If You Get All Your Information On The Entrepreneurial Ecosystem From HBO, You’re Screwed

This is the best quote I’ve seen all week. It’s from Greg Sands post on TechCrunch titled The Real Silicon Valley

Greg is a long time friend and co-investor. I’m on the board with him at Return Path and he’s on the board with my partner Ryan at VictorOps. Along with my partners, we are all LPs in Greg’s fund Costanoa Ventures.

Greg’s post is great. Here’s the windup:

“Every time I hear people talking about unicorns, I think “all hat, no cattle” or “another person living in the land of style over substance.” I’ve found myself blurting out, “F$&@ Unicorns!”* twice recently, including when I was on a panel at Stanford School of Engineering on Entrepreneurship from Diverse Perspective. (Yes, I get the irony.)”

Go read it. I’ll be here when you get back.

It’s useful to recognize that the two companies Greg mentions in his post – Datalogix and Yokou (he was an investor in both) are not based in the bay area (Datalogix is in Colorado (in Westminster, between Boulder and Denver) and Yokou is in Beijing)), reinforcing the notion that “Silicon Valley” is a state of mind or a metaphor, rather than a physical place.

Last week a CEO in the bay area who I think is dynamite DMed the following via Slack.

“people don’t talk about what they’re making. all anyone talks about is raising money”

This is a nice link back to Greg’s post, where he quotes Jim Barksdale, the CEO of Netscape (Greg was the first product manager at Netscape.)

“Our purpose here isn’t to make money. Our purpose is to acquire and serve customers. Making money is the logical consequence of doing our jobs well, but it isn’t our purpose.”

I’ve got a post in me called Dragicorns that I haven’t had the time to get out of my head, but Greg’s reminder will suffice for today.

If you are an entrepreneur, focus on the purpose. Your purpose. And your company’s purpose. Once you stop doing this and start focusing only on the money you are fucked.

  • I plan to print out and frame the last paragraph and mount it to the wall as a constant reminder.

    The expletive adds just the right amount of grit.

    Powerful and perfect!

  • Alberto Mendonça

    So true, but so many times so hard to explain to Vc’s.

  • I know when I was young, it was always my dream to be on a Stanford Engineering discussion panel, to be thought of as someone with the wherewithall to hang with the big dogs. I knew that if I ever got that chance, I would make sure to blurt out the F bomb…

  • Kevin Stanley

    Similar to another way in which people tend to think backwards. Never concern yourself with the marketing of a product before you have a product.

  • “Our purpose is to acquire and serve customers. Making money is the logical consequence…”

    This line, when quoted in isolation is probably as dangerous as a line which says “Our purpose is to raise maximum VC money”. One line starts off sounding as good whereas the other comes off as crude (evil?!). Both are partially right and wrong based on the context

    How do we define “customers”? Is it users or is it users willing to pay or is it users who actually end up paying.
    (a.) If we focus on the 3rd category, making money is inherent in the purpose itself. And that is not such a bad thing
    (b.) If we reward people only on the former (funding & advocating companies without revenues), in anticipation of reaching the third category somehow, then perhaps we should not condone those who prioritise funding over revenues.

    Of Black and White and Greys….

  • I’m also tired of the tech press spending 90% of their “ink” on fundraising rather than product – lazy and feeds this distorted mindset

    • +1. It’s not going to change, but it would be nice if it would.

  • Reminds me of Chris’ post on milestone v. goal – funding is a milestone not a goal

  • Agreed, as long as Purpose is tightly coupled with solving a financially relevant problem in a large and growing market.

    From my perch, the problem of chasing an un-fundable dream looms much larger than the implied arrogance of those convinced theirs is a Unicorn startup.

    Entrepreneurs do well to carefully consider who will fund them and why there is a good likelihood of securing those funds.

  • Harlan Blynn

    This makes perfect sense for VC funded companies but it is important to clarify that not all entrepreneurs are creating VC backed startups. The preponderance of entrepreneurs in the USA are creating emerging businesses that need to rely on earned money to push forth their business and purpose. The team I work with at Sanitas Brewing Company is just as entrepreneurial as my colleagues at Tendril and Revolv.

    • Yup – totally agree. And – I don’t think there’s any conflict in message – your purpose is product and customers.

      Barksdale wasn’t saying “don’t care about money” – he cared deeply about it (and Netscape made a lot of it). He was talking about the purpose.

  • Agree completely. I think focusing on purpose and customers is maybe a less well-developed muscle. Humans like to take cognitive shortcuts, and while fundraising is obviously difficult, maybe in some ways it can seem more direct or compelling than the hard work of customer development.

  • As a counter: Aren’t there just as many examples of companies focusing on the money that did well vs startups focusing on product that failed?

    Although definitely agreed that the tech press has major systemic problems in what they choose to write about. As a bootstrapped company with unique tech and product, we were told numerous times to come back when we have some VC funding so that we would have enough for “news”. As if that means anything other than we got some VC money…

  • locotx

    I agree. Once Cytware started focusing on hiring VPs, I knew we were screwed. We forgot about security and finishing up Cytlok. And since the two head developers (myself and another guy) did not have enough voting stock to over turn decisions, it was tough. Focus turned to making money for investors instead of finishing a pretty cool unique security software. *MissedOpportunties*

  • Great quote. Mr. Barksdale is a great down to earth guy with perspective. Know via a charity board I am on.

    I got in a huge fight with Professor Greg Oldham in college(now at Tulane). I told him people were motivated by money; but Hackman-Oldham theory disproved it and found people were motivated by having intrinsic control over their jobs. After trading for a number of years, I sent him an email and told him he was indeed correct.

    Nothing is more capitalistic than trading your own money. Nothing. But the joy isn’t in making money (although it’s nice if you are successful.) The joy is being able to do what you want to do, not being controlled by a boss, and not being controlled by anyone else.