When you are not in Silicon Valley

Situational awareness is a concept I learned from the aviation industry that pretty much describes everything I want to say here.

I’m a tech-startup founder, an admirer of what Silicon Valley (SV) embodies, and a long time follower of the personalities that came out of that place. I don’t live there, I don’t have any contacts there, I’ve been there only two times before (both paid by YCombinator) and I don’t have any way of moving there even if I wanted to.

For the few months leading to the founding of Toky, and until late 2016 more or less, I was obsessed with the SV way of doing things. I was consuming startup advice originating there, reading VC Twitter like crazy, checking TechCrunch daily, and following founders with huge investment rounds running their companies from San Francisco.

All of that knowledge shared for free is fantastic but if you don’t realize you have to adjust it to your reality it will end up killing your startup sooner rather than later.

For example, access to funding in Latin America—where Toky was born—is significantly harder than it is in SV or in some countries in Europe. I remember that getting funding for our seed stage in Mexico was so hard because we are a SaaS company and most of the investors back then didn’t have experience with it or with our industry in general. They were funding B2C or marketplace deals only.

Things that people take for granted in SV were an ordeal for us. Basic things like getting a credit-card processor to work took weeks, Stripe didn’t even exist here when we started in 2014, and the one we used instead ended up not working reliably for payments outside of Mexico so we had to take care of that too.

Purchasing a bunch of subscription software to “streamline processes”, like project management tools, monitoring tools, hosted services for open-source free software, all come from the idea that you should optimize your time for running your business in the most efficient way but what you need to account for is that paying $100/month for a project management tool that could have been just a Google Sheet, or paying $50/month for a hosted WordPress blog when you can do it for $5/month installing it yourself, quickly add up to what is lunch money in SV but could be a weekly salary for people in Mexico or other countries.

When you have millions of dollars in funding you are expected to optimize for maximum growth at the expense of profitability, but when your funding is slim, you have to focus on what is most important for keeping your startup alive, maybe profitability or maybe something else. As Paul Graham puts it, you need to be default-alive [1].

Once you have reached a state where you no longer worry—too much—about running out of money, then making optimizations make more sense. At this stage, paying for project management tools becomes an investment and not an expense, and having to worry about updating your WordPress site can be delegated to a hosted service provider.

Read everything you can about how to do what you want to do but have your own playbook that is in accordance with your reality, otherwise, you will just end up frustrated and most likely, with a dying business.

[1] If you want to start with general knowledge about how to create a tech-startup, check out Startup School by YCombinator. It’s offered free of charge and with the best intentions.