Heading into 2013: Thoughts on Ways The Start-Up World is Just So Much Better Now
I came of age in the tech/venture start-up world in the late ’90s. As we go into 2013, I’ve reflected a bit on just how much better things are for founders and entrepreneurs now than they used to be, even just in 2005, when we started EchoSign, let alone the old days of Web 1.0.
A few key but dramatic ways being an entrepreneur is SO much better than it used to be:
#1. Presumption You Keep, Rather Than Ease Out, the Founder CEO. Boy this is a big, big change no matter what anyone tells you. In ’05, this was not common thinking. The common thinking was then, especially in the enterprise, that markets matter the most, executives are swapped out for each stage of the company.
But Today, most top SaaS VCs believe what most top Consumer Internet VCs have for a while: you try to make it work with the Founder CEO. Change is highly risky.
This is a huge, epic change for enterprise VCs, let me tell you. Some, many haven’t made the change. But you can ignore them.
Some of this is due to the competitive of deals, but I think it’s really a recognition that software even in the enterprise has to be so much more agile these days, that you just lose too much bringing in the Professional CEO if you don’t need to. Thank you to Andreesen Horowitz for popularizing this so much it became groupthink.
#2. Liquidity. Ten years ago, it was basically impossible to get any liquidity for your start-up stock. If you somehow IPO’d, there were no 10b-5 plans. You were locked up forever, and could never sell, and the trading windows never opened for the execs. Lots of times, the only guys that made any money were the ones fired right before the IPO, because they could sell anytime, sometimes without a lock-up. The only way you could really make any money was in an acquisition. Look at Mark Cuban, the guy that really made out in the Web 1.0 world. So really, all anyone wanted to do was sell. Contrast that with Today:
- we have Sharespost and Secondmarket, real live exchanges to sell stock in post-traction start-ups. Thank you guys!
- we have partial founder liquidity from all top VCs in later rounds. this is a HUGE change from a few years ago, where partial founder liquidity was seen as a no-no. Done right, this can really free a company to just plain go for it.
- we have acqui-hires, which aren’t THAT great or completely brand new, but create options for founders we didn’t have before
- we have 10b-5 plans, which while slightly under fire from the WSJ today, allow orderly sales of stock if you are lucky enough to IPO without creating drama and negative signalling
#3. VC World Turned Transparent, And In Some Ways, On End. Ten years ago, getting a meeting with a top VC was tough, and the whole VC process was completely opaque, and VCs colluded with each other as a standard course of action. Today, top VCs aggressively seek out the best companies. And the entire process is highly transparent (thank you to Mark Suster, Quora, The Funded, and many others here). It’s still very hard to get venture capital in the grand scheme of things, but at least for the best start-ups, the process is much more open, rapid, and competitive.
Start-ups are tough. But one thing I can tell you, it’s 10x better now that it was getting my first start-up going in the DotBomb recession of 2002, and at least 3-4x better than when we got EchoSign started in 2005. These are The Very Best of Times, so far, for entrepreneurs.
Founders: The world is now yours, not theirs. If you are great — It’s open. It’s there for the taking. Make it happen.