Let a thousand flowers bloom and you’re bound to get a rose or two

A couple of sharp blog posts yesterday happened to cross paths at an important Silicon Valley junction — the intersection of Innovation and Independence — and together, they serve as a good reminder of what really powers the invention engine.

At the blog for iPhone app developer Tap Tap Tap, co-founder John Casasanta rails at a venture capital system that sucks the creative lifeblood out of a few winning start-ups while casually leaving many more with empty hands and broken dreams (the VCs, of course, would frame this process a little differently). “In a nutshell,” he writes, “VCs will give you just enough money to get the ball barely rolling, but then repeatedly force your hand in later funding rounds (if you even make it that far). They’ll have you by the cojones and you’ll have no choice but to give up more and more of what you’ve built through your blood and sweat. And what’s worse, VCs typically bet on a large group of startups with the expectations that one will hit big (the 1 in 10 guideline). So what about the ones that don’t make it? Well, the founders may very well care about their creations deeply. But the VCs will be quick to amputate and cauterize. They’ll cut their losses in a heartbeat no matter how this would affect the people who’ve poured their souls into their babies.” Casasanta’s advice to entrepreneurs like himself — forget (well, he uses a different word) the VCs. “I’m serious. It takes hard work and perseverance,” he says. “Plain and simple, the more you work at it, the more you’ll learn. And the more likely your chances for success down the line. There’s almost nothing better than the freedom of not having to answer to some suits breathing down your neck and assing-up everything you’ve worked so hard for. But what about startup costs? Sophia and I started up tap tap tap for a few thousand dollars each out of our personal savings. And we’re not any kind of exception. … There’s no reason why you’d need more if you’re dedicated to your dream.”

And that is where we pick up with Techdirt’s Mike Masnick as he takes issue with the contention that the valley’s innovation infrastructure is breaking down because more entrepreneurs are rushing ideas to market in search of the quick flip instead of doing all that is required to build sustainable businesses. This is not a breakdown, Masnick argues, but a change in the innovation culture. “The ‘tools’ for creating a startup make it easier and cheaper than ever before to simply throw something up and see if it sticks,” he writes. “And, yes, much of it is terrible — just like plenty of online content is terrible — but out of that, some great stuff evolves. The fact that there are plenty of short-term thinkers just throwing stuff quickly at the wall isn’t necessarily bad for innovation — it just means that innovation is taking a slightly different path. There are plenty of folks in Silicon Valley still thinking about the long haul, and looking at the trends and understanding them. But the ability to throw something up and see if it sticks is valuable as well, as it allows a lot more testing of ideas in the real world, without having to make huge initial investments.”

 
 

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  • Markus Unread

    Let me tell you a little story of the VC/Startup scam. In this case a very large telecom company who will remain nameless (but rhymes with Srint) put money into a little wireless startup. Things go great, they get patents, and a product on the way. The big telco jerks the little startup around by setting rigid design goals for the product, based on their (eventually faulty) market plan. While jerking the little startup around, they also get in bed with a very large chip maker who is (shhh don’t tell anyone) also getting into that very same form of wireless product.
    One day, the little startup wakes up to find that there will be no more funding coming from the telco. Panic! Gnashing of teeth!
    But hey, the large chip manufacturer would be happy to buy your IP for pennies on the dollar – just because they are kind and want to help out the poor crashing startup. The big chip manufacturer and the telco lived happily ever after. The startup could be seen from time to time, waiting at the light rail station, mumbling to itself and handing out business cards with the address crossed out.

  • Casasanta’s idea of avoiding VC and self-financing works well for many businesses where the investment is time and thought. Some businesses require capital investment though. They’re in more of a bind.

    Manufacturing, especially in the technology area, typically requires equipment, which requires factory space and people to run it all. If this gets into chip fabrication and clean rooms, the cost soars.

    So, I’m all for the idea of self-financing, but the VC system has to be fixed too as self-financing can’t be for all businesses. The quick-hit, sell-off strategy also works against more significant manufacturing concerns as well.

 
 
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