I have thoughts...
"Tech Startups Face New Investor Mandate: Profits Over Discounts"
wsj.com/articles/tech-…
"Tech Startups Face New Investor Mandate: Profits Over Discounts"
wsj.com/articles/tech-…
First, a few choice bits from the article, in case you can't see past the paywall:
"The proliferation of subsidized products and services from venture-capital-backed startups over the past decade reflected a rush by investors to fund the next behemoth consumer-tech company."
"The proliferation of subsidized products and services from venture-capital-backed startups over the past decade reflected a rush by investors to fund the next behemoth consumer-tech company."
"The thesis: Create a market leader with loyal customers hooked by attractive deals delivered at the touch of a smartphone app. Once the company got big enough, profits would flow and the subsidies could end."
🧐 We see how well this is working out...
🧐 We see how well this is working out...
"Startup investors are re-evaluating that approach. Following a year of dismal performances from companies that were heavily subsidized by venture capital, investors and board members are pressuring companies to figure out a more profitable business model..."
I want to be encouraged by this, but I'm actually quite worried. If you know me, that may be surprising because I talk A LOT about tech and VC's failure to align investment with the end goal of profitability.
Why am I worried? Because I still don't think that venture capitalists "get it".
My concern is that much more harm will be done in an attempt to make "unicorn economics" work.
Shifting the "growth at all costs" ethos to a "profit at all costs" ethos is not winning.
My concern is that much more harm will be done in an attempt to make "unicorn economics" work.
Shifting the "growth at all costs" ethos to a "profit at all costs" ethos is not winning.
And THAT will do damage to the work of people/orgs (:::ahem:::) working to instill better values into the world of business.
Flashback to 2016:
Flashback to 2016:
People like me, @marazepeda, @JenniferBrandel, @operaqueenie, @TaraReed_, @deldelp, @WAOFrancesca were women on the fringe challenging the belief that VC was the ticket to building successful startups.
We were bound by the world we wanted to help shape:
We were bound by the world we wanted to help shape:
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca In the last few years, especially with the stories and visibility of people like @dhh @jasonfried @bryce @joelgascoigne @randfish, a movement really started to take shape and move forward.
It's amazing to see a group with such varied experiences come to the same conclusions. ✨
It's amazing to see a group with such varied experiences come to the same conclusions. ✨
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish Our beliefs and vision are unwavering. We've known and been saying this same shit for years.
It's more/less that businesses need to have a quadruple bottom line -- creating value for customers, employees, society, and shareholders.
It's more/less that businesses need to have a quadruple bottom line -- creating value for customers, employees, society, and shareholders.
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish My concern is this "shift" from growth to profit is one that continues down a path of destruction. That as long as it makes money, all good.
I've seen up close how people in the SV ignore, downplay, or spin the morally corrupt implications of how money moves around the industry.
I've seen up close how people in the SV ignore, downplay, or spin the morally corrupt implications of how money moves around the industry.
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish We're watching now how one-time darlings like Facebook and Google become problematic for the sake of profit over people.
What good is innovation if it ultimately robs the communities it's intended to serve?
What good is innovation if it ultimately robs the communities it's intended to serve?
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish Back to the WSJ:
"The [VC] industry has a record amount of money to invest, and with interest rates staying historically low, many investors will be attracted to private tech companies even when they rely on private funding to pay their bills and dole out big discounts."
"The [VC] industry has a record amount of money to invest, and with interest rates staying historically low, many investors will be attracted to private tech companies even when they rely on private funding to pay their bills and dole out big discounts."
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish This part really gets me in my feels.
THERE IS SO MUCH GOTTDAMM CAPITAL OUT THERE. And HOW we invest it really matters.
We're tying this $$$ up in a system that only supports "high growth" business experiments, which often result in social destruction.
THERE IS SO MUCH GOTTDAMM CAPITAL OUT THERE. And HOW we invest it really matters.
We're tying this $$$ up in a system that only supports "high growth" business experiments, which often result in social destruction.
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish So, I not only want us to explore a world where we grow businesses in a moral and socially accountable way, but I want more people to have a crack at doing it.
If we didn't need to see billion+ dollar outcomes, how many more businesses would still be alive and thriving today?
If we didn't need to see billion+ dollar outcomes, how many more businesses would still be alive and thriving today?
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish How many businesses that have been taken down for unscrupulous activities would have made different choices?
How many more founders would still be *in charge of* the ventures they poured everything they had into?
How many more founders would still be *in charge of* the ventures they poured everything they had into?
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish How many more employees would have gotten a more equitable piece of something they helped build and take a risk for?
How many more fund managers who are not unimaginative white men would have a shot at deploying capital to support founders in *their* networks?
How many more fund managers who are not unimaginative white men would have a shot at deploying capital to support founders in *their* networks?
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca @dhh @jasonfried @bryce @joelgascoigne @randfish I could go on for days, but this thread is already long so I'll wrap it up with this:
Change is coming. We need to keep having conversations about what this industry is and what we want it to be.
And be careful with whatever horse you hitch your cart to.
Change is coming. We need to keep having conversations about what this industry is and what we want it to be.
And be careful with whatever horse you hitch your cart to.
@marazepeda @JenniferBrandel @TaraReed_ @deldelp @WAOFrancesca My bad, I added my handle where I meant to namecheck @ajscholz. Die Walküre. ✨
