It’s been a month now since I arrived in Paris to setup our offices in this great city. At first, I was concerned that spending much time away from Silicon Valley would detach me from the fast-paced, startup incubator that San Jose is. Everyone speaks the language, everyone gets technology—wifi is as available as Coca-Cola, technology events can keep your calendar booked solid if you so choose. It’s a great place to run a startup like MinuteFix. Any Starbucks barista can advise you on how to build a social network and everyone is buzzing to the same tune. People are not sending SMS messages, but rather Twittering, and blogging has become a house-hold term.
How refreshing it has been to come to Europe. And how healthy it has been for our business. When you are in the Silicon Valley, you tend to forget how the real world works. Things are simple, money flows easily, ideas get funded just from blog buzz. Powerful bloggers can make or break a company. People are young and energetic and tides shift with the wind. Revenue is a foreign word, and fads are fundable. We all want to become valley stars such as Robert Scoble, Michael Arrington and Loic Le Meur, who all have a ga-ga fan club maxing out their Facebook friends’ list.
This is not good for business. Entrepreneurs owe it to their investors and customers to not make decisions based on fashion, but must stand on their own two feet and do what’s best for the company’s financial health. Our companies are LLCs, S- and C-corps. They aren’t 501(c)s. In the end, a business must make money, and money is made in two ways: from revenue or through a liquidity event. And unfortunately when liquidity happens in the Valley, it shakes San Francisco harder than the San Andreas Fault. But we forget that to be acquired, it either takes tons of traffic, or the less common—a sound business model.
Getting away from the Valley for a while helps you understand this. Talking with traditional business people—I mean restaurant owners, small retail vendors, and most any entrepreneur who does not know what a blog is—you realize that we don’t run this world, they do. Evan Williams is not God, but the guy down the street sending his kids to school from the profit generated from a restaurant, is. We’re just spoiled and dazzled by the wine that flows at the TechCrunch parties. It’s all in the basics; a business should have more money coming in the door than going out. Venture Capital should not be the ultimate goal, staying away from it, should. Albeit, technology has changed the traditional business model, but at the end, any business runs the same.
Lenn Pryor and I discussed this topic a few months ago over lunch, and his description hit the target: The Valley is like a Vegas casino. Lots of noise, you can hear people winning, but most everyone loses. I do believe that without this type of environment we wouldn’t see the innovation that we do coming out of California. However, if we all thought more about running our startups like real businesses, we’d all be seeing more success.
Conversely, do you know why the French cannot replicate the Silicon Valley environment? Because they don’t have a word for entrepreneur.
It’s just a matter of finding the right balance.