
After the Gold Rush - miolini
http://techcrunch.com/2016/02/28/even-peter-thiel-has-got-soul/
======
willholloway
There is truth here, but remember that the age of the intelligent networked
machine is just beginning.

Look at the YC classes. They are very different from 2005. You can't get rich
making a site like reddit today. YC is going international, with X for Y
country businesses.

I was talking to a friend with a startup in Indonesia. In Asia its like 1998.

I think we are just at the end of the easy social/mobile revolution in the
West and on the cusp of the next robotics/AI/IoT revolution.

And the same process that created cheap and easy tools for software, the same
process that dropped the cost of starting a SaaS business 10x will happen for
robotics/ai/IoT.

Its already relatively cheap and easy to prototype and fabricate things like
low power bluetooth wearables.

Computers have just gotten tiny, low power, wireless and cheap enough to be
disposable. These devices are about to be everywhere.

This is not the end of the tech startup gold rush. It's time to learn AI and
hardware prototyping.

~~~
lkrubner
"the age of the intelligent networked machine is just beginning"

This sounds like pure denial. You don't want to face a painful truth, so you
create a rationalization. But your sentence could be applied to dozens of
other maturing industries, and your sentence would be wrong in every case:

In the 1880s: "There are thousands of oil reserves that no one has discovered
yet, therefore the field remains wide open to innovators who want to take a
risk on a new field."

And yet, after 1880s, the industry consolidated into a single behemoth. Even
as late as the early 21st century, wildcatters could still make some money off
a hard to reach patch, if prices were high enough. That didn't change the fact
that all the big profits were held by a few near monopoly powers.

In the 1880s: "Much of the country can not yet be reached by train, so this
industry is wide open to innovators who want to build new lines."

And yet the train industry consolidated after 1880.

1920s: "In automobiles, there are still vast innovations to be made to make
brakes reliable, and someone needs to invent an automatic starter, since hand
crakes are now dangerous, given the growing size of the engines. And an
automatic transmission would be an amazing breakthrough, if anyone can figure
out how to do it. The space is wide open for innovators who can solve any of
the many problems that remain in the auto industry."

But the auto industry consolidated from that point forward.

In the 1980s: "The CPU is a new idea and the path forward for processors is
still wide open to innovation."

And yet, Motorola was founded in 1928, Digital Equipment Corporation in 1957,
Intel in 1968 and AMD was founded in 1969. The dominant powers for computer
processors started a long time ago, the field consolidated when much was still
unknown about the ideal strategy for processors.

There are industries that clearly have not yet emerged as stable entities with
a clear path forward. Genetic engineering is an obvious one. But the software
industry is clearly much more consolidated than it was in the past.

~~~
willholloway
The train, the automobile, and the microprocessor were all harbingers of
exponentially increasing wealth and opportunity. Each technology lowered the
cost of starting and running businesses, as well as giant ancillary businesses
and markets.

The microprocessor preceded the gold rush we're eulogizing here.

They all spawned brand new ecosystems that created entirely new opportunities
for entrepreneurs to create wealth. The train even unified some nation states
that didn't exist.

~~~
lkrubner
It's possible that you did not understand the original article. Or perhaps you
did not read it. When you write:

"Each technology lowered the cost of starting and running businesses"

No, not in those industries. When an industry consolidates, the cost of the
starting a new business in that industry skyrockets. Eventually it becomes
impossible to start a new company in that industry. That clearly happened for
trains and automobiles, microprocessors, and certainly now for Internet
companies.

This is a pat re-statement of a tired cliche:

"They all spawned brand new ecosystems that created entirely new opportunities
for entrepreneurs to create wealth."

There will probably be economic growth in the future. I mentioned one obvious
industry that is still forming: genetic engineering. That doesn't change the
fact that the gold rush has come to an end for Internet startups.

Here you are changing the subject:

"The train even unified some nation states that didn't exist."

I come back to my original diagnosis: Your comment sounds like pure denial.
You don't want to face a painful truth, so you create a rationalization.

~~~
willholloway
Pretty sure this is troll feeding but in case you're sincere:

I didn't say cost was lowered in the "train" industry. Cost was lowered in the
milk industry. Because after the train people didn't have to keep cows in
urban areas to have fresh milk.

Your diagnosis is wrong. I've spent the last year focused on internet
connected hardware, immersing myself in all the amazingly powerful new tools
that just got cheap and open source.

The things I've made, the possibilities, the wonder of designing something on
a screen and having it manifest itself in the world, so you can hold it and it
comes alive right in front of you. The next evolution of internet techology is
going to be so much better than CRUD apps ever were.

Adopt a broader view of internet startups friend and you will see the internet
is just the communication/coordination channel for our cybernetic future.

------
Periodic
As someone who has worked at Google for a few years, I can't agree with the
author's characterization of tech behemoths. While they have embraced the
start-up mode of doing things for some new projects and are very free with
their investing, their core business is everything you'd expect from a big
business.

I'm not sure it's possible to grow as large as Google, Apple or Facebook and
remain agile. The product and organization gains too much inertia on its own.
Even if you have a brilliant idea for improving the product there are hundreds
of people you need to convince, months worth of meetings and reams of design
docs required.

The big companies may be innovating on the edges, but their established
products are all ripe for disruption.

Of course, if you look too disruptive they'll probably just buy you with their
mountain of cash.

~~~
Eupolemos
"Of course, if you look too disruptive they'll probably just buy you with
their mountain of cash."

Woe! :P

~~~
lubujackson
Unless they decline the offer, like Facebook did and Google did and almost
every current big company did at some point. If you are wildly successful
there WILL be that option in front of you at some point.

~~~
tdaltonc
Who offered to acquire google?

~~~
sogen
Google offered themselves to Excite, also Yahoo.

------
olivermarks
TechCrunch, the over confident tabloid reporters of hype who only a few weeks
ago were all breathless about 'unicorns', are now swinging the pendulum to the
other extreme. I'm in the bay area and there is a new realism for sure, but
the idea that low buck entrepreneurialism is 'over' is absurd.

Most of the current wave of tech's origins are in the Web 2.0 'read/write' web
that came after the dot com pump and dump funding fiasco...twitter et al grew
out of the ashes of the last vc and wall street debacle. we are a similar
inflection point IMO, where honest innovation will be more important than
megabuck funding fests...

~~~
jestrada
I think you're right. Most of what we read in media is the latest hype.
Unicorns were hype and covered to no end. This weeks hype is the end times of
tech.

There's no middle ground in most of the news I read. Imo, the markets are
tightening up forcing companies at all stages to cut their budgets and/or
generate revenue.

Tighter markets and harder conditions does not equate to the stagnation of
tech. They are not the same. In fact, constraints lead to greater innovation.

~~~
tim333
Yeah, I think it leads to the winner being the company with the best product
rather than the company that pulled in the most VC funding.

------
rco8786
It's somewhat clear that were headed for a bit of a downturn, but this article
reeks of the "everything that could be invented has been invented" fallacy.

~~~
onli
I think it is also kind of missing that you can't easily draw parallels with
the past here, as the field we are mostly talking about – software making, I
think – is the first(?) modern big industry field where the means of
production are in the hand of the workers. You can't easily compete with car
companies, cause most of us won't have the means to even produce a prototype.
But nothing is stopping someone capable enough from building his own OS, for
example. And yeah, then we come to the forces of design and market share, but
still – this is fairly new and distinct.

~~~
venomsnake
There is lack of freely available hardware on which said os to run - a lot of
companies try to be your gatekeepers.

The golden days like in the 90-s everything is PC, you can run whatever you
want on PC are still somewhere ahead of us with mobile and IoT.

~~~
cft
Mobile app stores are owned by two tech giants. Expect more and more stories
like [https://medium.com/@joshliptzin/this-is-how-google-kills-
you...](https://medium.com/@joshliptzin/this-is-how-google-kills-your-
app-c1abad30eb25)

~~~
venomsnake
I have a feeling that these tech giants are up for Standard Oil/ Bell surprise
in the medium future.

------
cornellwright
Oh no you have to do something new to get rich.

There's still plenty of money, talent, and success out there for new, good
ideas. It being hard to fund the same old thing again and again is more of a
feature than a bug.

And the argument about the last few YC classes - it takes years to see who the
stars are. I remember seeing one of the founders of Stripe speak when they
were in YC. It wasn't clear they were going anywhere. What they were doing was
cool, but there wasn't exactly lots of hype about it. Their success only looks
obvious in hindsight.

------
rm_-rf_slash
It's not startups that are losing their luster, it's tech-for-tech's-sake
companies. Now that we pretty much have everything we need to be connected, we
have to look beyond technology and to the strongest fulcrum of society:
culture.

Culture companies are the future. When you can get anything anywhere, the
brand matters far more than the product. Anyone can make a burger or a pizza,
so why are McDonalds and Pizza Hut crushing it across the globe, especially in
China?

We're already seeing this with news. Traditional media companies are
struggling to adapt while media outlets with personality like Vice (and Slate,
and Quartz) are doing better than ever.

When all the gold is mined, when all the tech is made, the only thing that's
left is to sell yourself.

~~~
manmal
I agree with you that brands will grow even more important.

Though, all tech has not been made yet - I suspect tech is taking a short
time-out right now before the next big disruptions are enabled by:

* VR (cinema, anyone? could even make some 3d printing obsolete)

* order-of-magnitude faster mobile internet

* cheap(er) robotics

* abundant energy supply thanks to fusion or <insert yet unknown source>; also, perhaps break-through battery tech?

* self-driving cars (obvious, but I think that in itself will enable a lot of disruptions, like cheap grocery delivery)

* cheap(er) drones (= flying cars eventually?)

~~~
rm_-rf_slash
Clarification: tech as in tech for this computational generation (i.e.
Smartphones). Pretty much everything there has been done, and it won't be
until new platforms that exist (like drones and VR like you mentioned) that
interesting things will be made.

That being said, such shifts do not often treat incumbents well. Microsoft
dominated the PC market in the 90s and early 00s, but their smartphone/tablet
is barely a footnote in the market.

------
stephenhuey
He said: "Today’s tech behemoths aren’t the lumbering giants of yesteryear.
They are leaner and meaner and more competitive precisely because they have
co-opted the same technologies startups used to attack them."

But this is far from true with the huge entrenched healthcare tech companies.
Many of them haven't even begun to employ the newer software technologies. I'm
down the street from the largest medical center in the world and numerous
doctors and nurses encourage me all the time with their complaints about the
major tech players in the industry. SV has barely scratched the surface of
what could be improved and I look forward to seeing many more entrepreneurs
join us in this $3 trillion industry.

~~~
amelius
The problem with the medical and biological fields is: you generally need
expensive equipment. Also, you will need expensive certification.

This is something that wasn't the case for software, so I guess this is also
why this goldrush was so much different than anything else we've seen before.

~~~
ASinclair
A similar problem is where the medical and software industries butt heads. The
Software industry likes to take risks and move quickly. It embraces failure.
Medicine avoids risk and moves methodically because of that pesky Hippocratic
Oath. Failure is often a life and death situation.

My father is a physician. So we've had lots of conversations about this
problem. I also here all of his complaints about software. Especially EMR
(Electronic Medical Record) systems.

~~~
amelius
I have a friend whose family doctor developed his own Electronic Medical
Record system :)

------
roymurdock
I like to scan these articles for numbers before reading. If I don't see any,
I exit out.

If you're going to talk about financial/economic phenomena please at least
conduct a modicum of quantitative research and give us some concrete data to
discuss, not just opinions in a void.

~~~
diminish
There's maybe one small number observation, I m not sure if it's correct as
there maybe high growth YC companies which will soon pass those 3/4.

"In 2011, Y Combinator’s poster-child alumni were — already — AirBNB, Dropbox,
and Stripe. Can you think of any Y Combinator companies from the last five
years as well-positioned today as those Big Three were then? Maybe Instacart,
if their unit economics work. That’s it."

~~~
nostrademons
That observation has a huge amount of hindsight bias. AirBnB was founded in
2006, DropBox was founded in 2007, and Stripe was founded in 2010. What did
the ideal startup look like in 2007? It was one of:

"A social network for X, like Facebook"

"A social news site for X, like Digg"

"A way to massively improve your e-mail experience, like GMail"

In other words, people always chase the massive startup that got popular about
3 years previously. This article is pretty much on-time if it's holding up
AirBNB, DropBox, and Stripe - those are the massive startups that got popular
about 3-4 years ago.

But in 2007, these were most decidedly _not_ the hot industries to go into.
Hotels were a done deal: Hilton, Marriott, Holiday Inn, and others chains
owned it, and who would think a tiny team could take them on? Filesharing was
an incredibly crowded market with 20-30 players, and in any case, if it got
popular Google was going to crush them with Google Drive. PayPal owned
payments; everybody knew it was a regulated industry with strong network
effects, so why bother to compete?

------
strommen
Maybe the "gold rush" is over. But there's still a heck of a lot of gold to
mine. We're not even _close_ to the point where there is no more valuable
software to be written (and sold).

------
bsder
No the _social_ gold rush is gone. Everybody who wishes to get online is
online already with _something_ and you have displace that.

And "gold rush" is a good term--"land grab" might be better. The fact that the
"disruptive" companies are all now skirting or outright flouting the law shows
that the easy land is taken.

If it's highly profitable, it's either illegal or difficult. Easy and
profitable means that, even if you're first, the horde is inbound.

Those of us with real products that can't simply be done with 4 20-year-olds
and a dog in Ukraine? We're chugging along, thanks.

Yeah, raising money is getting _really_ annoying, but, if we can't, we'll
bootstrap. Funny that, bootstrapping is an option when people pay you money.

And, do remember, the people who made all the money in the gold rush weren't
the miners, it was the people who sold shovels and alcohol.

~~~
matheweis
> And, do remember, the people who made all the money in the gold rush weren't
> the miners, it was the people who sold shovels and alcohol.

Ssssh, don't give away the secret. ;)

Actually, startups designed to sell to other startups will fail too when the
whole thing collapses like a stack of cards...

Enter Mandrill, which recently found its conversion funnel so ineffective that
they suddenly shut the entire system down.

~~~
tdaltonc
Is that what happened to Mandrill? I've read a coherent explanation of what's
going on there and why, but I'd love to.

~~~
matheweis
Well the official answer was "this change isn’t driven by profit–it’s about
aligning our culture and core competencies with our core customers’ needs.
There are many people who use Mandrill as a (free) utilitarian infrastructure
service, who are not our core customers, and who deserve to use a company
that’s better set up for that in the long run."
[https://blog.mailchimp.com/important-changes-to-
mandrill/#co...](https://blog.mailchimp.com/important-changes-to-
mandrill/#comment-3356313)

------
tarr11
Then[1] and Now[2]

[1]
[http://www.nytimes.com/2008/04/09/technology/09silicon.html](http://www.nytimes.com/2008/04/09/technology/09silicon.html)

[2] [http://www.nytimes.com/2016/02/22/technology/caution-
rebuffe...](http://www.nytimes.com/2016/02/22/technology/caution-rebuffed-
unicorns-and-other-start-ups-fixate-on-rainbows.html?_r=0)

~~~
dataker
I am not sure of what to infer from these.

In the end, the entire macroeconomic background is different.

~~~
tarr11
Even in 2008, there was a lot of denial about the impact of the downturn on
Silicon Valley.

"And they assert that they are not feeling anything like the pain that
followed the collapse of the dot-com bubble, which led to big job losses, an
exodus of talent, a plunging commercial real estate market and a significant
drop in investment in start-up companies."

~~~
tim333
Denial? Isn't their statement true that the impact of 2008 on Silicon Valley
was not as bad as the dot com crash?

------
vorador
Interesting article but I think it has a critical flaw — not all startups are
in the consumer space. Of course, there’s not going to be another Facebook for
the next couple years at least, but another Stripe — maybe?

------
joslin01
It's funny because the means through which big business tech companies have
"co-opted the same technologies startups used to attack them" is through
buying said startups. So no, I don't think it's all over.

You can't type on a keyboard and make an automobile factory that can compete
with the big car companies, but in software, you pretty much can. It's a
pretty chaotic market for this reason even if there are big dogs.

~~~
mapmap
It's not over. Big business [anything] companies become slower with each new
process and bozo explosion.

------
Bjorkbat
So, tl;dr version: The dark ages of the tech industry are finally over.
Everyone, rejoice, it's a brand new day.

Stop working on your social network. Stop trying to simultaneously pick the
lowest hanging fruit while going after the biggest pile of cash.

Go after problems that matter, rather than gizmos that might get a lot of
users, or "eyeballs".

------
johnrob
All of these claims are true in any market, but we ignore them during booms
because fundraising is easier (and de-risks our startup involvement). The only
novelty in this article is a return to honesty.

------
jbeales
"If you are building something which is genuinely extraordinary, that’s always
the right answer."

The gold rush is never over for extraordinary companies.

------
cft
I agree with this article overall, especially re: Google, but I do not agree
about Facebook. Most American users 13-25 do not use Facebook anymore.

Facebook will either have to work out a business model that makes it
profitable to frequently buy WhatsApps/Instagrams and then
Snapchats/Telegrams/etc or they will end too.

~~~
monkmartinez
I agree. I ask myself this question; "If <x> was to disappear tomorrow, what
would happen?"

The answer for Facebook and me, is nothing. If Google disappeared tomorrow, I
would be hurting for many services I probably take for granted. I suspect if
Facebook disappeared tomorrow, most people's lives would not _materially_
change for the worse. Perhaps they would even change for the better.

~~~
ZanyProgrammer
I think a lot of people would be better off without Twitter.

~~~
cft
I think twtr stock symbol may not exist by 2018 actually

~~~
askafriend
If you really believe that then put money into it.

~~~
cft
It's hard to short for such a long time, nearly impossible. Common shorts and
puts are short term instruments.

------
calebgilbert
I've gotta say as someone who is not actively developing full time, most of
the comments in here read like people in denial. It doesn't really matter what
anyone's opinion is, or what any of us say though - the future will bring what
it brings. That said I hedged my bets a couple years ago against the tech
world's macro economic future and culture.

------
personjerry
> Over in The Information, the Lessins argue that “the period where tech
> startups can readily disrupt larger tech companies is ending for a simple
> reason: Today’s tech behemoths aren’t the lumbering giants of yesteryear.
> They are leaner and meaner and more competitive precisely because they have
> co-opted the same technologies startups used to attack them”

I disagree. I am reminded of the comparison of the prisoner and the warden,
where the warden [behemoth] has his whole life to think about whereas the
prisoner [startup] is only thinking of escape [way to get a leg up on the
behemoth]. The difference is that many people see the behemoth with no
_obvious_ weaknesses and give up; but if they had the same weaknesses they
exploited, that would be too easy wouldn't it?

------
tedmiston
> Over in The Information, the Lessins argue that “the period where tech
> startups can readily disrupt larger tech companies is ending for a simple
> reason: Today’s tech behemoths aren’t the lumbering giants of yesteryear.
> They are leaner and meaner and more competitive precisely because they have
> co-opted the same technologies startups used to attack them” and so “until
> there is another fundamental technology disruption, the window of
> opportunity for startups is limited to more traditional markets with less
> competitive players.”

Oh, come on. Where there are BigCos, there is inherent bureaucracy slowing
them down. Creating a startup gives founder engineers the opportunity to
massively create wealth in a way that BigCo simply does not incentivize.

------
ilaksh
After the technopolies will come the decentralized technologies like the block
chain etc. Then we will eventually get a common platform built on things like
an AST format (e.g. web assembly) with a semantic module registry allowing for
creating interfaces across programming languages to integrate and evolve the
decentralized tech. Then we will get into competing smart contracts and
localized systems that limit company size and regulate social interaction via
the technology. Then we will have superintelligent hybrid systems with
features we can't anticipate now.

------
rdlecler1
Consumer may be entering a trough but the industrial internet is rising.
Social and enterprise SaaS are highly saturated, but these become tools for
the next generation of companies. The next wave of technology is characterized
by technology that senses and interacts with its environment and this will
drive tremendous innovation in the industrial internet (agtech, manufacturing,
construction, etc). As these technologies mature, become less expensive and
more ubiquitous, we'll see startups start diffusing back into the consumer
space and the cycle will repeat again.

------
chinathrow
Ctrl-f, thiel, not found. Why the slug?

------
edoceo
I'm glad I built a profitable business before taking any investment. Seems
like I'll have a little better leverage going forward.

------
andy_ppp
I bet you he's wrong and I intend to prove it.

------
GreaterFool
Now that TC announced it, it's official people! Time to close shop, pack your
bags and leave.

Startup gold-rush is anything but over. Tell me this: if not into startups,
where will the money go to find possible returns? Negative interest rates, oil
price can't find the bottom and stocks aren't really going anywhere either. So
where will this money go?

~~~
jMyles
> Now that TC announced it, it's official people! Time to close shop, pack
> your bags and leave.

I had the same thought - TC is pretty much an eye-roll-and-move-on for me at
this point.

However...

> Tell me this: if not into startups, where will the money go to find possible
> returns? Negative interest rates, oil price can't find the bottom and stocks
> aren't really going anywhere either. So where will this money go?

I think that the point here isn't that entrepreneurship is suddenly dead, but
rather that

> [the big players] have co-opted the same technologies startups used to
> attack them” and so “until there is another fundamental technology
> disruption, the window of opportunity for startups is limited to more
> traditional markets with less competitive players.”

The various *AAS models may be coming to the end of their usefulness as a
disruptive media, but there's plenty of "fundamental technology disruption"
ahead: mesh networking, crypto-blockchains, embedded, VR, and on and on.

------
ogezi
This is mostly true but it sounds a bit too gloomy.

~~~
kdkooo
Agreed.

------
steven2012
I disagree with the authors premise that there can only be 2-3 behemoths. Has
he not been paying attention to how kids use mobile apps these days? No one is
locked in to a single ecosystem like they used to be.

People use gchat, Facebook, Instagram, snapchat, whatsapp, and iMessage
simultaneously, for distinct purposes. And all of their friends do too.

As long as the app present value, kids these days have no problems switching
back and forth between apps, meaning they can get hundreds of millions or
billions of users too.

~~~
ilaksh
Facebook owns Instagram and WhatsApp. The only app on your list that isn't
controlled by a giant company is Snapchat.

------
debreuil
The gold rush is over because everyone who wants a PC has a PC. -2005ish

~~~
douche
The hardware hasn't really gotten significantly better in the last 10 years to
get people on the upgrade treadmill again. Phones are on that curve now, but
eventually they are going to top out too, and your iPhone 10 won't be that
significant an upgrade from your iPhone 9.

~~~
mkhpalm
I guess it depends how you measure getting better. If you're just looking at
Mhz then maybe I can understand.

For me, 10 years ago I had to use a desktop to achieve much of anything. These
days I have the power of my desktop except it weighs 2.65 pounds, wireless
transfer speeds up to 1300 Mbit/s, has a 13.3in 3200x1800 touch screen, 256GB
drive I can read and write much faster than my 3ware RAID0 setup I had back
then. Its the size of an actual notebook and runs all day long without getting
plugged into anything. Not to mention it only cost me $750 bucks compared to
at least twice that for my old desktops.

For me, it feels like things have improved fairly significantly.

~~~
douche
We're sort of out on one end of the bell-curve, really. For Joe Blow, average
computer user, email and Word and YouTube works on their decade old hardware.
Unless you're a gamer, there's not a lot of call to have the latest and
greatest - and you can still run a lot of stuff on lower settings on old
hardware. Long-lived console generations and the paucity of PC-first
development have kept the minimum specs on even AAA titles pretty low.

For instance, my parents are happy as clams using a G4 Macbook and a second-
hand HP Pavilion laptop

