Welcome to one of my regularly scheduled attacks of futility. It happens about once a month if I’m lucky and once per week if it’s a really hard month. It starts with something small that triggers it. A comment from someone. A post. An announcement. The post or announcement usually surrounds some frothy statement like, “Look at all of the money being thrown around! Wa-hoo!” or something not quite as hyperbole, but points to the same thing. I read the headline and then look at my own experience and think:
“Geez. I must be doing something incredibly wrong if it is this easy to raise money and I’m not. I suck.”
This thought has a tendency to spiral into, “What business do *I* have being a CEO? I’m terrible at this!” Eventually, though, I kick myself out of my pity party and get creative and work harder. To date, I’ve pulled through each and every attack with new ideas and a renewed sense of purpose.
I just gave a talk on being a startup entrepreneur in the midst of looking for funding at NXNE Interactive called, “So you wanna do a startup, eh?” The gist of it is that all of this frothiness isn’t so good for startups that want to build something that means a damn. The advice is awful. The frenzy makes for poor short-term thinking. And the urgency caused by all of it means that everyone is making bad decisions based on no evidence. VCs/Angels are following the herd when most of them are smart men and women who didn’t get to where they are because of herd mentality. Entrepreneurs are pivoting away from the ideas that put them on their path in the first place and following trends that don’t really mean a damn (gamification or daily deals anyone?)
If we ARE in a bubble, and many people think we are, then the cash grab myopic activities will merely accelerate the bursting of that bubble. And sure, there are people who make money during these frenzies, but it’s a small number and you probably aren’t one of them. You’d need lower scruples.
But I think the biggest travesty of this time period is ideas. As Mark Suster said in his awesome presentation (which was misinterpreted by TechCrunch as a cash-grab statement), “Some good companies simply don’t get funded.” Those companies are usually the trailblazers. Think Pandora. Think AirBnB. Think Zappos (who struggled with funding during the first bubble). Think just about every startup who didn’t follow the pack.
Ideas are crazy hard to bank on. They are crystal clear for the idea-thinker, but are incredibly difficult to gr0k for the idea-listener. An idea doesn’t come out of a single eureka moment. It comes out of years of thinking about a problem and having small bursts of inspiration here and there pummel your brain until you are able to piece them together one day into a cogent thought. Without taking the listener on that long journey, he/she won’t be able to understand how x solves y.
Take AirBnB for instance. The founders had a need: paying their rent. There was a conference coming up that created an opportunity: people looking for cheap places to stay. They pulled ideas from their own experiences: sleeping on an air mattress is a good, inexpensive way to travel and couchsurfing has made it safer to open up one’s home to strangers. They added a sparkle of business acumen to solve their original problem and address the opportunity: what if we charged a nominal fee for conference goers to sleep in our apartment on air mattresses? And then, when the experiment was a success, they had their big idea: let’s create a tool to match people like us with travelers? Brilliant, right? Well, we know that now, but not many people thought so. In fact, they were practically laughed out of VC and Angel offices when they pitched the idea. They understood the brilliance of the idea because they lived it and experienced it unfolding. But it was a radical way to approach things and not so easy to wrap a brain around by someone who had never been there.
So instead of wacky new ideas like this getting funded, ideas that look like other ideas get funded quickly. Of course, once the model is demonstrated/proven, it makes it much easier to gr0k. That’s why the ‘high level pitch’ is so popular. “We are Mint.com for Products.” “We are Foursquare for relationships.” Etc. It’s essentially:
“We are -insert company that is wildly popular here so there is no question as to the business model- for -insert slight variation of market/product/vertical-.”
But the issue here is that we start to see a market glut of products that are x for y instead of thinking about creating products and services that actually mean a damn. Not saying that x for y doesn’t ever mean a damn, but by and large it becomes a bit of a cash grab. Just add the frothy money slinging market we are seeing right now and it gets even worse.
Bring on the feelings of futility.
Why would anyone want to enter a frothy market that has an idea that comes from a real place of “let’s make stuff work better for people AND make money?” It’s heartbreaking. And no, I don’t want to pivot and grab onto cash cows. It’s distracting and dishonest and will lead to another crash. And that isn’t good for anyone.
That’s why I find it necessary to keep talking frankly about reality. It’s probably not popular or doing me any favors in my journey to raise money to fund Buyosphere‘s ability to build something that helps make stuff (in this case, commerce) better for people (and make money). But I’d really like to open up the conversation on how we can take a step back from the frothy frenziness of today’s startups and talk about real solutions for real entrepreneurs with real passion for their ideas who want to serve real people’s needs.
I’ve embedded my deck below. I’d love your feedback and your own stories. I’d like fewer journeys into the pits of futility and more into conversations about solutions.