A start-up with a view

These days, I spend a lot of time in “meetings”.  No specific agenda, just busy exploring my future as an “ex-VC”.  As such, the other day, I met with the CEO of a recently VC-funded startup.  This wasn’t our first meeting, so it presented a nice opportunity to see how slideware has become a working demo, soon to be a launched product. I was thoroughly impressed. But something didn’t feel right.

Yesterday, during a board meeting in Rehovot, I figured it out.  Their office had too nice of a view (actually, quite like the view from the Gemini office…).  Other than the view, the office was pretty ordinary (with the exception of a fussball table…).  But it didn’t feel like a start-up.  I have been to visit many companies in the past, and have personally worked at start-ups in their very early stage.  When Mercury was a start-up, we had a villa in Herzelia for home.  My office (as Ms. Marketing) was in one of the living rooms, with a very flimsy divider separating me from one of the engineers next to me.  Basic desk, basic chair, basic computer.

As an “ex-VC”, I think that an entrepreneur that selects such an office is making a mistake. It might be “hardly a difference in cost”, or it might be “ready to go”, but in my mind, just doesn’t create the environment of a start-up. 

Call me old fashioned, but I’m still a believer in the “garage” mode.  Even if you have $3M in the bank, you shouldn’t behave like you do.  You need to make ever $ count - and that is reflected in everything that a company does. Not just selection of furniture and computer equipment, but what kind of car do you rent when traveling, where do you stay, what food do you bring to the office, etc., etc., etc.

I know that VC’s are criticized for living “with a view”, while expecting entrepreneurs to sit in the garage.  But lets think about that for a moment.  The objective of an entrepreneur should be to make that $ last as long as possible, make as much progress in the business as possible, to get to the next funding point stronger, which allows to raise more money, at a higher valuation, and enables to attract better quality investors. 

If I was an entrepreneur, I’d skip the view.  Go to Rehovot.  Bring Shnitzel, Rice and Tehina to the office from a local foodery for lunch and really watch that $…  It’s an old saying, but still rings true “Cash is King”.

Tags: cash+is+king, garage+mode

Comments

[Amit - founder of a startup]

You are sooooooo right on this one.

I want to take it futher, I actually believe employees (and founders) should earn significantly less in their paycheck, and get more equity or salary completion upon milestone. Theres' nothing like the productivity of the garage mode, and if possible to bootstrap and push it forward a bit more , I think its best for everyone.

[Jeff]

Having been involved with start-ups that were founded in garages (in Palo Alto, of course) or living rooms, I could not agree with more emphatically. If a home or garage is not a viable solution, then these companies should be in shared office or short-term lease with bare-bones office furniture.

That said, I know many companies that when a series A round was completed, their investors pressured them to "grow-up" and get a real office.

[Nick]

You are probably right on the "too nice of a view" thing, but I think you're wrong on the rest of it.
As an “ex-VC”, you're probably familiar with the "importance of the team" theme, and quality people like to be appreciated _now_ in addition to being promised things later. Eating the same food every day and possibly getting health problems as a bonus to a less-than-average income, when the company can in fact afford better, just shows the company's priorities.
People are only too aware that the ultimate pay-day arrives only for that 10%.
The bottom line being that comfortable offices and work spaces, company activities, and good salaries are a better investment in the long term.
P.S. And as an employee I too think that "Cash is king", only this way it comes to mean something quite different.

[Bob]

Entrepreneurs should be judged by final results.
If someone spends $+ and brings $$$$$+ to shareholders then kudos to him. It is better than spend $- and have ROI $$-