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Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

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Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#41

Post by kedean »

danso wrote: post #20
potatolicious wrote: post #10

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…

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.

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.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#43

Post by bdcravens »

tptacek wrote: post #15
bdcravens wrote: post #8

I think people are missing the biggest takeaway: everyone wants to get rich writing Rails apps in a weekend that really don't contribute, that our brightest minds are being wasted. Rather than creating things that are truly innovative, we're barely iterating on things that were barely iterations to being with.

The world is full of weekend-hard Rails apps that can both contribute and make loads of money. The problem has nothing at all to do with engineering, and everything to do with echo-chamber marketing. The apps don't need to be harder to write; they just need to solve problems for nurses or attorneys or auto mechanics instead of early-adopter tech consumers and advertisers. David Heinemeier Hansson put this as succinct…

I wasn't picking on Rails specifically, and I do really agree with DHH on selling as opposed to "social traction".

You get to a very real point (kinda counteracts what I literally said, but gets to the heart of the point I was trying to make): don't play the startup lottery. Real apps, the apps you generate real revenue on, are those that don't require Series A.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#44

Post by tptacek »

peacemaker wrote: post #38
tptacek wrote: post #15

Earlier quoted context omitted.

The world is full of weekend-hard Rails apps that can both contribute and make loads of money. The problem has nothing at all to do with engineering, and everything to do with echo-chamber marketing. The apps don't need to be harder to write; they just need to solve problems for nurses or attorneys or auto mechanics instead of early-adopter tech consumers and advertisers. David Heinemeier Hansson put this as succinct…

While I agree with the quote "build something useful and charge money for it; it's not rocket surgery." I think it over simplifies things. What exactly is "useful" anyway? How do I find a useful idea? Who do I charge for it? How much should I charge? I think the real trick is finding that idea.

A good way to find out if an idea is useful is to charge money for it.

People come up with elaborate schemes to avoid doing that because asking for money and being turned down is a form of rejection, and rejection stings. I'll tell you from 15 years in startups, including long stints in companies I didn't run that weren't even part of my identity with customer prospects I didn't even care about: rejection always stings, will probably always sting, and you will subconsciously (to your great detriment) always avoid situations with potential reject even though you know you need to not do that.

The result is a system that converges on stories that can pick up 6-18 months of funding runway without ever demonstrating value from real customers.

There are businesses that need to boot up without asking for money from customers, but they're not common, and when you find one, it will be very clear why you'd defer revenue, and the answer won't have anything to do with monetizing eyeballs.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#45

Post by varjag »

potatolicious wrote: post #10

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…

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.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#46

Post by equalarrow »

I can't help but think about Peter Thiel encouraging people to drop out and start companies. But then I saw that it was Dan Lyons that wrote it.

Two people's opinions, in my mind, not to heed.. So, somewhere in the middle should be about right.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#47

Post by astine »

tptacek wrote: post #28
trotsky wrote: post #18

How do you report on business for a decade and yet hold such a visceral and character flaw type thesis about behavior that's nothing more than the intended, text-book result of specific monetary policy decisions?

What's the monetary policy that's influencing startups?

He's referencing the Austrian Business Cycle theory: http://en.wikipedia.org/wiki/Austrian_business_cycle_theory

The argument is that inflationary spending is what causes the boom bust cycle. Inflation creates an initial perspective of prosperity and causes an increase and shift in investment from capital goods to consumer goods. This leads to a self reinforcing bubble which eventually drains the economy and leads to a bust.

Trotsky is effectively saying that the bubble was due to interest rates and Dan Lyons is wrong to attribute it primarily to a character flaw of the persons involved. I don't wholly agree with that, but I think the ABCT does have merit.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#48

Post by ytadesse »

pg wrote: post #40

I'm going to kill this article as a dupe. It's just other articles rewritten in more colorful language. But it's giving this thing too much credit even to call it a dupe, because in the process of making the language more colorful, he's now describing something that is definitely not the case. The other articles are talking about a trend that's happening as slowly as global warming. No door has suddenly crashed down,…

With all due respect PG, I'm not sure there's precedence for you "killing" articles like this but I don't think that's a good idea.

This article has a lot of people talking and trying to figure out what works and what doesn't.

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#49

Post by rexreed »

pg wrote: post #40

I'm going to kill this article as a dupe. It's just other articles rewritten in more colorful language. But it's giving this thing too much credit even to call it a dupe, because in the process of making the language more colorful, he's now describing something that is definitely not the case. The other articles are talking about a trend that's happening as slowly as global warming. No door has suddenly crashed down,…

While I don't want to second-guess your judgement, I've seen many other articles that are just as much rehashes and not shut down as dupes. Why does this article deserve the axe so quickly? Indeed, if it is saying something different from the other articles (as odious as it might be), wouldn't that indicate it is not a dupe?

Re: Let's All Shed Tears For The Crappy Startups That Can't Raise Any More Money

#50

Post by DannyBee »

untog wrote: post #9
ryanisinallofus wrote: post #5

I really don't understand the hate with which Dan Lyons is speaking. Startups are crazy, sometimes hugely profitable companies that sometimes start up with the same money it takes to start a restaurant or less. Sometimes they succeed, sometimes they fail, sometimes they are a complete joke. It's intense and awesome and that's why we are all drawn to it: huge potential. VCs are a part of it and without them this marke…

I don't know if journalists are mad because they don't get into startups themselves, only cover them. Or because journalism has been fairly marginalized (sad but true) and is undergoing some major transitions... I don't know. Not to defend the article (which I agree a little too snarky, but will get pageviews) but I imagine that working as a journalist covering startups is a thoroughly depressing existence. If it's a…

I can't upvote this comment enough. Your explanation reminds me of why people hate lawyers so much. For every 1 good lawyer I meet, I meet 5 truly horrible ones. The same is true of startup founders i've met.

The responses you usually see to pointing out someone's idea is horrible is "well, it's hard to predict what ideas will be big, so you don't really know it's horrible. You may be wrong".

Given most ideas are horrible, and most startups fail, the onus is on the guy telling you how "rottenfood.com: Rotten food shipped same-day to your door!" will be the next big thing to provide evidence his idea is not horrible. Usually this "evidence" is in the form of talking points: "Rotten Food is a 500 million dollar industry just ripe for disruption". Then when it fails "the idea was good, but the time wasn't right, but it was a valuable learning experience".

No! The idea was not good. It was horrible. The fact that you think otherwise tells me it was not a valuable learning experience, because you didn't learn the most important thing.

I can't even write up this comment without it turning into all snark, so i'm just going to leave it to the tech journalists :)

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