The startup industry is highly insular. Even if you ignore
the homogenous composition of IT (mostly affluent, white, educated, men), the
conversation inside the industry often sounds like an echo chamber for the key
buzzwords of the day. This much should be clear even to those that only dance
around the periphery of the market. 90% of the companies investors are talking
about these days have the same key descriptors; they’re marketplaces, on-demand
services, SaaS, mobile first, etc.
Over the past few weeks, I’ve been traveling. I disconnected from the startup scene and was able to retreat into a number of books on business history. Not about information technology, but books about the evolution of other major industries. Agriculture. Transportation. Global Logistics.
Their histories are all quite different. But one striking similarity stood out among them all. The most dynamic changes within each stemmed from entrepreneurs and investors setting out to accomplish something, despite an enormous possibility for outrageous failure.
The innovations that reshaped industries weren’t clear cut. Rational human beings could easily question the decisions. And because they could be so easily objected to - the biggest winners required crazy, bold, audacious investments of time, capital, and human intellect.
It makes sense. If everyone is running towards one opportunity, it’s not poised for out-sized returns in that space.
Warren Buffet has famously stressed for folks to be greedy when others are fearful. Clay Christensen has cautioned that profitable markets face the greatest pressure towards commoditization. Even inside today’s tech landscape, we have Peter Thiel appropriately pointing out that there is only likely to be one Google, one Salesforce, one Facebook, one Uber, and so on. The next conquerors of industry are likely to arise in surprising spaces where there isn’t a clear opportunity.
The biggest victories in our industry have illustrated this style of counter-intuitive thesis. Emergence Capital is a firm built on investments in cloud software during an era of complete disillusionment with the cloud. Y-Combinator is an institution built on a bold bet that mentorship and education would provide much greater value in the early stages of startup life cycles in the future. Founders Fund has returned its investors capital by investing in spaceships and electric cars. All highly questionable theses at their onset. But all theses that have shaped today’s landscape as they proved true.
But still, 90% of the conversation in technology focuses on known buzzwords in proven markets. Seems like a strong indicator that 90% of these conversations are irrelevant.
Wouldn’t it be nice if, instead of a constant fear of being wrong, people started articulating bold and counter-intuitive positions about the future? Speculating on a future that might be wrong… but could be right. It seems that conversation would help us hone in on the world changing propositions a lot faster.