The startup elevator pitch of “It’s like ___, but for ___!” has become such a cliché that it has its own generator site, capable of churning out stuff like “It’s like SkillShare, but for SAT tutors,” or “It’s like ShoeDazzle meets SeatGeek.” That doesn’t stop people. If you’re looney enough to look at AngelList, you’ll see that same basic formula repeated in any number of startup company descriptions. Why? Because it’s easy. Taking the business model of one successful startup company, and applying it to a similar, perhaps more niche space, and rolling out a functional beta is a safe and easy way for the VCs to pick up your scent.
Admittedly, coming up with a truly new product is a hard thing to do. A lot of real innovation comes in the space of the “adjacent possible”, that is combining disparate things in new and exciting ways. It doesn’t always work, but when it does, watch out. That doesn’t seem like what a lot of startup companies are doing, at least not the ones getting huge piles of money for bringing in lots of people. How many “temporary” image sharing services do teenagers need to share naked pictures on, or social networks that gamify content consumption? How many industries can be “disrupted” before the unemployed and redundant start rioting in the streets?
In my past job, I was inundated by talk about what flavor of the month company was raising so much from whomever—partially because I was working for a startup company in the “___, but for ___” vein that was soliciting funding, and partially because our second blank consisted of people who manage the money to invest in venture capital funds, and the venture capital funds themselves. It grew tiresome, especially with so many startups doing exceedingly boring stuff with the intention of just bringing in as many warm bodies and eyeballs as possible to increase their valuations. No wonder some people think we’re experiencing a second technology bubble.
All of this makes the “Silicon Valley can do no wrong” rhetoric sound even more arrogant. If the modus operandi of Silicon Valley were less about eyeballs, advertising, valuations and exits, and more about solving real problems that affect real people, claims like “it’s becoming excruciatingly, obviously clear to everyone else that where value is created is no longer in New York; it’s no longer in Washington; it’s no longer in L.A.; it’s in San Francisco and the Bay Area.” would come off far less obnoxious than they do. Only in the venture capital world would something as scummy as payday lending get $14 million dollars. That same money could go to helping people improve their lives and finances to save them from even needing usurious loans to make it through the week.
The problem is that approach takes a long time, and doesn’t have the same prestige for the founder and profit for the VC firm. There are very real problems facing people around the world that are simply beyond the ability of web and mobile apps to solve: global warming, income inequality, disease, famine, and war. Technology can be a part of those solutions—just look at the work Gates Foundation has done for improving the cold chain required for vaccines. Even worse, with philanthropy on the decline, nonprofits and other organizations that work to improve people’s lives are forced to find new revenue sources. These sources often end up being returns from their investments, which are increasingly including venture capital funds.
If the endgame of serial entrepreneurs was to make a few billion in the startup and/or VC game, and then turn around and use their largess to improve the world along the lines of Andrew Carnegie, it might not be so frustrating. However, the situation as it stands is not sustainable. The numbers don’t add up, and either people will figure that out, or the bubble will burst. The end result will, optimistically, result in new companies focusing on building sustainable businesses to last. More likely, it’ll just be like the intervening years between the first and dot-com bubble and now. I think we can expect history to repeat.