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Summary:

SXSW has become cluttered with startups, and is a celebration of startups in general. But celebration has turned into a fetish — placing the act of creating a startup on a pedestal without casting any sort of critical eye on the likelihood of that startup succeeding.

SXSW Party

Preparing for South by Southwest Interactive every year, I’m inundated with pitches for services (now they’re apps when they used to be social or merely web-based products) that are fun, sometimes useful and generally something I wouldn’t pay money for. Since the magical breakout of Twitter in 2007 and the Foursquare success of 2009, SXSW has become more and more cluttered with startups trying to break out. It has also become a celebration of startups in general. However, that celebration has turned into a fetish — placing the act of creating a startup on a pedestal without casting any sort of critical eye on the quality or likelihood of that startup or idea succeeding.

For example, Wired just ran a story about the 160 applicants riding on six charted buses from Silicon Valley to Austin prepping some business idea en route to the event. After 48 hours coding on the bus, these applicants will be disgorged in front of a panel of judges that will choose the StartupBus winners. Meanwhile, there are at least six other startup contests or app contests happening during the event (I’m a judge at one of them). But amid the hundreds of startups launching, pitching, forming or otherwise trying to break out at SXSW, how many of them are real businesses? How many of them are thought out beyond a scrawl on a napkin, or a quick debate ahead of a startup weekend?

The Wired story notes that last year’s StartupBus winners DormDorm and DateBrowser never became real businesses:

“Two teams won last year: DormDorm, a startup designed to rent colleges’ vacant dorm rooms to travelers during the summer, and DateBrowsr, a Hot or Not for dating profiles the service pulled from several sites. Neither actually became real businesses, but many people involved in the StartupBus’ virgin voyage claim the experience was integral to both their personal and professional development, whether from skills learned or from connections made. Mick Johnson from the DormDorm team was accepted into startup funding firm Y Combinator and launched Whereoscope, which tracks family members by their cellphones.”

Of course these didn’t become real businesses. Most dorms already have programs to rent their rooms out during the summer and have had them for years, and a few calls could have easily nixed this idea. As for DateBrowser, that’s not really a business; it’s maybe a toolbar. Wired and the founders gloss over the fact that the winners of this startup competition never even had a chance at becoming a real business by focusing on the learning experience and the connections that the ride helped founders make. But I can’t.

The thousands of startups today that are pitching themselves at app competitions or in industry conferences all seem to think being a startup is enough. That daring to come up with some idea, any idea, and build a beta site is enough. That the users will come and then the business model will come and then the money will come. Google, Facebook and Twitter are their icons. Somehow the act of creating a startup has become the goal instead of the building of a business. As this post in The Awl points out, there are now startups built to merely create launch pages for your startup. (The Awl highlights LaunchRock, but Prefinery is another. I can’t believe there is a me-too startup even trying to build a market for startup launch pages.)

My issue is less with those littering the web with launch pages — if people want to take some time to test out a web site idea in their spare time, that’s far better than watching Two and Half Men reruns — but with the media, the venture firms and the ecosystem that has been built up to worship this idea of a startup. Maybe a little less fawning in the coverage and a little more skepticism is needed. For example, why is Wired devoting space to a startup competition that produced no real startups? If we called it “160 people get on a bus to Austin with their laptops,” it somehow doesn’t have that same cachet. Nor would it be worth sending an actual Wired blogger along to provide “updates from the road, as Wired.com reports every glitch, bathroom stench and late-night code dump on this perilous journey into the dot-com cosmos.”

Eventually, many of these sites will fade away, and domain names purchased on a whim after a late night of coding will expire. Some startups may get bought by Google or Facebook for their engineers, and even fewer will eventually realize their startup has the germ of a business which means that the startup will suddenly “pivot,” face the outcry from users, and perhaps make some money. Perhaps this has always gone on, but without Twitter and the infinite news hole offered to blogs, most of the offerings that fade away never infringed quite so much on people’s consciousness. But again, I’m not sure it’s just the bubble mentality and fawning coverage. On the web, it’s easy and cheap to create a prototype of an app or an idea and call it a startup. But is it a business?

I wonder if it dilutes the value of having a startup or calling yourself an entrepreneur. I think the fetishization of startups has helped create somewhat of a bubble, if not in valuations, then at least in me-too apps that will likely be deleted as soon as SXSW is over and everyone moves on to the next hot app. Yes, it has become cheaper to start a business, but has it also cheapened what it means to build a startup?

This rant seems to be part of a general zeitgeist, so why not wander over to the stories below for other thoughts on the issue:

One Nuclear Bomb Will Ruin Your Whole Startup Bubble from The Awl

The limits of Twitter and Facebook, the Bubble from Scripting News

Foursquare, Facebook, Founders, and Passion from Software Rants & Other Miscellany

 

  1. Yes, start-up culture is being fetishized ( by everyone, not just VCs and the tech media ).

    The root cause of the problem is that so few use Tim O’Reilly’s ‘Work on stuff that matters” as a parser.

    Doing so instantly throws out all the shallow, greedy, me-toos, and shines a light on those start-ups that deserve your attention.

    Ref.

    http://radar.oreilly.com/2009/01/work-on-stuff-that-matters-fir.html

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  2. “Wired and the founders gloss over the fact that the winners of this startup competition never even had a chance at becoming a real business by focusing on the learning experience and the connections that the ride helped founders make. But I can’t.”

    Why not? Get over it. At least one of the founders made their way into Y Combinator and I assume is now building something a bit more realistic. These competitions are not intended to be “pro” grade. You sound like an angry pro baseball player whining about all the kids in little league thinking they are going to be stars one day. Everyone needs dreams, and yes there are a lot of idiots with an IDE or a copy of Photoshop that will continue to crank out worthless garbage while trying to get rich quick. Those people can be found everywhere that matters. Ten years ago they were all in Hollywood, now they are in San Fran.

    I for one welcome the energy, excitement and interest to the field and wish everyone the best. It’s about time developers got to be rockstars.

    Thanks,
    Kav Latiolais
    @kavla

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  3. 160 geeks on a bus sounds like a dave mcclure idea without his wit or substance hunting for their Yuri M.

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  4. I guess functionally this speaks to a need for better product management and product marketing in this space.

    Technology is fantastic but without product leaders it’s very challenging to move beyond the idea stage. People who can identify the market and need that can be address by that technology and can craft a story around it that resonates with that audience are what really drive a business.

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  5. Jesper Vingborg Andersen Thursday, March 10, 2011

    The sixties … sex, drugs and rock’n’roll …

    There’s a striking similarity between the culture of startups and the culture of rockbands, up to and including gonzo documentaries and the massively skewed hit/fail ratio. In itself, that’s not a bad thing. After all, it’s where a lot of the real talent stems from.

    But … is the future of startups American Idol?

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  6. I completely agree. The reoccurring problem that I see is that software developers, especially those focusing on B2B, believe that having a great idea and creating a product is all you need to succeed. From there, they place the product in an app store and wait for the leads and money to roll in.

    While I’m all for the lean model and bootstrapping, it seem as though certain traditional business ideas are being haphazardly disregarded, if for no better reason than they are traditional. Product development, marketing, PR, sales etc. are all necessary components of a business model (again, especially when selling to businesses), even a lean startup model. Without them, a startup will likely be little more than a hobbyist.

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  7. It’s not fetishization as much as it is a decoupling of ideas and practical businesses. In the “old days” (perhaps ten years ago), the cost and effort of implementing an idea was high enough that the business case had to be worked out fairly thoroughly in order to get the necessary resources. Today, it’s comparatively easy and inexpensive to implement an idea as an app or a website, so the implementation takes places before anyone seriously investigates whether or not it represents a real business opportunity.

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    1. True, and it may not be a bad thing. Again, I think it’s great that people are trying to build things in their spare time, but I do wonder if it dilutes the meaning of building a startup or even being an entrepreneur.

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      1. Stacey – very topical and something I’ve been thinking about blogging about after going through a couple of launch conferences and now SXSW with my own company’s inaugural app. The thought of “where have all of the companies gone?” went through my head many times. It seems everything is an app or idea, and the fanfare goes to the coolest thing regardless of whether a business model or a business can be built around it!

        You highlight some key enablers of this – it is vastly cheaper to build new products now. Another enabler is the explosion of angels and super angels with seed money. A third enabler you mentioned is a key one – it’s Google & Facebook and their hunger for talent.

        It’s this last one that enables the angels to fuel cool feature ideas that have no hope of being businesses, because they can create financial success for the founders and modest financial returns for the angel investors when Facebook or Google buys their feature and more likely team for seven to eight figures.

        On a risk/reward standpoint, that is a very poor risk adjusted bet to make – only a few make it among a sea of many that do not – Facebook & Google cannot buy everybody.

        I’m more in the camp of business building. It does create interesting dynamics in the early launch phase of a business as we have to compete with the noise of the feature apps, many of which have features that look and smell like ours, but without the total package or longer term business model focus.

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    2. Agree. Don’t forget that only a few people peak out of the mass. There are much more in the background having thier experience. I think that’s what is the startup fetisch all about. Testing the barriers in a world that seems to have none.

      I’ve coached on some Startup-Weekends and I always recommend the following to attendees: “Take this event as it is- a limited and free test of your hard- and softskills. Learn how other people build busineses, create things, manage tasks and lead people. Listen, learn and think about it. The more you know, the easier the decisions when building your own business.”

      An event of this kind spills out a mass of information. Attendees should focus on soaking up as much as possible within these few hours. It is save there and it should be always. Please don’t value the result by measures of business world. A startup event is a community experience.

      A real Startup is very different from this. It is usually about creating revenue, built by a trustful team, followed a well thought plan. It takes weeks and months to do so. It’s tough business with cruel decisions.

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  8. Couldn’t agree more. The lure of the fast buck is destined to bilk investors (the “sophisticated” ones who should know better) of lots of money. However, because there’s so much action, it seems unlikely that even the most disciplined VCs will be able to stay on the sideline.

    Wonder if we’re headed into the next technological inflection point or the beginning of a growing bubble.

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  9. Dilute meaning of being an entrepreneur or a startup? Now that it is less costly to start a company and take a busines model for a spin (or let it evolve or not without a real plan) I don’t think deminishes what it means to be an entrepreneur. Just because startups of years past blew up in spectacular fashion and set a lot of other people’s money on fire doesn’t mean those experiences were more meaningful. The fetishization (word?) started some time ago. Thanks to Kauffman Foundation, economic developers, VCs, etc entrepreneurship has become a totem. Entrepreneurship will save our economy from itself so they say. But in the SXSWi space so often entrepreneurship is an exercise in self aggrandizement rather than the creation of a product/service of real value.

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  10. Yes, I hear about plenty of startups that make me roll my eyes – “Look Ma, no business model!”

    However, not all of us launching at SXSWi are caffeine-fueled hype, or VC-fueled hype for that matter. Have a look at mine:

    http://cardvine.com/

    I just opened CardVine’s public beta today. It’s a “freemium” service, so you can sign up for free, but you can also, if you care to, pay actual money (gasp) for a higher level of service. Moreover, there’s some chance you might indeed care to, because CardVine does something useful for you. Just have a look at the home page or my public card at http://ralphhaygood.com/, and you’ll quickly get the idea.

    I’m bootstrapped, so I can’t afford to blanket SXSWi with CardVine evangelism, but it’s a fantastic scene for selling a new service like mine face-to-face, one potential customer at a time. Right now, that’s good enough.

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  11. Blame it on people like Michael Arrington who made startup business his high school nerd fantasy and dragged everybody down with it.

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  12. We at the American School of Entrepreneurship would agree with Stacy…a little less emotionalism and a lot more practicality in evaluating your business idea, along with cash flowing it to find out if there’s a real business here. We’re not even particularly big fans of v.c. conferences, because we’ve found many ideas stolen there. It’s hard to have all the people one encounters sign a non-disclosure.

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  13. whereoscope.com: “As of today, March 11th, 2011, Whereoscope has been permanently shutdown. We have deleted all user data, and issued refunds to all our paying customers.”

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  14. Can you say “dot com bust #2 here we come” ?

    There are plenty of eager beavers who are going to get taken advantage of, as in used up and thrown away, by many worthless startups because they were too young to remember what happened in the last over-inflated dot com bust. I predict we’re going to have another in the coming years.

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