The start-up bubble
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The start-up bubble
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Re: The start-up bubble
#2the main differences i can see between this era and a decade ago (i worked as a VC in silicon valley) are the following:
a) less total money and less early money is being shelled out
b) more internet users in total mean vastly lower per user economics than in the past can be profitable
c) big valuations are mainly coming after user traction and better modeling of (b) so feels less bubbly.
as to the "stupid ideas", those my friend, feel exactly the same :)
Re: The start-up bubble
#3It's what it is. Yet, I often feel that criticisms of the startup wave are often a few years out of phase.
At least once a week on HN we get a rehash of the meme that "startups" are too focused on advertising and social media. But if you look at the companies YCombinator has been funding lately, you'll see the dominant theme is people building subscription services that cost $X a month.
I have to admit that I already find that tiresome, and maybe someday the haters will catch up and write linkbait about how that kind of business is BS.
I can also say that a 'startup' can denote a wide range of companies.
There are the guys who want you do a PhD thesis worth of research in two months. Maybe I could do that if I lived like Howard Hughes and ate piracetam tabs out of a huge bowl, but these guys don't even have cash to buy the data they need or the EC2 time, so tough luck. At least they're doing their startup on stolen time from their day jobs so the lack of cash doesn't mean they starve, it just means their business goes nowhere.
Then there are some "startups" that are over-funded. A few years ago I was mystified at how Colours took $50 million to build a crappy photo sharing app. Then I learned, the hard way, exactly how this happens...
Re: The start-up bubble
#4Lame. Apparently we have been in a bubble since 2007, depending on who you speak to. I recall in a famous YouTube clip circulating at the time that people thought it was ludicrous that Facebook was valued at $16Bn.
Of course people are going to overvalue companies. There are cycles in every industry, where people speculate and get burnt. Does anyone remember the Finance industry in 2007? How that is evidence against startups is beyond me. When the tech bubble fizzles it is going to take down established companies with it, as well as their employees' stock options.
At the end of the day the choice between working in a startup and an established company should be about the quality of the people you work with, not the number of employees.
If you have crap co-workers, it's not a sign that startups generally are bad, but rather a sign that your startup in particular is bad.
Re: The start-up bubble
#5I completely understand that it is fashionable to predict startup bubbles (people have been doing it every year in this current cycle since 2008), but the arguments in this post are flimsy and essentially boil down to "it's a bubble cuz it feels like one to me."
There will always be crappy companies being built and 3rd tier investors throwing money at them, but I've yet to hear a solid data-driven case for why this is a bubble. Sure - consumer web, ad-supported may not be a great place to be, but that's a very narrow view of tech as it ignores SaaS, b2b, enterprise focused companies.
Re: The start-up bubble
#6His LinkedIn states that he graduated last year and worked for a startup for a grand total of 3 months... nothing against the author, but he seems to be too young and inexperienced to fully understand the big picture of something as complex as boom & bust cycles in the startup ecosystem. I certainly don't understand them. Too bad that his startup-experience seems to have been a bad one. For some(most?) people a big company is just a better fit. Life is too short to be wasting it on something you're not passionate about.
Re: The start-up bubble
#7I don't disagree with the author on any of his points. But it's much easier to predict the future by drawing similarities with a sequence of events from the past which seem applicable and relevant. What makes the future interesting and exciting is that it hasn't happened, and if you truly knew what was going to happen, that means you have a unique opportunity to try to change it and avoid the mistakes of the past.
Re: The start-up bubble
#8It's what it is. Yet, I often feel that criticisms of the startup wave are often a few years out of phase. At least once a week on HN we get a rehash of the meme that "startups" are too focused on advertising and social media. But if you look at the companies YCombinator has been funding lately, you'll see the dominant theme is people building subscription services that cost $X a month. I have to admit that I already…
Curious: is there anything fundamentally wrong with subscription services that cost $X a month?
It seems that it is a more sustainable business model (rather than relying on advertising and social media) because they're providing a service or product that has actual value to users, enough to have them open their wallets to the companies.
Unless there's something I am missing here?
Re: The start-up bubble
#9>To be clear: many people in start-ups may be wonderful developers and programming gurus, however many of them are missing the fundamental theoretical basis that will take an algorithm to the next level of innovation.
so, I've worked for both big companies, small companies, and startups, and I guess what I'm missing is, what does your headcount have to be for you to have this "fundamental theoretical basis"? When you hire your 50th person, do Smart People knock on your door one morning and give you a book titled "How To Think"? Or is it the 500th person? The 5,000th?
Re: The start-up bubble
#10This post misses one important point: Startups are playgrounds.
You don't need to be the next Facebook or Twitter. You don't even need to be profitable (although we all aim for it). What you need is a team that can execute. Even if it turns out the idea was lame and the startup fails, the team learns a lot. Then they can apply that knowledge at new startups or regular jobs they may take.
And from investors' point of view, most of them have plenty of money - they don't do it just because they want more (if at all), they want to share their expertise, get to know talented people and fill their schedules with activities they enjoy.
I can't imagine, if there would be no investments at all. The investors would be just fine, but the money wouldn't flow. Because of that, there would be too much risk involved and nobody would devote their lives to great ideas. Long term consequences for the whole industry would be bad.