Last weekend I bought a new computer, well at least new for me. You see, I’m not a power user, so I love buying a cheap PC every few years, one that is slightly out of date. My purchase was an inexpensive HP desktop with a 500 GB hard drive and 4 GB of RAM, and it cost all of $250. #Score.
Now, contrast this with an IBM XT, circa 1985. In the mid-80’s, I could purchase an XT with a 10 MB hard drive and 128K RAM for about $2500. So for 1/10 the price, not considering inflation, I purchased a computer with 50,000x more hard drive and 31,250x more RAM.
That’s quite a bit of innovation in the past 30 years in PC hardware. And the same thing has occurred with many other tech products. How about networking speeds? How about cell phones? And how about how the internet has changed almost everything?
And yet, over the past few years, the Venture Capital community has engaged in public handwringing about the lack of innovation and big ideas coming from today’s entrepreneurs. Here are a few quotes to support my point:
“The tech world should be utterly ashamed, because we are at an absolute minimum in terms of things that are being started.” – Chamath Palihapitiya in Techcrunch April 2013
An entire generation of entrepreneurs are building dipshit companies and hoping that they sell to Google for $25 million, lamented a venture capitalist to me recently. He believes that angel investors are pushing entrepreneurs to think small, and avoid the home run swings. And you don’t get a home run unless you swing hard, he says. When you play it safe you nearly always lose. VCs and Super Angels: The War for the Entrepreneur
Innovation slowed down dramatically after the 1960s, Mr. Thiel said. We are not focused enough on getting back to a culture of innovation — people are just trying to figure out ways to coast. According to Mr. Thiel, not enough energy is spent tackling big, challenging problems, like space exploration. Instead, many people are chasing incremental progress and short-term gains. Contrarian Investor Shuns Hot Idea for Bigger Picture
Sorry, I don’t get what all the crying is about. With cloud computing and pay as you scale pricing models, it just doesn’t take as much money to build most startups these days.
As a result, big bloated VC funds that need to put $50 million into a company are dying off. Perhaps the VCs need to eat their own dog food and find some innovation in their business model? Or maybe AngelList will do it for them?
So What Does This Mean For You? It’s not a crime to pursue a business idea that isn’t judged by the VC intelligencia as a “big idea.” Go execute. Build a product or service in a growing market, and use a series of “small” successes to create a valuable company. And don’t let anyone with a self-serving agenda tell you your idea isn’t worthy.