The Stress of Startups
By Jeremy Cliff
“They like to say that a startup is sort of like jumping off a cliff, and having to try and assemble a plane on the way down”
Silicon Valley
Jeff Treuhaft
competing ost people worldwide fiercely would know of the city of with othSan Francisco. An iconic city ers to try known all around the world and go public. for its culture, beautiful colors, However, the and of course, the magnificent success rate is red bridge called the Golden very low just for any Gate. However, less would area, let alone for Silicon know about a smaller city Valley. Forbes author Neil about 50 miles south called Patel states that “Nine out San Jose. It may have a big- of ten startups will fail”. You ger population, but doesn’t laugh at the horrible dynamboast any iconic places or ics of a company in the TV culture. That is, except for show “The Office”, and while being the center of an area hopefully you don’t have a nicknamed Silicon Valley. narcissist like Steve Carell as Spanning from San Francisco the CEO, most of the aspects to Gilroy, Silicon Valley is the of that show are very true. location of some of the largStarting a company, especially est businesses in the world in Silicon Valley, is difficult to such as Apple, Google, Intel, the extreme. However, while Facebook, and Yahoo. These there is no one aspect that are only a few of a massive can determine the success number of companies that of a startup, several aspects influence the economy of the combined can increase the San Francisco Bay Area. New chances of a company going companies are being crepublic. ated all the time. Known as “They like to say that a startups, these companies are startup is sort of like jumping off
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a cliff, a n d having to try and assemble a plane on the way down,” says Mountain View resident Jeff Treuhaft. “And in the case of a larger corporation, a larger company, the plane or the person isn’t going to hit the ground at the bottom. The company’s still going to be around even if you’re not successful. So the main difference is I think that the measure of success is different” (Treuhaft). Jeff Treuhaft has worked at several
startups, mainly animation, in the past as well as Samsung, a major public company. Therefore, he has the experience in both public and nonpublic businesses. Treuhaft grew up in Cleveland, Ohio and majored in art at Skidmore College near Albany, New York. Whilst there, he had a major accomplishment in building a modern computer lab. “There weren’t many computers in the arts when I was there and a certain professor made a decision that they really needed to modernize the technology and support of the arts.” (Treuhaft) According to Treuhaft, the school had acquired some extremely powerful computers from a company called Silicon Graphics, and no one knew how to operate them except him. Therefore, he set up t h e
Jeff Treuhaft
lab and became in charge of the maintenance. “That was the opportunity that got really exciting as I was able to be the first person in there to read the manuals and try to figure out how these very high end machines work”. Jeff Treuhaft has worked in Silicon Valley for over 20 years. “And so while I have worked at some very early stage startups, where you would say it was just the two people in a garage type of approach, I’ve also been fortunate to have jobs and portions of my career where I was working for very large technology companies, companies that had lots of revenue and lots of employees, and operations all around the world.” He has worked for 3 successful startups, and one that was unsuccessful. Considering 9 out of 10 of startups fail, that is a pretty large number of successful companies that one has worked a t .
When asked if he could draw parallels to gambling with startups, he stated “I think it may seem that way, but I personally don’t believe that internally the business of startups is going to be seen as gambling. They are managing their risks, and trying manage too, that tech interpreter.” That said, a startup company is a hit or miss, mostly a miss. To reduce the chance of that “miss”, companies need to get a grip on the most important aspects: not only a good product but good relationships within the company and willingness and determination. “ I think the startups that are really clear about the mission, really clear about the goals, and have everyone around the table signed up everyday to go execute on that are the ones that can find success fastest, and the ones who can take best advantage of the opportunity of trying to start a company here in Silicon Valley.”, says Treuhaft. This means that companies that have the utmost determination will more likely succeed. “Less politics, trying to get shit done”. says Israeli entrepreneur Iri Trashanski. ““People just try to get things done other than to point and blame 2
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each other.” (Trashanski). This means that successful companies are more focused on accomplishing their mission then figuring out how the the company works. Trashanski grew up in Israel and worked in several startups there. One company he worked at was a business that developed anti-fraud software. Trashnaki moved to Boston in 2004, where he worked for several startups and then to Mountain View in 2007. He also worked for SanDisk and Samsung, but did not like the environment there, claiming it was too “process oriented”. Smaller companies, having fewer employees, can have good effects too. You become much closer if you work with the same 10 people every day then sitting in an office in a 10 story building. This leads to more collaboration and the relationships will improve the company’s workflow. “I think working with people that you work with in the past and you know to work and actually is very important because then you know what to expect you know the people you know the good things in the battery.” (Trashanski) The determination of the employees is
one major factor in startup success. Another one that would be more obvious is the product and the timing. Business news magazine “Forbes” claims that it is the main reason startups fail (Patel). A VHS tape company is not going to succeed in the 2016 internet age. Trashanski mentioned an example, a company in Armenia called Juno. “You know what they do? They do Ovens. smart ovens. Do you think there is a market for smart ovens? No it’s a market that hasn’t been disrupted for fifteen years.” this means that unless they come up with something extremely revolutionary with the ovens, nothing is going to change in the market. Ovens just cook food. There is really no other purpose for them. Of course, ways to make
ovens work faster and more efficient will always be there, but you’re not going to design an oven that can do your laundry. Have you ever seen those annoying adverts on TV for products like baskets that you can hang around your neck? Or a phone bluetooth powered toothbrush? Those are clear examples of products that are just too strange to attract an audience. They’re not necessarily bad or useless products. They’re just too odd to make a full market. Now some seemingly strange products that may have not been popular can suddenly become the rage. Whilst in Israel in the 90s, Trashanski worked for a company similar to Uber, a taxi company that serves based off of phone requests. However, back then it
Iri Trashanksi
wasn’t a big market because the timing was wrong. First of all, Israel was not a technological hotspot back then. It is technically a developing country. Therefore, setting up an advanced taxi system may not work as there are just no resources. Second, this was back before even laptops were commonly available in the Western world, let alone Israel. Therefore, there would be no real demand for it. Nowadays, with devices such as smartphones, the demand is much higher. Another aspect that may inhibit a startup’s success is the state of the economy. In 2008, the stock market crashed and the United States went into a recession. If there’s no money to invest, then how can there be money to support a business? Investopedia author Marc Davis jokes that “If your neighbour gets laid off, it’s a recession. If you get laid off, it’s depression.” This certainly was the case in 1929, the start of the Great Depression. Of course, companies nowadays are a lot more secure than they were back then. But even so, going public in a recession is extremely difficult. If 90% of startups fail in a normal economy, then you
can only imagine the effects in a recession. Referring back to Treuhaft’s statement “Less politics, about building the plane, it get s***t done.” certainly wouldn’t be close Iri Trashanski to being complete before hitting the bottom with an epic boom. With the valley bursting with technology, it is understandable why the competition is extreme. Getting a startup to go public seems virtually impossible, and it may be. However, it may also not be. Though there is not one factor that can determine the success, there are some key qualities that can increase the success. Therefore, while it may seem impossible, there are ways to get a startup goi ng.
San Jose, Cupertino, Palo Alto, and Mountain View are home to some of the largest tech companies in the world
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Works Cited Treuhaft, Jeff. Personal interview. 8 March 2016 Trashanski, Iri. Personal interview. 29 March 2016 Patel, Neil “90% Of Startups Fail: Here’s What You Need To Know About The 10%” Forbes. Forbes Mag., 16 Jan. 2015. Web. 10 March 2016 Davis, Marc. “The Impact of Recession on Businesses”. Investopedia. IAC, n.d., Web. 20 April 2015