I'm not starting a company
Overall, I am pretty happy to see the high level of interest in entrepreneurship these days. I actually think that we need more of it and wish that more teenagers were getting into it instead of just being passive consumers -- but that's another rant for another time. Out here in Silicon Valley, practically everyone here has a side job doing something entrepreneurial -- even if it's just writing mobile applications.
Back in the mid to late '90s, everyone and their mother was crapping out a company. B-school grads would walk out with their MBA, grab a couple of programmers, a web designer, and set up shop. They'd come up with some wacky-doodle idea, throw ".com" at the end and make a claim that although the company might be pulling in revenue of pennies per transaction, it would "make it up in volume." I didn't (and still don't) have an MBA, so I thought that there was some obvious-to-an-MBA factoid that made it obvious that this revenue strategy would work. After the dot-com implosion, I was vindicated because the emperor really wasn't wearing any clothes.
Ok back to our regularly-scheduled program...
Some say that we're undergoing another bubble. I can't say definitively that that is the case, but if it is, thank goodness it's not the insanity that we had a decade and a half ago. At least everyone is no longer buying servers by the pallet while building data centers and warehouses all over the place! One thing that I have noticed is that some of the companies being put together do not have sustainable revenue models. I guess that this is no different from people starting companies in other fields at other points in time. For example, there is a building I frequently drive by that has had no less than 3 or 4 different restaurants in the location in maybe 2 years. Ugh! Nevertheless, it's never a good idea to do something dumb just because other people are doing it.
Because I've seen far too many of these entities that fall into the aforementioned categorization, I've decided that I no longer want to start a company. I want to start a "business." I'll build a product/service that will have a price to acquire/use. That price will bring in enough revenue to sustain itself and make a profit. If people don't want to pay for it, then the "business" will go out of business. Seems pretty pure and simple, no? But, then again, what the heck do I know? I don't even have an MBA!
As I wander about the Valley meeting people and asking about their startup efforts, they all comment that they're starting (or have started) a "company." Some of the ideas behind these efforts are really compelling while others are -- shall we say -- not so compelling. Perhaps I'm a harsh grader because I lived through the extravagant excess of the dot-bomb era. If you weren't in the game back then, let me take a brief detour to explain...
Back in the mid to late '90s, everyone and their mother was crapping out a company. B-school grads would walk out with their MBA, grab a couple of programmers, a web designer, and set up shop. They'd come up with some wacky-doodle idea, throw ".com" at the end and make a claim that although the company might be pulling in revenue of pennies per transaction, it would "make it up in volume." I didn't (and still don't) have an MBA, so I thought that there was some obvious-to-an-MBA factoid that made it obvious that this revenue strategy would work. After the dot-com implosion, I was vindicated because the emperor really wasn't wearing any clothes.
Ok back to our regularly-scheduled program...
Some say that we're undergoing another bubble. I can't say definitively that that is the case, but if it is, thank goodness it's not the insanity that we had a decade and a half ago. At least everyone is no longer buying servers by the pallet while building data centers and warehouses all over the place! One thing that I have noticed is that some of the companies being put together do not have sustainable revenue models. I guess that this is no different from people starting companies in other fields at other points in time. For example, there is a building I frequently drive by that has had no less than 3 or 4 different restaurants in the location in maybe 2 years. Ugh! Nevertheless, it's never a good idea to do something dumb just because other people are doing it.
My personal take on the matter is that if you are going to go through all of the trouble to start a company, go the extra mile to make sure that it can stick around! I think there are far too many companies being formed expressly for the purpose of being acquired; folks are just out there looking for a big pay day. Don't get me wrong -- I'm not against making money, but if we're all trying to be Gordon Geckos, that's not a good thing in the long run. I'm willing to make exceptions for companies that are trying to advance technology; that's what innovation is all about. But, when someone tosses together some wack, "me too" company that makes a half-assed product/service and scrapes together just enough money to make it to acquisition-land, I get all sad inside.
Because I've seen far too many of these entities that fall into the aforementioned categorization, I've decided that I no longer want to start a company. I want to start a "business." I'll build a product/service that will have a price to acquire/use. That price will bring in enough revenue to sustain itself and make a profit. If people don't want to pay for it, then the "business" will go out of business. Seems pretty pure and simple, no? But, then again, what the heck do I know? I don't even have an MBA!