This is a story about making plans...
On the 21st of December, I was supposed to fly to Prague, Czech Republic and see my friends (pictured) and their not-so-new arrival who I saw crawling last time I checked Facebook. Time flies and kids grow up fast.
I wanted to see their finished house, shown here October 9th 2013. It's always worth travelling to see your friends.
Unfortunately I was really poorly.
It's kinda like the opposite of 2013, where I went to Prague but I was too poorly to go to San Fransciso. Oh and in the first half of 2013 I lived in my spare room or the shed. The second half of this year I've had my own apartment.
2013 was the year I didn't get paid at all. Anything. Not a penny. This year I was paid a lot. I worked a lot, and I was paid a lot.
If you want to be the best, you've got to put the hours in. I've not achieved anything of real note yet, but I try very hard. When I got sick, I had written 100,000 words in less than 3 months. I always knew it was going to be a difficult time as I got close to a couple of subjects I wanted to write about last of all. I felt strong, but experience tells me that I get dangerously depressed and start thinking "what's the point of it all" at random intervals. I remember staggering back from the pub in Cambridge with my co-founder, and thinking "I'm just going to kill myself" despite being mentored by billions of dollars worth of entrepreneurs and investors, despite my software being evaluated by dozens of famous companies, despite being accelerated to warp speed.
I was living with 3 amazing guys, and spending every day in a bunker with over 25 of the best & brightest technology entrepreneurs. These are the captains of industry. We were absorbed into the TechStars network, which gives us access to the right people, and the funding we need to make our ideas happen.
Funding rounds go Seed -> Series A -> Series B -> Series C -> IPO/Floatation. The idea is that you increase your valuation at each stage. You increase your valuation by increasing your turnover (or sometimes just your user acquisition rate). You increase your turnover by advertising & marketing. If somebody just invested a few million in my company, provided I'd load tested it, I'd then just spend a shittonne on advertising. Because a few suckers are going to be taken in by your advertising, you get growth, and you can go for your next funding round.
As your Venture Capitalists have a vested interest in seeing you grow so that they can get a better valuation when you raise money again, or when you float the company, they help you do huge deals. I met one of the founders of Sphero at TechStars in Boulder in 2010. You probably know it as the Star Wars R2D2 type robot that rolls around like a ball. It's always featured in trailers. How did they pull that off? TechStars.
You know what a "Unicorn" is in tech circles? It's a tech company with a valuation of $1bn+. Are these companies worth over a billion? Sure, their products work, but their valuation grew so fast, did their Intellectual Property keep pace? Look at MySpace. Dude in dormitory at Harvard writes a competing product, kills MySpace... that company is called Facebook. Twitter has $15bn of public money, but it's losing 86 cents for every single one of it's $22 shares. That's because it's not a profitable business, but who cares in a world where Unicorns are real.
You wanna know how to get a nice high turnover? Start two companies. Provide services between them. Take company A with £1m seed capital and pay £1m for "screwing nuts onto bolts". Then company B can pay £1m for "unscrewing nuts from bolts". Just do that a bunch of times until the necessary turnover is acquired. Your are now a B2B service provider with a turnover of £100m or however much you want. You can then take your accounts to a venture capitalist and say, I have a company with £100m turnover. We haven't got a monetisation strategy yet, but we've got good turnover. Your valuation means you'll be able to raise loads of money, so let's imagine that you raise £10m this time. Then you can do a bunch of £11m screwing/unscrewing deals. Perhaps you can get your turnover to $1bn now. Not far off Twitter's numbers. Raise some more money. Maybe £100m. Then do some more deals with your trusted trading partner. Get your turnover up to $10bn, why not? Should be a pretty good floatation. People are going to go nuts for the IPO. A company that turns over $10bn is a big deal.
Sounds like a good plan?
I missed not seeing my friends, but I'm pretty sad about stuff, one of which being the bubble that's about to burst because there's too much creative accounting going on. I don't see where I fit in this world where all companies are racing to get more users and higher turnover and raise more and more venture capital.
It's like the curtain was pulled back and the magic was gone.
King of Central Bohemia (October 2013)