Sergey Brin: Don't Come To Silicon Valley To Start a Business (businessinsider.com) 103
An anonymous reader shares a Business Insider report:If you're itching to start a company out of a garage, then you shouldn't pick up and move to Silicon Valley, according to Google cofounder Sergey Brin. It's easier to start a company outside the Valley than in it, he said onstage at the Global Entrepreneurship Summit. "I know that sort of contradicts what everyone here has been saying," he said with a laugh. "During the boom cycles, the expectations around the costs -- real estate, salaries -- the expectations people and employees have ... it can be hard to make a scrappy initial business that's self-sustaining," he said. "Whereas in other parts of the world you might have an easier time for that."But he adds that Silicon Valley is good for scaling that opportunity.
It's good if you have money (Score:1)
It's a good place to run your business if your business happens to have a lot of money. You can use that money to make even more money, if you're good at that sort of thing. You can also burn through a tremendous amount of cash without anything to show for it.
But the Web 2.0 bubble has already burst. (Score:2, Interesting)
When we discuss stuff like this we need to consider that the Web 2.0 bubble has already burst. It wasn't a spectacular burst like the initial .com crash, but the burst has still happened.
We've seen IPOs dry up.
We're seeing little to no growth for the major incumbents, even if they haven't completely flamed out yet.
People are tiring of Facebook, Twitter, and nonsense "social media" (with is mainly about subjecting users to ads).
LinkedIn, one of the Web 2.0 darlings, was just bought out by Microsoft.
The Ruby
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We've seen IPOs dry up.
What you seen is venture capitalists and investors no longer throwing money at every potential "unicorn" (a startup with a $1B+ valuation) that comes along. A lot of these unicorns have very little to show for after blowing cash through the wazoo. One notable unicorn had to cut back on employee perks because it was costing $25K per year per employee. VCs and investors want to see profits from business operations. That's not a bubble bursting, it's reality sinking in.
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What the hell are you talking about? That's exactly what a bubble bursting is: it's reality sinking in.
Expectations adjusting downward to match reality is the bubble bursting!
The expectations that are lowered include the value of companies and their stock, the salaries that employees will receive, the demand for products and services, and the understanding of what's viable.
You apparently don't realize that you just described the bubble bursting, while at
Re:But the Web 2.0 bubble has already burst. (Score:5, Interesting)
Erm, no.
It is reality sinking in but it is not a bubble bursting.
The dot com bubble of 2000 was a bubble bursting.
The housing crash of 2007 was a bubble bursting.
But prices of companies, real estate, and so on regularly go up and down and sometimes go down sharply (eg. LinkedIn) when 'reality kicks in' but that that not automatically mean a bubble has burst.
They're too different events - one is of a smaller scale the other is of a much LARGER scale that results in a large economy wide event that impacts everyone.
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Expectations adjusting downward to match reality is the bubble bursting!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
THE SKY IS FALLING! THE SKY FALLING! THE SKY IS FALLING!
Does this make you feel better?
You apparently don't realize that you just described the bubble bursting, while at the same time misleading yourself into thinking it hasn't just burst!
I lived through the bubbles bursting prior to the Dot Com Bust in 2001 and the Great Recession in 2009. Companies went out of business, empl
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Denial of the bubble bursting is another sign of the bubble having already burst.
This "bubble" is a like a bear taking a shit in the wood. Beside the bear, who else in world cares? (Hint: no one.)
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During previous "busts" most of the people I knew in companies that were making profits kept their jobs. The job losses in the Silicon Valley are seemed to be from all those companies whose money was only in stock valuations. Of course that caused ripples across the country and world and seriously hurt retirement plans of everyone who kept their jobs. But utlimately it was just another California gold rush revived, with major financial experts getting conned into investing in the new econmy. The housing
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We really need the "experts" to focus on fundamental basics in the economy instead of irrational exuberance.
That's what the VCs and investors are doing to the unicorns by forcing them to focus on profitable business operations and not offering endless perks for employees.
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Everyone talks about unicorns but they were always extremely rare (thus the name).
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Everyone talks about unicorns but they were always extremely rare (thus the name).
The line I picked up from a recent WSJ article that VCs and investors were funding 20 potential unicorns per month, which is a much slower rate than last year. Unicorns that made $1B+ in real money averages to two per year.
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Everything is a "potential" unicorn. No one has any clue what an unfunded company is going to be worth when they have no product, no employees, and only have a business plan that says "we're going to replace Facebook!"
Turns out sometimes it's the company you overlook that is purchased by Google for over $1B (which greatly increases the statistics).
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[...] a business plan that says "we're going to get bought out by Facebook!"
FTFY - The dot com version had Microsoft as the fantasy buyer.
Turns out sometimes it's the company you overlook that is purchased by Google for over $1B (which greatly increases the statistics).
I worked for a company that went on a buying spree prior to the dot com bust that paid two to four times more than what each acquired company was actually worth. Something that Google found out when they bought Nest for $3.2B in 2014 and recently halted unlimited funding that the division enjoyed for showing little in return.
web 3.0 is upon us (Score:2)
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In a similar vein, the valley can be relied upon to solve real problems — after financing all possible alternatives.
Whatever goes on, there has never been a shortage of real problems out there. Solving a real problem ties your capital up for a longer stretch of time. No VC worth his salt would choose to do that, when the alternative is a quick in-out. After a decade where "scale
Re: But the Web 2.0 bubble has already burst. (Score:1)
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Most startups here only have a goal of being bought out. Actaully becoming profitable is not in the plans. Their operations consist of continually going to all the countless conferences and trade shows that may be related to their "business". Basically, they're scams. The few honest ones may have a couple people mainly acting as consultants and other work for hire.
Translation (Score:5, Insightful)
"Do the riskiest part of starting a business somewhere else. Then, when it reaches maximum future potential, bring it to Silicon Valley so we can buy it out from under you for a song and make a ton of money."
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Walter White
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Once you've got enough money you really don't need more. If you can retire comfortably then SELL! Don't stay in the rat race if you don't want to be a rat. I see executives hopping from job to job when they clearly have enough money to live extremely well compared to all their underlings, but they still keep grabbing for more and more.
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This.
Location doesn't matter until it's time to put your startup under Alphabet's management. 'Future potential' is the acquisition price Google and others are willing to pay. Not the earnings potential.
OTOH, if you want to be bought out by Microsoft, come to Seattle.
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As far as I can tell, location doesn't matter for Google acquisitions except that if you aren't located near an appropriate Google office you may have to pack up and move post-acquisition. I suppose it *might* be a little easier to get someone to come look at you if you're in SV, but I doubt it makes much difference.
What really matters, I think, is being somewhere that you can get the talent and resources you need to build your business. SV is good because there are lots of talented people around, but tho
Re:Translation (Score:4, Insightful)
And those people are there because of all the businesses that are there. It's one big feedback loop that's going to keep building until it breaks
Or until the cities cave in and start allowing high-density housing to be constructed, building decent mass transit (which is easier with high-density housing), etc. The actual population density is quite low compared to truly urban environments. But while they insist on sticking with a suburban lifestyle they're going to be bursting at the seams.
Luckily, it does appear that Mountain View, at least, is finally starting to recognize this. After years of obstructionism, they have finally approved some high-density housing on the north bayshore. http://www.mv-voice.com/news/2... [mv-voice.com]. With a lot more of that sort of thing, they could fix the problem. Of course, if they do too much of it, all of the people with million-dollar mortgages on $300,000 (at best) houses are going to be in trouble...
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That "song" you sell it for is retirement in Tahiti. I envy entrepreneurs who receive the opportunity to have their work stolen thus.
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Start in a garage, go to SV for funding (Score:1)
'nuff said
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I move it to Georgia where the dirt is cheap and the labor cheaper.
That's because we have so much of the damn red clay we can't hardly give it away.
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Silicon Valley hasn't been cheap any time in the past 30 years. It has always been an overpriced zoo, it just has money and momentum.
Re: Expenses (Score:2)
location, location, location (Score:5, Insightful)
Can always just move in with Erlich Bachmann (Score:1)
I am sure there is space at the incubator.
Get out of his way (Score:3, Funny)
It sounds like Sergey Brin is tired of having to wait in long lines at the In-and-Out Burger.
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In-N-Out doesn't franchise. Just saying.
Other places are better (Score:5, Interesting)
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I am trying to start up my own business and it is a lot of trouble to find investors.
Is it really that capital intensive? Can you start off small?
Here's a strategy that I've seen work time and time again: start local and small and build a profitable base (of course CYA on the IP department with patents, trademarks and copyrights - if you want.). Expand with retained earnings. Nothing proves a concept like actually being a profitable business. And it gives you leverage with investors - "I don't NEED you, I just want to get bigger faster." or "I need more capital than I have because [insert
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It depends on the business. Certain businesses can start off small and build up. Some require a lot of capital up front (think, hardware or biotech), where others can rent space from AWS and just pay salary for the first few employees.
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Of course he'd say that... (Score:2)
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This.
While I don't think that he's particularly wrong, it seems a bit self-serving to push people out of the area. The advice should be to setup the business where it's affordable, but be open to hiring from anywhere, including Silicon Valley.
My company has employees in that area and our headquarters has moved to be near Google's (just in respect to location, not as a reason), but the majority of our employees are not in the Silicon Valley area, including myself.
start your business in Canada (Score:3, Insightful)
The healthcare situation in this country is so fucked up.
At least when you are paying everybody as little as possible to get off the ground, they will have good healthcare.
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This is not flamebait - we, as a Canadian business, have the majority of our customers in the US but every attempt to onshore employees has been blocked by this medical cost wall.
We haven't tried since Obamacare - would that drop our out of pocket by 50% to provide coverage similar to Canada?
Great advice (Score:4, Informative)
Start your company anywhere... but if you want VC money, get your ass to Sand Hill Road [wikipedia.org] because VCs can't see past the end of their own driveway.
Silicon Valley is a great place to be from (Score:4, Informative)
Worked and lived in Mountain View in the late 1980's; visited the peninsula many times since then.
Got out when I realized that I would not be able to afford a house unless I hit the startup lottery.
Also, realized I did not want to rear children in either side of Palo Alto (east or west).
Still, having some direct experience of Silicon Valley has been useful ever since; it helped me get every job I've had since that time.
"Self-sustaining"? (Score:2)
Oh right (Score:2)
Like I'd take advice from some nobody named "Sergey".
India? (Score:2)
Come to NC (Score:2)
High-Tech rednecks are a lot less expensive to hire than Hipsters and Yuppies.
Heck I can get a website cobbled together for a case of beer and one visit to a strip club.
Getting VC (Score:2)
You are far less likely to get VC funding if you are not physically in the Bay Area.
Yes, it is cheaper and easier to start a business outside of the Bay Area. But if you want the VC funding, you better be there. Then you can move your operations out...
Re:Google (Score:4, Interesting)
"But he adds that Silicon Valley is good for for scaling that opportunity."
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Why not lead by example by moving Google away from the bay area
I'm sure many of the employees will move, but the majority probably wouldn't. Forcing them to either retain a significant and expensive presence there, or lose the people who know how to keep the company going.
Similarly, opening up sites elsewhere makes a lot of sense if you can divide up the work and minimize communication. No one likes having half their team split geographically (particularly across many time zones).