I remember during the original dotcom bubble getting to a point where I was hearing about all these internet startups and constantly confused about whether they were real companies. “How is Flooz going to work? That seems like such a stupid idea. Why are they having so much traction, while [the startup I worked for] isn’t?”
Now that I’m a founder, I am starting to notice that a lot of these other startups are really just a lot of BS. Outside the Bay Area there’s a lot of kids who are “doing a startup” but have no clue at all. I think it has become fashionable.
Inside the Bay Area those kids are there but if they went to a good school they’re getting money thrown at them to screw around for a couple years on a product feature (not a business) before getting aquihired into facebook or google.
I must admit, I am jealous about the amount of stupid money these kids are getting.
But I know that I can’t go to the bay area and become a “yes man” in order to get that money. I’ve been in the bay area and the people who run VCs are dumb, dumb money. They havent’ the first clue about business, they really shouldn’t have that kind of monay. MAYBE andreeson horowitz are different, but they’re the exception that proves the rule. And for every 16H there are a hundred slimy, greasy con artists trying to insert themselves for a cut of the pie who will, if you give them a chance, give you bad advice that kills your company.
I’ve worked for over a dozen startups in my career before I became a founder. The number one cause of death for startups, in my experienced, is bad decisions from VCs. I’ve seen VCs force companies to give up profitable lines of business with product/market fit because that profitable business wasn’t the flavor of the day. (The number two cause of death: The founders fighting with each other.)
I just can’t give up reason to go be an employee of a VC firm for a couple years for a big payout.
It is terrible too because sites like PandoDaily and TechCrunch and Arrington and MG Siegler et al. do nothing but hype up these nothing companies ignoring the fact that they are conflicts of interest (eg: sharing the same investors) …. and then when the company gets bought and shut down (like Sparrow) the users are left in the lurch.
Ultimately it all comes down to this: There’s a “startup” culture that is not based on building startups. Its based on swing-for-the-fences longshot companies.
If you’re building a business with 1-10M in revenue, you could call that a lifestyle business. If you’re building a business with more than 100M in revenue, that’s what all the current culture tries to force you to build.
But there’s a huge range of businesses with $10M to $100M that are very successful (and would likely sell for over a $1B valuation) that you could be building– what you call “Fundamentally solid businesses”– these are businesses that take real money and make real money.
The problem is, the “culture” or VCs have been perpetuating this idea that the only thing worht building is anotehr Facebook, google, or twitter– that is, long shot company that will never make any money until long after it passes a $1B valuation.
There’s nothing any less “startup” about a $10-$100M business. And you build a $100M business you’re going to be rich– and return good money for your investors.
But investing, driven as it is from the bay area, is cargo cult. They only want another facebook because they are all jealous of the other VCs who got into Facebook.
And so you have a whole generation of people building startups who have been taught to make bullshit.