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Disturbingly accurate.

• Make a sufficiently shiny, yet imminently disposable product.

• Hoard employees (each one bumps your valuation by ~$1.5 million), be loud, get acquired.

• Kill product. (You never cared about it anyway -- it was just a vehicle for ego and attention. Now that you've got your $5 million, you don't need the validation of all those silly pawns/customers anymore.)




Heard this recently, with a little more background history, and little less humor: http://www.youtube.com/watch?list=LL1tJgy-O6EgwisFV559z43w&#...


What worries me, more than the accuracy of the story or not, is the overwhelming level of agreement from commentators. There's a pervasive sense of cynicism blanketing the tech start up world, but for some reason we're all still in the game.

There's a certain amount of hypocrisy you have to accept. We do this to ourselves. No one on HN would think worse of themselves for achieving a $5M exit, yet we are happy to vilify those who do.

Where are the founders of the next GE? The next IBM? Those who seek to solve the fundamental problems society faces? I'm not asking about space ships and world hunger. I'm just talking about solving real, concrete, long term business problems. The ultimate filter on this is simple: If your product were to disappear, would your customers' quality of life significantly decrease?


To be realistic, who wouldn't want to be holding 30% of a $10M or $20M buyout? There will always be the allure of quick money, and tech isn't immune to the sentiment.

It seems to be similar to the Zed Shaw talk-within-a-talk [1]. Instead of working for BigCo for a paycheck and going home to work on your own things, you use a lesser idea and work for a VC via their investments while developing your master idea. The difference is the level of risk and the size of the payout.

[1]: http://vimeo.com/2723800

The other part that isn't mentioned here is this is a commentary on the most visible portion of the tech industry, namely web/app based social startups. I can't help thinking of Sturgeon's Law. In a way, that makes me cautiously optimistic. You have a bunch of people tackling hard problems in computing as well as society. When Facebook changes it's privacy settings, or Path collecting our address books, we all freak out. It forces us to confront things we as a society never had to think about before. Fifteen years ago, who was thinking this seriously about mass privacy concerns that didn't involve the government?

I also look around and think about what cool things happened in the last decade. I can look up anything from a black monolith sitting in my pocket. I can connect with people I haven't seen physically in years. I can read about events as they happen in real time. I can buy just about anything without ever leaving my house, and it will arrive a couple of days later. I can learn about any subject from very respectable institutions for free.

In a few years, we will have a (more or less) unified communication system for health records, cheap 3D printers and fabricators, a mass market for self driving cars, and privately funded space travel. Right now people are seriously considering space mining of all things.

All of these things were born alongside purely self-interested companies that have since failed or were acquired. If it takes many short term companies to get a few gems, then let the VCs, GooBooks, and hustlers knock themselves out. I highly doubt we can optimize for more success, so I don't see a point in fighting it. Maybe it's that very culture that allows for such gems to be formed in the first place. Even if you are involved with such a company, the talent and knowledge you come away with is invaluable and will follow you wherever you go.

I would say you should try to make your ideas a reality. You should try to make money, build companies, and commit yourself. You just might be involved with something great.

</reality distortion field>


"Where are the founders of the next GE? The next IBM?"

Not doing startups.


If not now, eventually they must be or must have been "doing startups" because all businesses begin as startups. It's in the name, a startup is a company that is just getting started. Some eventually grow up into the titans of industry that we all know.

The parent is wondering why don't we see more entrepreneurs founding companies that look like they could become the next titans of industry. It seems to me that their companies either don't exist, or are currently invisible because they haven't begun gobbling up market share.


If new startups agreed that they wouldn't leave their users out to dry if they got acquired would you be more likely to trust them and use their service?


Getting a future promise from a startup CEO is as trustworthy as a politician's promise during election season.

The only sane approach is open data. Leave everything available for export so some other feature company can pick up where you left off.

You could venture into an insane realm where startups enter into a Startup Insurance™ league. When a company gets acquihired, instead of shutting down the product, a separate foundation runs the product (or figures out a way to open all the data for export).


No, because how would they enforce that? If your company is acquired, all that goes out the window anyway.


Keeping the product alive could be one of the terms of the acquisition, but it seems unlikely - it could lower the offer, and it's unlikely startup founders would throw away money on a matter of principle unless the community promise was somehow legally binding.

In a sense the promise is a "non-credible threat" in game-theoretic terms. It would attract users if they carried it out, but because acquisition happens after the user-attraction stage they don't have an incentive to carry it out. This means they won't rationally carry it out, which means they don't attract rational users. This situation can be avoided if they "tie their own hands".

http://en.wikipedia.org/wiki/Non-credible_threat


If startups want to be acquired, they'd never make such a policy anyway, because that makes them less attractive to the acquirer (who, after all, may only acquire them to prevent competition).




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