Investor Proud His Startup Is Wasting Money Living in a Mansion

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Sam Biddle

01/13/14 03:10PM

Filed to: waste

When you scoop up some venture capital money, the first thing you should do is rent out a mansion in one of the wealthiest neighborhoods in Silicon Valley. Don't worry: after you move into Downton Valley, your investor will cheer you on!

Kevin Colleran, an angel investor and partner at General Catalyst, recently shared some news about one of his portfolio companies:

Quickly, some of his Facebook friends chimed in to say that a bunch of "kids" renting the $10 million mansion at 125 Northgate Street in Woodside, California might not be the most prudent business move:

"That's a solid increase to the burn rate"
"Must be comforting to see your seed money used so wisely!"
"Hmmm, a "not so" humble start...how's their burn rate"
"Red flag"

Colleran then edited the post, deleting the "Definitely makes a statement" remark and adding "don't worry, they pay most of the rent to live there." Well, then. These "recent Stanford grads" better be working on something that makes Snapchat look like a bag of marbles if they want to justify living in the fucking Wayne Manor. Or, they should go work at an established company where kooky waste is OK.

Colleran wouldn't name the startup in question—let us know if you have any idea.

To contact the author of this post, write to biddle@gawker.com

4

noodles_nyc Sam Biddle 01/13/14 05:07PM

You're neglecting some of the efficiencies here:

If you use it both as a living place and a working place, and you split the rent multiple ways with all the cofounders, this could actually result in a saving compared to what they were originally paying in rent for their respective apartments and business spaces combined.

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Sam Biddle noodles_nyc 01/13/14 05:52PM

Sure—now apply that same rationale to a place that doesn't look like a castle!

noodles_nyc Sam Biddle 01/13/14 06:22PM

I still disagree with you. Most people have at least some standards for where they will live, especially if it's combined with the workplace. This isn't just a matter of lifestyle, but also one of contentment and productivity. I think if they moved into a cheaper office location, none of the cofounders would want to live there. Even if they did decide to live and work in such a place, I suspect their quality of life would deteriorate and detract from the business.

Still, I think there is a middle ground, and that is probably what you were referring to. In that case, I agree with you.

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SoMaRefugee Sam Biddle 01/13/14 05:02PM

It's the famous Buck Estate, which was built in 1934 and used to host lavish parties for the who's who of international elite. However, it fell into disrepair and it has sit unoccupied for a long time while the owner has been looking for a buyer. According to Zillow, rent for such a house is $13,570/month. Given the longterm vacancy, however, they may have gotten a better deal. And considering how many people you could fit living in there, split many ways it's probably a good deal for the area considering how ridiculously high apartment rents are in the Palo Alto area. Here's more background on the Buck Estate: http://priceypads.com/the-buck-estat…

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Sam Biddle SoMaRefugee 01/13/14 05:51PM

Yeah I believe it is.

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SoMaRefugee Sam Biddle 01/13/14 06:26PM

Sam: You "believe" what "is"? I know for a fact it's the Buck Estate. With that address you wrote in the post, do a little Googling for profiles from the NY Times, among others, and you can learn all about it. The place has quite the history and neighbors have fought over subdividing it for years. The place is famous. Silicon Valley deserves mockery in many respects, but you should do a little more research and analysis before posting hit pieces like this that take a lot of things out of context — e.g., apartment and office space economics in the area. It's damn expensive to rent an apartment around here — try $2,500 for an old 1 bedroom dump in Menlo Park or Palo Alto — so splitting rent on this place is a good deal if you can fit at least 6-8 people in there.

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woodsidestartup Sam Biddle 01/13/14 05:41PM

Chatous is the company.

Sam Biddle woodsidestartup 01/13/14 05:50PM

Thank you!