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She seems unclear in her own mind what she thinks the problem with SV is, because this seems to be a combination of all the standard brickbats people throw at the startup world (I wouldn't even say Silicon Valley, since these complaints apply equally well to any startup anywhere): that a lot of startups are "derivative" (like Google was); that startups tend to have exits (investors need them structurally, but founders like them a lot too); that startups solve trivial problems (like writing Basic interpreters for computers used by a few thousand hobbyists); etc.

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She seems pretty clear in her own mind to me. I'm not saying she's right, but it seems to me this is the essence of her argument:

"Groupon clone after Groupon clone, yawn… yet another social media dashboard, a cloud-based enterprise solution or, worse still, another photo sharing app; I’ve heard pitch after pitch of the same technology and keep wondering why all these highly intelligent, well educated youngsters, many of whom have been educated in the best universities in the world (Stanford, Yale and Harvard) are not putting their brains to good use by solving real-world problems. Instead they’re building technology to solve trivial issues – like apps that show where to spot your nearest tofu cupcake and share it with your friends.

I’ve come to the conclusion that entrepreneurship in the Valley has become productized, as organizations like Y Combinator attempt to marginalize, commoditize or manufacture a process that is inherently risky."

What's ironic is that the very tools she's using to complain are a product of the Silicon Valley. The blog itself runs on WordPress and pushes all its posts on Twitter. If it wasn't for the Silicon Valley model we may not be hearing her.

What you're pointing out doesn't really discount her point. There can be countless Groupon clones and photo sharing apps that blow hard and still be gems like Twitter and Wordpress.

So her argument is that we should try to only make successful products?

No, potentially world changing products. Most of which will fail. As most vc funded companies fail the failure is ok. She is complaining that the potential upside is too low due to lack of ambition to really change things radically.

Really I think her point is best summed up by "It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can."

Her complaint seems to be that startups aren't trying to be successful businesses, they're trying to be successful startups, which aren't necessarily the same thing.

I think it goes without saying that you should try to only make successful products, but I think what is being argued here is that many of the companies she is seeing are just 'follow the leader' type companies. Groupon was successful, so we'll do the same thing. There are a few social metrics companies doing well, so we'll jump into that market and see what happens.

What the author, I think, is saying, and what I believe personally is that if you do the same things that others are doing, you're guaranteed to have lots of competitors to duke it out with.

Strike out and do something unexpected, find a market or make your own.

It seems that many people think that creating a copy of another company with 'better design' or 'feature x' is innovating, but it isn't. Innovate in technology, business model, anything, but be innovative.

The reason she mentions the companies she mentions is that it is easier to remember the innovators than the copy cats (and often the innovators have greater success).

It seems to me that the passage you quote could as well have been offered to support my point as to contradict it.

Though as long as we have it here, it's pretty self-refuting that she treats all "cloud based enterprise solutions" as being effectively identical. That would be like someone writing an article a few decades ago and treating all startups making silicon chips as effectively identical.

I think you're right. I've never worked in a startup but my understanding is that their purpose is to discover profitable business models, not to put the world to rights.

If your tofu-cupcake-locations-sharing app takes off and lots of people use it then you've found a way to add value to people's lives and make yourself some dollars. That's what capitalism is all about, right?

I'm fortunate enough to have graduated from a very good university and I can tell you that the majority of people I knew there didn't leave and dedicate their lives to an altruistic quest to improve the world. Lots of them left to be bankers and consultants, whereas only a few went into academia.

There's always a tradeoff between how selfless you're prepared to be and how much money you need to take home to cover your own needs. There's nothing wrong with making money so long as you're not stealing it. And let's not forget that the more money you have the more money you're able to give away to good causes.

I agree with most of what you said, but I think you are trying to assert that academia is altruistic ? Academia is not altruistic. The Universities are in the billion dollar education business. They are just labeled non-profit yet they make hundred of millions collectively in TV contracts but none of that is used to help the poor communities and families many of their athletes come from. They are no better than bankers and consultants, or entrepreneurs trying to make a buck.

I was suggesting that individuals who choose an academic life over a more profit-seeking life are making a more altruistic decision. I agree with you that collections of academics (i.e. universities) often act in predatory ways - this is true of any sufficiently large group of people with a common interest: http://en.wikipedia.org/wiki/Crowd_psychology

> I was suggesting that individuals who choose an academic life over a more profit-seeking life are making a more altruistic decision.

"Altruism is the renunciation of the self, and an exclusive concern for the welfare of others." (Wikipedia.)

Not so fast. Never confuse non-monetary rewards for no rewards.

Altruists International offers a slightly more nuanced definition than that single line from Wikipedia.

I don't think pedantry here will fundamentally change his argument.

> I don't think pedantry here will fundamentally change his argument.

I'm not trying to change his argument - I'm pointing out that he's wrong.

Academics make less money but that doesn't imply that they're not working for things that they value.

The fact that someone makes a potentially less lucrative choice does not make them altruistic. It usually just means that they're trading money for something else that they want.

You wouldn't assume that buying a car is altruistic, so why would you assume that making an employment choice that gets me something I want in return for less money is altruistic? (Yes, buying a car can be altruistic.)

I think you misunderstand altruism. And no, he's not wrong.

Since altruism is itself a value, it's erroneous to say that altruism requires a person to not work for things they value. So, whether or not academics are working for things they value has nothing to do with altruism.

Altruism is primarily about whether your motivations are driven by the welfare of others, or by the welfare of yourself. If you are motivated by the welfare of others -- if, as Bertrand Russell once said, once you find yourself thinking about human suffering, you find it difficult to think about anything else, and if you then decide to work on alleviating the suffering of others -- then you are acting altruistically.

Someone who makes the conscious decision between a lucrative career and a career in academia, and chooses academia in order to advance the field of their choice, even though they expect to make less money for themselves, is making an altruistic decision.

Your original reply said, "Never confuse non-monetary rewards for no rewards." That has nothing to do with altruism. It doesn't matter if a person is receiving a "non-monetary reward", in the form of a sense of fulfillment, or in satisfaction.

If a person chooses to do something which will benefit others, and not themselves, they are acting altruistically.

Now, I happen to think that a person can be selfish and still be altruistic, because of the non-monetary rewards you're alluding to. I am self-interested in improving the lives of the people around me, so, although my actions are altruistic, it still benefits me in a sense. But, that's not a very popular way of looking at it; by definition, when people talk about "benefits" and "costs" associated with altruism, they're talking about things like money or physical health. So, again: if your actions cost you money and benefit others, then you are acting altruistically. I would say that choosing a life of academia fits that rather nicely.

By the way, you and I have gone 'round about this subject not all that long ago (http://news.ycombinator.com/item?id=2695906). Your "envy driven versus greed driven" argument is still one of the most peculiar things I've ever heard in this subject, so I don't expect you to agree with what I'm saying.

> I think you misunderstand altruism.

Let's see if we disagree.

> Altruism is primarily about whether your motivations are driven by the welfare of others, or by the welfare of yourself.

That's basically what I said, so I'm not wrong about altruism.

The remaining question is whether folks who don't appear to maximize their expected monetary return are typically altruistic.

Consider an econ professor vs a strategist at a hedge fund. The econ professor has a much less stressful life. She's got interaction with students, etc. Some people value those things more than they do the chance at an extra $500k/year.

> "Never confuse non-monetary rewards for no rewards." That has nothing to do with altruism. It doesn't matter if a person is receiving a "non-monetary reward", in the form of a sense of fulfillment, or in satisfaction.

The claim was that folks who aren't receiving monetary rewards are necessarily/mostly altruistic.

I pointed out that they're often receiving non-monetary rewards.

It's not clear whether you're saying that someone who does something for non-monetary rewards is being altruistic, but if you are, you're wrong. (Consider working for apples, or so you can live some place that you like.)

> Your "envy driven versus greed driven" argument is still one of the most peculiar things

What's odd about it? People who are concerned about how they're doing relative to other people behave differently than people who are concerned solely about how they're doing.

Yes, it's possible to "implement" greed by taking from others, but that's seen as bad. For the envious, that's seen as good.

She seems to have combined a few separate gripes into one large rant.

The main issue (as I read it) was that the "YC system" has attracted people that are only there for a quick exit and a pile of cash. She wants more of those brilliant graduates of Stanford, Harvard and Yale to make the world a better place instead of cloning Groupon for a fast buck.

It would be nice, but it's probably a bit too idealistic for the real world.

Actually a lot of these people making a fast buck are moving on to the big companies with a stack of experience behind them where they are doing things that effect a lot of people.

Looking at the choices my peers made, a substantial proportion of Harvard/Stanford/Yale grads will opt for the most foolproof, lucrative career available. It used to be investment banking, consulting, or law school, but with those industries under pressure their seems to be a turn towards rolling the die in an entrepreneurial setting.

I certainly don't think most students these days consider an elite education carries an obligation to make the world a better place.

I guess I don't understand your meaning that "she's not clear in her own mind." I took it as you saying that she doesn't really know what she thinks. Did you mean that you thought her argument was intellectually inconsistent ... or something else?

You say clone, I say refined. You say derivate, I say enhanced. etc.

Sure, on the surface most things are clones or derivate in nature, but that's just the surface. Is the iPhone just another phone? Is OSX just another operating system? Is MongoDB just another database?

Well sure, they are, but a "solved problem" doesn't mean we should just call it a day and pack up. If we did I'd be writing this comment on my Window 3.1 "super computer" :)

I think you're being a bit flippant here, dismissing out of hand a point that she's not making with some examples that are only tangentially relevant.

Google was "just" another search engine, sure. But it was far better than any of the other search engines out there. You can't say that of the groupon clones. They're all slightly different ways of doing Groupon, and none of them at this point look like they're offering any significant advantage over eachother. They may be more or less sustainable or profitable than Groupon, but they aren't game changers in the sense that Google was.

She wasn't complaining that startups have exits, she was complaining that startups are being designed around exits. None of the counter-examples you listed, nor any established company that anyone can name off hand, was designed for an exit. You can look at the guys who did <s>gmail</s> Google Maps* or Youtube and say yes, they got a good exit, but both companies were designed to do something new, and their exit followed from that. A lot of startups these days seem to be designed to show off design skills and the ability to write an app, rather than actually do something unique and useful.

Which brings me to your last point. Writing Basic interpreters for hobbyists wasn't trivial in the sense that the author meant. Finding a cupcake or sharing a photo is trivial: it doesn't much change anyone's life, and it's been done a thousand times before. It's trivial in the sense that a fart app for the iPhone is trivial. Microsoft's innovation was not that it could write basic interpreters, as people wrote basic interpreters for new architectures all the time. Their innovation was that they were an independent software firm who contracted their services out to hardware manufacturers. This is how they came to land the DOS contract with IBM that catapulted them to success. That innovation was as big as the innovation where someone first said, "why are we hosting this on a server in the basement? Why don't we throw it up on some server out there that doesn't care where we are or what device we're using to access it?"

If you look at any of the big tech companies around today, they got their start by doing something either a) no one had done before, or b) an order of magnitude better than anyone had ever done it. Most of the startups you see today don't make any effort at a) or b), but they are c) designed to be flipped in a talent acquisition. This is what the author was complaining about, and if you don't accept it as a legitimate criticism then you at least have to address her actual point.

*Edit: see response from protagonist_h

> guys who did gmail or Youtube and say yes, they got a good exit

as far as I know gmail was built at Google internally, it wasn't an acquired startup.

You are correct. I was thinking of Google Maps.

Just a little irony: gmail was created (at Google) by Paul Buchheit, who is now... a YC partner http://en.wikipedia.org/wiki/Paul_Buchheit

Google itself was focussed on doing something worthwhile - a significant factor in their success was they had a simple, clear homepage, that was just for search - instead of a portal, covered in distracting stuff. They didn't engage in pay-for-placements, so their search results were objective. They were fast (turns out people really value speed). And pagerank was somewhat better (I did comparisons at the time, and search quality was pretty similar - but google felt much better to use because of the other factors). The competing search engines were focussed on monetizing users, instead of doing something useful for them.

I think she's claiming that few startups are acting like google did. Yet, google would likely have succeeded as a YC startup, because YC emphasises "building something people want", as opposed to being driven by a business model.

YC is attempting to productize startups - to find the rules that maximize startup success. The experimental approach of "lean startups"; trying something fast, then iterating; pivoting all seem to be sensible, and seem to be working. But whenever you have rules, there's possibilities in a complex world that escape them - and that may be where the greatest breakthroughs are.

It's true that young people are less familiar with real-world problems (in general, not just in the third world) - yet, many game-changing startups seems to have been founded by young people: apple, microsoft, google etc.

Personally, I very much like the idea of changing the world, doing something valuable and not just to make money. Many entrepreneurs have advised that startups are so difficult that money isn't enough of a motivator to get you through. So, in that sense, I agree with her.

I think you're right on many counts. As far as YC is concerned, I want to emphasize that I have no problem with what they do. It's an engineer's approach to entrepreneurship: quantify, then scale. I get that. I respect it. What concerns me, however, is the broader market trend that it represents. Like any successful business, YC spawned copycats. YC alone has funded 316 companies, and the copycats have funded many more. At that scale, you simply aren't betting on world-changers. You're betting on flippers. Flippers are your bread and butter; they're what keep the incubators going. It's the $20MM acquisitions that keep you going for the next round, and that make kids rich.

Here on HN we see a fair number of stories of the form, "We demo'd as x, pivoted to y, and sold to z for $25MM 18 months later. Here's how." I'm happy for the founders' success, and I'm happy for YC's success, but it all seems so...shallow. There's no substance there. Granted, those involved in the deal would likely disagree, but it feels like the commoditization of startups have cheapened them and changed the motivations of founders. The trend I see is a broad one and not limited to one company or YC as a whole, but the ecosystem in general. It just leaves a bad taste in my mouth.

If we view "flipping" as simply big companies paying for features and/or people that they would have spent more time and/or money building themselves, then why is this bad? Seems more sensible than the offshore outsourcing model that big companies have tried previously.

I don't think you need to worry.

In the bigger picture, there are many more startups than there used to be (and therefore more "deep" ones, in absolute terms). It's partly due to the cheapness of the technology, though there's also been a social/economic/political shift away from the paternal corporation; and YC itself also definitely helps. Even if most of the startups are shallow (I'm not convinced that's true, but just for the purposes of argument), I think that there are now more "deep" startups than there used to be.

As for the startups that don't eventually hit on a real problem to solve, or somehow don't manage to execute, or get blinded-sided by a competitor or otherwise luck out - is it really worse for society that they do this, instead of working at a law firm, or merchant bank, or financial analyst etc? Might they not learn something valuable, that will later benefit society? Can you imagine better training, for initiative, getting things done, working with others, exercising self-discipline than a startup?

But I think the bottom line is that if they are getting $25MM payouts, then that shows that our market society is valuing what they're doing. Now, possibly the acquirers are wrong; but that is a fault of our society, not of the startups. And if the acquirers are wrong, it will likely be corrected before long. And, if it isn't, we economically we will be overtaken by a society with healthier, more grounded values - perhaps China. The problem is with "what buyers want", not with the startups who make it.

BTW: I totally prefer meaningful startups - both in a technical sense, and in a making things better sense. (e.g. HP put making money as a means to fund technical contribution; and it worked out well for them.) I think that ultimately they will have the greater success, so I think it will all work out in the end.

At that scale, you simply aren't betting on world-changers. You're betting on flippers. Flippers are your bread and butter

That's false. Effectively all our returns come from the big successes. HR acquisition valuations are rounding error by comparison. Which is why for example when I recently estimated the total value of all the companies we'd funded, I ignored the bottom 90%.

At a 6% stake, even a $15MM acquisition leaves you with $900k, or enough money to fund 50 new startups (almost a full YC round). Are you saying these acquisitions have little to no impact on your bottom line?

Companies won't pay 15m for HR acquisitions. Try 3-5.

But yes, statistically, even 15m exits don't affect our returns much.

(Your hypothetical case is also off, because you forget dilution and operating expenses. A 15m acquisition would fund less than a third of a batch.)

People also need to realize that Y Combinator is really just a monetization of Paul Grahams blog that he has worked very hard at for over a decade. There haven't been any serious companies (or acquisitions) created through YC as yet. What's the most successful YC company? reddit/hackernews -- which is either an extension of Paul's blog or a digg/slashdot clone depending on how you look at it, and either way, a content delivery website.

What Y Combinator has been successful at is attracting money to Y Combinator -- in other words, banking on Paul's reputation established through his long-running blog.

Founders nowadays think about selling about as much, and in about the same way, as they always have. But it's meaningless talking about startups being "designed to flip" because you'd do the same things regardless of whether you wanted to sell early or keep working on the company for the rest of your life: you have to make something great and thereby get rapid user growth.

Ironically, the only externally visible sign that a startup's founders are hoping to sell early is when they don't do something she attacks founders for doing: raising a lot of money. Raising series A from a VC fund means ruling out an early, small acquisition, so founders who want to keep that option open try to raise as little money as possible.

Editing your post to say something entirely different after I've written a rebuttal to it but before I've posted it is cheating ;)

So there's three main methodologies I see at play in the startup world. There's the go-big-go-home crowd, the facebooks and groupons and squares and so forth. There's the ramen profitable crowd that operate like typical small businesses: the fog creeks and the like. Then there's the flippers.

We all know the story of the Go Big or Go Home guys; they've been a part of the SV psyche for decades. Similarly, the ramen profitables/small businesses are pretty standard. My uncle started a small game development house about a decade ago that makes FPS training programs for service rigs in the oil industry.[1] It's a new take on a very old business model, and while they make a very comfortable living they're under no illusions of a $40MM buyout. They expect to be doing roughly the same thing ten years from now that they were ten years ago.

Compare the above with flippers. We have founders who come up with an idea for a cool, if maybe gimmicky app. They build it; it's flashy and does something interesting. They iterate, pivot, and find a userbase. Then they sell to Google/Apple/Microsoft/whoever. Now, there's nothing wrong with this per se. The issue that the author and I both have is that this appears to have been the plan all along. There appears to be no desire on the part of the founders to build a business, rather they're spending a couple years on a fancy tech demo in the hopes of landing a sweet job with a fat signing bonus. It's almost like a practicum as opposed to a business, something that you do for a few years after college so you can get a better job. The defining question for me is this: how many of the founders would be happy if in 10 years their company had experienced healthy growth and they had 15-30 employees, taking home $300k/year? Alternatively, how many are shooting for an IPO and a company that will still be around in 50 years?

I'm not saying flipping a small startup is a bad idea, just that it feels a bit disingenuous to call these ventures businesses. They feel more like a graduate degree combined with an innovative investment engine. And, while I understand why you took umbrage at the author singling out YC, these ventures are exactly the kinds of startups that YC churns out.

[1]Shout out: http://cooleimmersive.com/

I think you have a misunderstanding of why people invest.

There is no correlation between the type of business and the willingness of the founders to sell out quick vs ride it for the long haul, assuming in each case the founders are equally rational.

There is however a difference in aptitude for running an early stage startup and building a business that will pay you $300K per year. Many times the founders intend to do this but fail b/c it's not their strength. Let's face it, a lot of success has to do with timing and luck.

This is where something like YC is hugely valuable. You're working with seasoned entrepreneurs who can help avoid common pitfalls (which looks like luck) and funding is also more readily available so you're less likely to make a decision out of financial desperation.

I think you have a bit of blindness (no offense) in your argument to the way that market forces dictate what the right decision is. Given equally rational and equally risk-hungry decision makers, the decision to be acquired vs sticking it out is not often ambiguous. To argue that it's a matter of the individual psyche is I think fairly silly and overly focused on the personality/pr aspect of startups than on economic reality.

I think you're reading my argument as something it's not. I'm not saying that the current model is in any way bucking market forces, quite the opposite. I'm saying that the current model of entrepreneurship seems to be focussed more on a quick ROI/liquidity event rather than innovation or business-building. That in itself is not bad. My complaint, which I think the author is hinting at as well, is that this model of startup is far more "credit swap" than "mom and pop". It is, as she said, a commoditization of entrepreneurship.

YC, while invaluable for founders, is also an investment vessel factory, and the economic model it embodies shares much more in common with the kinds of financial products we see from Wall Street than traditional venture capitalism. Yuri Milner's offer of $100k to each YC graduate embodies this. It's a scattergun approach that, while likely profitable, incentivizes flipping over innovating.

This sentiment is an insult to the hard work, blood, sweat, and tears that my YC friends and colleagues put in every single day.

YC is made up of brilliant, hard working hackers, designers and hustlers who are trying to change the world through building disruptive software. It's never been about flipping. It has _always_ been about making something people want.

Once you make something people want (which IS none other than innovation), only then do you have the optionality of selling or doubling down. This argument is utterly confused. In so many words: You can't flip something that isn't actually innovative. Because nobody will want it.

Not intended to be an insult, although it's nice of you to go ahead and downvote every comment I made on this thread. Perhaps instead of taking a criticism of the industry as a personal insult (and reacting in kind), you could look at the meat of what I'm saying and address those points?

Edit: Sorry, not just every post in this thread, but every post I've made today. Wow. Way to represent YC. Stay classy, man.

I think you're being oversensitive, especially given that redthrowaway was responding to a comment which said, in part:

"There is however a difference in aptitude for running an early stage startup and building a business that will pay you $300K per year."

...which, at your level of sensitivity, is extremely insulting to the rather large number of people that own and manage the many small businesses that society relies on.

Any angel investor or VC firm resembles wall street. As I'll explain, this is a meaningless assertion:

- Suppose there is high risk. Any investor, whether it's an angel, VC firm, hedge fund, etc., is going to very likely use a scattergun approach. That's just how the numbers must work when you're looking at high risk investments. An exception means that someone got lucky.

- Take a mom and pop business. Suppose it needs capital. The typical approach is to get a bank loan. This is similar to selling shares to a VC but with different terms and a different distribution of risk. Just because something like a farm lends itself to loans and something like a video game for the iPhone lends itself to VC funding doesn't mean that the two businesses are fundamentally different, just that the cash flow and risk result in a slightly different form of cooperation between the individual(s) and the financial firm.

- "Traditional venture capitalism" was simply a more risk-averse type of financial firm. They let angels take the big risks and reap the big rewards and settled for bets that looked more like a sure thing (but still riskier than would have made it suitable for other forms of funding).

- I don't think you have made the case that any of this incentivizes flipping, or that flipping is "bad". I'd argue that to the extent that firms exist b/c they can be flipped, that is innovation that would not have happened if the financial structures didn't exist to match investment dollars with innovation and entrepreneurship -- startups get acquired because an acquisition offers better value and/or lower risk to the acquiring firm than trying to develop the equivalent thing in-house. If you're stretching this into an analogy about elaborate financial instruments, I think it's quite a stretch.

I think that what you're actually seeing is a bit of a credit bubble around startups that resulted from the destruction of many of the risky (but well known) wealth creation instruments that Wall Street had been using. Of course, more investment means another "layer" of startups will exist with another "layer" of risk characteristics. Yes this is similar to wall street, but it's a consequence of the basic laws of economics and nothing else.

when did something great need rapid user growth? Investors often require that to make a return, but does that define that you've made something great? Random example plastic logic, no customer growth, raised ~£1B, will plastic electronics technology change the world more than any Valley based company to date, who knows, but it has a damn good shot at making an entire new industry. They might not succeed as a company, but as an idea they are making something astonishing.

> ...and thereby get rapid user growth.

Only for a small subset of businesses.

(Usually, the ones that investors are most interested in, because it's where they're more likely to make more money.)

> Founders nowadays think about selling about as much, and in about the same way, as they always have.

Is there evidence for this? I get the impression that HP, IBM, Apple, Microsoft, Adobe, Sony etc didn't think about exiting as much (of course, selection bias). Though Xerox and Google did try to get bought.

I don't think that short-term vs. long-term motivations encourage precisely the same behaviour.

She is simply suggesting that startups today aren't working on anything important. I somewhat agree with the article.

A criticism like this is difficult for tech-minded nerds to accept, since "importance" is a fuzzy concept lacking clearly definable metrics. But we can test it this way: Pretend a company disappears tomorrow without any warning at all. Do you care? If not, whatever it is that they do isn't very important. I think it's fair to say that those groupon clones and photo sharing apps wouldn't be missed.

I don't know what "important" is, but I know it when I (don't) see it.

Startups aren't working on anything important these days. It's true. But that's mainly a factor of the economy. The economy isn't doing well and there isn't enough confidence to invest in things that might do something important (read: last over time).

I confess the exit-focus has always been disenchanting. I'm not a founder myself, but it always seemed to me a founder who starts a company with his eye on the door is a bit disingenuous compared to a founder who starts a company for... well, the company's own sake. Ref. Ford, Standard Oil, every hugely successful company from a handful of decades ago.

The only thing that really troubles me about exit-focus, to be honest, is the extent to which "a successful exit" can sometimes be conflated with "a successful track record." This definitely happens, and not just in the Bay Area. It's true that the ability to take a company from nothing to exit, and the ability to take a company from nothing to success in the marketplace, are correlated to a degree. Maybe even a large degree. Those skill sets overlap. But they're not perfectly correlated, and sometimes spectacularly not.

Achieving a successful exit is really hard and the vast majority of startups fail to do it. If someone has done it more than once they have demonstrated that they are exceptionally skilled at this game.

Your point does not address what you replied to. Your parent was pointing out that skill at exiting is not necessarily the same as skill at marketplace success, as an exit does not necessarily equate to marketplace success.

He said that multiple exits should not constitute "a successful track record" which is ridiculous. Such a founder is a rockstar and should be courted by all investors.

"He said that multiple exits should not constitute "a successful track record" which is ridiculous..."

First of all, I did not say that. I think you're pretty consistently misreading me here.

When I used the phrase "successful track record," I was pretty clearly talking about a record of success in the marketplace, i.e., a thriving company whose product(s) is not just being used, but earning sustainably growing revenue and traction beyond initial interest or buzz, and over a long-term period.

My entire point was that a record of multiple exits is to be commended, and is certainly what attracts investor confidence (for good reason!) -- but it can be conflated with in-market/company success, which can be dangerous.

The two things are correlated, and they're similar, but they're not identical.

The set of people who can take a company from 0 to 100 doesn't necessarily overlap much with the set of people who can manage it well at that point.

I might be missing obvious examples, but I can't actually think of top-tier examples of a founder taking the company from 0 to 100, turning it over to new management, and leaving, with the results being a great, long-lasting tech company. At least, I can't think of any that produced companies with impact on par with the founders-stay-for-the-long-haul companies: Microsoft, Intel, Sun, Google, Dell, nVidia, etc. Apple is an almost-example; both founders were gone in less than a decade, but the general consensus seems to be that the post-founder management didn't run it well.

It's hard to imagine counterfactuals properly, but I can't imagine any of those turning out better if the founders had left within, say, a 5-7-yr exit timeframe. An Intel where Gordon Moore checks out in 1975? Or, a Google where the founders retired post-IPO, around 2004-05?

Cisco?

I think you're correct that the best companies are those with founders who can both 'found' and manage, but is that a cause or effect?

I also think that the criticism that startups are not "big-thinking" enough is more appearance-based. She may be more impressed if startup pitches read like research papers and less like, well, startups.

However, there are a number of problems with conflating research problems with startup opportunities, one of the first being that the startup field is now a lot smaller than it was.

She talks about Stanford and Harvard students as though they're the best of the best and while it's true that recent graduates may have great potential, what you really want for research-level efforts is domain experts. It usually takes years to become a domain export -- far longer than the typical beginning-phase startup.

There are also a number of major problems with funding straight research efforts just from an expected-value point of view. Even Google was mostly working with known quantities (i.e., the exploratory research had already been done) when it started. If the result of a year-long startup effort is "turns out this is impossible" that's pretty bad.

Basically, there's a sweet spot for startups in a fiscal and informational sense and I think it will always tend to sound a little less impressive given that context.

It usually takes years to become a domain expert

Very true. Suppose you know coding when you're 25. Then you have even more years to study a domain and be able to apply your computational skills to the cutting edge and have that deep domain knowledge to pull off an amazing solution.

I would read a research paper-styled startup pitch for Color.

I also don't really see the investors pushing startups which could be 5-10 year IPO-track big successes into early exits. An IPO or even late-stage M&A into a very related company (e.g. Mint's "takeover" of Intuit...) is really different from a 6-12mo flip talent acquisition, but both are called "exits".

If anything, investors want the moon shots more than most founders do.

Yeah, the piece she seems to be missing is that it is sometimes hard to tell what will be a game changer in the long run when it first appears. (If it were easy, this would be a very different kind of industry!)

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