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Seems like a touch too much schadenfreude. I've seen some genuinely awful ideas in startupland, but one has to remember that predicting success is really hard,

Seems like a touch too much schadenfreude. I've seen some genuinely awful ideas in startupland, but one has to remember that predicting success is really hard, especially the big types of success like Facebook or Google. Google itself started as a product with no revenue stream, only a highly ephemeral "well we could sell ads?" one that almost didn't pan out. Facebook in its early form seemed like a website for Ivy Leaguers to fawn over each other. Both were companies created by green entrepreneurs who also similarly had little to no job experience, nor business leadership experience. The last page has yet to be written on either of those companies, but I don't think it's a stretch to say they've been two of the greater successes to come out of the "startup system". So sure, we can celebrate the fact that "we're like Groupon, except we sell trips to space!" (seriously, a founder tried to recruit me for this) isn't getting any more funding. But how many Facebooks and Googles are we going to miss out on also? And this won't be the end of the "startup crowd" - the sycophantic faux-journalists, the startup-groupies that don't ever seem to be building anything but are always present at meetups and parties, the guy at the event whose description of his company is consisted of 100% buzzword... those guys will remain. This isn't a return to sanity, it's just a plain old slowdown.

danso 14y ago
I think FB and Google are bad examples, because they were borne out of much more fundamental services than the kinds of start ups that the OP mocks. Sure, whatever their mission statements were sounded crazy and vague ("organize the world's information") but they had the technology to back up their lofty goals. The OP seems to be mocking startups that have neither the broad lofty goals nor the technical substance.
- kedean 14y ago
  It's also noteworthy that neither FB or Google were ever what could be termed a startup. FB was a college website first, then expanded gradually, it didn't try to instantly be huge, and I'm pretty sure zuckerberg knew that it wouldn't make money for a while. Google was a group of genius guys who had come up with a brand new method of web search (the pagerank algorithm) that had never been seen before, they had a legitimate product already.
rexreed 14y ago
Selecting the outliers as exemplars of what is typical doesn't make much sense. What about the 100,000+ non-Googles and non-Facebooks that very much fit into what the author is stating here? Poor businesses funded by poor investors supported by a poor media is the problem here and all that the "Series A Crunch" will do is "expose those who were swimming naked" as so eloquently stated by Warren Buffet [1]. Companies with good business models or great technology or great ability to persevere or the ability to iterate will always survive. The point of this article is that the clock has already run out for the ones that don't. [1] http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933.html http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933....
- potatolicious 14y ago
  The entirety of the startup "industry" is about exemplars and outliers. If we went by the typical outcome of a startup (or any new business, tech or otherwise) we'd never start anything. Everyone is in it to try and become an outlier. The theory is that we would be willing to invest in 1000 non-Googles and non-Facebooks if it means we can have a shot at having a single Google or Facebook. The "crunch", as it were, seems to be arising from the fact that there seem to be a lot more than 1000 non-Googles for every Google, and even the successful don't seem to be as successful as tech companies in previous generations - which leads to an adjustment in the ratio of failures/successes that you're willing to accept. That in and of itself is unsurprising, but the natural concern is whether or not we've figured out, even roughly, what predicts success, and if the "crunch" correctly targets clearly bullshit companies, or if it's a general contraction that will eliminate good companies as well as bad. I don't think anyone is lamenting the loss of bullshit businesses with no plan. The more concerning question is: are we any better at determining future success, on day 1, than we used to be?
varjag 14y ago
This overlooks there was good hard technology behind Google in the first place. PageRank was not trivial to devise and implement, it was measurably better than anything on the market already, and it provided value, well, to pretty much everyone in the world. There is no original technology behind much of the startups. Not calling any names, but a glorified mailing list or a shopping cart is not original technology, not in 2012. Facebook seems to do interesting stuff with social graph, but I can't help the feeling whatever value they have there goes to relatively tiny set of paying customers (advertisers) rather than to end-users.
bicknergseng 14y ago
Agreed. I was wondering how the post would change if it was emotionally neutral and took a serious, objective look at the subject rather than the "these people are dumb and should feel dumb" attitude. Criticism is necessary, but I think this kind of cynicism is mostly counterproductive. I think it takes more courage and intelligence to figure out how to make a blogger-turned-vc effective or find that diamond in the rough that no one expected to go anywhere than it does to say they're stupid.

danso 14y ago

I think FB and Google are bad examples, because they were borne out of much more fundamental services than the kinds of start ups that the OP mocks. Sure, whatever their mission statements were sounded crazy and vague ("organize the world's information") but they had the technology to back up their lofty goals. The OP seems to be mocking startups that have neither the broad lofty goals nor the technical substance.

kedean 14y ago
It's also noteworthy that neither FB or Google were ever what could be termed a startup. FB was a college website first, then expanded gradually, it didn't try to instantly be huge, and I'm pretty sure zuckerberg knew that it wouldn't make money for a while. Google was a group of genius guys who had come up with a brand new method of web search (the pagerank algorithm) that had never been seen before, they had a legitimate product already.

rexreed 14y ago

Selecting the outliers as exemplars of what is typical doesn't make much sense. What about the 100,000+ non-Googles and non-Facebooks that very much fit into what the author is stating here? Poor businesses funded by poor investors supported by a poor media is the problem here and all that the "Series A Crunch" will do is "expose those who were swimming naked" as so eloquently stated by Warren Buffet [1]. Companies with good business models or great technology or great ability to persevere or the ability to iterate will always survive. The point of this article is that the clock has already run out for the ones that don't. [1] http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933.html http://www.brainyquote.com/quotes/quotes/w/warrenbuff383933....

potatolicious 14y ago
The entirety of the startup "industry" is about exemplars and outliers. If we went by the typical outcome of a startup (or any new business, tech or otherwise) we'd never start anything. Everyone is in it to try and become an outlier. The theory is that we would be willing to invest in 1000 non-Googles and non-Facebooks if it means we can have a shot at having a single Google or Facebook. The "crunch", as it were, seems to be arising from the fact that there seem to be a lot more than 1000 non-Googles for every Google, and even the successful don't seem to be as successful as tech companies in previous generations - which leads to an adjustment in the ratio of failures/successes that you're willing to accept. That in and of itself is unsurprising, but the natural concern is whether or not we've figured out, even roughly, what predicts success, and if the "crunch" correctly targets clearly bullshit companies, or if it's a general contraction that will eliminate good companies as well as bad. I don't think anyone is lamenting the loss of bullshit businesses with no plan. The more concerning question is: are we any better at determining future success, on day 1, than we used to be?

varjag 14y ago

This overlooks there was good hard technology behind Google in the first place. PageRank was not trivial to devise and implement, it was measurably better than anything on the market already, and it provided value, well, to pretty much everyone in the world. There is no original technology behind much of the startups. Not calling any names, but a glorified mailing list or a shopping cart is not original technology, not in 2012. Facebook seems to do interesting stuff with social graph, but I can't help the feeling whatever value they have there goes to relatively tiny set of paying customers (advertisers) rather than to end-users.

bicknergseng 14y ago

Agreed. I was wondering how the post would change if it was emotionally neutral and took a serious, objective look at the subject rather than the "these people are dumb and should feel dumb" attitude. Criticism is necessary, but I think this kind of cynicism is mostly counterproductive. I think it takes more courage and intelligence to figure out how to make a blogger-turned-vc effective or find that diamond in the rough that no one expected to go anywhere than it does to say they're stupid.