back to article Non-big IT vendors: Trying to understand where startups fit in tech

Are startups to be avoided? You'll get different answers depending on who you talk to, but the arguments have relevance for the virtualization and storage markets as, today, most of the innovation is occurring with startups. I've been a champion of working with startups for some time now. I don't advocate engaging with …

  1. WibbleMe

    Let me put this into simple context.

    1) Face to face Business

    2) Great customer support

    3) Always available on the phone and knows the customer by name, including kids and dogs name

    4) Invests time and funding in local community events and charites

    5) Customers can drop in and ask questions person

    6) Regular face on the local business circuit like chamber of commerce, business partnerships etc

  2. Anonymous Coward
    Anonymous Coward

    They're not startups, they're bait shops

    Some guys come up with an idea and investors buy them a rod which they bait and put in the water.

    They don't get a bite, so more investors put up the cash for a boat and a few more rods, they get some nibbles from smaller fish but pull the rod so they aren't eaten.

    More cash buys a bigger boat and more rods, waiting for that big fish to gobble them up with societies money. Along comes the big fish using untaxed offshore "profits", to take the bait and the "investors" walk away with money that should have repaired your roads or educated your children.

    The big fish might just right off the billions it paid for the bait it can't integrate, but, pah, not their money anyway. It was unpaid tax on profits that they've just made in to a tax deductible asset.

    Oh, If you took a nibble before the big fish, then what you think you've eaten turns out to be a bait and switch to the big fishes legacy stuff.

  3. Anonymous Coward
    Anonymous Coward

    a company that is less than 2 years old is a "startup";

    a company that is over 3 years old and hasn't made a profit is "struggling".

  4. Naselus

    Startups and Unicorns

    I think the key point is to distinguish between the genuine startup and the Unicorn.

    A startup has maybe 10 staff, and everyone from the receptionist up has stock because of that month when they couldn't afford salaries. They have 1 product, which is barely viable but might just be brilliant. They've existed for 2 years, they haven't really made any money yet but they're also not losing amounts more likely seen in the GDP figures for Eastern Europe. After 4-5 years tops, they'll start to turn a profit.If they don't, then they go bankrupt within the same period. They follow the basic laws of free market economics, and they are pretty much exactly the same regardless of if you're an electrician, a software house, a fishmonger or whatever.

    That's a startup.

    A Unicorn, on the other hand, does not even begin to follow the rules. They piss money entirely freely and continue to exist mostly by bringing in more and more new investors with favourable stock options. Their business model is exceedingly questionable and cannot be expressed without using words like 'disruption' and 'innovating' and 're-inventing'; if they have a product, then it almost certainly costs more to produce than it actually fetches on the market and doesn't even begin to cover their R&D costs. They refer to themselves using the ridiculous 'pre-revenue' terms that you mentioned, and they achieve absurd valuations before IPO based mostly on VCs picking numbers at random to make themselves feel better about all the money that's been lost in the process. Buzzword bingo and snake oil are the order of the day, because any rational appraisal of the company would show it to be completely impossible to economically justify.

    They have burn rates measured in millions of dollars and will often have 4-5 funding rounds without ever seeming to produce a realistic path to profit. Oh, and they'll have 500+ staff in the process, and will grow at a rate so absurdly rapid that it is obvious that they're not even trying to run efficiently. At least one senior member of staff will have worked at Oracle, or Netapp, or Google (where they will have undoubtedly been 'senior vice president of product inflammation' or something), and everyone in the company will have meaningless titles like 'Supreme Value Addition Herald' (salesman) or 'grand Poobah of Pacific Regional Monkey Tits' (receptionist). What amounts to their plan for the future is entirely centered around selling themselves to Google, or Microsoft, or VMWare, in the hope that the big players will drop $40 billion or so on a company so they can have the patent for a single icon from the web interface and then dump everything else about it after 3 years of trying to figure out how to make them profitable.

    Nutanix - in fact, most hardware startups - would be one of these; so would Uber, Slack... oh, and Outsourcery. Outsourcery is what I'd describe as a 'mature' unicorn, in that it ran at massive losses with unsustainable staffing levels for years and years without showing any sign of doing anything useful until finally even the VCs were no longer stupid enough to keep pumping money into it.

  5. Long John Brass

    'senior vice president of product inflammation'

    How about 'senior vice president of product inflammation systems & software'

    1. Naselus

      'Software' is too intelligible. More likely to be 'inflammation systems and machine intelligence'.

      1. Long John Brass

        Missing the bacronym

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