The sky is not falling

I am writing to share some reactions to Claire Cain Miller’s piece in the New York Times, “Silicon Valley Booms but Worries About a New Bust.”

I met Claire at the Founder Showcase event she mentions in her article and thought her to be an inquisitive and thoughtful person.

I have four primary reactions:

  • I do not believe it is “easy to come by” money in Silicon Valley.
  • I do not believe startups are wasting money on “lavishly” decorated and “holier than thou” offices.
  • I believe we are seeing a new generation of smarter, more efficient startups.
  • I was quoted out of context.

I do not believe it is “easy to come by” money in Silicon Valley.

Claire writes, “… for anyone with a decent idea and the drive to start a company, $100,000 to get it off the ground is easy to come by.”

I have direct experience fundraising within the time period this article covers, having helped Cabulous present to raise over $500k and fundraising for the company I co-founded, VidCaster. My 50+ fellow peers in the highly competitive 500 Startups accelerator program have direct experience fundraising right at this moment. My wider network of peers includes those in programs such as Y Combinator, TechStars and of course those entrepreneurs branching out without an accelerator behind their back.

None of these entrepreneurs would ever say $100,000 is easy to come by.

All 100+ investors I have met with while fundraising for VidCaster and Cabulous, whether angel, “super-angel” or VC, are cautious, thoughtful and thorough in the examination of any investment.

Most notable is the attention toward solid and sustainable revenue. We did not pursue funding for VidCaster until we were absolutely sure that our business had created a scalable and sustainable revenue stream, proven simply by looking at our books.

Companies that raise funding from investors whom I encounter are almost universally deserving of capital to expand what is already a successful business.

I do not believe startups are wasting money on offices.

Even as we approach levels of tech sector employment not seen since the late 90’s, use of space is extremely efficient — twice as efficient to be exact.

SFGate article from earlier this year:

“…as tech jobs have multiplied, their real estate footprint has fallen. Where tech companies occupied 18.3 percent of San Francisco office space in 2000, they occupy just 9.3 percent today, according to Yasukochi, who based his estimates on data from the California Economic Development Department, Moody’s Economy.com and his firm.

That’s one reason so many offices in San Francisco remain vacant. At the end of 2010, 17.1 percent of the city’s office space sat vacant, according to Jones Lang LaSalle, up from 14.7 percent in the first quarter of 2009.”

Fellow entrepreneurs I know shy away from investing in traditional, lavish office spaces reminiscent of the 90’s. In fact, most startup companies growing today look to share space in San Francisco or the Peninsula with other software companies doing similar work. I have been a longtime member of Parisoma co-working space in San Francisco and as our company grows we are partnering with other startups to lease shared facilities in San Francisco.

I believe we are seeing a new generation of smarter, more efficient startups.

In San Francisco and Silicon Valley we are witnessing a slow motion revolution in the way that companies are formed and ideas are monetized.

The next generation of startups focus on functional products that earn revenue. They reach a point of significant recurring revenue before seeking funding. They are conservative with cash and go to great lengths to minimize expenditures, especially those “legacy” expenditures from the previous generation of startups such as lavish offices or physical server infrastructure.

In fact, I went so far as to remind Claire during all of our email communications of my core belief that this next generation of startups is very different.

A quote from a recent email exchange with Claire yesterday afternoon:

I’ll share again since it’s a strong belief of mine: I think our startup (VidCaster) is a great example of what I believe to be a wider trend in this generation of startups — focusing on a product that earns real revenue, pursuing funding only when the company is showing real traction.

I am disappointed to have been quoted out of context in this excerpt from the article:

Soon came VidCaster, a service for Web sites to add video; it was started by Kieran Farr, a taxi driver turned chief executive. He said his service had absolute stickiness — meaning that it lures Internet users to stick around for a long time.

“What’s the gross margin of the business look like?” asked George Zachary of Charles River Ventures.

“What does that mean?” Mr. Farr said.

“That’s a problem.”

Unfortunately, this is where the article stops quoting.

I’ll admit I was taken aback by George’s question, but I wasn’t the only one — other audience members told me they were confused why he asked this as well.

To understand why, here’s a quick bit of accounting background: gross margin for software-as-a-service companies is an irrelevant metric, it approaches 100% if we are doing our job right and running a functional software business.

George asked this question because he thought we were a service business in video production — an industry where margins are closely monitored — which our slides and my verbal presentation clearly stated we were not. He later apologized for his misunderstanding and ended up giving VidCaster the highest score of the panel.

I respect Claire, her writing and her intent to provide a behind-the-scenes look at one of the only bright lights in our nation’s economy, however I do not agree with the perception that the sky is falling over Silicon Valley.

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Posted in econ, internets, media, tech, work | Tagged , , , , , , , , , , , , , | 4 Comments

One thing that you will learn quickly is that a computer is very dumb. It does exactly what you tell it to do, which is not necessarily what you wanted.

—Introduction to Computer Programming from Berkeley Foundation for Opportunities in Information Technology from here

Posted in Uncategorized | Leave a comment

Emergency!

Working taxi dispatch phones, I received a call around 1am from a group of loud women.

“We have an emergency, we need a taxi immediately.” (Loud yelling in the background.)
“What’s going on? Is anybody injured?”
“No, nobody is injured. We need a taxi right now, we’re at Geary and Gough.”
“What’s the emergency?”
“We were just thrown out of our taxi here in the middle of nowhere. We’re 3 girls all alone and we need a taxi now.”
“At Geary and Gough. Okay we’ll call a pickup there.”

They’ve already been thrown out once. I doubt any of our drivers would want to pickup that order.

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Woman in Tears

I worked taxi dispatch phones Friday night, answering hundreds of calls from people looking for a cab all across the City during the busiest time of the week.

A woman had called around 10pm for a cab from the Richmond district, let’s say 20th Avenue and Clement. She sounded like she had finished a long day at work and just wanted to get home, or so I invented in my head.

She patiently called back every 15 minutes or so until around 10:50pm when she called back in tears. Just before her call, a cab in our fleet finally responded to her order and, as luck would have it, arrived near the same time as a Yellow cab. She had called Yellow about 20 minutes earlier, understandably frustrated from waiting so long and wanting to try another option.

Also understandably, both cabbies are pissed off. It’s a busy night. Drivers can make a lot of money during this time period. Chasing orders for no gain is a waste of everyone’s time.

What do cabbies do when both arrive at an order? Some cabbies see it as part of the “taxi code” to both leave the order to punish the customer for calling two companies. I’ll usually defer to the other driver as I’m non-confrontational. Some cabbies choose to engage in verbal or physical altercations.

In this case both cabbies took off, leaving our poor protagonist in tears and still without a way to get home nearly an hour after her initial call.

Please note this is not meant to be a criticism of any cab company, drivers, customers, or even traditional radio dispatch, simply an example of service failure due to extremely excessive demand for a City administered transportation service.

The staff of the SFMTA Division of Taxi and Accessible Services is fully aware of these issues and we can hope that they are working to act in the near future on peak medallion permitting and layered dispatch.

Posted in politics, taxi, transit | 3 Comments

Python Multithreaded S3 Bucket-to-Bucket Copy (on Amazon Web Services)

For both backup and staging purposes, we regularly need to backup an entire S3 bucket to another bucket. AWS has no built-in function to do this, nor does the boto Python library.

We started off with a simple for key in bucket.list() and copied the files one by one in sequence with key.copy(dest_bucket, key_name). This is imperfect for a few reasons:

  • There are many files, and the files are very large. Processing one by one takes a long time. Sometimes we need a copy asap.
  • AWS is designed to fail. Applications built on AWS should be developed to handle failures. With the sequential design, if any one of the key copy requests fails, for any reason, it will interrupt the rest of the process.

This seems like a perfect problem for threading, and I have been looking for an excuse to play with Python’s built-in threading features. This also seems like a perfect chance to try hosting an open source project on GitHub, also a first for me.

Issues:
– Does not set ACL. I assume this is set to bucket default.
– Timeout is clumsy, results in multiple 30 second delays. Instead, should log error/timeouts and retry x times.

Performance:
– 52GB / 7 minutes = 52,000MB / 420 Seconds = 123.8 MB/sec

With tweaks to timeout and error handling, this can be significantly improved. Curious to hear other people’s experiences too.

Try it out!

Posted in internets, work | 1 Comment

Take Me to Chinatown

I drove Thursday this week, a day after the SF Giant’s World Series Parade attracted record crowds.

The morning was spent driving to and from the airport — I had 4 trips to SFO before noon.

In the afternoon I picked up an impeccably dressed middle-aged guy near Levi’s Plaza. He wore bright white pinstripe pants with a colorful bow-tie, his hair was perfectly gelled on top of a chiseled face.

– “Where are you headed today?” I asked.
– “Take me to Chinatown,” he replied. “I’d like to get some presents for the kids.”
– “Where are you in from?”
– “North Carolina.”
– “Oh I think I was there once for spring break with the family. There’s water near there right?” I can be a real idiot with smalltalk sometimes.
– “Yes, North Carolina is adjacent to the ocean.”

Redirecting the conversation, “Where in Chinatown do you want to go?”
– “Somewhere near the shops with all the knockoff purses and stuff,” he said. I wondered, would he tell the kids that they were knockoffs? Maybe they specifically requested, Dad get us the $10 coach bag!
– “Okay I’ll take you to the entrance close to Union Square so you’re oriented.”

A quick trip up Pine Street had us quickly approaching Grant Ave when he says, “Wait, no this isn’t it I want the other Chinatown.”

– “The other Chinatown?”
– “Yeah the one right across from the water with all the purses and stuff.”
– “Sir, this is Chinatown. ‘Shops across from the water’, sounds like you might mean the Fisherman’s Wharf?”
– “I guess, but there’s all these Chinese shops with cheap purse knockoffs and stuff.”
– “Yeah, I think you’re referring to the Fisherman’s Wharf near the piers. There are a lot of Chinese people that own or work at those shops. There’s a lot of Chinese people here in general.”
– “Oh. That’s probably it.”

Posted in taxi, work | 1 Comment

Avenue Street

I answered a lot of phone calls last night at the taxi company.

Around 3am a girl called demanding a cab at “320 Avenue.”

That didn’t make any sense. “320 Avenue? That doesn’t make any sense. What’s the street name?”
– “Avenue.”
– “Which avenue? Like 3rd Avenue, 4th Avenue?”
– “Avenue!!! Avenue Street!”
– “What city are you in?”
– “San Francisco, duh…” in a perfect valley girl accent.
– “There is no street called ‘avenue’. Are you on 20th Avenue? Maybe 3rd Avenue? What’s your address?”
– “It’s 320 on Avenue Street!”
– “Avenue Street?”
– “Yeah Avenue Street! 320 Avenue!”
– “Maam, there is no street named ‘avenue’ in San Francisco. Can you call back with your real address?”

She called back 3 or 4 times in the next hour, always very frustrated and presumably thinking I was part of some conspiracy meant to silence the existence of Avenue Street in San Francisco.

Posted in taxi, work | Tagged | 1 Comment