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The Technology Sector’s Dangerous Obsession With Startups

I have a serious issue with the internet technology sector as it exists today. Specifically, I take issue with the way startup culture is venerated in digital circles.

In pursuit of ‘innovation’, technology startups are seen as the biggest value creators of the digital economy. The technology media is almost exclusively focused on reporting what is happening with Silicon Valley startups,  startup founders are depicted as modern day heroes, startup culture is seen as the guiding model for running a business, and massive industry events have become evangelical gatherings of startup believers where they can engage in the worship of everything even vaguely associated with technology startups.

And I think all of that is very wrong. Worse than wrong – it’s dangerous and damaging.

Any idiot can start a company (and many do). Being a startup founder or an entrepreneur is not an accomplishment in any way, shape or form. Building a sustainable business, that’s the real challenge.

The emergence of the mobile app ecosystem has given rise to a plethora of startups – literally millions – whose initial founding idea was “let’s build an app!” The startup itself is the raison d’etre of many a fledgling business, and that is a very bad way to start a company intent on any semblance of longevity at all.

But what about all those super successful app startups, you say? The Instagrams, Foursquares, Paths, and Pinterests of this world?

There’s a word to describe those: lucky.

For every technology startup that makes it, tens of thousands of others (quite literally) fail to achieve anything other than a spectacular waste of venture capitalist’s money.

The VCs don’t mind much though, because they’re playing a numbers game. For every 50 million they waste on disastrous startups, they only need one startup to actually succeed and make them 100 million when it gets sold to Google or Facebook or Yahoo or any one of the other technology giants that beat the odds and actually made it big.

I would argue that the ones that actually do manage to get bought out and make a pretty buck are not necessarily indicators of success either. We are, after all, experiencing the second internet bubble, with astoundingly unrealistic valuations for technology companies resulting in painfully inflated prices for startups.

It is ignorance being fed by naivety disguised as optimism and enthusiasm. A hollow, self-perpetuating machine where startup founders get bought out and become venture capitalists driving a new generation of meaningless startups founded by the next batch of intoxicated twenty-something ignorami.

At some stage the money will run out, the stock values will plummet to realistic levels, and it will all come tumbling down. Afterwards we’ll look at this whole episode with profound levels of embarrassment and 20-20 hindsight.

In the meantime, you can do your bit to prepare for the inevitable collapse of Bubble 2.0. First of all, don’t buy in to the startup hype. Don’t get caught up in the founder-buyout-VC-founder cycle.

Instead, focus on solving real problems. Focus on doing great work that delivers real value for your customers, whoever they are.

Avoid the cult-like startup worshipping events like the Web Summit and SxSW, and instead listen to people who have resisted the lure of the quick buy-out and managed to build sustainable businesses. They might not be able to show triple-digit month-on-month growth figures, but these people are the real engines of the digital economy. And they’re not necessarily founders, CEOs, or MDs themselves.

The people that add the real value to the technology sector are the ones that are quietly getting on with things, doing great work for their customers, and not getting high inhaling the evanescent vapours of Silicon Valley sycophancy.

Also take care to avoid the secondary fallout from the industry’s startup-veneration, such as the astonishingly ignorant ‘common wisdom’ around employee productivity outlined here, which leads to factory-like coding sweatshops that results in burnt out employees and the release of sub-par bug-ridden products.

Instead you would do well to foster a great working environment where staff feel appreciated and empowered and where creativity can thrive. Free massages, pool tables, and on-site dry-cleaning services are not requirements for a great company – often those perks are just fluff to hide a lack of substance and intended purely to lure in job-hopping talent from other startups. And that sort of employee, chasing the ‘next big thing’, is not the type of staff member you should be courting.

Don’t believe the hype. Startups are not where the majority of the technology industry’s value is created – established businesses are where much of the innovation actually emerges from. And startup culture is not the standard by which technology companies should be measured – in fact startup culture, with its focus on hype-driven vacuity and short term gain, can be anathema to sustainable business operations.

Focus on substance and real value, and you’ll survive the oncoming collapse of the second internet bubble just fine.

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