- The cover of a magazine doesn't always
show what's inside the magazine.
With Silicon Valley, it is a glossy cover.
The reality inside Silicon Valley can be a difficult one.
This is Raw Startup.
I've actually taken the journey to Silicon Valley.
We started Vivino in Copenhagen, Denmark.
When we wanted to win the US market,
I moved to Silicon Valley to make sure that happened.
Today we have over 35 million users,
20,000 people install Vivino every single day,
and we've raised more than 57 million dollars.
I will show you things that you didn't know
about Silicon Valley, things that will surprise you.
For every reason not to move, I will
give you tips on how to handle it.
I will show you exactly how we handled those challenges.
Sure, there are business reasons not to move,
on top of that are all the private reasons.
For me, it was hard to move the full family
from wonderful Copenhagen and everything they knew.
Nine hours time difference, and 11 hours
flight from everything the kids knew,
and far, far away from their friends.
The day of the move, a morning back
in August 2013, was especially difficult.
I still remember walking up the stairs at the airport
and well, it still gets me that it was a really, really
difficult thing to take the family away from
everything they knew and really a good life in Copenhagen.
So at one point at the airport I thought
to myself, what the heck are you doing?
Taking the family away from everything they love
is difficult, it was definitely a rough day.
Okay, moving on.
Throughout the video I'll give you some pro tips
for every single reason not to move,
on top of that I'll give you a full list
of bigger things and how to deal with Silicon Valley.
Okay good, let's start by defining
what Silicon Valley is in this video.
Silicon Valley is located in the west of the US,
about six hours drive north of Los Angeles.
The old Silicon Valley is located
in the south around the city of Palo Alto.
This is where it all started 50 years ago, and today
companies like Google, Facebook and Apple are based there.
Up north we have San Francisco.
In the past 10 years a lot of companies
have decided to be based in San Francisco
instead of the traditional Silicon Valley.
Today tech giants like Uber, Twitter and Salesforce
are head quartered in San Francisco.
Vivino is also based in downtown San Francisco.
If you look at the map, it shows
the full San Francisco bay area.
In this video, I'll use a broad definition
of Silicon Valley which includes the full San Francisco
bay area and the cities of Oakland and San Jose.
Population of this area is around eight million people.
Okay, good stuff, let's get started with the list.
Number one, recruiting is hard,
and keeping employees, even harder.
Sure, the best people are in Silicon Valley,
but what does that matter if you can't hire them?
The competition for the best people
in Silicon Valley is insane.
I've never seen or even heard about another place
where there's so much competition for talent.
When you move to Silicon Valley you realize that you're
not as attractive as you were wherever you moved from.
You're now playing in the big league,
competing with companies like Google, Facebook and Apple
and thousands of other start ups.
They all want a piece of the best talent.
In your home market, be that Buffalo, New York,
or Copenhagen, Denmark, you were a big fish
that could attract the best talent.
In Silicon Valley, you're a tiny, tiny fish amongst sharks.
The second thing is once you hire
somebody good, you also want to keep them.
With so much competition for talent, our employees
are contacted by head hunters every single day.
Their LinkedIn is being pounded by amazing offers.
So, the job market is rough.
Let's look at the pro tips and
see what we can do about that.
The first one, use your x-factor.
Use your x-factor if you have one.
We're in wine, and make it attractive
for everyone who's into wine.
Fortunately, a lot of people are into wine,
so try and attract people that are specifically
interested in whatever you're building.
Second one is don't hire engineers in Silicon Valley.
The competition is especially difficult
when it comes to engineers, so try and hire your engineers
elsewhere, elsewhere in the world or elsewhere in the US.
At Vivino we don't have any engineers
in Silicon Valley, they're all based elsewhere,
most of them in Copenhagen, Denmark,
that is an amazing pool of great engineers.
Finally, be the best place to work.
Build a culture where people really want to work.
Word spreads and people hear
that this is a good place to work.
Great, let's move on to number two.
Number two, everything is insanely expensive.
The cost is really a big problem,
especially if you're an early stage start up.
In the early stage, what you really need is time.
Time to get the product right.
You could easily have a situation
where a certain amount of money gets you one year
of runway in Silicon Valley, but somewhere else,
it'll give you two years of runway.
The cost of setting up a start up
in Silicon Valley are just crazy.
Salary amongst the highest in the world,
and the same goes for rent and most other expenses.
Now this is not because people live lavish lifestyles
in Silicon Valley with caviar every night.
The cost of living is so high that if you don't
have a good salary, you'll end up on the street.
Let me illustrate that with a few examples
for an article from SF Gate.
The median price for a new or existing condo
in San Francisco is 1.3 million dollars.
That means the income needed to buy a median home
is over 300,000 dollars per year.
Obviously even in Silicon Valley,
most people don't make 300,000 dollars a year
which means it'll take two high incomes
to actually be able to buy a house.
That takes us to the next one.
Let's say you have two people making money in the household.
Then there's a good chance you'll need some child care.
The average cost of child care
is around 2,000 dollars per month.
The same cost in Copenhagen would be around 500.
I've been blessed with three wonderful children, and
I'd say good luck affording three kids in Silicon Valley.
This means that to have a decent lifestyle in Silicon Valley
you have to make a lot of money.
That means high salaries, and that's not great
for a bootstrap start up with very little cash.
I have one pro tip on this one,
and it's a little bit of a strange one.
Don't try and save money.
This might be a little bit of a strange pro tip.
Sometimes you can find things that cost less,
but don't even go there, you want a great lawyer,
and you have to pay for it, there's no way around it.
You will get what you pay for.
You get a cheap rent, there will be a hole in the roof.
You find a cheap lawyer, and you'll end up
paying a high price in the end.
I'm afraid this is the price of doing business
in Silicon Valley, there are no short cuts.
Moving on.
Number three, time difference and
distance can be a major challenge.
In many cases, moving to Silicon Valley
means splitting up the team.
Any split up matters.
Of course nine hours is a big challenge,
but as soon as you split up, things change.
You're not in the same room anymore.
You'll need a lot more coordination and communication
to avoid misunderstanding and to make sure
that work progresses smoothly.
Even if you don't split up the team,
a move means you move away from whatever you're use to.
That could be business partners, family,
or whoever you usually rely on.
Silicon Valley is far from Europe,
and even pretty far from the east coast of the US.
The time difference can be as brutal as the flights.
Let's say you start work at 9am in Silicon Valley.
At that time, it's 6pm in Europe.
This means that during normal office hours,
you're never in the office at the same time.
On top of that you have the holidays.
In the US they're kind of surprised by having
a five day vacation for Easter, and somehow in Denmark
they're surprised by Thanksgiving every single year.
Good stuff, let's get to the pro tips
and there's quite a lot of them this time.
The first one, everyone should trave alone.
We humans are social beings and like to travel together.
This is not a good idea.
Whenever possible people should
travel alone for two reasons.
If you travel with a companion,
you will spend most of your time with that travel companion.
That's not the purpose of traveling.
You're from the same office, spend the time together there.
If you travel alone you'll spend more time
with the locals and that's exactly what you want to do.
Also, you don't want the offices to be siloed.
You want people from one office to be as much as possible
in the other office, so you want to maximize the time
that people from a different location are at your location.
It's pretty simple math.
If three people travel separately,
they'll be at the location three times longer
as if they were traveling together.
Number two, give long distance employees priority.
If you're in the US respond to all messages
from Europe first, if you're in Europe,
make sure you respond to US messages as soon as they arrive.
If you don't do that, everything's gonna take forever.
Everything's gonna move in 24 hour cycles
and it will slow down your organization considerably.
Communicate and over communicate.
Everything changes once you're not in the same room,
you have to communicate a lot and more than you think.
Make sure each location is as independent as possible.
When we moved, we decided that product
and engineering was gonna be in Copenhagen,
most other functions were gonna move to San Francisco.
That split has worked well.
What you really want to do is to have functions
that can work independently at each location.
We had severe problems with marketing here in Silicon Valley
because it relied too much on engineering in Copenhagen.
As soon as we made marketing independent
here in Silicon Valley things worked out just fine.
Now let's move on to number four.
Number four, traffic and transport is horrible.
No matter where you decide to live in Silicon Valley,
it's unlikely it will be right next to your office.
You'll have to do some kind of
commute, and that can be painful.
Public transport is not that great.
There is BART, Bay Area Rapid Transport,
most cases it's not that rapid,
it's pretty over crowded and very often breaks down.
It was built in the 90s for the population
that they bay area had in the 90s.
Everything has changed in the bay area sine 1996
except for BART and BART just can't handle the pressure.
Obviously you can take the car, but that isn't any better.
Over the past 10 years traffic
has gone from bad to horrible.
This article says 80% growth in traffic from 2010 to 2017.
All that said, I'm incredibly privileged.
I take my bike down to the ferry, ride the ferry
over the bay, but when I go home, I ride all the way
home over beautiful Golden Gate.
Takes me just over an hour, amazing.
So for me, this has not been a big struggle.
I've had the best commute in the world.
Now let's get to the pro tips.
The first one's obvious, take the bike.
If at all possible, take the bike.
Not everyone can, but if possible do it.
But be careful out there, most drivers are not used to bikes
and it can be pretty dangerous.
Set realistic expectations.
This is almost like just giving into it,
just expect an hours commute if you live in Silicon Valley.
That's just the way it is.
Number five, society and politics are confusing.
For a tech nerd like me coming to Silicon Valley,
it was always like coming home.
Everywhere you go you see tech and it's amazing.
At the same time, everything is confusing.
Basic societal needs are not as well funded
and organized as I'm used to in northern Europe.
A lot of things just don't work
and we're not doing anything about it.
It's very, very hard to find consensus to make any change.
As the tech capital of the world,
we need to do a better job at getting society around us
to work, as we're a part of that society.
So many strange paradoxes that defy logic,
let me give you some examples.
Silicon Valley may just be the most
prosperous area in the entire human history.
We've never seen this much wealth
gathered in a relatively small place.
Then why when you walk the streets of San Francisco,
there's homeless people everywhere?
That's just not right, and something
in society is broken there.
We're in the tech capital of the world.
You see self driving cars and the latest tech
everywhere in Silicon Valley, then why
are parts of society decades behind the rest of the world?
Visiting any government institution
is like doing time travel.
There are long lines and plenty of big paper forms.
It can take months to get a new driver's license.
You go to the DMV and have a look, it's not pretty.
Somehow banks also haven't followed the rest of the world.
I mean, they've been using mobile payments
in Keyna for the past 12 years, but somehow
in Silicon Valley, we use paper checks.
Paper checks, really?
To me that doesn't make any sense.
When I moved here I had to learn to write a paper check
because I hadn't done it for 20 years.
It just feels like the entire country is divided,
and it's impossible to find a consensus
even to do what's good and right for the country.
Instead, all political decisions are just run by money
and sold to the highest bidder.
For business, that means a lot of industries
are just broken and inefficient.
Old laws that can't be changed and monopolies
that should be broken up, but are not.
In the wine business, there's
something called a three tier system.
It's a system that was introduced almost
100 years ago when prohibition ended.
It's a system that makes no sense to the average
wine drinker and no sense to most of the industry.
Still, a few people make a lot
of money off this three tiered system.
They've been blocking any change,
and have been successful in doing so for almost 100 years.
This is the case for a lot of industries.
Broken laws, monopolies, inefficiencies,
and there's no way for society to change
the laws for the good of the people.
Okay, pro tips on this one.
Check your industry well, it may be broken.
When I moved to the US, I knew the wine industry
in the US was very different than anywhere else in the world
and very difficult to work with.
Make sure you do that research, check your industry well.
You might get very, very surprised.
Okay we're done with the list.
I now have some overall pro tips for you.
The final tips might just be the most
important ones, so stay tuned for that.
The first one, travel frequently to Silicon Valley.
You can get some advantages out of Silicon Valley
by traveling to Silicon Valley.
I did that a lot before I moved here.
I rented a cheap motel around the airport,
rented a car and got a lot of good meetings,
both in the south in San Francisco,
as well as all the way up in Napa.
It was a great way to get a taste of Silicon Valley,
built my network here, and later made the move a lot easier.
I would recommend anyone to
travel in at least once a quarter.
When you decide to move, have a lot of money.
If you decide you have to move,
make sure you have a lot of money.
Don't do it before an A round and
move as few people as you can.
Don't come here with a short runway and expect
to raise money, that usually goes wrong.
Have a really good reason to go.
The most important pro tip here is that you need to make
sure you have a really good reason to go to Silicon Valley.
If you don't need to be here, you should not be here.
Ask yourself, do you need to be here?
If the answer isn't hell yes, you shouldn't be here.
For Vivino, we wanted to make sure we won the most important
wine market in the world, the US wine market.
We felt that if we won the US market,
there's a good chance we would win the entire world,
and we sort of needed to be in the largest market to win it.
Great, that's it for the pro tips.
In the end, it's about where you are with your start up.
If you can deal with all the challenges
in this video you'll probably be fine.
Obviously, every story has two sides,
and this is one of the sides.
This video is a part of a two part series.
The other video is about why
you should move to Silicon Valley.
That video is gonna pop up right now.
If it doesn't, it's because the video
hasn't released yet, but will in a few days.
That's it, if you want more videos just like this one
to help you build your amazing start up,
please subscribe to my channel right now.
Thank you very much for watching.
(upbeat music)