WebMission: Getting under the skin of The Valley

So I am on this trip with 20 or so UK and Irish tech companies in Silicon Valley, otherwise known as WebMission. I did this last year and blogged a lot of it. Everything I said then still stands. This place is amazing in terms of the sheer scale of ambition of companies and people here. We have exactly the same passion about tech and startups back in Europe of course. But we are highly distributed and fragmented between different cities and markets. Here it is all in the one place. That makes The Valley a powerful experience.

Having said that, the character of the Valley is changing. On the one hand many companies are having huge problems and laying-off staff at a rate of knots. On the other, this produces another recycling of people into new startups – because the opportunity cost of creating a new company when you don’t have a job is effectively zero.

As for WebMission itself, I’m sure I’ve said this before but I’ll say it again. It’s probably the best tour for startups I’ve been on and always gets a great bunch of companies and people together. It’s like a Travelling Silicon Valley in it’s own right. And it reminds you how cool and crazy entrepreneurs can be. Hang around 20 or so of them – at one point, all haggling with a bike hire shop attendant to get some extras thrown in – and you’ll know what I mean.

But back to the travelog.

If you want to know what’s been happening here this week here’s the short version: Most of the group arrived last Saturday and met up for a reception in the evening. On Sunday the companies hung out together in SF. The morning was taken up by a brunch hosted in the beautiful loft apartment of PR guru Susan MacTavish Best. Frankly, it is so much more fun going to a networking event in someone’s home than in some anonymous office. It feels more intimate and welcoming. In the afternoon a few of us went for a bike ride over The Golden Gate Bridge.

In the evening we did something deeply in character – had a Chinese and then a pint in an Irish pub.

(In fact, I had planned to write blog post titled something cheesy like “In praise of bonding”… but I think I’ll just say it here. When entrepreneurs get to hang out with each other and not just talk business, but also have fun together too, this create the kind of trust you can’t just engineer. These relationships create amazing building blocks for the future which will turn into partnerships, mentoring, even new companies. You just can’t beat it).

On Monday the work began. We had an excellent “meet the experts panel” which involved representatives from PR and lawyers, VCs etc. There is nothing like just sitting down with the key players in any market and hearing it straight from ‘the horses mouth’ (see below for some observations from that). We then all bussed down to Google and Microsoft where, although they gave us some – to be brutally frank – fairly standard corporate presentations, a few of the WebMission companies also had some private meetings as well. Tediously, Google announced a venture fund at 5pm as we were walking out the door, which seemed like a missed opportunity, given they had 20 great web companies on their campus.

The Microsoft presentation was about Microsoft. The Google presentation was much more about the future of the web, and as a result was a tad more inspiring – even though there was not much in it that one hadn’t heard before. At Google, the WiFi was open. At Microsoft you had to get an individually generated username and password. That says something to me at least.

Interestingly, Microsoft pushed its BizSpark contacts in the UK rather than consider direct approaches here. Google has no equivalent programme but did send their M&A guy to say hello and give a talk.

It’s always good to see how these guys roll on their campuses. Certainly, it would appear that Google is poised to go out of business. I didn’t see anyone on a computer there. Just people sitting in the sun having lunch.

Monday night I decided to run a TechCrunch Europe meetup in a bar and it became suddenly apparent that this was a great idea. Why? Rather than there be some kind of formal “invite”, it meant that the mission startups looked like they were hosting something other startups could come to. (BookingBug and ProofHQ kindly sponsored the beer). This is no criticism of the WebMission organisers. Merely that having some space where the mission companies themselves can organise something works quite well.

But I digress.

In terms of what the companies on this mission can draw from this exercise, I’m sure many of the companies here are having some very interesting conversations both with companies out here and VCs. And their research about doing the business in the Valley will stand them in good stead. Not many companies on the mission are actively looking to raise money – the Enterprise 2.0 focus of this year’s event means many are already booking revenues and in some cases profits – but all of them are doing research into expanding into the US and the Valley is a great place to start.

Funnily enough the simple answer for “getting into” Silicon Valley is the same as it would be for getting into any tech scene in London or Berlin or Paris. But because it’s “The Valley” people forget this. The answer is this: start looking like you are part of the scene as early as possible.

If you turn up trying to make a virtue of the fact that you are different – say, a Brit, or a Frenchman or any other European person – then you have definitely got the wrong end of the stick. Two things will happen – people will think you are not quite serious and over-playing your “I’m different” hand. But you’ll also fail to get the message about your startup across in language people here understand.

Here are some other thoughts gleaned so far from meetings and discussions I’ve had:

• It’s a very competitive market. If you don’t have a presence here and your competitors do, they will use that against you in the US market.

• Networking with other startups and people is key.

• Speed is key – long introductions on email don’t wash so keep email niceties to a minimum.

• You’re allowed to ask for help from someone you’ve met, it’s not considered rude. An email three hours after meeting someone for 5 mins asking them for help with something is considered fine and normal.

• Hiring local people to “talk the same language” as other business people here is a wise move. You will get your ideas across a lot faster.

• It’s more crucial for Enterprise tech startups to be in the US than Web 2.0 ones which can almost be anywhere because the enterprise sales process is longer and more face to face.

• Part of getting assimilated quickly into the scene is helped by making your corporate web site literally look like American one – as in interface. No, seriously, this is not a joke, it really helps.

• If you can’t answer the phone at midday Californian time then just renting a desk here that you’re never at (because you’re actually back in Europe) is pointless.

• Some states offer incentives to go there. Like Alabama. But It’s “cart before the horse” to set up an office or a call centre in Alabama because you’ll get a financial incentive to set up there. It’s not where tech companies want to be – unless they want a call centre in Alabama.

• The VCs talk to eachother about the companies all the time and if your name gets a bad rep for whatever reason then this is going to make things very difficult. Gossip is rife.

• One of the best ways to impress VCs is to tell them you don’t need money, you have revenues.

• Conversely, Valley startups are is still obsessed with scaling big before generating revenues. The fact that you might have revenues is often of no interest to them, even if you are offering them a partnership deal which might bring them revenue. They often consider monetization a barrier to growth.

• VCs here are not doing Series A or B rounds right now. They are either doing very early stage or late stage deals. The early stage deals are centred around giving a small startup team enough money to burn for three years to get a product to perfection – but without a revenue model, just a really great service – then sell it.

• When pitching, emphasise your proposition to the customer – the ACTUAL business. Don’t bother pointlessly emphasising that you are setting up an office here. No one cares you are setting up here – they care if this is a business or not.

• Don’t pitch as if you are trying to raise money if you are not.

• When pitching use no more than 5 slides

•  Hardly any (almost none) US VCs invest in startups that are NOT incorporated in the US as a company – so you basically have to incorporate here if you are planning on playing at all. The preference is to register the company in Delaware as they have the most corporate friendly state. In fact some VC’s won’t look at a startup unless yit is a Delaware company. Y-Combinator sets up all of their companies as Delaware LLC’s for instance. ‘C-Class companies’ only cost about $500, you don’t need to be a resident, and one person can hold all positions in the company – making it really easy to do. If you’re not generating sales in the US it would only cost around $800 a year or so run. You do also have to register in the state you’re going to do business in, so you will have to also register in California, which sadly will cost you more money and has a more convoluted admin process. [Thanks to Glenn form Booking Bug for those notes].

• Getting office space in a cool place, among other startups – somewhere like Pier 38 – is much better than getting a bog-standard rented office space. It will get you into the eco-system of other tech companies much faster.

• The PlugaAndPlayTechCenter was very impressive and something Europe badly needs. I will post on this later.

Lastly it is worth mentioning that the feedback I’ve had from VCs and others so far is that this clutch of WebMission companies are seriously impressive. That has been both the on and off the record feedback.