Why are the most bull people in Silicon Valley in startups?

Where is China's Silicon Valley last time? , Ms. Li Yu, editor of Chinese entrepreneur, manuscripts, wants to continue writing about the differences between Silicon Valley and China. I gladly, looking for a beautiful place like Silicon Valley (my balcony), looking at the green trees, began to think of a question that has plagued me: why Silicon Valley's most cattle are in startups, and the attractiveness of big domestic companies remains the same.

The best technical personnel in the start-up company phenomenon

At home, big technology companies, especially multinationals, have a strong appeal to technicians, at least in the 90 's I graduated. A Microsoft or IBM offer is far better than a precarious start-up in a small workshop.

In Silicon Valley, this is not the case. The time to attract the most bulls, such as Google,ebay,paypal,youtube,yahoo!, is their entrepreneurial period, or the period before the IPO, not after that. PayPal is a typical start-up company. When Palpay got bigger, everyone left PayPal, created YouTube (Steve Chen), LinkedIn (Reid Hoffman), Slide.com (Max), Facebook (Roelof Investment), Geni (David Sacks), Yelp (Yelp) ...

We are now exploring the causes of this phenomenon.

Amazing returns

Small companies in Silicon Valley, if one day can be a big listing, the resulting wealth is astronomical, this has become a consensus, no longer said.

Recently I found another phenomenon which was not noticed before, and it is more memorable. I ask a senior person a question: how do the mergers and acquisitions of Silicon Valley companies work? I was surprised by the answers I got. If a big company has a fancy for a small, technical company, assuming that the company has no assets other than a few good people, the approximate price will be paid at a price of 2 million to 3 million dollars per technician, he said. In other words, for a 4-5-person company, at around 10 million dollars. Of course, this is not all cash, but a part of the cash, a part of the stock to pay. Not long ago Facebok to 50 million U.S. dollars to buy friendfeed, in fact, is a fancy Bret Taylor and some other technical personnel, when the acquisition occurs, the entire team is only 10 people. This is a buyer-oriented transaction.

If from the point of view of a very cattle technician, apply for a position to get the return even more, also less than be acquired, not to mention the return of the listing. This order of magnitude above the difference, enough to lure a lot of real entrepreneurial spirit of the cattle.

The pursuit of food and clothing without worry

In the process of contacting the founders of these startups, I found another detail, that is, when they are starting a business, they are mostly fed and clothed. As an entrepreneurial company like the people net, we often need to look for the best people, the eyes naturally to the Silicon Valley. At this time, a difficult question is: if a university graduate of good programmers need a high salary, the kind of people who have been in Google or the most cattle in the department of the company to pay for how high? Is the salary of all people now plus?

When I carefully understand and think about this problem, I found that the answer to reassure me. For the Bulls in Silicon Valley, they have been able to accumulate a lot of wealth for their previous ventures or the success of startups, and millions of dollars should not be an exaggerated estimate. The pay for their next job becomes less important. Just like a man with some savings to teach in a poor mountainous area, how much money should the headmaster pay? If the difference between the 20 blocks in the middle of a month or 100 or 120 is important to the cash flow of this school, I think a lot of people will choose 100, or even lower, because for them, this is a little different. But why do they have to go? That's what I said in return. In large companies, there is no problem getting enviable fixed returns, but if you want to get the next millions of dollars, or more, in the same time, it's only possible to go to a place like "poor mountain education".

The magic thing about stocks is the long term incentive. It is easier for everyone to pursue a more distant return only if they have been in the immediate (last 2 years) of food and clothing and more money is just a bank figure. If I have only 10 yuan in the pocket, even if it is 100 times times a year return investment I am not interested in, or Wu master where the roast sweet potato more suitable for me.

Differences between China and the United States

I have always advocated putting everything into history to understand the differences in two countries. The two environments we have mentioned are different.

For the payoff part, the dilemma now is that, first, financial services are immature. Financial services refers to the "angel investors" to "venture capital" to the SME market, are still in their start-up period. It takes time. Finding the best ones from thousands of companies requires more than 10 years of accumulation to improve their accuracy and thus enhance the support of good start-ups. The trial and error of investment, the cycle is measured in years, so the accumulation of time need longer. Second, China's mergers and acquisitions are far less than in Silicon Valley, and today's portals and big companies are more inclined to compete with start-ups than to make acquisitions. Because the best people are more likely to congregate in big companies, big companies are actually dominant (unlike Silicon Valley, where really good people are out there), and human costs are still low. The cost of doing it is the real cost multiplied by the probability of success. In China, even if the probability is low, but the proportion of personnel costs in operation is far less than that of Silicon Valley, so that "hit" than "buy" more cost-effective.

After this analysis, I am very optimistic about the future of China. 10 years ago, internet companies began the first round of the creation of the myth, another 10 years, 20, when the myth into common sense, when we have more and more friends around, students through entrepreneurship to achieve great success, the start-up company will attract more people. At the same time, in another 10 years, when our current program staff, system administrators and Web site editors have begun to worry about food and clothing, but to take a step closer, entrepreneurship is the first to become a tempting choice, in the near front wave.

The future of China's cattle will certainly be the same as Silicon Valley in the start-up companies.

Source: Author: Jian Shuo Wang Published: 2010-05-22 20:05