Turbulence and the Start Up Bubble- “If you freak out, I’ll freak out”.


Editor’s note: The following is a guest post written by Jason Lorimer from CulturaHQ.

I was recently on a Southwest Airlines flight (not this one thankfully) from Philadelphia to Chicago, sitting next to a beautiful blond woman. Her being in the same general line of work and me being a nervous talker, we passed the time by talking shop. Specifically, how we were both amazed at how few innovative ideas seemed to be coming out the abundance of start up companies popping up all across the US.

How many task tracking and photo applications does the world really need?

With all the low hanging fruit out there waiting to be disrupted, why did everyone seem to be trying to build a better version of the same dozen or so things. My seat buddy, as adorable as she is smart, said:

“They build for the funding first and the customer second.”

Obvious and insightful — Marry me I thought.

On the return trip some days later, I sat in the back row having shown up late to the gate and was greeted with some of the worst turbulence I’d ever experienced. Not so bad in it’s depth as it was in it’s length. For several minutes at varying intervals, this 747 was being thrown around like a rag doll. Being in the back row and an avid people watcher, I noticed something that allowed me to refocus my brain away from the sheer terror that was creeping up my neck. The turbulence had gotten so bad that people were starting to be alarmed. They were slowly turning their heads to look at each other as if to say:

Should I be freaking out right now? If you are freaking out, I’ll freak out.

The flight soon after settled and once the attendants lined the aisle with over-priced booze, everyone seemed to go back to normal. The next day I was telling this tale to a friend back in Philly and I laughed to myself midway through as the parallels clicked: The start up scene is that airplane, the passengers entrepreneurs and the turbulence the investment capital. Everyone looking around at each other but not speaking up. Imagine the same mental monologue from an early stage entrepreneur:

“Is it me or is my start up pointless? I mean, if you don’t think yours is pointless, mine must not be pointless because if you thought yours was pointless, you would be freaking out about that 300K of investors money you are burning every month and you are not so I shouldn’t be worried that I have no customers or even a proof of concept, let alone revenue.

Anyway, Are you guys going to the Tumblr party at SXSW? I heard Jon Hamm is going to be there.”

For the record, anybody willing to put their neck on the line to build something instead of running their mouth about what they are going to do is good in my book, but is it possible
that start-up bubbles might just be caused by vanity as much as they are by an abundance of available capital?

Are revenue models not cool?

Maybe I am being naive but I just think if most entrepreneurs would put aside the idea of being crowned the Internet King on the Month and just focus on transforming pre-internet business models into post internet. ventures, everyone down the line would be better served.

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  • Rudiger

    Did you get her number? Did she have nice legs? Details, please!

    • Of course.
      I’ll check back in to let you know if she ends up marrying me or not.

  • Yup. Pure vanity. Would you start a restaurant without knowing if there was a way for it ever to be profitable? At least with a restaurant, you can sell off the equipment if it tanks. $300k to build something that has no real asset value, can never be redeemed, and might never turn a profit? There’s too much money floating around, and too many wannabe-Zuckerbergs running around spouting garbage…most of whom don’t even know how to code. It’s candyland; same crap as 1998, and everyone gets to keep their new Jeep Cherokee except the designers and developers who’ll be workless and homeless come next year. Mark it.

  • Jared Volpe

    Let’s start a list of startups with legit (and cool) revenue models.

    Airbnb, Etsy, …

    • Universityebusiness

      Awesome! I like kickstarter.com for crowdsourcing. Also, please check out my launch page for my startup: http://raspwire.com

  • Building for funding first and customers second strikes me as akin to buying a lottery ticket. I’ve read and find easy to believe that only a few percent of startups ever get funding beyond family and friends. Only in a strange place like Silicon Valley (where I live) and at a strange moment like the present would many people suppose otherwise. And it’s by no means just a matter of being a “high-growth” rather than “lifestyle” company, labels I’ve always thought dubious anyhow. It’s also a matter of fads and preconceptions among investors. Of course, many unfunded startups die, but so do many funded ones, and more than a few unfunded ones survive and prosper.

    I’m building my company CardVine (currently in public but quiet beta) for customers first and investors a distant second. Among other things, this means I say CardVine is like business cards but more convenient and effective. If I were building for investors first, I’d probably say CardVine is a new kind of social networking app – which it is, in a way, but I suspect hardly anyone outside Silicon Valley and a few other “tech hubs” would care to hear about that.

  • I think the VC community is a lot to blame for the lack of innovation among start-ups. Unfortunately, many VC’s have a herd mentality and invest in the “hot” ideas at the time. How many “group buying” start-ups have received funding in the last couple years? How many “social gaming” start-ups have been funded? Entrepreneurs have a tendency to follow the money, so naturally if these are the types of ideas that are getting funded they will try to do something similar with a twist.