Sine Qua Non — An indispensable and essential action, condition, or ingredient

Breaking into Tech with a “non-technical” background is hard. The same barriers that exist in Finance also exist with Startups. This post lays out the specific action steps that I followed to make this transition. No words can express my deep respect and appreciation for everyone that I mention (below) and the countless people that helped me during this process.

Persevere

For those of you that don’t know, I got laid off from my first job in October 2012. After 2 months, I got an offer to be a 2nd year Investment Banking Analyst in Atlanta. I accepted and within 5 months, I was promoted to 3rd year Investment Banking Analyst (Chapter 2, more on this later).

Stay hungry, save money, and leverage online resources

Although my girlfriend was still in Chicago, I decided to move to Atlanta so that I could live with my parents and take advantage of the higher salary.

Like most investment banking analysts, I started thinking about exit opportunities in the middle of my 3rd year by doing private equity interviews and prepping for my MBA.

Going through the motions made me realize that I wanted more than a higher salary, so I opted out and searched for alternatives on social media.

Don’t be afraid to reach out to potential mentors on Twitter

My focus on San Francisco began when my tweet caught the attention of Balaji Srinivasan, Andreessen Horowitz’ Newest General Partner.

Where it all started (December 9-12, 2013)

 

Naturally, I was not going to let this type of opportunity get away from me. So, I kept tweeting things that I was passionate about, but were also relevant to him. He continued to respond with retweets that in turn led to Direct Messages, more venture capitalists (VC’s) following me, and questions about my background.

The Spark: Resume Request, Direct Messages, and more Retweets (December 2013)

 

Act on the advice you’re given

After some time, he shared his passion for education. Then, he said, “we should get you into tech.” To start, he told me to read all of the Suggested Reading links in his Startup Engineering MOOC on Coursera. Startup Engineering is a sequel to Peter Thiel’s CS183 course and it completely changed my perspective on what I needed to do next in my career.

Figure out how you’re going to add value

My Aha! Moment came when I read the notes for Peter’s class onDistribution:

“People understand team, structure, and culture are important…but for whatever reason, people do not get distribution. They tend to overlook it. It is the single topic whose importance people understand least…Even if you have an incredibly fantastic product, you still have to get it out to people. The engineering bias blinds people to this simple fact. The conventional way of thinking is that great products sell themselves; if you have a great product, it will inevitably reach consumers. But nothing is further from the truth.”

I immediately knew that this is where I was going to add the most value at a startup. After a few opportunity suggestions from Balaji, I started focusing on roles related to or centered on Sales, Marketing, and Business Development.

Network to build a personal board of directors and open doors

Just because someone connects with you on social media doesn’t mean they’re your friend. While online relationships can be broad and deep, they’re not quite like human relationships. Silicon Valley is relationship-driven and I wanted a group of people that I could consult with regularly for advice and feedback (Personal Board of Directors).

With that in mind, I decided that I had to plan my first trip to San Francisco and meet Balaji in-person. Since my cousin was graduating from Berkeley in May and my girlfriend had never been to California, I killed 3 birds with 1 stone and planned my visit around my cousin’s graduation date.

As I was preparing for my trip, I noticed that Geoff Lewis was also following me on Twitter. I was really excited about many of the companies he invested in on behalf of Founders Fund and loved an article he wrote while he was the CEO of Topguest. The article was called how to score massive meetings for your startup and I liked this template because I recognized that the most successful people in Business Development maintain a set of “pick up the phone” relationships with decision makers in companies that allow them to sell to end customers in a scalable way. Instead of sending him a Direct Message, I did my research (read his blog), sent him a cold e-mail following his template, and setup a time to meet in May as well.

The last meeting that I setup for this trip was with Kanyi Maqubela from Collaborative Fund. The types of problems that I wanted to focus on were further down Maslow’s Hierarchy of Needs, so it was important for me to get closer to a personal board of directors that was also passionate about mission-driven companies. He was receptive to my cold e-mail and agreed to meet with me.

Maslow’s Hierarchy of Needs (e.g. MOOCs / edtech, shared services, agtech, bitcoin, drones, VR, quantified self, etc.)

 

In the interim (December-May), I established executive-level relationships with startup companies by leveraging my connections in Corporate Development (BMO alumni). After doing some Due Diligence (Stage 1 and 2; using public information) on each company, I cold-emailed the decision maker and made strategic introductions to one of my contacts that could solve his or her problem in a way that was mutually beneficial.

I thought about it like this: If I didn’t get a response to an e-mail, it wasn’t meant to be or it wasn’t the right time. The only thing that I had to consistently do was send 5 personalized e-mails to influential people everyday. To me, those e-mails were like sales pitches and ~80% of my “sales” came from ~20% of my efforts.

Another way that I thought about it was:

“Doing the unrealistic can be easier than the realistic because there’s less competition for the bigger goals.”

Position yourself for serendipitous interactions

One day, my girlfriend and I were listening to NPR in the car and she told me to pay attention. The radio host explained that about a dozen mansions in the Bay Area were being leased to groups of young entrepreneurs and run as communal living spaces.

I recognize the value of positioning and the power of serendipity, so I sent a request to book a room in a place called Agape on Airbnb. I read aboutAgape in SF Gate and knew that amazing things would happen if I stayed there. The host promptly responded saying that he also grew up in a classical family, his mom was a cellist, and I was a good fit.

As soon as we arrived, we decided to buy groceries. Unbeknownst to us, anAgape resident prepares family dinner every Monday and the person responsible for it had forgotten to do it that week. I saw this as an opportunity for us to get to know our hosts better and offered to prepare the meal instead after my friend Montrey suggested it.

Agape Family Dinner (May 13, 2014)

We said grace and Justin Rosenstein asked me why I was in town. He had just gotten back from presenting his “Do Great Things Speech” at TechCrunch Disrupt in New York and offered to help me. I was grateful because I believed in the “Helping Humanity Thrive” mindset.

Helping Humanity Thrive Venn Diagram

Identify the people that know each other in your network

My meetings with the VC’s went well and I learned that Justin’s brother, Perry, went to school with Kanyi. Kanyi and Geoff also knew each other and both offered to make introductions to contacts in their portfolios. Geoff and I spoke over the phone because he had to reschedule, but we agreed to meet in person after I moved to the Bay Area.

Craft your story and don’t talk about it, be about it

I quickly learned that people in tech don’t like investment bankers that much because they think that they’re just Finance guys that crunch numbers all day. With that in mind, my goal was to clarify that an investment banker is essentially a B2B salesman with deep industry knowledge and a strong quantitative background. In case that would not convince them enough, I decided to take a Computer Science class online from Stanford to learn how to communicate with engineers more effectively. I also wanted to prove that I could establish strategic partnerships and raise money quickly, so I helped organize Atlanta’s first Healthcare Hackathon with a startup and raised ~$40,000 in collaboration with its leadership team.

Take calculated risks and don’t be afraid to use your savings

I realized that finding a job long-distance would be difficult, so I asked Agape if I could stay there for a month in September. They agreed, so I bought a one-way ticket.

Risky One-Way Ticket (September 5, 2014)

 

Know what you want

The type of company that I wanted to join had to have the following criteria:

1. Team: Founders that have done it before
2. Culture: Ethical, humble, and personable
3. Early Stage: Series B or below
4. Top Tier Investors: Due Diligence that I could trust on top of mine (ideally backed by Founders Fund, Collaborative Fund, and a16z)
5. Market Opportunity (Size): Solving a problem that the CEO also has
6. Full-Stack Startup: A place where I could learn and add a lot of value

Build a support system (to help manage your psychology)

On the plane, I read about managing my psychology and learned that the quickest way to happiness is gratitude (Peak and Emotional Equations byChip Conley are great if you’re interested). However, I still needed a support system. I wanted to be close with other minorities without an Ivy League background that had successfully built a network in Tech. I knew that Diversity was an issue, but Naithan Jones and Divine figured out a way.

Diversity issues in Tech (Source:http://goo.gl/m50DJA)

Gender Gap in Tech (Source:http://goo.gl/m50DJA)

 

They both followed me on Twitter, so I sent them a couple of Direct Messages to set up meetings during my first two weeks.

Before and After meeting Naithan Jones

Before and After meeting Divine

 

Real recognized real, and we hit it off immediately. After my meeting with Nait, he told me not to worry about anything and invited me to a dinner hosted by Erik Torenberg from Product Hunt. Nait emphasized that I had to meet this guy named Chris Lyons, Deputy Chief of Staff at Andreessen Horowitz. Chris and I clicked because he’s also from Atlanta and bought a one-way ticket to San Francisco as well. Chris offered to help me and we all started sticking together. After that, Nait introduced me to Ben Horowitz and Dori Caminong at Glide Memorial Church. Dori introduced me to Ben’s wife, Felicia, and they both kept me updated on ways that I could help them build bridges between tech and the community.

Surprise Birthday Party for Nait Jones (Left to Right): Santi Yago, Ruben Harris, Felicia Horowitz, Chris Lyons, Nait Jones, Ben Horowitz, and Danny Bocanegra (December 6, 2014)

Event: A GLIDE Talk with Van Jones and Jim Gilliam (Left to Right): Dori Caminong, Nait Jones, and Ruben Harris (October 29, 2014)

 

Take meetings that may seem off-topic

During that first week, my friend Josh Kahn also introduced me to his buddyAlex Regenstreich. This meeting was not supposed to be related to business at all, but I noticed that he knew Jane Yu, the Head of Partnerships & Philanthropy at AltSchool. AltSchool was on my list because it met all of the criteria above and lucky for me, Jane and Alex interned together at Google.

Don’t hesitate when it feels right

Jane and I met for coffee on Monday, September 22. It went very well, but she said she had no opportunities on her team. She offered to refer me to any other roles that I was interested in and I thanked her. That Friday, I got another e-mail from her asking if I would be interested in working on a paid project with her over the next 5–6 weeks. Without hesitation, I said yes and started that Tuesday (September 30). I was really happy about that because my girlfriend’s birthday was on September 24 and we had been praying for a job that we would be able to celebrate together when she came to visit me that weekend.

Alexa’s 25th Birthday (September 29, 2014)

 

What’s even more crazy about that is my rescheduled meeting with Geoff was on Wednesday (October 1) and AltSchool is a Founders Fund portfolio company. During that meeting I asked him to be my mentor and we agreed to quarterly check-ins.My first time in the Founders Fund office (October 1, 2014)

Work hard and over deliver

Two weeks later, the AltSchool project was completed and my contract was extended. I eventually earned a full-time position on the Growth Strategy team and moved into a new apartment.

Just to show you how God works, on my way to my new job, a man was trying to get my attention and I recognized that he was Charles Hudson, Partner at SoftTech VC. He said I looked familiar (I had e-mailed him a long time ago) and asked me if I lived in the area. We found out that we were neighbors and that led to a conversation about him becoming a mentor. What are the chances that I would have two African-American Venture Capitalists that are well-known in my circle (Charles and Kanyi)?

Suffice to say, I’m grateful. Grateful for Jane, my family, Alexa’s family, my mentors, and everyone that has supported me during this process.

2013–2014 was about creating online relationships and making them real. Stay tuned for what’s about to go down in 2015!

SEE ALSO: This graphic will demolish every excuse you have for not founding a startup

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Not everyone is on board with the term "Silicon Beach," the name that's been given to Los Angeles' buzzing tech scene. "As a brand guy, I have an originality problem with it," Michael Dubin, cofounder and CEO of Venice-based Dollar Shave Club, told Business Insider. "It implies that what’s happening 'down here' is just our version of what’s happening 'up there.'"

On the other hand, ZipRecruiter cofounder and CEO Ian Siegel says: "I say sell the sizzle. Would you rather work at the beach or in a valley? Easy choice." Whether you buy into the moniker, Los Angeles has been a center for tech innovation for years. A host of successful ecommerce, fashion, and social-media startups have gotten their starts in sunny Southern California, reaping the benefits of plentiful venture capital and proximity to the entertainment capital of the world.

And though the boom has now spread to communities east of the 405 freeway — like Nasty Gal downtown and Maker Studios in Culver City — the beachfront communities of Venice and Santa Monica still hold a special draw for entrepreneurs.

"Every time we recruit someone, we put them up at the Shore Hotel [in Santa Monica]," Siegel says. "They stare out at the ocean, and then walk a block to our offices where again they can stare out at the ocean from just about every window. You take someone from the Midwest or East Coast and give them that experience ... let's just say we have a high close rate."

And with a mayor as supportive of innovation as Eric Garcetti, it's likely that trend will continue. During his inaugural speech, in 2013, Garcetti pledged to give Silicon Valley a "run for their bitcoin."

The neighboring beachfront communities of Venice and Santa Monica have long been a haven for edgy, artistic types. In the 1970s, the "Dogtown" section of Venice was the site of a renaissance in skating culture, chronicled in a 2001 documentary called "Dogtown and Z-Boys" and later in the film "Lords of Dogtown."

Much of the tourist action is centered on the Venice boardwalk, where signs advertising incense and henna tattoos signify the area's lasting hippie roots.

But if you walk just a bit farther down the block, you'll notice the fortress-like headquarters for secret-sharing app Whisper. The startup moved into the house last spring, leasing it from an unnamed owner who purchased it from actress Anjelica Huston for $11 million.

Click here to tour Whisper's headquarters »

When most people think of startups, cities like San Francisco and New York come to mind.

Los Angeles, not so much.

But Mike Jones, the CEO and founder of startup studio Science, disagrees.

"I find there's incredible talent here," he says. "I've got a strong reputation here; it's a natural place for me to be."

Jones is probably on to something. Los Angeles mayor Eric Garcetti said in his 2013 inaugural speech that Los Angeles would give Silicon Valley a "run for their bitcoin."

Secret-sharing app Whisper, privacy app Burner, and Snapchat have all set up shop in the area. 

Jones, formerly a CEO at MySpace and an AOL executive, co-founded Science three years ago. Science invests, funds, and develops early-stage startups, and it forms deeper relationships with startups than your typical VC firm would.

Part of Science's formula for success is something Jones calls Science's "Growth Platform," its internal technology platform and series of practices. Jones says Science's Growth Platform is what's responsible for helping to scale the startups Science has invested in, and for driving customer growth. 

Jones says Science, which has already launched 25 startups, ended 2014 "having acquired, founded or invested in 18 portfolio companies generating over $150M in 2014 total gross revenue." You're probably familiar with at least a couple of Science's companies.

Subscription shaving startup DollarShaveClub raised a hefty $50 Million Series C round in September, and announced in November that it now serves 8% of global razor shipments and has over a million members. 

"As a brand guy, I have an originality problem with it," Michael Dubin, the cofounder and CEO of DollarShaveClub, told Business Insider. "It implies that what’s happening 'down here' is just our version of what’s happening 'up there.'"

Marketing firm HelloSociety, which connects the 300 most influential Pinners with brands like J.Crew and Madewell, reaches more than 36 million Pinterest users every month, and is responsible for more than 372,000 daily engagements on and off of Pinterest every day, Jones says.

And pet boarding marketplace DogVacay, which offers an alternative to dog kennels, raised a $25 million Series B round in November, and later announced it had surpassed more than a million dog stays, making it the largest pet service company in the world.

Science is fixated on breathing life into antiquated industries — shaving, for example, or disrupting pet care — so it's no surprise Jones says Science has developed a focus on millennials. "While our reach is broad because of our ability to market and grow companies across the most ubiquitous social destinations, at this point Science possesses the strongest portfolio of platforms and technologies enabling brands to reach millennials," he says.

Science says it sets itself apart from traditional VC firms not only in its unique location, but also in its method of how it builds startups. Jones stresses that Science builds its companies internally to make them self-sustaining.

Whatever Science is doing, it's working: Science has tripled its growth, marketing and finance teams in its Santa Monica headquarters, ending 2014 with 150 people on staff. Nearly one-third of Science's portfolio became profitable in the last quarter of 2014, too. 

"When we started Science, our vision was simple — build big companies by pairing operational all-stars with the most passionate entrepreneurs,"Jones says in a post on Medium.  "Three years later, we’ve substantiated our formula of leveraging our network of companies across a spectrum of direct to consumer goods and services, with online growth and marketing companies to nurture an environment of experimentation and advancement."

SEE ALSO: See why more startups than ever are setting up shop on the beach in Los Angeles

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Venture capitalist Bill Gurley had a warning for tech investors at the Goldman Sachs Technology and Internet conference on Thursday.

He thinks that private tech companies with unrealistic, sky-high valuations aren't being properly audited.

“Stop cramming money into private companies,” Gurley, a Benchmark partner, told the audience, Forbes' Ellen Huet reported.

Here's Huet, who attended the event:

"The opportunity to invest in a private round of a popular company is getting so hyped that some startups are inviting investors in, Gurley said. He told an anecdote about a friend of a friend who 'got a phone call where they were invited to participate in a private round,' he said. 'And I just thought the notion of the invitation is so Madoff-esque, right? … This is a party where everyone has been invited. It’s just not that hard to get access.'"  

Gurley specifically warned against overspending on low-margin, on-demand, same-day delivery startups like Google Express, which has a low-profit business model. Subsidizing their way into the market is "going to hurt,"Gurley said (Gurley is an investor in on-demand car-hailing company Uber). “Pay attention. These companies aren’t going through a proper audit process. … We’re drifting from high-margin businesses to ever-increasing low-margin businesses in terms of what we’re saying are unicorns. Be careful. I don’t think it’s sustainable if you extrapolate that way.” (Our emphasis added.)

Private tech companies are raising a ton of money, and consequently have to increase their burn rate, the amount of money these companies spend.

In an interview with the Wall Street Journal last fall, Gurley said that burn rate is the highest it's been since 1999, and that startups are taking on an "unprecedented" level of risk because it's easy for startups to raise money. Warning of a tech bubble mirroring that of the late 90s, he also says people are happily working at startups that may be losing millions of dollars a year because the industry is very optimistic.

Here's Gurley in that interview:

"In the software-as-a-service world, where the risk is potentially among the highest, Wall Street has said it's OK to lose tons of money as a public company. So what happens in the board rooms of all the private companies is they say, 'Did you see that? Did you see they went out and they're losing tons of money and they're worth a billion. We should spend more money.' And there are people knocking on their door saying, 'Do you want more money, do you want more money?'"

Part of the reason for this, according to Gurley, is that many of today's entrepreneurs weren't around for the last tech bubble. "They have no muscle memory whatsoever," he said. "If the environment were to change dramatically, the types of gymnastics that it would require companies to readjust their spend is massive. So I worry about it constantly."

Gurley has invested in startups like Uber and OpenTable. His investment firm, Benchmark, has invested in companies including Yelp, Snapchat, Dropbox, and Instagram.

SEE ALSO: Top Silicon Valley Investor Explains How Uber CEO Travis Kalanick Is Like Jeff Bezos

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Some couples aren't just great matches for each other — they hold major power across their industry as well.

In honor of Valentine's Day, we put together a list of the couples who are ruling the tech world.

This is an update of an earlier article by Alyson Shontell and Julie Bort.

Yahoo's Marissa Mayer is married to VC Zack Bogue.

When it comes to power, Yahoo CEO Marissa Mayer yields plenty. This year, she was at the forefront of a plan to spin off Yahoo's 15% stake in Alibaba into a new public company, which sets Yahoo up for major potential growth at her hand. However, it also means that all eyes are on Mayer for the foreseeable future.

Coupled with husband Zack Bogue, co-managing partner of venture capital firm Data Collective, the pair holds serious clout in the tech world.  

Aaron and Karine Hirschhorn co-founded "Airbnb for dogs," DogVacay.

Aaron and Karine Hirschhorn co-founded DogVacay, a network of local dog sitters that's now available in over 3,000 cities. They came up with the idea after a terrible experience with a kennel that left one of their dogs, Rocky, hiding under Aaron's desk for the next two days.

Dubbed "Airbnb for dogs," this service allows pet users to go away without worrying about the well-being of their pooches. It has raised $47 million from investors such as First Round Capital, Benchmark, and Andreessen Horowitz, most recently receiving $25 million in a Series B round of funding led by Omers Ventures.

Dave and Brit Morin each run startups that raised boatloads of money. They had a baby last fall.

Both alumni of powerful tech giants — him: Apple and Facebook; her: Google — Dave and Brit Morin now run their own startups.

Dave runs Path, a mobile social network, which he co-founded in 2010. He also invests in a bunch of startups through Slow Ventures. Brit started her own company, Brit+Co, a design and cooking site full of inspirational how-to posts, in 2011. Since its launch, it has since raised $7.6 million in funding.

On top of all that, the couple, who have been married since 2011, welcomed their first child last fall.

Recent times have seen a surge of SaaS IPOs. In 2014 there were several high-profile flotations: Zendesk, HubSpot, New Relic, and Hortonworks.

At the start of 2015, Box completed its initial public offering and raised $175 million in the process; its stock jumped 66% on the first day of trading.

All of these companies owe their very existence to Salesforce.com, which paved the way for all Software-as-a-Service (SaaS) companies. I had the good fortune of joining Salesforce before its IPO in 2004; the company has since grown into a global powerhouse. The success of Salesforce ushered in an era of enterprise software based on a new business model — software delivered via the Internet and licensed on a subscription basis.

The software industry has changed forever because of the vision of Marc Benioff and the other co-founders of Salesforce: Parker Harris, Dave Moellenhoff, and Frank Dominguez. Working alongside them will forever be a highlight in my career.

Entrepreneurs today should study the tactics Salesforce used transform from scrappy upstart into an industry bellwether. Salesforce became a great company — and was able to IPO — by applying the following 7 principles:

• Your Value is Easy to Articulate.
• Rally Your Team Around a Cause.
• Know Your Customers. Make Them Heroes.
• Build a Platform.
• Make Trust Your #1 Value.
• Punch Above Your Weight Class.
• Take Risks and Ride the Wave.

You’ll observe many of these same traits in today’s successful SaaS companies.

Although there’s no guarantee that your SaaS company will IPO, if you adhere to these 7 principles you’ll tilt the odds in your favor!

Your Value is Easy to Articulate.

To have a viable business, all of the following should hold true (and if they do, your startup has the potential to take-off like a rocket ship!):

• You product satisfies a need and others are willing to pay for it.
• You have enough potential customers to grow your company.
• Your solution is complex, with high barriers to entry for competitors.
• You are able to effectively market and sell your product.

If you can succinctly state the value of your product, many things will follow. The market will easily understand what you have to offer. Your message will resonate with potential customers because they can easily comprehend and remember it. Providing a simple statement of your solution belies its technical complexity and puts customers at ease (while putting competitors on their back foot). You’ll also be able to market and sell your offering to your customers and to potential employees.

The Salesforce product at the outset was strictly for Salesforce Automation (SFA), with aspirations to become a full-lifecycle Customer Relationship Management (CRM) suite. That’s a lot to comprehend for potential customers and employees alike.

Simply stated, Benioff’s vision was to make Enterprise Software as simple to use as Amazon.com. As you can see, Salesforce closely resembled its inspiration (and incorporated a pithy phrase to describe its value to customers).

• Salesforce: “Point. Click. Close.”
• Zendesk: “Zendesk is software for better customer service.”
• Hubspot: “Solve for the Customer.”
• New Relic: “We are all data nerds.”
• Hortonworks: “We do Hadoop. Enabling the Data-First Enterprise.”
• Box: “Enterprise content collaboration.”

Rally Your Team Around a Cause.

Building a startup and scaling it into a lasting company is no small feat. To accomplish this, entrepreneurs need a team as passionate about the company as they are.

In an interview from 2000, venture capitalist John Doerr made the following statements about startup hiring which highlighted the differences between “mercenaries” and “missionaries”:

Mercenaries think opportunistically; missionaries think strategically. Mercenaries go for the sprint; missionaries go for the marathon. Mercenaries focus on their competitors and financial statements; missionaries focus on their customers and value statements. Mercenaries are bosses of wolf packs; missionaries are mentors or coaches of teams. Mercenaries worry about entitlements; missionaries are obsessed with making a contribution. Mercenaries are motivated by the lust for making money; missionaries, while recognizing the importance of money, are fundamentally driven by the desire to make meaning.

A startup with the vision to change the world will attract missionaries who strive for a goal loftier than a large pay packet. Not all startups can provide this type of motivation to their employees; companies that do will assemble a team motivated by purpose rather than profits.

Salesforce had a truly aspirational goal: to change the way enterprise software is delivered. Benioff was a visionary who recognized in 1999 that the Internet could be used to deliver Software-as-a-Service. This notion was preposterous at the time. Companies were reluctant to store their data on 3rd party servers. CIOs had an array of concerns about SaaS; they doubted a web-based application could compete with packaged software with respect to security, performance, functionality and control.

In the face of this, Benioff extolled the virtues of “No Software.” He stated that companies should be able to rent software over the Internet, a proposition that was much cheaper than the hefty expense of an “on-premise” Enterprise Software purchase.

Every entrepreneur wants a team fervent about the company mission. Truly great companies are those that instill passion and devotion among their employees.

In the case of Salesforce, the cause was “The End Of Software” (as we knew it).

Know Your Customers. Make Them Heroes.

A lasting relationship with customers is important for any business, but it’s absolutely critical for building a successful SaaS company. What might work in the offline world — focusing on a point-in-time transaction and not caring about usefulness and value to the customer — will not create a sustainable SaaS business. Think about the differences between traditional Enterprise Software and the SaaS business model.

Traditional Enterprise Software is…

• Purchased by the customer in a one-time transaction.
• Expensive. List price for Enterprise Software is in the millions of dollars.
• Installed “on-premise” by the customer, on hardware also purchased by the customer.
• Operated by an IT staff that the customer has to retain.
• Subject to upgraded that the customer has to purchase and install.

Contrast this with the SaaS model…

• “Sales” are replaced with “Leases” on a per-user basis (as much or as little as needed).
• Customer does not purchase software or hardware.
• Customer does not need an IT staff for operating the application.
• SaaS updates are performed in a way that is seamless to the customer.

In the SaaS realm, a “sale” is just the beginning of a long-term relationship with the customer. SaaS providers should be attuned to the needs of their customers; if their service doesn’t provide value, the customer won’t renew (much less expand) the lease.

SaaS providers are landlords, leasing access to functionality and data storage on their servers. Being a successful “landlord” (SaaS company) means having happy “tenants” (customers). Salesforce shared this apartment analogy on its website, in marketing campaigns, and at user conferences until the term “muti-tenant” became associated with SaaS. (We also filed many patents on our multi-tenant database architecture.)

Benioff understood that SaaS required more than a traditional customer support team and defined a new role in the company: Customer Success Manager (CSM). Access to a CSM would be available to customers willing to invest in a higher-priced plan; in exchange, the CSM would analyze customers’ use of Salesforce and proactively suggest best practices. CSMs would frequently chat with customers and provide “quarterly scorecards” to highlight features or add-ons for the service.

Salesforce also made a point of marketing the success of its customers. Posters emblazoned with images of actual users were placed in the Salesforce corridors; each person was labeled a “Hero” for their adoption of our SaaS. Salesforce even ran print and online ads touting these “Heroes.” Our customers became advocates for the product within their companies and at our user conferences.

Promoting customers as heroes had a side-effect — it created a personal connection among our team. We all felt a duty to the people on those posters.

We wanted them to keep smiling as a result of our software.

Build a Platform.

You’re an entrepreneur building a SaaS business, and can succinctly state the value of your offering. Your team is motivated by the audacity of your vision and is dedicated to make it a reality. You understand that your startup needs to entice and retain customers (long-term “tenants”) of your service. Given all of this, the following advice will seem counterintuitive:

Don’t build what your customers are asking for.

Your customers may ask for something specific, but you should decide if it’s the right thing to build for their success (and yours).

This example from the early days of Salesforce will illustrate. In the early-2000s, companies were not accustomed to having their corporate data outside of their possession. The idea of an application owned and operated by a 3rd party was anathema. Many potential customers (and investors!) of Salesforce insisted that Benioff provide an “on-premise” version in addition to a SaaS offering.

It took the resolve of Marc, Parker, Dave, and Frank to stay true to their mission — to upend the software industry. They heard what their customers were asking for, but delivered something better. They refused to build an “on-premise” version of their product. And if they had, it would have prevented them from building a platform for SaaS applications.

From 2004 thru 2008, Salesforce laid the groundwork of becoming an application platform. It should be noted that customers didn’t ask for any of these things:

• 2004: we enabled deep metadata-driven customizations, which was marketed as “Customforce.”
• 2005: we announced “Multiforce” — a widget to selectively expose application functionality in the Salesforce UI.
• 2006: we launched AppExchange — a directory of extensions to the core Salesforce service.
• 2007: we announced Apex, an expressive language to add business logic to Salesforce system events.
• 2008: we unveiled Visualforce — a template language to build custom Salesforce UIs.

Salesforce assembled the pieces of a platform, and convinced 3rd party developers to build features for the service. If you can replicate this model, you’ll (virtually) scale your product development team by several orders of magnitude!

Build a platform that you know will provide value for the majority of your customers. Listen to their requests and use them to guide, but not dictate, your product roadmap.

You want to ensure customer success and not build what your customer is asking for? I don’t disagree.

Make Trust Your #1 Value.

The death knell for a SaaS company rings when there’s a problem with customer retention. For a thriving SaaS business, you want to maintain “customers for life.” Your user base should accrue over time, ideally using more features of your service at higher price points as they become more sophisticated.

Your customers won’t stick around if they don’t trust you.

Within 18 months of the Salesforce IPO, we had a trust problem. Our team, our software, and our databases grew in size and complexity. It became difficult for us to deliver features in a timely manner, with the quality that was required for enterprise software.

The performance and uptime of our servers suffered. From December 2005 to February 2006, Salesforce experienced a series of serious outages. Critics argued that the limits of the SaaS delivery model had been reached. The viability of the company was in doubt. Our customers lost trust in us, and we lost trust in ourselves.

In times of crisis, you prove your mettle.

Salesforce co-founder Parker Harris responded to the outages by halting all new feature development. Our team focused on improving the performance and reliability of the service, a process that took months. In the midst of this, Salesforce launched a site called trust.salesforce.com, which displayed the real-time status of its servers. This type of status page is commonplace today; in 2006, this amount of transparency was a novel idea.

To this day you’ll see the following statement on the Salesforce trust site:

Success is built on trust. And trust starts with transparency.
With a SaaS offering, you need to earn your customers’ trust through service reliability and full disclosure when systems are having issues. Like any other utility, your customers expect your service to be nearly always available.

Punch Above Your Weight Class.

How do you get recognition and respect for your SaaS startup? The odds are stacked against you:

• Transformation of IT to cloud services has really just begun. Why SaaS?
• Your marketing budget is tiny. You need to build a brand. Who are you?
• Your startup competes with incumbents. What’s special about you?
• Potential customers dislike change. Why should they switch now?

To build a sustainable business, you must answer all these questions. You need to convince customers that SaaS is the best approach. You need to convince industry analysts and press that your startup is a disruptive force. You need to convince customers that your solution is as reliable as established offerings. And you need to convince everyone that your company is introducing a sea change right now, and they don’t want to miss the boat.

Why SaaS? Software-as-a-Service allows customers to rent as many or as few licenses as they need. For SaaS customers, there’s no software (or hardware) to buy because the product lives in the cloud. For SaaS providers, there’s a single version of the application to maintain and update; it is far more efficient to support a SaaS application than traditional software. This is an easy story to tell because everybody wins!

To answer the remaining questions of who, what, and why (now), take a page from the Salesforce playbook.

From its earliest days, Benioff spoke of Salesforce as a viable alternative to Microsoft, Siebel Systems, Oracle and SAP. By associating his fledgling startup as a rival to these successful companies, Benioff controlled the conversation. It didn’t matter that all of those companies were far more established than Salesforce. By repeatedly comparing Salesforce to the industry giants, Benioff added a level of credibility to the company.

Analysts and press began covering the scrappy SF startup that had the audacity to challenge the old guard. Salesforce was clearly the underdog, and Benioff took every opportunity to upstage his larger competitors.

One early Salesforce ad campaign declared “The End of Software” and depicted a sleek fighter jet shooting down a red biplane; by implication the jet was Salesforce—and the biplane was Oracle.

Salesforce also employed guerrilla-marketing tactics at a Siebel Systems user conference, staging a mock rally to protest “The End of Software.” The stunt was so convincing that it was covered on the evening news!

Salesforce always provided a continuous stream of strategic press releases. These well-timed announcements kept Salesforce top-of-mind, and could be about a new client win, an industry partnership, or the steady growth rate of its customer base. Emphasizing growth is particularly savvy, because a startup will naturally have a higher growth rate than an established incumbent — by virtue of starting from a much smaller base!

As a startup, you are an underdog in the industry. Embrace it as Salesforce did. It’s an effective way to make a name for your company; you have nothing to lose. And if large competitors react to your tactics, they will have done you a favor — by validating your message!

Take Risks and Ride the Wave.

A startup has several advantages over its competitors: it is nimbler, more creative, and can leverage newer technologies than its staid counterparts. Startups exist to solve existing problems in novel ways.

Entrepreneurs are visionaries; they see a better future and are convinced they can make it come to fruition. This is certainly true at the founding of a startup.

The challenge for entrepreneurs is this: to continually think about their next move. What is the next disruption that can be introduced and how will it shape the company? Entrepreneurship is about risk taking, and making bold statements about “what’s next.”

Benioff is a serial visionary. His ambition didn’t stop at the initial idea for the Salesforce product. Benioff was always thinking about the evolution of Salesforce: from a single-application, to a suite of applications, to a rapid application development platform, to an enterprise collaboration tool, to an application container and database provider.

Each phase of the evolution of Salesforce was shaped by observing the developments of its direct competitors as well as companies in adjacent fields. Product strategy was informed by trends in mobile computing, social networking, and big data. Salesforce learned to acquire companies for core technologies that would advance its ambitions.

Benioff regularly makes bold statements about the future of software, and challenges his team to turn these statements into reality. He’s also fond of the following saying:

"Everyone overestimates what can be accomplished in a year, but underestimates what can be accomplished in a decade."

Think of what tomorrow could bring. Make a bold statement about what your company can achieve in 10 years.

Then hop up on your surfboard. Ride the wave. And don’t forget your Hawaiian shirt. Aloha!

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It’s becoming more and more expensive to scale a startup in San Francisco. In fact, it’s twice as costly to operate a startup in 2014 as it was in 2009.

According to data from Jones Lang LaSalle, office prices in San Francisco have nearly doubled in five years from $36 per square foot per year to $63.

Typically businesses allocate about 150 square feet of office space per employee. Given the market rate for office space, hypothetical 20 person Series A startup will spend about $200k per year per employee in 2015.

In parallel, startups and incumbents vying for talent in the increasingly competitive job market have bid up the median wage of a San Francisco technology worker 15% each year, from about $90k to well over to $180k in 2014. Wages include salary, benefits, stock options and perks.

Wages constitute the majority of the increase in startup expenses. Real estate costs add only 5% of per employee costs.

The combined inflation of real estate and wage costs have a dramatic impact of the operating expenses of startups. The chart above compares the op-ex (excluding marketing spend) of a hypothetical 20 person Series A startup and a hypothetical 80 person Series B startup over the past five years. In both cases, the op-ex figures double from $2.5M to $5.0M and from $7.9M to $15.6M respectively.

The cost savings startups achieve from cloud computing infrastructure or other technology cost reductions are dwarfed by the steady cost increases of labor in particular. These heightened costs of doing business may explain some of the increase in startup round sizes.

Of course, 2014 was the best year for venture fundraising in more than a decade and more venture dollars pursuing more startup opportunities in the Bay Area means even greater demand for top talent. It’s quite likely that the substantial injection of venture dollars into the ecosystem are creating the market dynamics that increase startup costs. Consequently, it’s not unreasonable to expect wage inflation and consequently higher startup operating costs to continue.

SEE ALSO: How I broke into tech with a non-technical background

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NOW WATCH: Animated map of what Earth would look like if all the ice melted

Mobile tech is booming: New figures from Digi-Capital show the number of mobile-tech "unicorns"— companies with $1 billion-plus valuations — has almost doubled in the last 12 months.

In 2013, there were 38 unicorns across all tech sectors; in 2014, there were 68 in mobile Internet alone. And the collective value of these companies is twice the old tech unicorns, up from around $130 billion to $261 billion.

Here's a breakdown of the analysis by size:

Right at the top sits taxi service Uber, one of the most valuable startups in the world. It's worth an estimated $40 billion. The only larger startup is Chinese smartphone company Xiaomi, but Digi-Capital's analysis excludes hardware companies. (As a now-predominantly mobile company, Facebook should arguably also be included in the analysis, but Digi-Capital says it has left it out as it would "swamp everything else" due to its huge size.)

The success of transportation services is a recurrent theme in the data. In a breakdown by sector in Q4 2014, Travel/Transport is comfortably the largest category. It illustrates how disproportionately valuable the sector is: In 2014, Games was comfortably the largest category by install on both Android's Google Play Store (41.2%) and Apple's App Store (40.6%). But the value of unicorns in the sector is less than half that of Travel/Transport.

So where are these Unicorns coming from? The majority of the value — $144 billion out of $268 billion — comes from the United States. The US also has 6 out of the top 10 most valuable. But over half of the unicorns now hail from Asia. There's 38 of them — as many unicorns as there were globally in 2013. It's a clear illustration of the rising fortunes of the Asian tech sector, and how homegrown companies are benefiting massively as the next billion people come online in emerging economies.

Finally, here's the full data set:

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NOW WATCH: Venture Capital Legend Reveals How To Spot The Next Tech Superstar

The London-based money-transfer startup WorldRemit on Wednesday announced a new $100 million funding round, with a reported valuation of more than half a billion dollars. The round is led by the Silicon Valley venture capital firm TCV, whose previous investments include Facebook, Spotify, and Netflix.

The news comes just weeks after another London money-transfer startup, TransferWise, raised $58 million, with a rumoured valuation of $1 billion. TransferWise's investment involved Andreessen Horowitz, one of the largest and most respected venture capital firms in the world. Andreessen Horowitz partner Ben Horowitz also personally joined TransferWise's board.

And last year, the peer-to-peer loan service Funding Circle, also London-based, raised $65 million, bringing its total raised to $123 million. The round was led by Index Ventures, along with participation from Accel Partners and Union Square Ventures.

We're beginning to see a trend: Investors are finally waking up to the weakness of traditional banks and the possibilities of FinTech. And the UK's FinTech startups are their main weapons.

Compared with other sectors, the financial industry has remained relatively untouched by technology. Media has been turned on its head; the transportation industry is being racked by Uber; the mobile-app economy didn't exist just a few short years ago but is now bigger than the film industry. In contrast, the major players in finance — with the exception of PayPal and Square — are largely the same as they were 20 years ago.

This is beginning to change. TransferWise is a perfect example of how the tech sector can move onto the banks' turf — and with great success. Launched in 2011, the company aims to eliminate the high transfer fees associated with sending money overseas. It's working — the company is growing 15% to 20% month-on-month, and it has transferred more than $3 billion using the platform, saving its customers money in the process. And while it is one of the most prominent FinTech startups, it is far from the only one.

Tech is tackling finance's problems, and now tech's biggest investors are taking notice.

Index Ventures cofounder Neil Rimer said Funding Circle exemplified "the new class of fintech entrepreneurs who are combining technology and novel business models to offer much better value than banks and other customers have been offering their customers."

Earlier this year, Andreessen Horowitz's Ben Horowitz said TransferWise "could not have come at a better time ... we see little to no innovation from the traditional banking sector, which creates a massive opportunity for new financial institutions."

Bank regulators are alive to the threat, too. Bank of England Governor Mark Carney worried aloud on stage at Davos that the sector was vulnerable to an "Uber-type situation" that was "imminent."

Bitcoin is another example. Even amid hacks and declining prices, unprecedented funding is flowing into the digital currency ecosystem. The bitcoin exchange Coinbase recently raised $75 million in venture-capital funding, with investors including Andreessen Horowitz and the New York Stock Exchange. In the long term, it's an open question as to whether bitcoin complements or competes with conventional FinTech. But for now, unprecedented access to the sector is yet more proof of investor interest in new tech-driven financial products.

Silicon Valley investors are betting on FinTech startups over the established banks. And that funding will in turn accelerate the growth of new and innovative financial services — at the established financial industry's expense.

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NOW WATCH: Here's Why Anybody Who Is Somebody In Finance Is Getting This Bottle Of Honey From Gary Shilling

Last week, at a StrictlyVC event San Francisco, investor-writer Semil Shah interviewed Keith Rabois of Khosla Ventures in a wide-ranging chat. Among the issues raised was why companies are staying private longer, and whether founders, investors and the institutions that finance venture capitalists should be concerned.

Rabois – a former lawyer who’d earlier served as COO of Square, and was an executive at PayPal, LinkedIn, and Slide — didn’t equivocate. He said he thinks companies that delay their public offerings are making a mistake, and he traces the trend to “his PayPal friends” and specifically to PayPal cofounder Peter Thiel.

Said Rabois: “My views are a little bit more like [fellow VC] Bill Gurley’s than Marc Andreessen’s or Peter Thiel’s, [which is] that companies should go public earlier rather than later [for] a variety of reasons. One is that you actually get a lot of cash, and that cash gives you leverage to do things. Secondly, you have a currency, and you have a price on your currency and you can acquire things, which is very difficult to do as a private company.”

Continued Rabois, “Some of the reasons that people don’t want to go public are just excuses. The founder doesn’t want to have scrutiny, doesn’t want transparency.” Other oft-cited reasons that management teams give for pushing off an IPO include concerns over employee retention and flagging morale, said Rabois, who called all of them “bad reasons” not to go public.

As for the common complaint that employees begin obsessively watching their company’s ticker after a public offering, for example, Rabois noted that companies’ shares “go up and down” and that staffers can “get a little miffed and annoyed” by those gyrations. But he added that management can also respond proactively to those swings, saying that they’re ultimately among a long list of “soft things” that affect employee satisfaction.

“If you actually manage people, you know the things that are going to distract the people in your office [are things like] the food you serve,” Rabois told the gathered attendees. “I actually had a revolt [at a former company] because I took away bacon because it’s not good for you. All the engineers barfed [at the move] and I didn’t know why they were all annoyed at me until someone asked a question [about my decision] at a company meeting.”

As for retention, Rabois shared a story about the online review site Yelp, on whose board of directors Rabois served for roughly eight years. (He stepped down in January 2014.)

According to Rabois, Yelp co-founder and CEO Jeremy Stoppelman — who’d worked as an engineer at PayPal earlier in his career — “was very nervous about going public because he’d gotten all this advice from Peter [Thiel] and my PayPal friends,” who had themselves gone through a “searing experience” when PayPal staged its IPO in 2002.

“[PayPal] was one of two companies in technology that went public that year – the other being Netflix – we [filed our S-1] the day after [the terrorist attacks of] 9/11, and people had a lot of emotional reactions to all the things we went through,” said Rabois. “The state of Louisiana suspended us the week before we went public [owing to customer service complaints. We had numerous other issues]. So Peter and other friends of mine started telling everyone that it’s terrible to go public,” and the “Facebook crowd kind of bought into that,” he said.

So have a lot of other entrepreneurs, said Rabois, characterizing today’s accepted wisdom about the dangers of going public as a “derivative sort of consequence” of that “mess.”

It’s a shame, suggested Rabois, who said that once Yelp did go public, in March 2012, it became “the best thing ever for the company. Morale improved, actually, the year before we went public. Retention post going public is significantly better than the two years before going public. I’d argue that innovation [at Yelp] is better. We’ve also been able to acquire a couple of strategic assets, one in Europe, one just last week . . . one maybe could have been done as a private company but the others surely couldn’t have been.”

Said Rabois, “All the most innovative companies on the planet are public. Apple – nobody is more innovative than Apple — Amazon, Google. If you have the right founder, you can innovate. Every other answer is an excuse.”

SEE ALSO: The $350,000 raised for Detroit's Walking Man has turned his life upside-down

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NOW WATCH: 14 things you didn't know your iPhone headphones could do

Sam Altman, the president of seed accelerator Y Combinator, has a warning for startups.

In a tweetstorm on Wednesday, Altman, whose organization has funded startups including Airbnb and Dropbox, warns that startups need to keep their burn rates low.

Altman said that startups that burn through cash too quickly — even when things are going well for the company — can face problems.

"Founders would do well to remember that having an almost comically low burn in the early days work more often than the opposite," he said.

Altman says some young companies have burn rates as high as $150,000 per month. These startups seem to think their next round of financing will be easy to come by, but that may not be the case —especially if they don't have much traction.

Altman's warning to startups echoes that of another Silicon Valley investor. In an interview with the Wall Street Journal last fall, Benchmark partner Bill Gurley said that burn rates are the highest he's seen since 1999, and that startups are taking on an "unprecedented" level of risk because it's easy for startups to raise money.

Warning of a tech bubble mirroring that of the late 90s, he also says people are happily working at startups that may be losing millions of dollars a year because the industry is very optimistic.

Here's Altman's tweetstorm:

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NOW WATCH: 14 things you didn't know your iPhone headphones could do

I go to Starbucks on the way to work every day. I know it's not the best coffee available, but for all its detractors, it's an efficient caffeine-delivery mechanism.

Today, I took the long way to work to try Philz Coffee, a San Francisco coffee-shop chain that just finished a $15 million Series B round. It's using the money to expand nationwide.

It's not every day you hear about a coffee chain getting venture capital money from firms that usually invest in tech companies. Summit Partners, which led the round, has invested in Uber, Belkin, and Arista.

Philz started up in 2003, so it grew up during the latest tech boom. But it doesn't deliver coffee by drone, accept Snapcash, or put Soylent in its drinks (as far as we know — although it does advertise a secret ingredient).

So why all the fuss? I decided to find out, and visited Philz' original shop in San Francisco's Mission district.

The first thing I noticed after walking is in was the shop's walls. They're painted with clouds and covered with colorful paintings:

The couches, sofas, and tables opposite the coffee bar itself give Philz a calm, social vibe. There wasn't much of a line when I visited.

People were on laptops, but it didn't seem like a place to do business. Everyone was relaxed and happy, not staring at their phones waiting for someone to call out their name.

Philz is a place for people who enjoy drinking coffee.

The blackboard menu was filled with an overwhelming number of blends, each with odd names like "Silken Splendor,""It's the Best," and "Ambrosia Coffee of God." It wasn't clear what each one would taste like. My barista told me each blend was made from two to seven coffee beans blended together and mixed with a mysterious blend of cream and sweetener.

I say "mysterious" because the sign out front touts a "secret ingredient," and they didn't tell me exactly how they do it.

There's plenty of food, too. Philz offers fresh-looking bagels, muffins, and pastries for about $2 to $5, which is reasonable. You could eat breakfast there, if you wanted, but I got the impression that people come here for the coffee, and the food is just a bonus. 

I finally chose a blend called Tesora — a medium roast, and Philz' first blend ever. I saw Splenda behind the counter, but I got my coffee "Philz way," with medium cream and sweetener.

Philz Coffee's slogan — and possibly the secret to its success — is "one cup at a time." I soon discovered that Philz isn't for the commuting worker. It's a slow process. I watched my coffee drip from its bag in one of the four brewing machines my barista was in charge of.

But once it was done, it was unlike any coffee I'd ever had. The coffee I'm used to tastes like coffee. But this genuinely tasted like butter, nuts, and caramel. It was the smoothest coffee I've ever had.

You definitely pay for the quality, though. My large was $4, about a buck more than I pay for something similar at Starbucks.

So while there's no obvious tech angle, Philz investors probably see an opportunity in the premium-coffee market. It's possible that slower-moving sit-down coffee shops like this one will steal some customers from Starbucks, just like "fast-casual" food chains like Chipotle and Panera Bread have taken business away from McDonald's.

It all depends on why you're drinking coffee. If you're in a hurry, just trying to wake up before a busy day, Starbucks has your back. But if you've got a little extra time and money to burn, I'd go to Philz almost every time.

SEE ALSO: Meet the engineer who sold his company for almost $200 million and used the money to open a chocolate factory in San Francisco

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NOW WATCH: We got inside Shake Shack and found out what the hype is all about

Shunwei Capital, co-founded by Chinese smartphone maker Xiaomi’s chief executive Jun Lei, has raised 1 billion yuan ($160 million) in its first local currency round, China Money Network reported, citing a post on Jun's account on Chinese social networking site Weibo.

Shunwei, a China-focused venture capital fund, already has $750 million under management, with investments in both early and growth-stage startups, according to its website.

The fund was founded in 2011, a year after China’s top smartphone maker Xiaomi was established. The latest round, which was reportedly completed before the start of the Chinese New Year, takes the total up to $910 million.

Shunwei serves as another vehicle through which Jun is attempting to expand the ecosystem needed to sustain Xiaomi’s long-term success -- investing in everything, from startups working on wearables to online video content.

In November, Xiaomi had invested $300 million for an undisclosed stake in Baidu Inc.’s online video content subsidiary iQiyi, in which Shunwei is also an investor. Xiaomi is also spending a billion dollars to grow its Internet television and content business.

More than 420 million smartphones were sold in China in 2014, International Data Corp. said on Tuesday. The last few months have witnessed many new records in smartphone use in China -- from the proportion of purchases made through cellphones during Alibaba Group Holding Ltd.’s Singles Day mega sale, to the 1.01 billion virtual red envelopes exchanged via Tencent Holdings Ltd.'s Weixin messaging app on the eve of the Chinese New Year.

SEE ALSO: Cable networks are speeding up your favorite TV shows to squeeze in more ads

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NOW WATCH: 14 things you didn't know your iPhone headphones could do

Technically, Jet.com doesn't exist yet. Visit the homepage and you'll see some vague information about what Jet is going to do, as well as when it's going to launch ("Very soon.")

But what's surprising about Jet.com is that it has already raised a huge amount of money. Investors have put in $220 million (£142 million) before it has even launched.

That might seem insane — how do they know it's going to work? A lot of people call out monster deals — such as $220 million in funding for a shopping site that's not launched yet — as evidence of a tech bubble.

Jet.com investor Scott Friend is well aware of just how crazy the amount of money invested in the company is. "When you describe the amount of capital and the context of it being pre-launch, it sounds absurd,"he told Re/code.

He stressed that you need to look at the context of the deal to understand why Jet.com is so valuable.

Jet.com CEO Marc Lore has a track record of building internet shopping companies that become very, very successful. He started Diapers.com, as well as Soap.com, and sold the sites to Amazon for $545 million (£352 million) in 2011. Those sites were all about selling a wide range of products cheaply, with Amazon drawn into a price war with Diapers.com. So when Lore says to investors that he's going to build another e-commerce site that's going to use a subscription model to make products cheaper, he has some credibility.

What Lore wants to build is a version of Amazon that uses dynamic pricing. If you live closer to a warehouse, then the items you order will be cheaper. And Jet.com also aims to offer lower prices than Amazon, using its $50 yearly subscription to offset prices.

It's not just Jet.com that has raised money before it properly existed, either. You could say the same about Uber too.

Right now, Uber is known for being an app that connects drivers with passengers who want to go somewhere. It looks at that demand, and matches people up. If lots of passengers want rides then it puts the price up. But that's not all that Uber wants to be. It has launched experimental delivery services, and is testing out a food delivery service in Los Angeles and Barcelona.

Don't think these kind of valuations just apply to giant companies like Jet.com and Uber — tiny startups receive big money because they look to the future.

When tech investors plough money into a company, they're looking at what comes next, where the business is going.

Take Yo, for example. It's an app that lets you send the word "Yo" to your friends. Yo received funding at a $5-10 million valuation. That seems insane, but spend an hour with Yo CEO Or Arbel and he'll explain his upcoming deals with content providers, the idea that Yo can be used by brands to advertise content, and you might come away convinced (although perhaps not willing to invest millions).

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NOW WATCH: Mark Cuban: This Is My Most Successful Investment Ever

If you're tired of your day job, fear not. We've compiled a list of 11 startups that will make you want to quit your job and bet your career on an exciting new venture.

These companies could make (or break) your whole career.

If you're looking to make a switch, and if you're willing to gamble on some startups disrupting their traditional industry equivalents, look no further than the companies on this list.

FanDuel

Headquarters: New York
Investment raised to date: $86.2 million

FanDuel is a fantasy sports website for busy or casual fans. It lets users participate in one-day leagues, as opposed to having to commit to season-long leagues. The company says it pays out over $10 million in cash payouts weekly, and has paid out $600 million to date.

Founded in 2009, FanDuel is "seriously considering" another round of funding that would give the startup a $1 billion valuation. FanDuel offers leagues for MLB, NFL, NHL, and the NBA.

Magic Leap

Headquarters: Dania, Florida
Investment raised to date: $592 million

Magic Leap is an intentionally vague virtual reality startup that describes itself as a "developer of novel human computing interfaces and software." Rony Abovitz’s stealthy startup could provide a more-realistic kind of proprietary augmented reality than what's currently available on the market, like Oculus VR. He's said Magic Leap is "a new way for humans to interact with computers." 

In October, Magic Leap raised $542 million in a Series B round from Legendary Entertainment, Qualcomm Ventures, Andreessen Horowitz, KPCB Holdings, and Google. Sundar Pichai, the man who runs Android, joined the board of Magic Leap after its most recent round of fundraising news.

Shyp

Headquarters: San Francisco
Investment raised to date: $12.1 million

Shyp takes the hassle out of shipping packages. Instead of schlepping your goods to UPS or the post office, all you have to do with Shyp is simply take a picture of whatever it is you want to send. A driver will then pick up the package in minutes, and you're done.

You can track your package's progress and see when it arrives at its destination. Shyp comparison-shops across carriers and charges you the lowest price for shipping, tacking on $5 per package plus the cost of shipping. Unlike Postmates, which delivers packages locally, Shyp delivers your packages anywhere in the world.

The London-based money-transfer startup WorldRemit on Wednesday announced a new $100 million funding round, with a reported valuation of more than half a billion dollars. The round is led by the Silicon Valley venture capital firm TCV, whose previous investments include Facebook, Spotify, and Netflix.

The news comes just weeks after another London money-transfer startup, TransferWise, raised $58 million, with a rumoured valuation of $1 billion. TransferWise's investment involved Andreessen Horowitz, one of the largest and most respected venture capital firms in the world. Andreessen Horowitz partner Ben Horowitz also personally joined TransferWise's board.

And last year, the peer-to-peer loan service Funding Circle, also London-based, raised $65 million, bringing its total raised to $123 million. The round was led by Index Ventures, along with participation from Accel Partners and Union Square Ventures.

We're beginning to see a trend: Investors are finally waking up to the weakness of traditional banks and the possibilities of FinTech. And the UK's FinTech startups are their main weapons.

Compared with other sectors, the financial industry has remained relatively untouched by technology. Media has been turned on its head; the transportation industry is being racked by Uber; the mobile-app economy didn't exist just a few short years ago but is now bigger than the film industry. In contrast, the major players in finance — with the exception of PayPal and Square — are largely the same as they were 20 years ago.

This is beginning to change. TransferWise is a perfect example of how the tech sector can move onto the banks' turf — and with great success. Launched in 2011, the company aims to eliminate the high transfer fees associated with sending money overseas. It's working — the company is growing 15% to 20% month-on-month, and it has transferred more than $3 billion using the platform, saving its customers money in the process. And while it is one of the most prominent FinTech startups, it is far from the only one.

Tech is tackling finance's problems, and now tech's biggest investors are taking notice.

Index Ventures cofounder Neil Rimer said Funding Circle exemplified "the new class of fintech entrepreneurs who are combining technology and novel business models to offer much better value than banks and other customers have been offering their customers."

Earlier this year, Andreessen Horowitz's Ben Horowitz said TransferWise "could not have come at a better time ... we see little to no innovation from the traditional banking sector, which creates a massive opportunity for new financial institutions."

Bank regulators are alive to the threat, too. Bank of England Governor Mark Carney worried aloud on stage at Davos that the sector was vulnerable to an "Uber-type situation" that was "imminent."

Bitcoin is another example. Even amid hacks and declining prices, unprecedented funding is flowing into the digital currency ecosystem. The bitcoin exchange Coinbase recently raised $75 million in venture-capital funding, with investors including Andreessen Horowitz and the New York Stock Exchange. In the long term, it's an open question as to whether bitcoin complements or competes with conventional FinTech. But for now, unprecedented access to the sector is yet more proof of investor interest in new tech-driven financial products.

Silicon Valley investors are betting on FinTech startups over the established banks. And that funding will in turn accelerate the growth of new and innovative financial services — at the established financial industry's expense.

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Earlier this month, Vista Equity Partners acquired Automated Insights (Ai), a startup that uses technology to turn data into news articles, for an undisclosed sum.

"We aren’t disclosing the amount, but I will say two things about the financials,” founder and CEO Robbie Allen told TechCrunch. "Our shareholders are very happy with their return, and we were already in a strong financial position."

Sorry Robbie! But we know the price.

Ai was acquired for $80 million in an all-cash deal, a source with knowledge of the deal tells Business Insider.

Ai, which is headquartered in Durham, North Carolina, was founded in 2007. It raised $10.8 million from investors such as former AOL executive Steve Case and Samsung Ventures. Vista also acquired a competitor of Ai, STATS, last June. Both STATS and Ai use technology to turn data into articles that read like they were written by humans. STATS specializes in sports content; Ai produces real-estate, marketing, finance and sports content.

What does a $14 billion PE firm want with robo-news companies?

Allen explained some of the logic behind the acquisition in a blog post. Vista owns 26 companies, and Allen thinks he can help those companies better leverage their data. "Vista’s resources and STATS’ distribution will allow us to fast-track our Wordsmith natural language generation (NLG) platform across multiple industries," Allen writes.

The Associated Press works with Ai and increased the number of articles it produces ten-fold, Ai says. Here's an example of an Ai-written AP article:

Allen did not return multiple requests for comment. 

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Here's an incomplete list of hypotheses and business ideas that we're especially curious about for potential funding by Homebrew.

Our investments interests, within the context of the Bottom Up Economy, are much broader than just what we detail here. We just wanted to collect and update areas where we're being particularly proactive (seeking out experts, startups, opinions).

When we update this, we'll tweet or blog or send smoke signals to let you know. As always, if you're working in one of these areas, you can reach us at hunter@homebrew.co and satya@homebrew.co. Hat tip to YC's Request for Startups for inspiration. 

Platforms and tools for businesses of one

Vertical software & services

Consumer software & services

Enterprise and small business software & services

Other stuff

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Creating your own startup can be overwhelming at times, but luckily there's a new directory called Startup Stash that contains everything you need to know, all in one place.

The first thing you'll notice about Startup Stash is the simple grid layout that makes finding resources and tools exceedingly easy and manageable. The grid contains 40 categories that cover everything from early-stage idea generation, market research, and domain names all the way to later-stage resources such as raising capital, investor relations, and customer support.

Clicking on a category will bring up a curated list of the top 10 resources or tools for that particular area, all of which have been researched and compiled by Startup Stash founder Bram Kanstein.

Say you're looking to find a good design layout for your app. After clicking Design, you'll see a list of the best web resources for design (in no particular order).

The Design category includes inspiration-oriented websites like Little Big Details, which highlights small yet impressive design details such as the inclusion of a color-blind option in "TwoDots." Then there's also research-oriented websites like UX Archive, which compares the user interfaces and layouts of popular apps like Snapchat and Instagram. Finally, there's creation-oriented websites like Sketch, the Apple Design Award-winning professional vector graphics Mac app for actually bringing your app's design to life.

Clicking on any of the websites on the list expands to handy about page that further explains what the website, resource, or tool does.

Here's what the about page for Sketch looks like.

If you find a resource or tool that fits the stage your startup is currently in, Startup Stash also includes a direct link so you can check out the resource for yourself.

With 40 sections, each section with its own top 10 list, Startup Stash offers a whopping 400 resources and tools —  and that's only the beginning. Kanstein says he wants to add new categories including revenue models, pitch and deck, product and task management, and funding docs in the future.

And that's the real potential of Startup Stash: Creating a one-stop shop for startups that can be expanded as needed. Know of an amazing resource that's not on the list? Not to worry, Startup Stash lets you submit it for consideration.

"I thought it would be fun to build a simple and useful site that can help you find resources and tools while building your startup," founder Bram Kanstein wrote over at Product Hunt. "Hopefully Startup Stash will become the first thing you look at when you need a certain tool, just like an oldskool [sic] startpage!"

You can explore Startup Stash for yourself by clicking here.

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Last week, 25-year-old Atlanta resident Tess Johnson received an unwelcome surprise when her Jeep Cherokee was stolen from the parking lot of her apartment complex. 

Later that day, she stopped by a Warby Parker store in Atlanta's Buckhead neighborhood to pick up a pair of glasses she had ordered the week before.

A sales representative there asked how her day was going.

"The group of employees circled around me as I told the story and each of them was so empathetic and awesome," Johnson told Business Insider. "They offered to take me out to dinner that night, and I said they were too kind to offer. They joked that I could use a beer — I'm a huge beer person so I said that a beer sounded amazing. Offhand I mentioned maybe I'll head to the Porter later (it's a serious craft beer bar in Atlanta), and they all said that was one of their favorite restaurants too."

Johnson works at an ad firm called Blue Sky Agency, and she has a passion for craft beer marketing. 

As she was leaving, the store manager asked Johnson her address.

"I felt like she might have had something up her sleeve," Johnson said. "She told me to please take care, and to come back soon and let them know how things were going."

A week later, a card with a $20 gift card to the Porter Beer Bar arrived at her apartment. 

"Everyone [at the store] is so kind and the manager is amazing," Johnson said.

We first spotted Johnson's story on Reddit.

SEE ALSO: See why more startups than ever are setting up shop on the beach in Los Angeles

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