The godfather of Silicon Valley Entrepreneurship how startups cope with the fatal squeezeSophia Amor

many start-ups experience a special phase in the first few months of their failure:

2006, dropped out of school after the art of photography, 22 year old Sophia · Amoruso Sophia Amoruso in the shopping site eBay founded a women’s clothing store, Nasty Gal, specializes in selling Vintage clothing. Just like every shop owner, operating independently of the shop Sophia, often spend hours looking for a perfect clothing in the vicinity of the discount store, and then put them into a better design style, in the online sale. She spent $8 on a used leather jacket and sold it for $1000 on an online shop.


third, the company is now heading for failure.

first, the company is spending more than its first financing;

"I made a profitable company, but I didn’t want to be in debt.". I’ll return every profit I get back into business, which is why Nasty Gal has been successful."

technology news December 9th, Tencent, founder of Silicon Valley incubator YCombinator is known as the "godfather of Silicon Valley entrepreneurs" said Paul · Graham Paul Graham recently published Bowen, for start-up companies how to deal with the matter of vital importance "fatal extrusion suggestions. The article reads as follows:

second, investors have higher standards of requirements for companies they have invested in;

Abstract: from $220 thousand in 2008 to $23 million in 2011. Last December, Nasty Gal opened its first physical flagship store in Losangeles, which was close to $130 million a year.

, if you’ve fallen into

this last sentence is very critical. Founders of start-ups tend to be self deceiving, often assuming that investors are interested in their business and are willing to provide more money. But in fact, it’s hard to convince investors for the first time, and it’s harder to get second more funds from investors. Prompting founders to seek financing for the second time is often based on three factors:

this sort of second-hand clothing store overnight, only one week brought her a $2500, even more than it has done before working hours a month to earn money. A year later, Sophia closed the online store on eBay and officially created Nasty Gal. Since then, her income has gone up again, from $220 thousand in 2008 to $23 million in 2011. Last December, Nasty Gal opened its first physical flagship store in Losangeles, which was close to $130 million a year. Nasty Gal, a tribute song named Pinker Private Companies has become Inc. Magazine "the year’s" "most aggressive" retailer".

Sophia speaks of the ups and downs of life in a sincere manner. Because they can not concentrate on school, she finally decided to leave home, ride on the west coast tour.

last May, the 30 year old Sophia’s autobiography, "the girl boss," also topped the American bestseller list, so there was one more title in her title – best seller writer. In the book, she tells of her early life and the experience of starting an online shop.

early Sophia was very resistant to capitalism, in her autobiography is described in detail in those days — have been around picking up trash in the life, resist the capitalism has become her shoplifting habit excuse. From the start, Sophia showed a very smart side, even when she was at the lowest point. Whether it is on Amazon for $200 to sell a bunch of stolen books, or refuse to shopping in the mainstream stores, Sophia’s youthful rebellion has become a solid foundation of her days after the start.

Abstract a start-up will experience a special phase before it fails: a large amount of money, an increase in monthly losses, and a stagnant income.

was unable to judge whether the company would succeed at the first venture because the forecast was premature. But now to ask whether the business is successful, the default answer is failure, because this is already the default result of such a situation.

even though they still have a lot of money in the bank, the losses are increasing every month, and the income is barely increasing. In general, startups have 6 months of development. The more brutal version is that they have 6 months to prepare before the final bankruptcy. Start-ups want to get more financing from investors in order to avoid this particular stage.

I call the beginning of the article "fatal squeeze."". I have tried to resist the creation of new phrases, but with the name given above, the founders were immediately aware of their situation when they were caught up in it. One reason why the deadly squeeze is so dangerous is that it will strengthen itself. Founders tend to overestimate their chances of financing and slack off their products’ profits, which further reduces their chances of financing.

, now that you know what the "fatal squeeze" will do, obviously, the best thing is to avoid it as much as possible. Y Combinator warns the founders of financing that they need to treat each financing as a last resort. Because the "fatal squeeze" self reinforcing feature also has a crack scheme, the less you need to invest further, the easier it is to raise money.

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