A good read, for sure. As someone outside of the US, it makes me wonder if Instagram's succes would have been possible if it was a non-US company, or even a startup outside of California?
That's a provocative statement, here's the justification:
Instagram had "only" 18 employees. Wherever you are, will1000, hiring 18 employees of the caliber who built Instagram for 18 months would cost you $2M. Instagram was able to pay for them with equity, instesad of starting with $2M in the bank.
The direct reason that this doesn't work outside silicon valley is that outside silicon valley you, will1000, will not work for me for equity instead of a market salary. That is only possible in Silicon Valley.
In other words, you don't want to believe that a % is worth anything, and that's why you won't accept equity based compensation (outside silicon vallye).
look in your heart and you know it's true. what's the lowest salary + equity compensation you would accept?
Could instagram have afforded you?
Right, because only in Silicon Valley will people work for equity and no salary. They live off the air.
Explain to me how talented coder 'x' (whoever, maybe will1000) will be able to live without any compensation whatsoever during 18 months.
Even in SV that's an exception, not a rule, and even in SV people need to eat. So the more commonly employed scenario is that there is a bit of funding which is made to stretch as far as it will go by compensating key employees with equity rather than salary for some portion of their total package.
0 salary and just equity is an exception.
Read http://www.dailymail.co.uk/news/article-2127882/Meet-OTHER-n... and it becomes clear that the 18 employees were recruited mostly with equity.
Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen using the kind of equity (e.g. 10% pool) that instagram was using, without enough cash in the bank to pay a large base salary to each of those extremely talented people.
Outside silicon valley that's what you would need to do something like this: a whole ton of cash, or lower your standard of employee. Only in Silicon Valley can equity be used for this kind of bargaining power, to retain 18 people who are of such a quality that they are able 36-handedly to build a company in 18 months that is worth $1Billion.
As a simple example: I could never get you to work for me part-time for $0 and 30% equity in our company: except in silicon valley, where I could do so extremely easily, just by showing a product that is near completion.
It's your fault. You're the one who doesn't want the riches and results. You're the one who doesn't want to change the future, by working for next to free for it, and having just equity.
There's a reason a couple of kids in silicon valley can build multibillion dollar companies while on a ramen diet, and you can't.
you (and the market you're in) just doesn't want to.
You're currently running a company with in excess of 18 talented engineers without a viable income stream?
And your payroll is 'pocket change'?
> Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen with the kind of equity (e.g. 10% pool) that instagram was using - outside of silicon valley that is.
Of course it does.
You make some outrageous statement, then fail to back it up, next you make a new outrageous statement which is even further from the truth.
There's nothing to "back up" - I said that the most talented employees in the world, who can build a $1B company up in 18 months, will not do so outside Silicon Valley in exchange for a 10% employee equity pool, and a low base salary.
Outside Silicon Valley they would only do so for a very high base salary.
In the valley, this is easy. You do have to give up equity though.
In London, the above will get you shown the door, with a grin. Haha, good luck.
Explain to me how talented coder 'x' (whoever, maybe
will1000) will be able to live without any compensation
whatsoever during 18 months.
Read http://www.dailymail.co.uk/news/article-2127882/Meet-OTHER-n.... and it becomes clear that the 18 employees were recruited mostly with equity. Hiring the quality of talent that we're talking about, in will1000's market, just doesn't happen with the kind of equity (e.g. 10% pool) that instagram was using - outside of silicon valley that is.
Obviously with the trajectory Instagram was on it was much easier to hire with equity. I don't know what you mean about the "level of talent" though. There are hundreds of small teams with the talent level of Instagram both in and out of the valley, but talent does not guarantee traction. What makes Instagram extraordinary is a confluence of factors, not just an amazing team.
I just don't see it happening. one thing is you are right, I don't have detailed payroll figures. I was going on the prevailing wind and the fact that the employees were 20-somethigns.
So there must have been some "we know people at $comp and they will buy us out"-talk to convince people to work for free.
That is one of the biggest things about the valley.
The probability is low because guys outside of bay area don't build app to dent anything. They don't aim to build an app that is cool: to them, their friends, their investors, their users, and ultimately their suitors and acquirer.
They build it to mint money, which is why this story inspires them too.
You're living in a bubble, if you can't see that.
The think that most impacts me of this article is how they get 25000 users the first day. How do you do that?. Is due to having a huge net of early adopters as friends?
Edit: twitter spelling!(tweeter...)
It's partially a gamble, and magazines write articles only about the winners.
I know that SV is not the golden city that this articles paint, but it is way ahead when we speak of entrepreneurship and startups.
It's the same in Germany. If you fail with a business you are on the same level of a criminal to many people. I don't care about being jobless (because I know how to scrub together at least 1000 Euros every month). But the "failed business" stigma is really what inhibits entrepreneurship here.