Many entrepreneurs are drawn by the allure of the mystical land of Silicon Valley.
It’s even been reported that investment bankers were scrapping Wall Street for the Silicon Valley hustle, in the dreams of a bigger pay cheque and creative work.
There’s a presumption, one that is wildly inaccurate, that Silicon Valley is the ‘golden ticket’ to all start-ups. This couldn’t be further removed from the truth when faced with the reality of the competition and hustle found in Silicon Valley every working minute.
As the Co-Founder of The Hacker Exchange, it’s my job to connect both aspiring and existing entrepreneurs from Australia to Silicon Valley and help transform their business and mindset towards entrepreneurship. Here are the lessons I’d recommend any Aussie entrepreneur consider before booking a one-way flight to SFO.
#1 Get it done or get outdone
The world’s most talented and innovative individuals head to Silicon Valley to chase the digital gold rush in their quest for success and hopefully be the one out of ten startups that don’t fail.
As an Australian start-up, it’s worth considering what it takes to not only survive but to stand out in the competitive landscape of one of the world’s most competitive markets. Experience tells us that time and time again, some Aussies still severely underestimate the intensity of the hustle in Silicon Valley.
For perspective, Saturdays and Sundays are just another work day public holidays are just another inconvenience to getting work done and emails still come in at 2 am. It’s also an expensive city to live in. Living costs in San Francisco, or more broadly the Bay Area, are outrageously expensive. If you don’t move quickly enough, you’ll likely run out of cash.
It’s an incredibly competitive environment where the dreamers are quickly separated from the doers. The phrase I counsel founders before considering visiting Silicon Valley is, “either get it done; or get out done!”
#2 Build networks, then build more
Silicon Valley is very relationship driven and it takes time to build a network of support people who are interested and willing to help. There cultural nuances you mightn’t expect, from how emails are done (short, sharp, to the point), to how networking and introductions are done (social equity reigns superior) – all of which take time to familiarize.
Getting to know people and have them buy into your vision may appear as easy as attending a few meetups, shaking a few hands and exchanging business cards, but don’t be surprised at how much networking you may have to do to get a foot in front of any investor.
For example, most angel investors won’t take emails or calls without an introduction from someone they know, and whose judgment they respect. It’s a filtering mechanism. As Valley veteran Sarosh Kumana, a seasoned entrepreneur, angel investor and a Board Advisor to Sand Hill Angels told me in a recent interview, “I’d like to be a nice guy, but there’s no time to be a nice guy to everyone.”
#3 Demonstrate the benefit of an outside perspective
Colleagues have told me that U.S. investors won’t invest in non-U.S. companies. In fact, in my experience, some Silicon Valley investors won’t even invest in companies outside a 70km radius of Palo Alto!
Some suggestions to be considered for early-stage funding include demonstrating proven success of expanding into the US market, such as sales, profits and a defined path toward profitability. Also consider whether having a US-domiciled corporation and selling your business and assets to a Delaware corporation, is an option worth pursuing.
Another way to prove to investors you are serious about putting roots in the US is to join an accelerator or incubator such as The Batchery, 500 Startups, YC or Plug and Play etc. These initiatives give startups access to investors and their syndicate partners, distribution partners and other ecosystem partners, which can be hugely advantageous when your networks are largely based outside of the US at first.
#4 Nail the elevator pitch
It’s easy (and tempting) to think your startup idea is going to change the world and that others will immediately jump to support what you’re doing. The reality, however, is that many startups find it quite challenging to articulate their value when they first hit US shores, unaccustomed to the straight-to-the-point-nature of investors.
Here are three initial items I suggest any startup refine before even considering hitting up an investor:
- Market: is there a market for the problem you’re trying to solve? How big is it?
- Solution: Does the product or service solve the problem with a good profit margin? Is the IP protectable? How to get sales at an acceptable cost? What’s the competition?
- Team: Does the founder have the team and capability to pull it off? Is this the right team to access and find the path to market?
Silicon Valley is an incredibly nimble, fast moving and ultimately, inspiring place to live and work. Yes, it’s hard work, but if you’re ready to get tested, can handle rejection and want to succeed more than the person next to you, it’s one hell of a ride. Homage to the hustle!