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I think there's a significant problem in SV culture that says you must disrupt all of the time, and that forming a stable business is not a goal. Silicon Valle
by mpdehaan2 11y ago
I think there's a significant problem in SV culture that says you must disrupt all of the time, and that forming a stable business is not a goal.
Silicon Valley (the show) pretty much nailed this on a regular basis when shoddy-investor-guy warns against making money because you'll be worth less money because people know how much money you can make.
It's totally reasonable to eat a market while it exists, and then find a new market later -- or even decide that the shrinking market is actually ok, and you're content with your share of that market.
Unless you're the VC -- because you have a VERY high risk fund (almost by definition) and you'd like only 10-30% success but with 100x profits on those 30%.
This leads lots of tech companies to flame out, overstress, and build things people don't need, because the sane, logical ideas are the ones that are harder to find investment for (if they can't bootstrap them).
It's a weird space.
- vcarl 11y agoYeah, I talked to a startup that had an existing product with a revenue stream, but they were aiming to take like 10m in investment in order to either grow exponentially or flame out early. That makes zero sense to me, why not bootstrap and build a real company rather than be a piece in somebody else's larger game?
- mpdehaan2 11y agoMore difficult if the startup can't yet support itself and just needs to get over a hump and get to a good growth point, because everybody wants a big exit. It should have bootstrapped before it got to that point, but can't get that money now when it needs it, or it's going to grow to be not-super-huge. That being said, most wouldn't flame out if not for the crazy pressure of using it for explosive growth. There needs to be more "medium size / medium growth business investment" type VCs. I've never met any, but they might exist. $10M doesn't make you flame out, but how fast the VCs want you to spend it can, they only give you money for a year or two so they can get a larger percentage stake later, and that you are moving for an exit versus profitability.
- tyre 11y agoWe're building a CRM for local governments (http://romulusapp.com http://romulusapp.com) and have absolutely found this to be the case. Investors are not only terrified by government, but consistently talk about things like blockchains and GoPro + drones as things they are more interested in. I'm all for experimentation, but it has been surreal to see the discount for solving an actual problem despite a massive market opportunity, little competition, and clear customer need + willingness to pay.
- davidgerard 11y agoYou mean there's actually a sort of "business" case for saying "<random thing> ... ON THE BLOCKCHAIN!!"?
- shadowfox 11y agoOff topic. Got to say that you have got quite an interesting system there.
- digi_owl 11y agoThe mentality is also reaching into public traded companies, invariably resulting in them overextending. It all seems to come down to the chase of the growth curve. Anything thats not growing by x% per quarter is considered sick and on its death bed. Never mind that it may maintain its current place in the market for years and years, "investors" don't want to touch it.