Exposing Silicon Valley Secrets

Episode 20 of Silicon Valley Successes SVS:

·      Andreas Ramos has written 14 books, on SEO, his latest four books are Amazon best sellers. His books have been published in the US, Europe, and in China.

o  Andreas was the manager of SEO at Cisco, SEO Strategist for Stanford Business School, and managed Digital Marketing for Harvard and MIT.

·      His most recent released book is about exposing Silicon Valley to the world.

o  Andreas work with a lot of startups and began realizing that these startups are not getting good information.

o  He realized that he had to write something that shows what the key is to really work in Silicon Valley.

·      95% of startups fail in Silicon Valley, it is very common, only one of the 20 succeeds.

o  But these failed startups may not succeed the first time around, but they learn a great deal from their failures, so they pivot, come back and do a second or even more attempts until they have a success.

·      The most important thing in Silicon Valley is not the technology, not the money, but the connections. The Network is most important.

·      Most people think that you must go to meetups, to conferences, to pitch events. But the real connections are hidden in personal connections.

o  The real deals are done in the backs of the restaurants or someone’s backyard, not in the public eye.

·      Meeting up to talk about deals in public coffee shops in Mountain View near Google is not one of the best options; Big Corporations hire people to eavesdrop into conversations.

·      A mistake that Andreas noticed in startups is that founders would invite a buddy to join his or her startup and give 50% equity right away.Not long after, the second person will realize that they don’t have to do any work since they already have 50% of the money.

·      You must get to know VCs well for many years and become good friends where they don’t see the threat anymore.

o  They can tell you what really goes on in Silicon Valley.

·      There are people that don’t need pitch decks, powerpoints, etc., to acquire funding from VCs and other investments.

o  This is all because of the networks and connections that someone has with these people and uses them to acquire funding with minimal effort.

·      VCs and other investments really invest in the team and the idea of a startup.

o  Once they know or have seen a startup do good with his team and his idea, there is a big chance of funding the same startup without pitch decks or proper business meetings for future endeavours.

·      Some investors are very strategic; they look at the metrics, study everything and look at the market.

o  Some investors invest just by the fact that they like that founder.

o  Other investors will invest in someone just because other investors are investing in them.

·      It’s the same with why they’re not investing:

o  Some investors look at the idea and saw that it’s not good, so they don’t invest.

o  Some will not invest just by the fact that they don’t like you.

o  Some will not invest just because no one is investing in that startup.

§ Investors will not tell you why they did not invest in your company.

·      Startups should be really careful in raising money.

o  Raising too much money can become a problem.

o  In some situations, once VC money is involved, startups stop improving their products because VCs only want revenues so they could either sell the company or get acquired, exit, or get their money multiplied and get it back, the idea of product improvement is not as important as scaling.

·      Investors say that they want to build a better world, they say that they want social responsible companies, but the people say that investors really care about, 98.9% of the time, is to make more money.

o  If an investor sees an idea that can make more money for them, they will invest,

·      One of the biggest problems in Silicon Valley is that founders are so smart, with their PhDs from Stanford, from MIT, etc., and they think that they can simply come up with a solution on their own.

o  There are startups that raised over $20 million dollars, and the team worked on the product for 2 years. Once the product was released in the market, they found out that there is no market for the product, so within 6 months, the startup fails.

§ This case is called product in search of a market.

·      Startups should be careful in hiring family, friends, and significant others in their businesses.

o  One reason is they are hard to fire.

o  Second is it won’t look good to the investors; they will think that the founder couldn’t find anyone better to fill the job.

§ There are some cases where hiring a family member works, but in typical cases it is a let-down.

·      If a startup can show how solid their team is; their skills, credentials, experience, if they have connections, then it is easy to get money from investors.

·      Investors won’t provide money for research, or for development.

o  Investors will only provide funding if the company has traction or an MVP and can start getting revenue because they want to earn money quickly.

·      Investors love the idea of putting $100,000 in and getting $10MM back within a year.

·      Professors at business schools who write books about startups have never done a startup before, they are not going to start building a startup because it will cause them to lose tenure.

·      Most VCs have never done a startup.

o  VCs are backed by MBAs, and they are trained to manage large companies and they do not try to take crazy risks that will likely fail.

o  MBAs are very cautious about their money.

·      Andreas advices that not all accelerators are bad; founders should join for the connections.

o  They should talk to the directors, or leaders because they are the ones who know a lot of people.