ddodge

You are correct. It was not meant to be negative. It was meant to convey the importance of the shift from social/consumer apps with no thought of monetization, to startups focused on solving real world problems that generate revenue from day one. This can be boring to investors looking for flying cars, or journalists looking for mind blowing technology.

I mentioned Circuit Labs, great technology that makes money in a boring way by selling parts. I also mentioned Thalmic Labs as an example of cool technology.

My personal favorite was Skip, the RFID checkout company, but I couldn't talk about it because they haven't officially launched. I think there could be an indoor location play using the RFID tag data.

Overall, I was impressed with the focus on solving real world problems and generating immediate revenue. Boring to some, but I liked it.

Another one I hear a lot "We had that feature 2 years ago". They have no idea why it isn't blowing up.

The $30/user is just a valuation metric, not the acquisition justification. They bought it because mobile and photos are core to what Facebook does...and Instagram does it better than Facebook. A lot better.

Exactly, it does work both ways. It would be interesting to know the details/motivations on why Ev Williams (Blogger), Dennis Crowley (Dodgeball) and Max Levchin (Slide) left Google. Yet, Andy Rubin (Android) and Chad Hurley (YouTube) stayed on and were very successful. Same parent company, different results.

This is basic stuff for anyone here. I'm sure you get asked for startup advice all the time. Here is something you can send to people who ask you for help. It will get them started thinking...and come back with more focused questions.

YC companies are the best in the world at elevator pitches. This post explains why you need 3 pitches; 1 minute elevator pitch for random encounters, 6 minute pitch for events, and 30 minute pitch for VCs and investors.

Also why your elevator pitch is important to recruiting new hires, getting new customers, and making deals with partners. The pitch is not a marketing task, it is vital to growing your business.

This post was written 4 years ago. At that point is was too early to tell. Four years later we know YouTube was a pretty good deal. Myspace looked like a great deal for a few years. Now...not so much. It takes several years to know if things will work out or not.

My son Darren works for Jason at Mahalo. He is too busy working to comment here...so I will for him :-)

Darren works 6 or 7 days a week because he loves what he is doing, and is learning a ton from Jason. Yes, he is tough and has high expectations. But, Jason is the best mentor and teacher around.

Jason isn't for everyone, but if you want to rise to the top really fast...a ride with Jason will get you there.

Some people may follow the money for pre-IPO stock options, but those are exactly the kind of people you don't want. They are in for the money and will jump ship at the next perceived opportunity to strike it rich.

Most people change jobs because they want a new challenge. They want to build something new, or do something they haven't done before. The fact that stock options are part of the deal is frosting on the cake.

In the case of high profile startups with multi-billion dollar private valuations, the upside potential at IPO may be pretty limited anyway. Stock options are always a gamble. In this environment of limited IPOs they are a big question mark.

HackerbySea, I agree the Secondary Market is inefficient, and is artificially inflating prices. Individuals are bidding up prices without any financial information or real competitive market.

However, I think the public markets will be more efficient, and have more complete financial information. My guess is that the public markets will not value Facebook, or other high flying private companies, at a much higher valuation. In fact, I think the public markets could value these companies at substantially less.

In the end that is what makes a market, buyers and sellers, all with different opinions. It is impossible to say who is right at this time.

My point is that private valuations have been driven up far higher than ever before for three basic reasons; 1.) Lack of IPO market has driven the creation of new markets 2.) 409A has required companies to value their stock at much higher valuations than ever before. 3.) Second Market allows individuals to buy private stock, and bid up prices, without complete financial information.

Time will tell how efficient or accurate these alternative markets really are. My guess is the gap between private valuation and IPO public valuation has narrowed considerably, and we will not see the IPO price bounce we saw in the past. Just a guess. Time will tell.

Don Dodge

Exactly. The process is designed to reduce false positives. The downside is there will be some false negatives.

It is not 100% accurate and it can take months to get through the process, but if we do it right we will be spending years together. So, it is worth the investment in time.

Don

I wrote this article over 3 years ago, while working at Microsoft. Ironically, I now work at Google. I haven't analyzed the numbers again since then, but I suspect the trends and reasoning are still the same.

I was surprised and delighted to see thousands of hits coming from HackerNews...more than 3 years later. Several search startup CEOs told me they showed this blog post to their VCs while raising money. Pretty cool.

Search is much harder than it looks. The "table stakes" investment required to operate a real search engine have escalated significantly since I wrote this. The competition is tougher, and winning just 1% market share is very, very difficult.

The new markets for search are hyper-local search, mobile search, social filtered search, and search automated action like Siri. Market share might be easier to win in these markets.

Don

Ken, There is NO implicit criticism of people who don't work nights, and none was intended. Sorry if you came away with that impression.

Google is all about achievement...not which hours you choose to work. The fact is that most employees do not stay for dinner. Google people have different work schedules. Some come in early, some stay late, some work 9 to 5 at the office, and get back online at night after the kids go to bed. Some people work from home. There is no pressure to conform to some schedule.

Google is like a college campus. There are people everywhere, all working different schedules. There is always someone around so you never feel alone.

Don