The value of short term thinking
influencehacks.com
influencehacks.com
But, I digress... Yes, life has changed since 2007, but many of the same fundamental problems still persist.
If I may get on a soap-box that I've borrowed from others wiser and more well-spoken, what have we done with this fast-paced technology boom?
With an exciting few exceptions, most of it has been centered around thinks like "social networking" -- chatting with friends, posting pictures, playing games, reviewing and "checking-in" at various places and things like that. What has this mind-blowing tech revolution really done to enhance the quality of life of the average user? Very little.
And that is a major reason why you don't see long-term viability in business plans – because the products themselves don't solve long-term problems and real needs.
Fix healthcare – heck, fix a part of healthcare. Improve transportation. Improve education; teach people something. Improve the looming water or energy crisis. Encourage more self-sufficency. Make products that get people jobs. Build efficiencies between businesses, between businesses and consumers. Etc, etc. etc. Become essential. Then you'll see long-term business opportunities.
The kicker is that those are all need driven – not technology driven... yet so many people, like the author of this post, are so tech focused they still miss the fact that tech is just the toolset used to deliver value to customers – by meeting their needs.
It's said that it takes 10000 hours of practice to become good at something; what's wrong with building another text app or music app while practicing? It's all experience, building up to something great in the future.
I don't mind you practicing for 20,000 hours, but please do not publish online and do not spam the internet with "your text app or music app while [you were] practicing".
There may be a value in some early writings of Shakespeare or Tolstoy, but I cannot possibly imagine anyone willing to go through all the clutter that the brightest writers ever written, from the very first dot they've put on a blank piece of paper.
Then build something that isn't.
I agree that healthcare, transportation, education are vitally important areas that constant innovation will yield results for everyone, consumers, producers, governments, workers.
However, the social networking changes have enabled new knowledge pathways and relationships that simply could not have existed more than a decade ago. Sure, much of it is just superfluous fluff and inane posturing. But then, probably the majority of information transmitted over the telegraph, then the telephone, and now the internet has always been inane banter and useless chatting.
But just because telegrams were full of news about new babies, birthday wishes and promotion announcements didn't devalue the worth of the nascent communications industry.
What happens when new ways of communicating occur is that entirely new ways of working and collaborating grow out of it.
In just about every case, connecting with people leads to greater understanding, tolerance, and entirely new knowledge patterns.
Will there be high-profile social networking flameouts? Yes. Will the future of communication, relationships, production and consumption be shaped by these patterns? Undoubtedly yes.
It seems galling to many that optimising day-to-day communications between friends gets more attention than healthcare, but humans are a social species. Chatting and sharing information has always been at the core of being human. If a core function of being human improves, surely humanity itself has been improved?
It's the difference between finding a problem and figuring out what technological change can address it, vs finding a cool new technology and looking around for some sort of problem to apply it. The later approach produces a lot of imagined problems and business failures.
One weakness in SV monoculture is the preponderance of kids who have never done anything but tech; the only Real Problems they know about are basic human drives like communication and how to find the best local happy hour. Not that this doesn't produce some occasional spectacular successes, but it keeps the-best-and-the-brightest all playing in a very expensive tournament with little social value generated by 4th+ place finishers.
The contrarian in me thinks that fresh CS grads who want to be entrepreneurs should immediately take non-programming jobs in some boring old-line industry like banking or retail or government and spend a year learning the problem domain. Then sit down to figure out what software to write. Or put it this way: I really don't care about Twitter or Foursquare or even Facebook. I'd pay good money for a Banksimple invite.
They just want scale, viral growth, network effect, more ways to sell advertising. Most of the money today is on completely superfluous crap, and that's why the economy is on the mud.
Why invest on improving individuals, when you can just distract them and reach for their pockets?
IMHO, this is one of the more clear cases where VC interests are directly at odds with the interests of post-IPO investors – particularly the ones more likely to be interested in long-term gains (people investing for retirement/retirement funds among others)
That said I wonder if this will correct toward a contract scheme ala national sports, where the 'engineers association' starts negotiating 1 - 5 year deals for 'star' players. It seems it would be more efficient economically.
I disagree about this one. In 2007:
+ AdMob raised $15M for their Series B from Accel and Sequoia.
+ Google announced their Android platform (after having purchased it in 2005).
+ Apple launches the iPhone.
I would say those are major examples of the big bets large corporations and investors were placing on mobile being a fast, if not the fastest growing segment of tech.
Thinking about self driving cars is certainly long term. We are all excited about the possibility of self driving cars, but it will takes lot of money and engineering brainpower before it become viable in the market. Remember, the first DARPA Grand Challenge was in 2004.
Software startups deal with what is just about possible. They don't try to make quantum computers or launch rockets like SpaceX(Which itself is a startup from 2002).
Five years is also roughly the time frame of Venture Capital funding. With Silicon Valley companies, it may be a bit of the tail wagging the dog because exits are often driven by investor timelines.
I would say it's far more likely that the funds followed pre-established patterns than they created the patterns.
This too shall all likely pass, but for the meantime, we're probably just going to have to live with this culture and thinking, and hope that we continue to make good progress regardless (everything from artificial organs to self-driving cars are beoming reality while this is being typed, so there's plenty of hope underneath.) It still has negative affects (and is depressing), as the OP explains, though.
One thing he forgets to mention is how companies raised capital back then. In the middle of 2007, fundraising was far different than it is today. The deal flows were much longer, accelerators such as YC were almost unheard of, and investors had less overall competition.
I remember going through fundraising with my last employer in 2007. We raised a $1.5 Series A (not a seed, something comparable to seeds today), had far less term sheets than companies get today, and winning a UC Berkeley business plan competition was our access to a pool of investors (unlike a demo day for YC, 500, Techstars).
I agree with the idea that a startup's vision is subject to the shifts in technology around it. And for the same reasons that you point out, I agree that it does not make sense for all tech startups to be thinking too far ahead. However, you could also argue that the sudden shifts in technology happen because there are companies whose vision is BIG and executed as planned. Some companies are just more susceptible to technology changes because they're building on platforms that are susceptible to those changes.
But no, I have yet to build a successful company, so who am I to act like I know? :)
I think we never hear about these visions as companies probably see them as a competitive advantage. But if everyone spoke about where their startup could be in 5, 10, 20 years we'd be able to accurately shape the future together rather than it simply haphazardly manifesting based on incremental investments.
The value of short term thinking is that it's more fitted to our time. We do not build companies to last forever, we might as well cut the cost of thinking long term and try stuff until it's profitable enough to be bought...