Everpix, Snapchat, and The Startup Lie

Everpix, Snapchat, and The Startup Lie(subimage.com)

23 points by tpsc 12 years ago | 7 comments

mathattack 12 years ago |

When small start-ups I’ve spoken with do make money, they often find it difficult to recruit additional investment because most venture capitalists — and often the entrepreneurs they finance — are not interested in building viable long-term businesses. Rather, they’re interested in pumping up enough hype and valuation to find a quick exit through an acquisition at an eye-popping premium.

This highlights the difference between VC and bootstrapped firms. The VC expects 30-50% annualized returns. To get that you need hypergrowth. If you want modest growth, avoid the VCs. But they exist because there is a need for people to fund moonshots. They would rather have one business succeed with a 20x exit and have 4 fail, then have 5 firms exit at 2x.

Where I differ from the OP is I don't see this as a morality play. I see "getting an exit" as a way to redeploy risk capital. Once the business is stable, ownership should transfer from risk investors to more traditional one. Or to more traditional companies.

To get to Everpix - could they have succeeded if they just bootstrapped and focused more on Marketing earlier on? I don't know. I wish their founders well.

pearjuice 12 years ago |

https://news.ycombinator.com/item?id=6694674

Duplicate.

meritt 12 years ago |

I'd love to see a post-mortem explaining how they possibly could have a $35k/mo AWS bill for a platform that only serviced 55k users.

spartango 12 years ago | |

While this would be interesting as a matter of engineering curiosity, Everpix's AWS bill was not close to the #1 hurdle between them and profitability. It seems like low hanging fruit, but you'd be optimizing away something small relative to, say, their employee costs or per user revenue.

phea 12 years ago | |

Seriously, they should have went with dedicated boxes on something like Softlayer comme Dropbox. Unlike CPU-cycles, storage needs are relatively predictable as people usually don't remove photos after uploading them.

semerda 12 years ago | | |

Softlayer - yikes! Was with them once and never again. AWS is far more flexible and cheaper (based on my experience). Not to mention the full suite of services available under the 1 umbrella from AWS where Softlater just cannot compete.

bowlofpetunias 12 years ago | |

Good question. I've seen a lot of people claiming AWS was the wrong choice from the start, but IMO at the stage Everpix was at, the flexibility of AWS would still have been a reasonable and viable choice.

But $35k for only 55k users just doesn't add up in the absolute sense, AWS or not.