1/n
VCs only want to invest in startups that can be bought by incumbents, otherwise they don’t foresee ROI.
So if you are dealing with a VC-backed startup you can be fairly certain they are doing nothing innovative, for reasons depicted in my original tweet.
VCs only want to invest in startups that can be bought by incumbents, otherwise they don’t foresee ROI.
So if you are dealing with a VC-backed startup you can be fairly certain they are doing nothing innovative, for reasons depicted in my original tweet.
2/n
Attempts to break this model usually focus around bootstrapping, enabling companies to grow organically, from the bottom-up; albeit much more slowly than their VC-back counterparts.
Attempts to break this model usually focus around bootstrapping, enabling companies to grow organically, from the bottom-up; albeit much more slowly than their VC-back counterparts.
3/n
Accepting slower growth is supposed to mean making something better, but better how? Are the products produced by smaller firms better?
Accepting slower growth is supposed to mean making something better, but better how? Are the products produced by smaller firms better?
4/n
Just as markets are efficient, product knowledge spreads at the speed of light, immediately equalizing the product landscape the moment a company comes out of stealth mode.
Just as markets are efficient, product knowledge spreads at the speed of light, immediately equalizing the product landscape the moment a company comes out of stealth mode.
5/n
So-called “product differentiation” isn’t what’s happening in software, rather it’s how well one scales their sales and distribution that makes or breaks a company. Take any leading product and compare it to the next few in line; they are the same thing.
So-called “product differentiation” isn’t what’s happening in software, rather it’s how well one scales their sales and distribution that makes or breaks a company. Take any leading product and compare it to the next few in line; they are the same thing.
6/n
Smaller companies thus don’t really compete on product differentiation, and they cannot compete on what matters; scaling their sales and distribution.
Smaller companies thus don’t really compete on product differentiation, and they cannot compete on what matters; scaling their sales and distribution.
7/n
If we take product differentiation out of the equation then why bother starting a company? Running a business becomes nothing more than optimizing a small sales and distribution pipeline for a rehashed product that slightly improves on some larger company’s feature.
If we take product differentiation out of the equation then why bother starting a company? Running a business becomes nothing more than optimizing a small sales and distribution pipeline for a rehashed product that slightly improves on some larger company’s feature.
8/n
If we are going to break this model, small companies need to move away from supposed product/market differentiation and towards market creation. This obviously isn’t anything a VC would be interested in but that’s a good thing.
If we are going to break this model, small companies need to move away from supposed product/market differentiation and towards market creation. This obviously isn’t anything a VC would be interested in but that’s a good thing.
9/n
Market creation requires coming out with a product that is not only entirely new but has undeniable advantages to society. Market creation requires companies to look at *problems* that actually need solving, rather than building to please investors and incumbents.
Market creation requires coming out with a product that is not only entirely new but has undeniable advantages to society. Market creation requires companies to look at *problems* that actually need solving, rather than building to please investors and incumbents.
10/n
Problem-focused building is something society has largely lost. When PCs first hit the stage there was no market for personal computers, it got created. Same with a host of other great innovations, including the first smartphone.
Problem-focused building is something society has largely lost. When PCs first hit the stage there was no market for personal computers, it got created. Same with a host of other great innovations, including the first smartphone.
11/n
Humans are not meant to throw ideas at already-solved problems in order to deepen some large organization’s pockets. They are meant to take actual challenges and resolve them through their ingenuity. This is something Silicon Valley used to stand for.
Humans are not meant to throw ideas at already-solved problems in order to deepen some large organization’s pockets. They are meant to take actual challenges and resolve them through their ingenuity. This is something Silicon Valley used to stand for.
12/n
I think VCs do far more harm than good when it comes to promoting innovation. Their quickest-route-to-ROI approach shifts the focus away from genuine problem-solving towards bland feature improvement.
I think VCs do far more harm than good when it comes to promoting innovation. Their quickest-route-to-ROI approach shifts the focus away from genuine problem-solving towards bland feature improvement.
13/n
The assumed VC track needs to be dramatically reduced for the model to change. Tomorrow’s builders need to be incentivized to create markets, not push someone else’s needle a little further.
The assumed VC track needs to be dramatically reduced for the model to change. Tomorrow’s builders need to be incentivized to create markets, not push someone else’s needle a little further.
