most don't even list their email addresses on their websites, and of the ones who do a lot of them openly brag about deleting every single email that doesn't come with an introduction. Many won't even tell you what industries or stage they focus on.
If venture capitalists are tired of getting shit on in the media in a way that dentists or accountants or whatever aren't, then maybe they should exhibit the same baseline professionalism as is expected in every other industry.
Actually I would make the distinction that tech is ridiculously far ahead of most other industries- but still very low on the scale. (if by scale we mean zero to perfect meritocracy)
Networks matter a huge amount and are dominated by a certain class and racial demographic.
At least we've begun the conversation and I believe truly meritocratic success is very possible, but those on the inside are definitely more likely to be successful that those outside. (really specifically raising a certain kind of seed or early venture funding, where some normal business metrics may be missing- (investing in the founders) )
I can list every luck/event in my career over the past 10 years but I would trade them all for the luck of receiving single seed round of funding to work on my own project. It's not for lack of trying.
They used to have a monopoly on reach. Readers came to directly to them. Today that role belongs largely to tech companies. Media companies are heavily dependent on the algorithms and whims of the likes of Google, Twitter, Facebook, Apple, and Amazon. And it's not just distribution: it's their business models, too. Apple taking a cut of NYC subscription revenue, Amazon doing similar things through its Kindle devices, Facebook and Google ads, etc.
This would be an existentially terrifying position for any business to be in. And as much as the media likes to portray itself as putting truth-seeking and objectivity first, it's still very much a collection of self-interested profit-seeking businesses.
When you're the media and you're faced with this situation, what do you do? What weapon do you have? Your content of course.
It doesn't need to amount to full-scale propaganda or anything obvious. You simply hire writers and editors who are themselves anti-tech, and results will follow. Even if you don't hire that way as a media organization, your employees' incentives are aligned such that they should naturally lean anti-tech, given the realities of the business situation and its effect on their jobs.
When your whole world is being destroyed around you, it's not that strange if you develop a hostile attitude to the people doing the destroying, even if your job description is to be an "objective journalist".
I regularly read NYT's technology section. It seems like most things have a negative slant towards them, especially when it pertains to Google, Facebook, YouTube, or other social media sites. Most of the positive pieces they run about tech serve to emphasize how different the subject is compared to the big bad tech giants.
For example, AirBnB has thousands of employees and yet barely anything changed in their service in the past few years. The engineers who work there are not productive. Their main skill is in creating highly complex solutions whilst taking minimal risks; that's not what engineering is about. The same goes for almost all major software companies. Each engineer does very little work and contributes very little towards real innovation. These big network effects are holding tech back. They are draining cash away from pure tech and focusing it on social networks.
Let's be real. Tech has had a consistently anti-tech slant the last few years.
This is such a weird point to make given it seems like almost none of the Uber and Airbnb Alumni seem to have been in any kind of tight knit club before. This wasn't something like PayPal mafia members starting yet another company, they seem to have been started by relative outsiders and most of the employees seem to be as well.
Maybe there's an argument to be made that some of the people who strike it rich as early employees of tech unicorns end up investing in other companies or founding other companies. But these companies seem to be proof that you don't need to have come from a tight knit club to become a successful startup.
You literally just said YC took you in and gave you a demo day where they invited everyone. You didn’t do that, YC did. YC takes very few people out of those who apply. So instead of being a counterexample, you just provided a great example. They are a well regarded network and gave you an in to the rest of the networks! Could someone who DIDN’T get into YC achieve the same thing just as easily, getting all those employees and Series A, or would they limp along on angel funding?
OTOH, it is true that outside YC there are subclusters that are a lot less meritocratic and more network based.
OTOH, YC entry is meritocratic.
You would need more data before concluding it is not true.
In no order:
* The business is fundamentally based on ignoring the law.
* They've done nothing but lose money, more than any private company ever.
* The money keeping them afloat is very dirty (mostly from Saudi Arabia)
* The culture is well-known to be awful.
* The drivers are completely exploited, working long days with no security and taking huge financial and physical risk.
* Their headquarters is at one of the most awful corners in the city, which they've done nothing to improve.
And in the end they'll have to start making money. Which means either increasing their prices or increasing their cut. When that day comes we'll realize what we've lost.
But yet, all the people who signed up and coded the app will be millionaires.
Smells like society misallocating value.
This is a weird take for me. I don't mean to single you out but I see it everywhere. If I went and bought $100 worth of stocks, not many people would say I lost that money. Most people would agree that we have to wait and see how that investment works out. In every other context we call it "investing" (some investments work out and some lose money) but here it's just called "losing money" without even looking to see if it's a good or bad investment.
> something about Uber creating all these millionaires sickens me
This feeling is called envy.
When you're taught to always do the right thing and not to engage in the profit-maximizing morality-disregarding behavior we see from companies like Uber, when you make the decision not to become employees of those companies, seeing that others did decide to work with those companies really forces you to re-evaluate how the world works. The first step in that process involves disgust reflecting on the bad actors.
https://uk.reuters.com/article/uk-uber-tax-britain-idUKKBN18...
I am genuinely not trying to be play dumb but what is the innovation or vast improvement? Apps like mytaxi were pretty much showing up before/after uber came to light, without violating laws or exploiting folks. Also, how does such a claim get balanced to the vast financial loss they seem to be accumulating?
> created value
For whom?
18: Go to Harvard or Stanford for CS.
22: Work at FAANG companies.
25: Quit and raise millions for your startup.
26: Sell your company to a FAANG company/IPO
28: Join a VC firm, invest in people like you, and make predictions on Twitter all day.
I mean how many ex—Amazon founders do you see? Probably not at all in proportion to the number of alumni relative to all VC funded cos.
Is there a reason to single out Amazon specifically? Because I’ve heard of lots of Xoogler founders and exFB founders.
They are a very different company to Facebook, Apple, Amazon or Google, I feel like they are bundled in mainly to make a cooler acronym.
I hold no ill will against all of these people getting rich this way. Let's just not pretend like they're innovators, though.
There's a reason it's not in their backyard. It's their backyard.
In the same way that United is not a tech company, but they have a website that accepts reservation.
Tech companies create new Tech as part of their lifecycle: Intel, AMD, Google, etc etc. They create new Tech that didn't exist before, and this is core to their product.
I get that Silicon Valley shifted from Real tech 20 years ago to Futile WebApps that deliver pizzas faster, but it makes me sad that the new definition of tech shifted so much to pure business.
10 years ago, we had some "hard tech" with a lot of tech innovation. I was arguing that the meaning of "tech company" shifted to a business company, using tech as a way to streamline operations. Those are very different in my opinion.
I obviously prefer the first one. But I accept that in the collective mind, tech company mainly means a website nowadays.
Do they create software as a service, hardware, and so on? No, but they are a group of practitioners that are really good at putting the pieces together.
They've also built a few things like M3 and Envoy.
Take the "PayPal mafia" for instance, out of one successful company spawned others -- SpaceX, LinkedIn, Facebook (via investment cash). These companies will spawn others, so on and so forth.
It's a cycle that feeds upon itself and has been a successful model, but it does have major flaws due to "hardcoded" pattern recognition.
For example, Texas loves to tout its "business friendly" atmosphere, but I have personally seen people get sued over non-competes and, much worse, non-solicits. Meanwhile, see what's happening in California: https://www.shrm.org/resourcesandtools/legal-and-compliance/...
I have a couple buddies who have started their own thing out of Uber and they’re doing well. The issue I see is it’s going to be pockets of companies around the gig sharing economy for Uber and similar items in rental/real estate for AirBnB.
Employees of both companies have solved some really tricky problems, and they know they can use their experience to solve another set of problems + make it easier to raise money for their venture.
Also - I do appreciate you qualified your post with SV being the lead in software companies. I think that’s still true and SV will be the lead for a long time but other cities will be cheaper + you don’t need to be in SV to find great talent anymore and you don’t need to be there to raise good capital. If you have an idea that’s solid and a decent team you’ll be able to find fundraising but it’ll be interesting to see if software stays in SV and we see the software related but more physical goods startups relocate out of SV.
SaaS businesses are so much less capital intensive than hard goods based businesses so I’d imagine those companies don’t start in SV so they can has less expenditures in areas that don’t matter.
you just don't hear about the failures out there. I bet there's much more failures than there are successes.
If it weren't, banks would've all lent out money to startups!
Sure there are, but a few successes can make up for a lot of failures. Ycombinator, for instance, has been doing its thing for quite a while now and appears to be doing quite well.[1]
[1]Not personally having looked into their financials
Which credentials are the most valuable then? Which company as a new grad is most similar to Stanford, MIT?
The smaller the company is, the higher the position has to be to make the credentials stand out.
For instance, being a recent graduate at FAANG is probably more or less equal to being a pre-A series startup CTO, if there are no other entries in the CV.
That said, at more senior levels, your model fits more closely. A mid-level Alphabet product manager is likely to have been a founder or C-level exec in a startup or two.
I am an alum of one of these cos, and I suspect the makeup of the average employee as far as risk-taking goes (and again experience seeing a company go from nothing to $20b+) is much higher than an equally competent employee at, say, Microsoft or Amazon. There's a level of self-selection involved here.
The reverse causation seems like a compelling explanation: innovators built Uber and AirBnB, rather than Uber and AirBnB built innovators (as the title implies).
The advantage of ex-Uber, ex-Airbnb folks is not that they are more innovative—it's that they have experience in solving the organizational problems of doubling the size of a company over and over and over again within a very short time frame. If you only get people who are good at making innovative small-scale projects then they'll hit a wall when the organizational challenges of hypergrowth suck all the productivity and alignment out of the team. If you get people who only have experience operating at huge scale they won't be able to prioritize short term goals needed to get and maintain traction.
