Turning of the Corkscrew: from Burn to Bust

From “Startups” to “End Ups”. I recently heard a talk about the cycle of life of companies here in Silicon Valley. It’s a good perspective of the different stages and evolution of a company.

In the beginning, you go from the stage of trying to reduce “Burn” rate. So everyone you hire is irreplaceable. In this stage you need people who are iconic, unique and who take the initiative and just get S--t done whatever it takes. Sometimes it is ugly but they get the job done. 

But as you become more successful and scale, the goal of the company shifts to trying to reduce the odds of going bust. Hence the “Bust” stage. You need to make sure you have processes, add in code ie. automation, make sure everyone on your team is replaceable. Basically standardization (or some people prefer to call it bureaucratization) by making sure people fit in their box and do not deviate from the processes that make the business work. 

That is why you see so much churn of staff as companies grow. And this churn and continual move to critical mass in new companies and industries is what keeps Silicon Valley so competitive & interesting. Knowledge and best practices spread all over. Almost like bees flying around and pollinating their spores around. 

So an older example, would be the folks who left Fairchild Semiconductor and started Intel. Or how refugees from Ebay seeded many of the future massive marketplaces and ecommerce businesses. Or how many ex-Yahoo! People seeded Google, Facebook and many present digital media and adtech giants. More recently you see how many ex-Facebook employees have ended up in the world of Crypto. 

At present times, I’m super excited to see where top people from Airbnb, Square or Coinbase end up.And the new awesome startups and ideas they kick off or join. It’s the wonderful virtuous cycle that drives innovation in Silicon Valley.