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BRINGING INNOVATION TO MARKET

What's a Real Company?

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At Y Combinator's AngelConf yesterday, Michael Arrington bemoaned the proliferation of, as he called them, "dipshit companies." I suppose by this he meant companies that offer unassuming products and services--and entrepreneurs whose chief ambition is to sell out to a larger enterprise for a relatively small amount of money. 

There's something undeniably seductive about this line of thinking, especially as it applies to so-called Web 2.0 start-ups, which often offer dead simple services built on top of existing ones. After all, it's hard to get excited about a company like Voyurl, which, TechCrunch tells us is, "Blippy for web browsing," which in turn was billed as "Twitter for credit cards." How could a company that lets me share my web browsing history or my credit card purchases with my Facebook friends create lasting value or make the world a better place? Why would a serious entrepreneur start with such a trivial premise?

The trouble is that these start-ups seem only trivial until they change the world. Back when I was writing about Twitter two and a half years ago, most serious business people thought that the service was a joke. Then this happened. And this. And this. Today, one can argue about the Twitter's long-term prospects as a business, but it would be crazy to call the company trivial. Twitter has had a marked influence on world events, has become a legitimate source of news, and has made businesses millions of dollars.

In fact, the "dipshit company" formulation sounds eerily similar to Clayton Christensen's definition of disruptive innovation:

Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream. 

Fred Wilson makes this point especially well

...you just don't know what is a crazy idea and what is a brilliant idea. And you don't know what is a great team and what is a weak team. Of course, we have our opinions on that. We make those judgment calls every day. But we are often wrong.



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