One of the most encouraging sentences I've read in months appeared this week in a Wall Street Journal article about food-delivery startup DoorDash: "Venture investors, who at one point last year backed 10 companies a month at valuations of $1 billion or more, have started to pull back on deals they deem too risky." Hallelujah. Common sense--or compunction--it seems, is finally "trending" again in Silicon Valley, and that deserves a celebratory chorus.

Statements similar to that have been appearing more and more in tech-related business stories, as investors have started to question startups with little to show beyond a flashy sales pitch and a gimmicky app--short for both application and approach, in this case. Maybe it's the markets, or maybe it's the Theranos effect, as investors--and fawning media--look back at that blood-testing debacle and realize that a black turtleneck on a young CEO does not a Steve Jobs make.

This latest expression of investor wariness appears in the context of DoorDash's disappointing (for DoorDash) round of investment, which fell short of its hoped-for billion-dollar valuation. Imagine a food delivery service that operates in less than two dozen cities being deemed not worthy of a billion-dollar valuation! But that it could still be "valued" at a slightly less stellar $700 million shows investors haven't fully seen the light. $700 million? For what? And why are these kind of valuations still taken seriously?

The reporter who broke the Theranos story, The Wall Street Journal's John Carreyrou, told ProPublica that at a certain point he realized investors were handing over money based on nothing but assurances. At what point did that become the norm? It would make a great addition to the "It's What You Do" insurance commercials that are running now. Like moms who invariably call at the worst possible time, if you're a venture capitalist, you hand over hundreds of millions in exchange for empty promises--it's what you do.

So along comes DoorDash, which says it wants to change the way people connect with restaurant food. Or make every night more like pizza night. Who knows? The CEO described its mission as "helping customers get the very best out of their community" when announcing its partnership with Taco Bell. It's got an app--an app!--that allows customers to order, pay and track the progress of their crunchy taco--or one of 250 "curated items" from the local 7-Eleven--to their front door. Third parties are making the deliveries, not somebody who's "invested" in the product, whether it's the food preparer, or the eater. And not only has two-year-old DoorDash recently cut the pay of some "dashers," hardly an endearing business practice, but Business Insider has also reported about the company's less-than-upfront training videos and unauthorized listing of restaurants as partners. They've been sued by West Coast darling In-N-Out Burger for doing just that. This is a company allegedly worth $700 million?

In November, Bloomberg reported on DoorDash's negotiations with investors. It quoted research firm CB Insights--a data analysis firm that's itself risen to prominence on the tech-startup craze--as saying the market for food delivery via app is "overcrowded." But apparently many investors aren't deterred by the fact that this ocean is already full of sharks. And now Amazon is wading in with services in seven cities, too.

Despite investors' increased penny-pinching, or millions-pinching, it's clear that sanity hasn't totally returned to Silicon Valley. The recent DoorDash valuation reminds me of a famous remark by a former leader: "Fool me once, shame on you, fool me...you can't get fooled again." Except it turns out that if you're a VC, the lure of a big payoff means you can. Again and again and again.

Published on: Feb 19, 2016