Which is why my recent trip to Silicon Valley was such a pleasant reprieve. Having heard that the State of California is on the brink of bankruptcy, I expected to find a scene from the movie Escape from New York, with burned-out cars littering the streets and groups of young men loitering around burning garbage cans. But what I found was an armada of sparkling silver 911s and glossy white FX45s pulling in and out of the parking spaces in front of Starbucks on University Avenue. I decided to investigate.
The Starbucks on University is ground zero for the Silicon Valley scene. The kids from Facebook HQ thumb their iPhones as they wait for their chai. The venture capitalists drive down University from Sand Hill Road, ducking into Starbucks to refuel for their next meeting with what they hope will be the next Twitter.
I pulled up a chair, ordered an Americano and spent the afternoon eavesdropping. Here’s my list of the top six ways businesspeople in the Valley are different from the rest of us. Silicon Valley types:
- Consider their most important asset to be their technology. Customer relationships are somewhat secondary. Their position seems to be if the product is good enough, the customers will come. No sense worrying about all of that touchy-feely service stuff.
- Use their cash flow statement as their most important operating statement. Everyone does an A, B and C round of financing, and the cash flow statement is simply a gauge used to know when to go for the next round. Whoever buys their company will need to worry about making a profit.
- Treat revenue as the Holy Grail. Declaring a profit means you’re not being aggressive enough.
- Consider business failure to be inevitable. Kind of like a baseball player who knows he’s going to get on base only three out of every 10 times he tries, they wear their failures on their sleeves like a badge of honor.
- Think selling a business is the natural cycle of any company. There’s nothing secret about exit strategies. Everyone is planning for their exit—and their next start-up.
- Value their companies based on a multiple of revenue. One entrepreneur I overheard was bragging that he had just received an offer for “six times.” He was talking revenue, not EBITDA.
As I gulped my last sip of coffee and prepared to leave, I cracked a smile—there is something contagious about all of that optimism being in one place.
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John Warrillow is the author of Built To Sell: Turn Your Business Into One You Can Sell. If you’re curious to see if you have a sellable business and want to know how much you can get for it, take the 4 minute sellability index quiz at Built To Sell.
