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  • Jason Calacanis 15:00:29 on 2019-01-05 Permalink
    Tags: , , startups, ,   

    Should I move my startup to Silicon Valley: the 2009 & 2019 answers compared 


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    Often the best advice is situational, and the situation here in the Bay Area has changed dramatically in the past decade. Today I wanted to detail the two answers a founder would receive to the question, “Should I move my startup to Silicon Valley?” depending on if they asked it in 2009 or 2019.  

    [ Click to Tweet (can edit before sending): https://ctt.ac/e9D6Z ]

    Should you move to Silicon Valley: The 2009 answer

    It was easy to give advice 10 years ago when founders asked me if they should move to Silicon Valley. The answer was a wholehearted “yes!” Given without reservation or consternation because:

    1. The sheer number of investors here
    2. The density of talented people here

    High-growth startups, defined as the ones trying to hit $100M in revenue in under a decade (what you need to attract the elite investors and to achieve unicorn status), need talented team members and mountains of cash.

    There is no place in the world with more of those two things than the Bay Area.

    If you want to take over the movie business, you go to Los Angeles because that’s where the talent, money and distribution is. If you want to build a unicorn or decacorn, you come to the Bay.

    It’s never really been a major debate.

    Great founders can come from anywhere, but they build large businesses here.

    Sure, we would see a Groupon (Chicago), Tumblr (New York) and Snapchat (Los Angeles), now and then, but we would see many more Ubers, Airbnbs, Facebooks, Googles and Teslas in the Bay.  

    Supply and demand worked exceptionally well for Bay Area investors, who didn’t feel any FOMO by sticking to startups in the Bay Area. Candidly, most VCs still don’t want to get on planes and do board meetings in places that are more than 1-2 hours away from the Valley (read: Seattle to San Diego).

    Should you move to Silicon Valley: the 2019 answer

    Over the past decade the delta between running a business in the Bay Area and everywhere else expanded dramatically.

    Apartments in the San Francisco and the Bay Area are two to five times that of other cities. Heck, I’ve been reading about American developers moving to Tokyo and Kyoto to work remotely while living epic, affordable lives in one of the highest-functioning cities in the world.

    Compensation will vary 2-3x as well in many cases. Combine that with the short tenure of people in Silicon Valley, typically calculated in months/quarters, while talent in other cities settle in and stick around for years, and it’s no wonder that VCs themselves are changing their position on the location of your startup.  

    Additionally, “remote work” has gone from a strange phenomenon a decade ago, to — at least for startups — commonplace today.

    Add all this up, and I’ve seen the same VCs who insisted on founders moving to Silicon Valley in order to get funded, telling founders it’s great to come to Silicon Valley, but it’s also fine to stay where they are.

    Often, the best advice is to split a startup’s office functions across geos, with corporate and product being in the Valley and everything else being “wherever makes things grow faster.”

    I’ve seen startups raise $3m in the Valley with a plan to burn $250k a month, then move to Canada and have their burn drop by 75% — expending their runway by a couple of years.

    If you do choose to be here in the Bay Area as a nascent startup, incurring the costs, you will be taken more seriously by most VCs — even though they will deny this. The thinking by some is that if you can’t figure out how to navigate the Bay Area you won’t navigate your business.

    Talk about mixed signals!

    Bottom line: Raising money is still much easier when your HQ is based in the Valley, but deploying capital across geos and embracing remote workers will stretch that cash meaningfully. Check back again in a year, if the economy and housing crash in 2020 the 2009 answer might be the correct one again!

     
  • Jason Calacanis 15:00:29 on 2019-01-05 Permalink
    Tags: , , startups, ,   

    Should I move my startup to Silicon Valley: the 2009 & 2019 answers compared 


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    Often the best advice is situational, and the situation here in the Bay Area has changed dramatically in the past decade. Today I wanted to detail the two answers a founder would receive to the question, “Should I move my startup to Silicon Valley?” depending on if they asked it in 2009 or 2019.  

    [ Click to Tweet (can edit before sending): https://ctt.ac/e9D6Z ]

    Should you move to Silicon Valley: The 2009 answer

    It was easy to give advice 10 years ago when founders asked me if they should move to Silicon Valley. The answer was a wholehearted “yes!” Given without reservation or consternation because:

    1. The sheer number of investors here
    2. The density of talented people here

    High-growth startups, defined as the ones trying to hit $100M in revenue in under a decade (what you need to attract the elite investors and to achieve unicorn status), need talented team members and mountains of cash.

    There is no place in the world with more of those two things than the Bay Area.

    If you want to take over the movie business, you go to Los Angeles because that’s where the talent, money and distribution is. If you want to build a unicorn or decacorn, you come to the Bay.

    It’s never really been a major debate.

    Great founders can come from anywhere, but they build large businesses here.

    Sure, we would see a Groupon (Chicago), Tumblr (New York) and Snapchat (Los Angeles), now and then, but we would see many more Ubers, Airbnbs, Facebooks, Googles and Teslas in the Bay.  

    Supply and demand worked exceptionally well for Bay Area investors, who didn’t feel any FOMO by sticking to startups in the Bay Area. Candidly, most VCs still don’t want to get on planes and do board meetings in places that are more than 1-2 hours away from the Valley (read: Seattle to San Diego).

    Should you move to Silicon Valley: the 2019 answer

    Over the past decade the delta between running a business in the Bay Area and everywhere else expanded dramatically.

    Apartments in the San Francisco and the Bay Area are two to five times that of other cities. Heck, I’ve been reading about American developers moving to Tokyo and Kyoto to work remotely while living epic, affordable lives in one of the highest-functioning cities in the world.

    Compensation will vary 2-3x as well in many cases. Combine that with the short tenure of people in Silicon Valley, typically calculated in months/quarters, while talent in other cities settle in and stick around for years, and it’s no wonder that VCs themselves are changing their position on the location of your startup.  

    Additionally, “remote work” has gone from a strange phenomenon a decade ago, to — at least for startups — commonplace today.

    Add all this up, and I’ve seen the same VCs who insisted on founders moving to Silicon Valley in order to get funded, telling founders it’s great to come to Silicon Valley, but it’s also fine to stay where they are.

    Often, the best advice is to split a startup’s office functions across geos, with corporate and product being in the Valley and everything else being “wherever makes things grow faster.”

    I’ve seen startups raise $3m in the Valley with a plan to burn $250k a month, then move to Canada and have their burn drop by 75% — expending their runway by a couple of years.

    If you do choose to be here in the Bay Area as a nascent startup, incurring the costs, you will be taken more seriously by most VCs — even though they will deny this. The thinking by some is that if you can’t figure out how to navigate the Bay Area you won’t navigate your business.

    Talk about mixed signals!

    Bottom line: Raising money is still much easier when your HQ is based in the Valley, but deploying capital across geos and embracing remote workers will stretch that cash meaningfully. Check back again in a year, if the economy and housing crash in 2020 the 2009 answer might be the correct one again!

    The post Should I move my startup to Silicon Valley: the 2009 & 2019 answers compared appeared first on Calacanis.com.

     
  • Jason Calacanis 15:00:23 on 2019-01-03 Permalink
    Tags: , , , , , , , startups   

    As an angel investor should I invest in a founder working on two projects (or working half time on one)? 


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    Peter Thiel (in crown), playing multiple Paypal employees at chess — including Sacks (the only winner) and Roelof Botha (to right of Sacks).

    Just got asked this question on Quora.

    If it’s Elon Musk or Jack Dorsey, sure, go ahead and invest in them.

    If it’s anyone else, it’s likely not going to work out well as an investment.

    [ Click to Tweet (can edit before sending): https://ctt.ac/c1U8m ]

    There are some serial founders who specialize in starting and handing off startups to exceptional managers; Sky Dayton (who founded Boingo Wireless, EarthLink and other startups) comes to mind, but these individuals are rare.

    You need to ask yourself as an angel investor the following two questions when looking at a founder with “founder ADD”:

    1. Has this person managed multiple projects before and how did that work out? I’m going to assume they haven’t done this before or you wouldn’t be asking the question.
    2. Does this person really believe in this startup, product, team and market, and if they do, why are they distracting themselves with other projects?! Perhaps they are hedging their bets.

    The second question is the important one here. Perhaps the person started the project, needs to spend time with a sick family member, and they have an exceptional President and management team. In that case, I would evaluate the performance of the team and the likelihood that the President can take over as CEO.

    Bottom line: startups are absurdly hard. Running two at the same time is like winning two chess matches at once. Anyone can play two games of chess at the same time, but very few will win both. This is an imperfect analogy, of course, because startups are not “win/lose,” they are more like “win small/win medium/win big/win gigantic/lose.” Even if the person wins both games, perhaps they will just win modestly —- which will suck for you as an angel investor.

    The post As an angel investor should I invest in a founder working on two projects (or working half time on one)? appeared first on Calacanis.com.

     
  • Jason Calacanis 15:00:23 on 2019-01-03 Permalink
    Tags: , , , , , , , startups   

    As an angel investor should I invest in a founder working on two projects (or working half time on one)? 


    Warning: preg_match_all(): Compilation failed: invalid range in character class at offset 7 in /homepages/23/d339537987/htdocs/ec/wp-content/themes/p2/inc/mentions.php on line 77
    Peter Thiel (in crown), playing multiple Paypal employees at chess — including Sacks (the only winner) and Roelof Botha (to right of Sacks).

    Just got asked this question on Quora.

    If it’s Elon Musk or Jack Dorsey, sure, go ahead and invest in them.

    If it’s anyone else, it’s likely not going to work out well as an investment.

    [ Click to Tweet (can edit before sending): https://ctt.ac/c1U8m ]

    There are some serial founders who specialize in starting and handing off startups to exceptional managers; Sky Dayton (who founded Boingo Wireless, EarthLink and other startups) comes to mind, but these individuals are rare.

    You need to ask yourself as an angel investor the following two questions when looking at a founder with “founder ADD”:

    1. Has this person managed multiple projects before and how did that work out? I’m going to assume they haven’t done this before or you wouldn’t be asking the question.
    2. Does this person really believe in this startup, product, team and market, and if they do, why are they distracting themselves with other projects?! Perhaps they are hedging their bets.

    The second question is the important one here. Perhaps the person started the project, needs to spend time with a sick family member, and they have an exceptional President and management team. In that case, I would evaluate the performance of the team and the likelihood that the President can take over as CEO.

    Bottom line: startups are absurdly hard. Running two at the same time is like winning two chess matches at once. Anyone can play two games of chess at the same time, but very few will win both. This is an imperfect analogy, of course, because startups are not “win/lose,” they are more like “win small/win medium/win big/win gigantic/lose.” Even if the person wins both games, perhaps they will just win modestly —- which will suck for you as an angel investor.

     
  • Jason Calacanis 15:00:13 on 2019-01-01 Permalink
    Tags: , , , , , startups   

    How do you get an angel investor’s attention? 


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    Don’t say everything

    Got asked this question on Quora. The answer for me, and for most angels, is easy: send a short email with a link to the product or a product video.

    [ Click to Tweet (can edit before sending): https://ctt.ac/3lcnX  ]

    Protip: Do not email your life story or 3,000+ words on why you built your product. This will make you look deranged.

    The goal of your email is to get the investor to a) understand what you’re doing and to b) respond.

    You want to send just the most important thing, which is one of the following things 99% of the time:

    1. your product
    2. your traction
    3. your market
    4. your technology
    5. you

    What you don’t want to do is send an angel EVERYTHING in the first email. Get them on the hook with the best thing (perhaps two things) and try and get them to ask you more questions.

    As an example, Henry from Cafe X sent me a video of the prototype of the Cafe X machine, along with two sentences, while based in Hong Kong. Since then, I’ve invested millions in the company, I’m on the board and they have three locations rocking in San Francisco. Mission accomplished.

    Note: I don’t respond to all my emails, I get around 300–500 per day… but I do open most of them, and I do click on links often.

    PS – I’m going to try and write a blog post every day in 2019 and set them to publish at 7AM… consider this day one of 365.

    The post How do you get an angel investor’s attention? appeared first on Calacanis.com.

     
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