[Note: The following post is intended for people who actually read what it says, not for those who don’t read it, but feel the need to react to what they think it says.]
Obviously, I love internet-enabled technology and startups and am overly (obsessively?) fascinated by how the internet is changing our lives, jobs, relationships, culture and well, I could keep going. I’ve chronicled a lot of that fascination and interest on this blog for the past 12 years.
However, there are times when I wish Al Gore hadn’t invented the internet.
If there was no internet, I wouldn’t have to read things like this New York Times clichéd story about startup companies that are (possibly) on the cusp of making it big financially (translation: like Instagram). They’ve rounded up some startups (some of which I like and use) that are already over-hyped, or that were created or funded by over-hyped individuals.
In my opinion, there are some bound-to-flop ringers in the list. (I call them Gertrude Steiners in reference to her quote about Oakland: There is no there there.)
And some on that list can’t lose unless the founders wait too long before cashing out. Hint: Dropbox.
But in my opinion, the entire premise of the story is wrong.
The companies they are pointing to may be the next big financial windfall for their creators and early investors. It’s about being the next financial big thing — the next big hit for venture-backed startups.
If that’s the definition of a “big thing,” then I prefer lots of small things that bring value to all of us — even financial rewards.
Moreover, there are several flaws in the obsession with the “next big thing” focus (startup porn, as some would describe it). Here are just a few: 1. Venture capitalists have a good record at choosing the next big thing. 2. Past success is an indicator of future success. 3. “Big things” are created by individuals who start for-profit companies for whom “exit strategies” define success, and 4. To be the next big thing, you need to create a solution to some banal or “first world” non-problem.
Let’s take those in order, in a lightening round:
1. Venture funds make big bucks: Let me point you over to the folks at the Kauffman Foundation who issued a major paper yesterday that says institutional investors should rethink the whole idea of investing in venture funds (and accept the blame for the previous failures of such funding strategies). It was written by the individuals at Kauffman who have been investing in venture funds for the past 20 years (e.g., not merely and academic exercise). They blame themselves (institutional investors) for believing the hype of VCs and declare on the press release, “After Fees and Expenses, Most Investors Will Do Better in Public Markets.” If you disagree, take it up with them, not me.
2. Past success is an indicator of future success: That’s right up there with past failure being an indicator of future failure. Frankly, failure is probably a better indicator. Does away with the hubris success can bring, at least.
3. “Big things” are created by individuals who start for-profit companies for whom “exit strategies” define success: Most of the companies listed have built their products using software platforms that were not created by for-profit companies that had exit strategies. Even when Al Gore created the internet itself, it was before he had a VC gig.
4. To be the next big thing, you need to create a solution to some banal or “first world” non-problem: Frankly, it’s embarrassing to look at the list of potential next “big things” and realize we’ve arrived at the place where a generation of entrepreneurs are devoting themselves to creating a means to find a taxi easier than, say, finding a cure for dementia.
I love the internet and technology and the people who create the cool things on this list, but being the next big thing financially for a few people is far less important than being the next thing that matters to us all.
After seeing an article like this, in order to get the sour taste out of my mouth, I click over to Kickstarter and see ideas that might be small to the world, but are big to an individuals and a few of his or her friends or fans. I love this stuff — and I love the heart and passion that goes into things that are proudly small.
Or, to get over the obsession with big, I kick the tires on ideas that may not become products, but will be approaches to software that can make it easy for me to do those things I want to do.
I love business. I love entreprneurship and innovation. I like it when people make money. But the next big thing will be bigger than making a billion dollars for a tiny group of individuals.
[Note: I go way back on this topic. In 2006, I wrote a cover story for MyBusiness magazine titled, “The Next Small Thing,” that was the first (of many) national cover-story on Jason Fried. He wrote about it on the 37 Signals blog here.]