Bubbles and the bursting thereof.
Listen. I’m all for having thoughtful, reasonable discussions about Where We Stand in terms of The Big Picture here in the tech startup world, about the impact of early-stage zeal and the rise of the angel investor, and about the effect of increasing M&A activity on traditional venture portfolios. Really! Because most of them so far have been just downright inane! (cf. “Angelgate”) (cf. *facepalm*)
So to see Fred Wilson and Roger Ehrenberg talk about The Impending Bubble in today’s Observer is a good thing! Because there certainly is a lot of money flying around, and a lot of it seems to be being thrown around by very dumb people for very dumb reasons with very dumb expectations. Plus, Leon got to publish a piece quoting a VC using the word “bubblicious” (twice!), so basically everyone wins here, right?
Yet despite all my earnest exclamation points I do have just have one tiny gripe, and that is this: please, you guys, please choose your words carefully.
I’m (obviously) a real big fan of VCs because I’m (obviously) a real big fan of startups, and our crazy little incestuous tech startup world is a really valuable ecosystem that simply would not exist without the generosity and backing and support and—frankly—the courage of all the VCs willing to throw their weight behind us. And that means a lot!
Which is why shit like this just fucking hurts:
“It’s not all going great,” Mr. Wilson told The Observer. “You know, companies are failing. A couple of high-flying entrepreneurs came crashing to the ground recently. Justin Shaffer of Hot Potato and Sam Lessin of Drop.io—both of those companies essentially failed. Both of them ended up ‘selling’ their businesses to Facebook, but those were really just—Facebook wanted to hire those people, and they wrapped it up in a ‘sale.’ But those companies were unsuccessful. They failed. So there is failure out there—like, right in front of us. We can see it.” (Hot Potato’s former lead web engineer Matt Langer responded, “Maybe Fred and I have different definitions of ‘failure.’ Justin and Sam both built companies that Facebook considered valuable properties … when the single most important company on the Web considers it worth their while to acquire the product you’re building and the people you’re working alongside the absolute last word that comes to mind is ‘failure’.”)
Like, whoa bro. Whoa. That is some serious excessive endzone celebration shit right there. “Crashing to the ground”? “Failure”? “Unsuccessful”? Really?!
I’m obviously very grateful to Leon for giving me the opportunity to comment on this (because god damn, if some of my closest friends are going to have to find out that one of the City’s biggest VCs just said everything they’d worked on could be reduced to the words “unsuccessful” and “failure” I’m just happy they could be reminded a sentence later that all their hard work on those unsuccessful failures got bought by literally the biggest site on the entire fucking internet and, hey, you know, that’s nothing to scoff at!), and I don’t have much to add here that hasn’t already been said beyond just “chill, bro”.
I mean, I was there the last time we went through this! I remember back before the bubble burst and I remember the lavish parties and the VC-sponsored cocaine habits and the ordering a Red Bull and a bag of Skittles to the office at 11pm and scratching your head wondering how the fuck Kozmo was ever going to turn a profit. And I remember the businesses we called “failures” back then and they sure as hell didn’t look anything like the two you’re pointing out, because there’s just absolutely no conceivable angle—not that of an investor, a founder, a co-founder, or a former employee—from which they could be considered such.
So what were they then? I don’t know! Is there some German word for “Aw shucks, they just weren’t the next Google!”? Because we need that word!
But seriously, all I do know is there’s just no need for any VC in this town to come off sounding like he’s dancing on anyone’s grave. And I only say this because I really like Fred! I admire him, I have a lot of respect for him, I love what he writes on his blog (long time listener, first time caller!), and the reason I think this is important is because Fred’s a really prominent figure in the tech scene and has a pretty unique position from which to set the terms of debate around here. I’d just like to remind him that we’re all in this together: we can’t start our businesses and create jobs and generate wealth without you guys, and you guys don’t turn a profit without us.
So, you know, everybody be cool.
