
Which Categories of Seed Startups Are Thriving? Which Aren't? - rmason
https://tomtunguz.com/which-categories-of-seed-startups-are-thriving-which-aren-t/
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sprafa
Fascinating that so much money is going into blockchain startups when I can’t
think of that many useful applications for it.

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SkyPuncher
Agreed, nearly every commercial use seems better off simply relying on a
centrally trusted authority.

"This has to be on the blockchain. But! don't look behind the curtain to
everything else in our company that relies (and thrives) on a single point of
trust.

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pilingual
The underlying blockchains often do not have central authority; that is, no
one entity can make a rash decision for bitcoin tomorrow.

Cryptokitties can manipulate their contract, so in that case it is true a
central authority is in control. Even though Bitcoin has been around 10 years
there is still a lot of development and people are still figuring out how to
approach this type of thing. The obvious answer is to start with a central
contract and have a mechanism to slowly decentralize or remove ownership. It’s
going to take time to get it right but it will happen (and even cryptokitties
can upgrade their contract to include this logic).

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grey-area
_The underlying blockchains often do not have central authority; that is, no
one entity can make a rash decision for bitcoin tomorrow._

I disagree, they have plenty of pinch points which allow de facto control.

The small group of core developers control the laws of the currency and
directly tied to that its value. They can perform hard forks and change all
the rules. The users have very little influence there.

Exchanges control which currencies are popular, along with huge amounts of the
money in circulation, and change things like deposit/withdraw rules
arbitrarily.

The miners can attack the currency to rewrite history (has been done), refuse
to use new rules, or switch to a new currency.

Many of the fundamental tenets of bitcoin as it started out (that most users
will mine, that most users will take care of their own wallets) have been
proven too optimistic when in widespread use. People just don't want
decentralised things given the massive tradeoffs and the rewards of
centralisation for companies are too great.

I think blockchains like bitcoin are a very interesting experiment, and
currencies will escape state control as nation states continue to wither away,
but none of the current currencies is fit to take that role, nor was the pivot
of startups to 'blockchains for...x' a good idea - it's a solution in search
of a problem in most cases. We are unfortunately more likely to see a
corporate currency or one from a superstate take that role than a
decentralised one.

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yyyyip
If you (or anyone else) think you can effectively break bitcoin then there is
a billion dollar bounty available to you in the form of a highly leveraged
bitfinex short position.

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pjc50
Short positions on highly volatile (and probably manipulated) markets are
_extremely_ vulnerable to short squeezes. There's no good way to take out a
leveraged short that's guaranteed to remain in place for, say, six months.

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hollerith
Good to know, but just because any particular short position is not
_guaranteed_ to remain in place for six months doesn't mean there is no good
way to profit from shorting Bitcoin.

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pjc50
The problem is that a leveraged short position that is closed out/margin
called can lose more money than you initially invested. The market can remain
irrational longer than you can remain solvent.

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emmanueloga_
The charts look lovely but is this even worth discussing without knowing were
the data comes from? From all I know the author could have made those in
Microsoft Paint O_o.

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FailMore
Very difficult to make anything in MS Paint

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contingencies
[https://en.wikipedia.org/wiki/The_Big_Lez_Show](https://en.wikipedia.org/wiki/The_Big_Lez_Show)

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wintercarver
This is a bit of a personal plug, but as for examining trends of funding and
startup activity in the “AI” realm, I wrote up a brief summary of some CB
insights investment data earlier this year [1]. I thought it was interesting
to examine the difference between investment activity and entrepreneur
activity, as there is always some inherent information asymmetry between
entrepreneurs and investors. Not a deep analysis, but a few basic charts :)

[1] [https://medium.com/@kevinconnolly/the-top-100-ai-
startups-91...](https://medium.com/@kevinconnolly/the-top-100-ai-
startups-9136ade072a4)

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arbuge
As others have pointed out, this article really needs to be backed up with
sources.

> Software - up more than 3x, Software is a perennial category. Automating
> expensive internal processes in novel ways is Levi’s 501 jean of the startup
> world: a stylish classic that will never go out of style.

I agree with the above text but the graphic for software shows a clear plateau
and doesn't quite bear this out.

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CalChris
Yes, but it is a high plateau, the highest on the chart. Perhaps, rather than
Levi's 501, Valentino Rockstud.

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hn_throwaway_99
I loved the graphs in this article. Would be interesting to plot some of the
most successful companies in each category and see if there was any
correlation to whether they were formed at the start, peak, or tail of a
"wave".

Also, some categories had multiple waves, e.g. "pre-mobile social media"
(early '00s) and "post-mobile social media" (early '10s).

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thecleaner
But this uses funding as a metric for thriving. That's seems misleading. Lots
of startups raised boatloads of cash and crashed.

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pascalxus
Funding doesn't mean it's succeeding. It just means it's really hot right now.
I would much rather see which category of startups are actually succeeding: as
in getting revenue, profits and user traction.

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jjeaff
Revenue numbers for early stage startups might be hard to come by.

I was in an accelerator with a bunch of startups and one in particular was
having a lot of trouble putting together a series A. And strangely, they were
one of the few that had decent revenue numbers.

At the suggestion of a savvy fundraiser, they took all mention of their actual
revenue out of their pitch and they immediately started getting real interest.

They were then able to raise the funds.

It seems that actually having revenue just really dashed the pie in the sky
dreams of many investors. With no revenue or profit, they were free to pretend
that when the money started flowing, it would be hockey stick growth.

With revenue numbers, they could crunch the numbers and see the gradual growth
curve and that would scare them away.

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somebodythere
Consumer fintech definitely feels like a bubble. There are a few promising
entries in the space, but the overarching trend is price wars in various
sectors (trading/investing, loan underwriting, wage advances, bank accounts)
competing for the same (scarce) millenial dollars. The TAM is certainly large,
but margins will quickly go to zero, and with the sheer amount of contenders
in each space, I don't see the majority making it out alive.

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olalonde
This visualisation would be more useful if all the graph followed the same
scale on the Y axis, IMO.

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rsp1984
Appreciate the charts, but what is "Software" as a category? Looks like a
container for anything that doesn't fit into one of the other categories. Can
someone explain?

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tomkit
Interesting, but it would be more interesting to see these charts alongside a
5-10 yr returns graphs in the same said categories

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trilila
I think the question should be more like "Which categories of seed startups
are getting FUNDED" rather than "Thriving". Thriving means they will develop
into sustainable businesses, and while most of the shown categories will, it
probably omits startups in less trendy categories that are thriving but are
not necessarily attracting funding at the same level as these. I understand
it's great to chase billion dollar unicorns, but most of us here will probably
only ever build million dollar companies. Would be interesting to learn more
about their dynamics as well.

