January 19, 2007
The Thrify Start-Up Approach
In yesterday's WSJ, Pui-Wing Tam and Rebecca Buckman report on the shift between dot.com companies in the late 1990s, who burned $2 million+ a month versus a much more fiscal approach nearly ten years later.
The rounds are smaller than they were, it's less about a quick IPO and more about either creating a real business or selling out to one of the big boys.
The latter is always so much less interesting for me as a force who helps get them get off the ground. I get my real kicks on seeing my clients name in Broadway-like lights, which could be through an acquisition - but its hardly as much fun.
Client Sharpcast's CEO Gibu Thomas is quoted in the piece as are other start-up entrepreneurs, including music website Lala.com founder Nguyen, who has 60% of their $9 million round in the bank. They point to extravagant marketing moves of the late nineties like Pets.com $110 million spend in two years, with $25 million of that going to Super Bowl advertising. Who made that decision and do they now have a job I wonder?
According to research firm VentureOne, Silicon Valley technology start-ups now survive an average of 17 months on a single round of funding before needing to raise more money, up from just 10 months in 2000. It also takes less $$$ to deliver online value to a consumer today than it did ten years ago.
At this month's STIRR event in Palo Alto, a monthly networking event where start-ups do a one minute pitch and schmooze with industry movers and shakers, I talked to six start-up CEOs over the course of a 2.5 hour period.
One, who will remain nameless, has an interesting mobile social sharing platform. He told me that he really doesn't need big money to get to Point B, yet he tells me that VCs are starting to throw offers, all of which he has refused -- for now. He even had a $6 million offer on the table. Cash? I forgot to ask.
Another CEO I talked to tells me that 80% of his technical and support staff are overseas, mostly India, which means substantially less operational costs. And here I thought it was a cool algorythm doing all the work behind the scenes. "Nope, cheap data entry," he said.
I spoke to another visual search engine play as well, who is moving in a similar direction to Riya, yet since their $19.5 million investment, they have shifted their focus to their visual shopping search engine Like.com.
As for the next few months, keep a watchful eye. A watchful eye. DEMO 07 in two weeks should be interesting. More on the renown upcoming launchpad event as we get closer.
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