Something is rotten in tech startup land. Don’t call me a hater for saying so. It’s not that I’m anti-innovation or a disbeliever in disruption or calling it a full-scale bubble or saying every darling startup is going to fail. None of those.
Somebody posted too many party fliers. The uninvited crowds have all turned up. The people here don’t respect your parents’ furniture, are throwing beer cans in your back yard and there’s a dude passed out face down in your sister’s bedroom. About an hour ago he thought he was invincible. That he defied the laws of gravity. He turned up for the fun but went too hard, too early.
There’s no one sane I know anymore who doesn’t privately say that things have gotten out of hand. Few like to say so publicly.
And I blame unicorns.
Not the successful companies themselves but the entire bullshit culture of swash-buckling startups that define themselves by hitting some magical $1 billion valuation number and the financiers who back them irrespective of metrics that justify it. Unicorn has become part of our lexicon in a sickening way and will no doubt become part of the history we tell about how things got so out of control again. Ten years from now people will be embarrassed to say unicorn.
I met a wealthy investor from China. I explained about some of the companies we’ve backed in the past that became worth more than $1 billion. Our firm has funded many of them. On average they have taken 9-11 years to reach this status and most of our investments have never gotten there.
I was trying to tell a real story about grit and risk and determination and seeing the markets early but struggling to persuade others. He smiled midway through my story and said, in broken English, “oh, you have unicorns!” No. We fucking don’t. We have companies that became valuable through founders that sacrificed for years and through hard work--and partly through luck--achieved great things.
But the status symbol of this milestone is driving investors, entrepreneurs, the press and everybody into thinking you magically can achieve this status in a matter of a few years with a great team and an astounding idea. The truth is that many “unicorns” have reached the status solely because the funding markets have said so. At least for now.
My fear isn’t whether these companies will be valuable in the future. Many will. Many won’t. That’s how markets go. My concern is that culture of unicorns has created a generation of entrepreneurs & investors looking for shortcuts. Do you know how many people I meet these days who are “packaging up money in SPVs (special purpose vehicles),” or raising syndicates or doing secondaries or advising high-net-worth individuals how to get into unicorns? For a fee, of course.
I’ve met people straight out of their MBA program doing this. I spoke with a guy who is doing deals all over the world and told me he is differentiating from other capital by his firm’s “technical skills.” When I asked his area of technical speciality he said, “Oh, no, I’m not technical. I just meant that we understand business fundamentals better than our peers.” I can’t make this stuff up. It seemed like a message in a bottle opened from a shipwreck in 1999.
And of course it’s not just our industry – it’s pervasive in society, this shortcut mentality. It really hit me this past week as I was reading two great articles online (yes, I’m a news & politics junkie). The first was by Eric Cantor, the former Republican House Majority Leader in Congress writing a great Op Ed in the NY Times about the surprise resignation of John Boehner, the Republican Speaker of the House.
In the op-ed piece (which you should read if you’re interested in politics) Cantor laments the current refusnik wing of the Republican party who would rather shut down the government than make hard compromises with the Democrats and find grounds on which to agree and give up on areas in which their party is passionate about in order to govern. He feels that the party is looking for shortcuts to achieve objectives
The tragedy here is that these voices have not been honest with our fellow conservatives. They have not been honest about what can be accomplished when your party controls Congress, but not the White House. As a result we missed chances to achieve important policies for the good of the country.
The response I often hear to these points is: “Well, Republicans at least need to fight.” On this I agree. It is imperative that we fight for what we believe in. But we should fight smartly.
I have never heard of a football team that won by throwing only Hail Mary passes, yet that is what is being demanded of Republican leaders today. Victory on the field is more often a result of three yards and a cloud of dust. In politics this means incremental progress, winning hearts and minds before winning the vote--the kind of governance Ronald Reagan perfected.”
This is not a blog post about politics--the op-ed is a Republican leader writing about the Republican party. It’s a post about taking shortcuts vs. doing the hard work and making compromises. It’s his words, not mine.
Victory on the field is more often a result of three yards and a cloud of dust. I like that. So, too, startups. It’s not about being on stage at a Demo Day or featured in an article in TechCrunch or closing a $20 million round. It’s about continually shipping code. It’s about putting our menacing bugs. It’s about a 6:15am flight to a customer in Detroit in Winter for a $200k deal to hit your budget for the quarter.
And I read an even better article this weekend. I would go as far as saying I read a beautiful treatise to life by Aaron Bleyaert, titled “How to Lose Weight in Four Easy Steps.” The title is a misnomer, as it isn’t THAT kind of blog post. But Aaron did apparently lose 80 pounds in the last year. How? Simple
Step 1: No Beer
Step 2: Portion Control
Step 3: Have Your Heart Broken
Step 4: No Fruit Juice
But as you may guess, 90 percent of the article is about Step 3. Let me give you a taste
Start going to the gym regularly, and even though you don’t know that much about exercise and you’re way too weak to do pretty much anything but lift 5 lb weights and use the elliptical machines with the old people, do it until your sweat makes a puddle on the floor. Then go home and go to bed early and the next day do it again. And then again. And then again. …
Turn your collar up against the cold and drive home to a meal of a single chicken breast and steamed vegetables. Go to sleep. Go back to work. Go to the gym. Sweat…
Get on the treadmill. Push yourself to level 3, then level 4. Then 6. Run so fast you feel like you are going to die. Hit level 10. Pray for death. Find the strength to keep going…
Watch as your life shrinks down to four things: 1.) work, 2.) the gym, 3.) the food you eat, 4.) sleep.
You start to see new people working out here and there and you realize you have done something you once thought impossible: You have become one of the regulars. Once in a while, you are the last one leaving the gym.
Your body changes slowly, then all at once — you are suddenly thin and muscular. You hit your goal weight, pick a new one, then hit it again. You go out and buy new clothes. You receive wave after wave of compliments.
You’ve stopped drinking alcohol months ago, so now when you hang out at bars or parties you don’t talk to anyone new. But with your new body and new clothes, gorgeous women hit on you constantly.
You make puddle after puddle after puddle and eat single chicken breasts and work and sleep and the weather gets warm and then gets cold and you know all of Taylor Swift’s songs by heart and the only things that exist in the entire universe are you and The Gym.
[You] realize it’s been exactly a year since you started working out. You think of all those miles you’ve run and those pounds you’ve lifted and chicken you’ve eaten and puddles you’ve made. It doesn’t seem that bad. You realize that it’s not about hitting a goal weight, or lifting a weight. It’s about being able to wait. Waiting, being patient, and trusting that life will slowly inch along and things will eventually get better. After all, change takes time.
I have edited this post heavily. Mostly because I’d like you to read it yourself. So I’m linking to it again. It’s really about love. And sacrifice. And hard work. And putting in the daily things that it takes to achieve great things. And how in the daily routine of being yourself, committing to goals and just living life, you realize that goals were easier to obtain than you had imagined. It’s a love story of sorts. Boy meets girl.
If you’re fortunate enough to raise $100 million early on to build your startup – congratulations. But to all of the 99.999 percent of other startups out there please know that this isn’t the success by which to measure yourself. Measure yourself in gym visits, in 3-yard gains, in sacrifice and dedication. Avoid the metaphorical parties and the alcohol and the extra pounds and know that your gains will come in lines of code and purchase orders and signed offer letters and repeat purchases. And during your year in the gym nobody may notice. I may have to wait until way down the road when you come out 80 pounds lighter.