Rules For the New Bubble: 2011 -2014 “The signs of a new bubble have been appearing over the last year - seed and late stage valuations are rapidly inflating, hiring talent in Silicon Valley is the toughest since the last bubble and investors are starting to openly wonder how this one will end. Breathtaking Scale The New Exits Tools in the New Bubble Order of Battle Wide Adoption Visibility
The bubble is being driven by market forces on a scale never seen in the history of commerce. For the first time, startups can today think about a Total Available Market in the billions of users (smart phones, tablets, PC’s, etc.) and aim for hundreds of millions of customers. And those customers may be using their devices/apps continuously. The revenue, profits and speed of scale of the winning companies can be breathtaking.
Rules for building a company in 2011 are different than they were in 2008 or 1998. Startup exits in the next three years will include IPO’s as well as acquisitions. And unlike the last bubble, this bubble’s first wave of IPO’s will be companies showing “real” revenue, profits and customers in massive numbers. (Think Facebook, Zynga, Twitter, LinkedIn, Groupon, etc.) But like all bubbles, these initial IPO’s will attract companies with less stellar financials, the quality IPO pipeline will diminish rapidly, and the bubble will pop. At the same time, acquisition opportunities will expand as large existing companies, unable to keep up with the pace of innovation in these emerging Internet markets, will “innovate” by buying startups. Finally, new forms of liquidity are emerging such as private-market stock exchanges for buying and selling illiquid assets (i.e. SecondMarket, SharesPost, etc.)
Today’s startups have all the tools needed for a short development cycle and rapid customer adoption - Agile and Customer Development plus Business Model Design.
The Four Steps to the Epiphany, Business Model Generation and the Lean Startup movement have become the playbook for startups. The payoff: in this bubble, a startup can actively “engineer for an acquisition.” Here’s how:
Each market has a finite number of acquirers, and a finite number of deal makers, each looking to fill specific product/market holes. So determining who specifically to target and talk to is not an incalculable problem. For a specific startup this list is probably a few hundred names.
Startups that win in the bubble will be those that get wide adoption (using freemium, viral growth, low costs, etc) and massive distribution (i.e. Facebook, Android/Apple App store.) They will focus on getting massive user bases first, and let the revenue follow later.
During the the Lean Startup era, the advice was clear; focus on building the company and avoid hype. Now that advice has changed. Like every bubble this is a game of musical chairs. While you still need irrational focus on customers for your product, you and your company now need to be everywhere and look larger than life. Show and talk at conferences, be on lots of blogs, use social networks and build a brand. In the new bubble PR may be your new best friend, so invest in it.” - Steve Blank.
About
As a point of reference (in my blog) you will mostly find musings about: life lessons (that are worth sharing), good food, good design and things on two wheels (bikes and motorcycles) and lastly - tech innovation/start up - lessons, insights titled "The Hustle."
Please do ask me anything. I am always very eager and glad to be of help.
Search for content
Great press for Baydin!
I knew there Angry Birds were following me around.
Jetman update: to fly through Grand Canyon! (via In First U.S. Flight, ‘JetMan’ Will Fly Through the Grand Canyon | Popular Science)
Wow … Beam me up Scotty!
Buell RR - American iron racing ingenuity … A true beauty.
Blacked out R/60 - love the tractor seat.
Love their point of view. Wow … minimalist, powerful and unapologetic.
Breathtaking.
Confederate Motorcycles - Rebellion
(Source: youtube.com)
New Hellcat From Confederate … wow! (via Confederate Development Room)
Anatomy of a Cafe Racer (via Pipeburn - Purveyors of Classic Motorcycles, Cafe Racers & Custom motorbikes)
By studying the underlying patterns of how software, hardware, and networks interact, Song has become expert at understanding the flow of both “good” data and ill-intentioned hacks.
“1. Tenacity – Tenacity is probably the most important attribute in an entrepreneur. It’s the person who never gives up – who never accepts “no” for an answer. The world is filled with doubters who say that things can’t be done and then pronounce after the fact that they “knew it all along.” Look at Google. You think that anybody really believed 1999 that two young kids out of Stanford had a shot at unseating Yahoo!, Excite, Ask Jeeves and Lycos? Yeah, right. Trust me, whatever you want to build you’ll be told by most VC’s something like, “Social networking has already been done,” “You’ll never get a telecom carrier deal done,” or “Google already has a product in this area.” You’ll be told by the people you want to recruit that they’re not sure about joining, by a landlord that you’ll need a year’s deposit or by a potential business development partner that they’re too busy to work with you, “come back in 6 months.”
If you’re already running a startup you know all this. But some founders have that extra quality that makes them never give up. At times it goes as far as being chutzpah. And I see this extra dose of tenacity in only about 1 of 10 entrepreneurs that I see. And if you’re not naturally one of these people you probably know it, too. You see that peer who always pushes things further than you normally would. What are you going to get further out of your comfort zone and be more tenacious? It is really what separates the wheat from the chaff. I once had a debate with a prominent VC on a panel. The moderator asked the question, “if an entrepreneur writes an email to a VC and doesn’t hear back what should they do?” This VC responded, “Move on. Next on the checklist. He’s not interested.” Without much thought I shot back, “That’s the worst advice I’ve ever heard someone give an entrepreneur.” Doh. I almost couldn’t believe I had blurted it out, but what came out of my mouth was so heart felt that it just rolled out.” - BSOT
Pipeburn - Purveyors of Classic Motorcycles, Cafe Racers & Custom motorbikes
What a beautiful example of American Iron interpreted by British minimalist sensibilities of an era past.
Start up Tax in the Valley? Come to Boston and bring along your “west coast” “laid backness.”
