Startups are going to save us, relax everybody

In typical Silicon Valley Breathlessness Forbes published an article by Victor W. Hwang arguing the fact the Startup movement isn’t about startups. He argues that it’s actually a movement to free people from the chains of our current economic system. I definitely don’t buy this. Most people start a company for one of two reasons, they find a problem that they have a better solution for than anything provided (or a novel solution) or to make money. Typically it’s a combination of the two. No company in existence is out there not to make money. Companies that aren’t profitable cannot stay in business for long unless you’re lucky and funded by people that thing you will eventually make them a lot of money.

An opinion piece in the NY Times from 1/2/2014 pretty much sums this fact up. You’re replaceable at a startup and likely even more so than any time in the ¬†future of the company. It’s really easy to fire people when you have no money, especially if you are open and honest about how you go about letting people go.

Furthermore, if the startup movement was in fact about bettering the plight of people we wouldn’t be seeing the social stratification that we’re seeing in cities like San Francisco, ground zero for the startup movement. In SF some of the neo-techno-libertarian-elite are upset that they even see the poor people on their streets rather than out of the way like in cities like NYC (he issued an apology not unlike Tiger Wood’s for being a sex addict). Not only are these the people that are involved in the startup movement, but they are funding it. Yes, I know that this is only one person and on the other side you can point to Alexis Ohanian of Reddit fame, which really is doing a lot of social good.

In some ways the startup movement has made it easier for people to be cogs in the wheel. They work long hard hours, large companies like Facebook and Google push and push to get more for less. In many cases this can cause depression and the exact opposite of what the Startup movement is striving for. In fact, the goal of the Lean Startup is to make it extremely easy to ramp up new employees and ensure full coverage if something goes wrong. These companies and products are designed around the idea of building in quality rather than testing or patching it in. Of course, there’s a benefit to the employee in these cases too – they’re free to really explore new problems and create new things without needing to worry about reoccurring problems.

I do believe there are many startup founders are genuinely trying to change our society for the better, but it hasn’t been a frictionless process and will likely only get worse as we move forward. The Sharing Economy, for example, has come under fire from traditional companies, neighbors, politicians, and even members of the sharing economy. While in other cases, such as Zynga, we see companies that are essentially parasites that thrive through creating addicting games and clogging a platform with their notifications (those notifications stopped and Zynga basically died).

It’s important to be skeptical of statements that glorify any portion of our culture. The article that spurred me to write this has a similar tone as many of Thomas Freeman’s, of the NYTimes, articles, fully optimistic, but missing a broader portion of the population and the long term impact. We should be wary of these articles because we’ll end up believing that it’s more complicated to calculate a median value than an average. The startup movement is to help people start companies, some founders are dreamers, some truly try to change how work is done, but they most aren’t truly changing the world in amazing ways. We’ll be fine if reddit, AirBnB, or some other services vanishes. We were when Digg, Google Reader, Palm and any other influential company vanished.

Technological Convergences

Convergences happen in all different ways. They happen in books or book series, where a good author can plan to have plotlines converge in a specific time and place. In the case of the series I just finished, the Malazan Book of the Fallen, the author was able to get two totally unrelated characters meet in really unexpected ways. It happens in films too, Crash and 21 Grams are two great examples of this. This happens in technology as well. Most of the time, we as consumers never even see it happening. When we look back though we realize it was incredibly obvious that it would happen. Two great examples of this happened with cell phones.

MP3 players have been wildly popular since they came out in the late 90’s. Napster and easy to rip CD’s made them incredibly useful and provided hours of great listening. Around the same time cell phones were becoming smaller and more popular. No unexpectedly, phone manufacturers decided that it would be useful to put a music player onto the phone. These were clunky and really only used when people didn’t have a better MP3 player. Apple had created a great MP3 player and realized, like the phone manufacturers that users only wanted to carry one of these devices. This is one of the reasons that drove them to make the iPhone. Great interface and good music experience. At this point they already had the music infrastructure and the loyal fan base to be sure of a high number of sales.

Around the same time as the MP3 boom businessmen were starting to use Portable Digital Assistants (PDA). This was a replacement to the calendar and phone book. It also provided a few applications that allowed some work on documents. It could also be used to schedule emails when the PDA was synced with the computer. It was obvious that this would be a great device to connect to some sort of network aside from plugging it in. Blackberry used to make two way pagers and figured out a way to send emails and other useful data over the pager network. This was one of the earliest smart phones. Eventually Microsoft and Palm got into the phone manufacturing game for the same reason. People didn’t want to carry two device a PDA and a phone. If you put them both together you’d have a better product and would sell more.

These two technologies converged on a similar product, smart phones. Both types of phones had a very different set of users initially. However, since the iPhone there has been a further convergence of these phones into general purpose phones. Blackberry, while still catering to the business side, is shifting to compete directly with the iPhone because business users want the apps that the iPhone has. Palm has vanished from the market being unable to compete and Android has appeared as the first PC based OS. Android is a distribution of Linux, it doesn’t run well on PCs but MS and Apple are moving in a direction of merging mobile OSes and PC OSes (sure it’s a Mac, but it uses Intel so there’s no different besides the OS).

If we look back at these convergences, aside from new competitors and firm failure, they appear to be pretty obvious. Why wouldn’t these companies move into these market spaces? I’ll discuss some of that in my next blog.