INSUBCONTINENT EXCLUSIVE:
exit, and unicorn creation data
Surely the path to billion-plus valuations would be equally varied.But surprisingly, many of their secrets to success seem formulaic
The most valuable San Francisco companies to arise in the era of the smartphone have a number of shared traits, including a willingness and
earnLosing money is not a bug
This is the most important rule
It is the collective glue that holds the narratives of San Francisco startup success stories together
of the most valuable internet and technology companies citywide lose gobs of money or post tiny profits relative to valuations
Dropbox lost more than $100 million after losing more than $200 million the year before and more than $300 million the year before that
annual profit.
Not making money can be the ultimate competitive advantage, if you can afford it. Industry stalwarts lose money, too
Salesforce, with a market cap of $88 billion, has posted losses for the vast majority of its operating history
Square, valued at nearly $20 billion, has never been profitable on a GAAP basis
DocuSign, the 15-year-old newly public company that dominates the e-signature space, lost more than $50 million in its last fiscal year
(and more than $100 million in each of the two preceding years)
Of course, these companies, like their unicorn brethren, invest heavily in growing revenues, attracting investors who value this approach.We
But the basic takeaway is this: Losing money is not a bug
noteworthy is the propensity of so many city startups to wreak havoc on existing, profitable industries without generating big profits
Craigslist, a San Francisco nonprofit, may have started the trend in the 1990s by blowing up the newspaper classified business
Today, Uber and Lyft have decimated the value of taxi medallions.Not making money can be the ultimate competitive advantage, if you can
afford it, as it prevents others from entering the space or catching up as your startup gobbles up greater and greater market share
To succeed as a San Francisco unicorn, it helps to lose money provided by one of a short list of prestigious investors who have previously
lower-profile but still wealthy investor
an eventual exit.Whatever the exact connection, the data speaks for itself
need to know a lot about semiconductor technology or networking infrastructure to explain what a high-valuation San Francisco company does
populated mostly with companies that have widely understood brands, including Pinterest, Instacart and Slack, along with Uber, Lyft and
consumer-facing, high brand recognition qualities of San Francisco startups may be tied to the decision to locate in an urban center
If you were planning to manufacture semiconductor components, for instance, you would probably set up headquarters in a less
space-constrained suburban setting.Reading between the lines of red inkWhile it can be frustrating to watch a company lurch from quarter to
poster child for this strategy
profit.These days, San Francisco seems to be ground central for this company-building technique
If you want to be a movie star, you go to Hollywood
And if you want to make it on Wall Street, you go to Wall Street
Likewise, if you want to make it by launching an industry-altering business with a good shot at a multi-billion-dollar valuation, all while
losing eye-popping sums of money, then you go to San Francisco.
