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?
Reading between the lines, it seems the major contributing factors to their success were the connections they had to other ex-Stanford alumni (Zuckerberg himself being one of them), the internship at Twitter and the stint at Google. A more interesting question (at least for me) is: Would Instagram's success have been possible (or that fast) if the founders had not gone to Stanford?
As someone in the US and in California, but !in the bay area and !in rapport with the likes of Marc Andreessen, Jack Dorsey and Mark Zuckerberg, I too wonder if Instagram-like success would be possible for a startup that is not in that position. And if it isn't possible, perhaps the rest of us should think twice about aspiring to that specific type of success.
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?
> 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 and no salary. That is only possible in Silicon Valley.
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.
The portion you refer to is pocket change - it would not retain these employees outside Silicon Valley, where such caliber of employees are willing to give great weight to 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.
I'm a bit confused, we might have misunderstood each other.
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.
You are an incredibly lucky person if living for 18 months with no salary is plausible for you. Either that or you've already worked somewhere for a large salary. You shouldn't talk down to people because they haven't experienced the same luck as you. Instagram was an exception to just about every rule, and I don't think it's a bad thing that a majority of the world would laugh at anybody trying to sell them the idea of work in it for equity.
That was part of my point that Instagram would be less likely to work out outside of SV. This article helps us on the outside looking in understand how many things you have to have going for you other than just talent and a good idea to achieve the level of success Instagram has.
All right, that's fair. But people hugely underestimate the difference that employees willing to consider equity as serious compensation makes. It's the difference between being able to afford to change the world and not being able to afford to do that.
That is one of the biggest things about the valley.
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.
It would be interesting to know how they pitched the jobs to their future employees? If someone came to me saying "Hey dude, work for free and you get 5% stake in a photo sharing app for the iPhone. It's cool app. We have filters!" I'd show him the door.
So there must have been some "we know people at $comp and they will buy us out"-talk to convince people to work for free.
I'd be interested in knowing where you're located. Not quite for "free" but including a very low salary what you've just derided seems like a fairly standard startup pitch...
There is no mention of salaries in that article. It seems like you are a little bit jealous and rampantly speculating about this whole scenario.
Obviously with the trajectory Instagram was on it was much easier to hire with equity. I don't know what you mean about the "level of talent" though. There are hundreds of small teams with the talent level of Instagram both in and out of the valley, but talent does not guarantee traction. What makes Instagram extraordinary is a confluence of factors, not just an amazing team.
I'm not jealous at all. Talent is one thing, but do you honestly think you can have a professional team working on the payroll that (I assume) Instagram had?
I just don't see it happening. one thing is you are right, I don't have detailed payroll figures. I was going on the prevailing wind and the fact that the employees were 20-somethigns.
The probability is low because guys outside of bay area don't build app to dent anything. They don't aim to build an app that is cool: to them, their friends, their investors, their users, and ultimately their suitors and acquirer.
They build it to mint money, which is why this story inspires them too.
It also counts that you are in a habitat where having beers with Zuck or being one of the first employees of google or twitter( or just name one..) is easy. If you need a 500000$ seed investment? No problem, I will talk to Andressen and it'll be done in a week..
Of course it's not always like this but SV is the place where this may happen.
The biggest difference I notice with other places beyond the easier access to investment (I am from Spain), is that people there has a "can do" attitude that is almost completely missing everywhere else. If you go to Stanford, it is expected from you to go and make something big just because of that. Also there is the glorification of failure as a learning experience.
Here in Spain I am seeing lots of good Ideas to start a small bussines or a Start up for almost no money, but even in the middle of the crisis, people who doesn't have a job gives me a blank stare every time I talk about them. They'll just keep looking for a simple job at a big company, as it that is the only possible way.
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?
The can-do attitude is something to be envied but the dynamism and opportunities available in the Valley and generally in the USA make a big difference. If your big idea doesn't pan out then the (almost) worst case scenario is that you simply go and work for somebody else. I don't think other country's economies are nearly as developed in that respect. In many cases developers are hired on the basis of cost and anything that the might prejudice that in the eyes of managers and employers (for example being a little too dynamic or independently minded) removes a lot of the cushion you have and makes going for the safe, corporate type of job more practical, not necessarily more desirable.
Don't forget the other side of the coin: that "can do attitude" and that environment can also, if you buy into it too far and don't get lucky, have you broke and homeless.
It's partially a gamble, and magazines write articles only about the winners.
I agree with that, but that´s true anywhere in the world. In Spain if your company fails you may be personally liable of the debt. Recently a bank removed 3000€ from my grandmother account because of a debt dated from 1993 of my deceased grandfather´s company. My grandmother is 97 years old, and the funniest part is that debt was settled long ago. Also if you fail nobody is going to trust in you any more, you are done.
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.
> Also if you fail nobody is going to trust in you any more, you are done.
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.
My point was not so much about SV but about the "can do attitude" - when taken too far it will have you go deeper into debt and chasing pipe dreams rather than cut your losses. It can kill good companies too, if it leads you to ignore risks.
Even if an individual tries to do it for coolness, and is passionate about it, the rest of the guys around him are not. And that can be a significant cultural influence.