Entrepreneurial Success Happens in Places Other than Silicon Valley

I was struck by an interview that Mark Zuckerberg gave at a Y Combinator event this weekend in which he said that if he were starting Facebook today he would have stayed in Boston.  Zuck talked about how Silicon Valley is “a little short-term focused” and that there’s “a culture in the Valley where people don’t commit to things.”  He brought up an example where in Seattle employees stay at the same company twice as long as the Valley.

Zuck makes some good points, though the stat he quotes from Jeff Bezos about Seattle workers is a misleading number.  Seattle has strong companies that treat their employees well with Amazon and Microsoft.  When companies like Google and Facebook opened up Seattle offices, they were able to recruit top talent from Microsoft and Amazon to those new offices as easily as they did in the Valley.

I do agree with the comments about the Valley being short-term focused.  The company I work for today, Clearspring, which is based in Washington, DC, is a perfect example Valley focus versus non-Valley focus.  Clearspring has had a couple of different acts in its life as a company.  If Clearspring were based in Silicon Valley, odds are the company would have been sold once we shut down our widget business.  Instead our investors remained patient and management focused on the long term, we actually MADE an acquisition, and now are the largest sharing platform on the Internet.

When Zuck talked about Boston it made me nostalgic for the days of AIM and AOL.  Before I started at AOL in 1999, we bought a company based in Boston called Booklink.  Booklink was a browser that eventually became the foundation for the way we would compose and display instant messages in AIM for many years.  The best part of that acquisition were the guys that came with the technology.  A few of them were the original authors of the Windows AIM client.

The point Zuckerberg makes, and the thing I am trying to reinforce is that talent and technology can succeed at any time and any place.  Silicon Valley may be the heart of consumer technologies but life does exist outside that bubble.  Whether Mark really meant what he said about not moving the Valley does not matter, companies like Foursquare, TripAdvisor and Clearspring we thrive no matter where we are.  Success comes down to ideas, people and execution, it does not matter where you are located, and I think that was Mark’s point and I know it is how I feel.

You know what’s cool? It’s not 100K registered users.

For years, startups were measured by how many registered users they had.  The company’s valuation was directly tied to this number, and in some cases this key stat was used to calculate a purchase price.  It was amazing that acquirers or VCs did not pay attention to the active users, and startups were pretty coy in trying to hide the active number unless it was a good number.

In today’s world, getting registered users is so easy thanks to things like oAuth and Facebook Connect, that having a registered user count is almost pointless.  The friction to register is so small, that any site can launch today and have a 100K users tomorrow.  Yet, I still see press releases touting registered users in combination with the recent round of funding.

The press still talks about Skype’s registered users (over 600M) but ignored their active user number for years (25M concurrent, ~200M 30 day active).  You know what, I can say that AIM has over 1B registered users, but I am not sure that number indicates how successful the product is.

I am always intrigued by two metrics when I talk with startups.  First, of course, is active users over a 30 day period, if the startup will tell me.  The second number, depending upon the product, is how many users are contributing data to the site.  The first number will of course cut through the BS of registered users and get to the heart of how many users are really using your product.  The second number flushes out how many users are just passive consumers versus how many actually participate in the site.  So at the start you may have a company say they have 100K registered users, but their actives are 30K, and 3000 contribute.

To borrow a fake line from a fake movie and to make it my own, “100K registered users isn’t cool.  You know what’s cool? 100K active users.”