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Silicon Valley produces a new wave of billion dollar start-ups

More and more Silicon Valley start-ups are turning their Chief Executives into billionaires these days, it seems. A report in The New York Times indicated that an “unprecedented” number of companies, ranging from a minimum of 25 all the way up to 40, are now worth over $1 billion. Among them are household names including Pinterest and Spotify.

Another such company is Evernote, provider of the free online storage box and note-taking app which recently hit the 1 million user milestone in India. “A lot of us didn’t set out to have a big valuation,” said Evernote CEO Phil Libin, “we’re just trying to build something that lasts.”

So how exactly are all these businesses reaching the billion bucks mark? With low interest rates, securing large investments from private equity companies is easy; and once you have one private investor, bidding can escalate. In addition, a large number of these billion dollar start-ups like Survey Monkey, Mobile Iron and Data Direct Networks are selling their products and services solely to other businesses – becoming a big business provider is a considerably less risky proposition than selling to consumers.

The growing volume of billion dollar start-ups is also indicative of how the tech trade is evolving. “There are disruptions everywhere,” says Robert Tinker, CEO of Mobile Iron, a provider of smartphone and tablet management software. “Mobile disrupts personal computers, a market worth billions. Cloud disrupts computer servers and data storage, billions of dollars more. Social may be one of those rare things that is totally new.”

Of course, once your company has reached the $1 billion milestone, it’s not simply a case of cracking open the champagne and giving your staff a bonus. Tinker is keenly aware of the pressure Mobile Iron is under: “If somebody comes to a job interview here in a $100,000 car, I know he’s not hungry. The reality is, I’ve taken $94 million in investors’ money, and we haven’t gone public yet. I feel that responsibility every day.”

Tinker learned from the Dot Com crash that pride can come before a fall, and is under no illusions that anything but hard work and constant innovation will keep Mobile Iron afloat. Phil Libin of Evernote, which started at almost exactly the same time as the global recession, is inclined to agree: “There is no safe industry anymore, not even here.”

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