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From the WSJ article: Don Dodge, a startup investor and well-known “developer advocate” for Google, said today’s startups are more focused than ever on revenue

by colmvp 14y ago

From the WSJ article: Don Dodge, a startup investor and well-known “developer advocate” for Google, said today’s startups are more focused than ever on revenue—as evidenced by the large revenue-growth charts most of them showed off during the presentations to investors. In prior years, founders focused more on the number of people using their service, he said. Refreshingly, he said, there are no longer social-networking-related startups. “It’s run its course,” he said. “Now startups are more focused on solving boring problems that make money,” said Dodge, who last year invested in a YC company that helps programmers create mobile apps. I wouldn't be surprised if he's being tongue-in-cheek by saying 'boring'. Or at least, it's not meant to be negative. Besides, there are lots of boring problems that can be made into interesting and beautiful solutions. For example, Square is made payment processing into an elegant and holistic experience.

t0 14y ago
That's exactly it. Revenue. I've heard PG say in numerous interviews that he doesn't want to incubate small companies. He said he wants "the next big thing". Has he changed his mind?
- mlinsey 14y ago
  Revenue growth is better than active user growth, but growth is the high order bit. In other words, growing revenue 10% a week is better than growing active users 10% per week. But for a startup (in the startup=growth sense), 10% growth in active users per week and no revenue is much better than being ramen profitable and growing revenues at 2% per week.
- edanm 14y ago
  Perhaps the average group going into YC has shifted in their goals. I believe there's a general trend towards focusing more on small-risk small-reward startups, I assume this trend is trickling into SV as well.
  - karamazov 14y ago
    It's a common misconception that "big hits" can't have early revenue. I'm not sure why.
    - bishnu 14y ago
      The reason is, Google.
- tylerhwillis 14y ago
  PG has always been in favor of "ramen profitability." I've never heard him disparage revenue or think having it is indicative of being a small company.
- jacoblyles 14y ago
  Revenue is a great signal of a good business.
jcr 14y ago
I think there's some truth in both perspectives, yours and dmor's. There is also a third perspective; use of the term "boring" and saying social has "run its course" was intended as a compliment to the current W13 batch, although being dismissive of previous "social" startups. Unfortunately, using the term "boring" even in jest as a compliment is still a bit too close to calling someone's baby ugly. (I'm certainly guilty of using poorly chosen words at times, and so is everyone else.) Another issue, is some potential investors most likely want to appear disinterested even when they really want to invest, since it is to their advantage in negotiations. It seems part of the intent behind the "Handshake Deal Protocol" was to put an end to this kind of posturing and dancing. Playing hard to get might be profitable in some sense, but it wastes an enormous amount of time and effort. The last issue is "interesting" and "fascinating" are choices. You decide to be interested of fascinated by a subject. Other than surprise, it often takes effort and investment to be interested or fascinated. Others may decide differently. I've worked on a ton of fascinating and challenging things that when explained to others could literally bore them to death. Even if the bored people count on the boring thing every single day, the decision to be interested or fascinated by it is their choice to make. When people find a difference in their interests, the usual result is along the lines of resentment, intimidation, or elitism. A better approach is to acknowledge the difference of opinion on "interesting" and try to find some common ground of mutual interest. The whole W13 batch is interesting to me. Even if I don't fully grasp the problem they're trying to solve or don't agree that their approach, I always enjoy learning about someone fascinated enough to try building a company around a problem that they consider interesting. If I just don't get it, then there's most likely an important, unknown something I can learn from them. If I do get it, then I my understanding is probably way behind theirs, and I still have something to learn from them. If you're uninvolved with the push and pull between startups and potential investors and are unaffected by startup outcomes or business competition, then it's easy to ignore the nonsense and enjoy learning about all the new companies on demo days. It's OK to be a spectator and cheer the accomplishments of others.
compumike 14y ago
It's not meant to be negative. At CircuitLab (Don Dodge's specific example for "solving boring problems that make money"), we're interpreting "boring problems" as a concise way of saying "problems that people have 9am-5pm (at work) and want to solve faster so they can leave at 5pm". That's not a bad place to be. Or perhaps they are problems that are exciting to our users but boring to Don Dodge. :) WSJ direct link: http://blogs.wsj.com/digits/2013/03/26/at-smaller-y-combinator-social-is-out-revenue-is-in/ http://blogs.wsj.com/digits/2013/03/26/at-smaller-y-combinat...
- starmole 14y ago
  Don't under sell CircuitLab! I thought it was the only cool and useful engineering project of the batch! You actually have deep technical skills that are not easy to replicate. And you can go both ways: web based, educational, makers or go make a native (just use chromium :)) high priced version and go after the incumbent market.
ddodge 14y ago
You are correct. It was not meant to be negative. It was meant to convey the importance of the shift from social/consumer apps with no thought of monetization, to startups focused on solving real world problems that generate revenue from day one. This can be boring to investors looking for flying cars, or journalists looking for mind blowing technology. I mentioned Circuit Labs, great technology that makes money in a boring way by selling parts. I also mentioned Thalmic Labs as an example of cool technology. My personal favorite was Skip, the RFID checkout company, but I couldn't talk about it because they haven't officially launched. I think there could be an indoor location play using the RFID tag data. Overall, I was impressed with the focus on solving real world problems and generating immediate revenue. Boring to some, but I liked it.

by colmvp 14y ago

t0 14y ago

That's exactly it. Revenue. I've heard PG say in numerous interviews that he doesn't want to incubate small companies. He said he wants "the next big thing". Has he changed his mind?

mlinsey 14y ago
Revenue growth is better than active user growth, but growth is the high order bit. In other words, growing revenue 10% a week is better than growing active users 10% per week. But for a startup (in the startup=growth sense), 10% growth in active users per week and no revenue is much better than being ramen profitable and growing revenues at 2% per week.
edanm 14y ago
Perhaps the average group going into YC has shifted in their goals. I believe there's a general trend towards focusing more on small-risk small-reward startups, I assume this trend is trickling into SV as well.
- karamazov 14y ago
  It's a common misconception that "big hits" can't have early revenue. I'm not sure why.
  - bishnu 14y ago
    The reason is, Google.
tylerhwillis 14y ago
PG has always been in favor of "ramen profitability." I've never heard him disparage revenue or think having it is indicative of being a small company.
jacoblyles 14y ago
Revenue is a great signal of a good business.

jcr 14y ago

I think there's some truth in both perspectives, yours and dmor's. There is also a third perspective; use of the term "boring" and saying social has "run its course" was intended as a compliment to the current W13 batch, although being dismissive of previous "social" startups. Unfortunately, using the term "boring" even in jest as a compliment is still a bit too close to calling someone's baby ugly. (I'm certainly guilty of using poorly chosen words at times, and so is everyone else.) Another issue, is some potential investors most likely want to appear disinterested even when they really want to invest, since it is to their advantage in negotiations. It seems part of the intent behind the "Handshake Deal Protocol" was to put an end to this kind of posturing and dancing. Playing hard to get might be profitable in some sense, but it wastes an enormous amount of time and effort. The last issue is "interesting" and "fascinating" are choices. You decide to be interested of fascinated by a subject. Other than surprise, it often takes effort and investment to be interested or fascinated. Others may decide differently. I've worked on a ton of fascinating and challenging things that when explained to others could literally bore them to death. Even if the bored people count on the boring thing every single day, the decision to be interested or fascinated by it is their choice to make. When people find a difference in their interests, the usual result is along the lines of resentment, intimidation, or elitism. A better approach is to acknowledge the difference of opinion on "interesting" and try to find some common ground of mutual interest. The whole W13 batch is interesting to me. Even if I don't fully grasp the problem they're trying to solve or don't agree that their approach, I always enjoy learning about someone fascinated enough to try building a company around a problem that they consider interesting. If I just don't get it, then there's most likely an important, unknown something I can learn from them. If I do get it, then I my understanding is probably way behind theirs, and I still have something to learn from them. If you're uninvolved with the push and pull between startups and potential investors and are unaffected by startup outcomes or business competition, then it's easy to ignore the nonsense and enjoy learning about all the new companies on demo days. It's OK to be a spectator and cheer the accomplishments of others.

compumike 14y ago

It's not meant to be negative. At CircuitLab (Don Dodge's specific example for "solving boring problems that make money"), we're interpreting "boring problems" as a concise way of saying "problems that people have 9am-5pm (at work) and want to solve faster so they can leave at 5pm". That's not a bad place to be. Or perhaps they are problems that are exciting to our users but boring to Don Dodge. :) WSJ direct link: http://blogs.wsj.com/digits/2013/03/26/at-smaller-y-combinator-social-is-out-revenue-is-in/ http://blogs.wsj.com/digits/2013/03/26/at-smaller-y-combinat...

starmole 14y ago
Don't under sell CircuitLab! I thought it was the only cool and useful engineering project of the batch! You actually have deep technical skills that are not easy to replicate. And you can go both ways: web based, educational, makers or go make a native (just use chromium :)) high priced version and go after the incumbent market.

ddodge 14y ago

You are correct. It was not meant to be negative. It was meant to convey the importance of the shift from social/consumer apps with no thought of monetization, to startups focused on solving real world problems that generate revenue from day one. This can be boring to investors looking for flying cars, or journalists looking for mind blowing technology. I mentioned Circuit Labs, great technology that makes money in a boring way by selling parts. I also mentioned Thalmic Labs as an example of cool technology. My personal favorite was Skip, the RFID checkout company, but I couldn't talk about it because they haven't officially launched. I think there could be an indoor location play using the RFID tag data. Overall, I was impressed with the focus on solving real world problems and generating immediate revenue. Boring to some, but I liked it.