With all the recent talk of a tech bubble, I feel like I have to throw my two cents into the conversation. A recent NY Times article written by Nick Bilton claims that “With the exception of a select few, Silicon Valley has spawned no real companies over the past decade. Even now, as the value of eyeballs has gone down, people are buying concepts, not companies.” He believes that start-ups are merely being founded with the hopes of being acquired by a much larger company. Specifically Bilton spoke of the no revenue business model and how it is accelerating the tech bubble.
As you can imagine this article is very controversial. Many people have stepped up and supported Nick Bilton, while many others have spoken out in utter disgust. For example, check out Dave McClure’s Twitter account to see his explosive reaction yesterday. So what is the debate about? Why is everyone so worked up?
There are many different ideas on the root of the issue. What do I think? The central issue is the value of a company and how it is associated with the value it creates. While the true value of a company is merely what someone else is willing to pay for it, we must strive to look at this differently. The most valuable companies are interested in solving a problem or bringing to life a personal belief. Clif Bar is a great example of a company that has successfully done this. They quickly created huge revenues, they never took on funding and they were created with the hopes of creating a better nutrition bar. After turning down numerous acquisition offers, Clif Bar shined as an example of long term value and growth.
So what needs to change to ensure that we are on the right track? The biggest hurdle is to begin to have companies created in hopes of creating long term value to society. A quick dollar is very tempting but we must figure out a way to make money while creating this sustaining value. This does not mean acquisitions are not good. (I think Instagram deal is a smart move for Facebook and probably worth the $1B valuation).
The emerging market that I hope to see more young entrepreneurs enter is in the social good business. Why not create a company that helps solve a social issue or provides a value to society? This type of thinking will not only allow future companies to better the lives of others, but also creates a value that is easy to invest in. The hard part in this industry becomes how to value a company that solves world hunger….or a company that saves the lives of hundreds of thousands of people? Not very easy.
So while I do not see signs of a tech bubble (yet), as entrepreneurs we are responsible for doing our part to prevent one. This can be done through investing in long term growth, participating in ethical practices, and seeking to solve important issues. By setting out to accomplish these things, you are not guaranteed success but you are guaranteed a leg up in the long run on the kid in a garage trying to build the next $1 billion company in under 2 years. Are you up for the challenge?
Today on TechCrunch there is an article written by Christine Tsai regarding the idea of a “family market.” The family market/industry is a trillion dollar space that involves parents, grandparents, kids, etc. While the opportunity is present, many entrepreneurs have neglected it in the past. I predict over the next 3 years this will change drastically.
Take Kevin O’Leary for example. The VC on Shark Tank sold an education software company for $3.7 billion. I am sure he had a great product but he has admitted to being successful for a very distinct reason. Parents cared about the education of their child and they thought that if they did not buy his software than their child would not learn to read. Pretty hard to walk away from that deal as a parent.
Now I am not saying that every product in this industry falls into this category or should be marketed this way. What should be considered though is that families care deeply about each other and want the best product or service. Want to know where to begin? Look at your family and find something that you would be willing to pay for, either for your parent or child. Is there a solution that already exists? If so, can you improve it? Make it more affordable? Make it more efficient?
As I have written before, I am in the social good business. There is no need to prey on consumers, especially when you become blessed enough to be in a position to help others. Entering the family market allows an entrepreneur to better the lives of loved ones. Making a living is important but making a difference in the quality of someone’s life is much more important. Let’s face it, if you can make a difference in people’s lives then you will find a way to monetize it. Together we can leave this world a better place than the way we inherited it. Remember “The earth is a loan from our children!”
This article is a great follow-up to my last post about for-profit social good businesses. Generation Y is beginning to get more coverage for their belief in moral obligation. As a member of this generation, I think I have a decent grasp on why this feeling has arisen.
As the generation matured (some of us will never grow up), they believed that the US was the greatest country in the world. On September 11, 2001 that perspective was challenged and many of those in my generation had their eyes opened to a different view of the US. Whether you agree or not, it became apparent that the US was not considered the greatest nation on earth by some people in other countries. This was the first step in the change of mindset.
The second and probably most important aspect is the explosion of coverage and awareness for third world countries. This can be attributed to social media such as Twitter and Facebook. The immense coverage of genocides, earthquakes, and tsunamis has shown that foreign countries need help. So what happens when young people see that others need help?
Obviously Generation Y believes they should help the people in need. This is possible due to the third reason for a shift in mindset. Generation Y has been encouraged to “change the world” or “take action.” No other generation has ever been given the message of action so intensely, nor had they ever been enthusiastically given access to the resources needed to create that change.
When you take a step back, it is easy to see that Generation Y business leaders are merely products of their environment. That environment needs to continue to raise young people to believe in social good, while also seeking entrepreneurship and innovation. What will you do today to help this culture continue?
The young people of our world are growing up in a very unique time. These people have experienced more wars, tragedies, and economic failures then most grown ups do in a lifetime. While many individuals would expect this to have a negative impact on our youth, I notice a different trend.
Many young people are taking a unique approach to entrepreneurship and business. Instead of trying to create businesses that solely exist for profits, social good has become a huge market. From Better World Books to The Community Corkboard, entrepreneurs are creating for-profit companies that include social good aspects. This effort is commendable, especially when you attempt to realize the possibilities.
Imagine a world where the rich were attempting to solve social issues through philanthropy (Gates, Buffet, etc), and the poor/entrepreneurs were trying to solve the issues with innovation. Everyone would bring their greatest assets to the table in the name of progress.
Forget the world where children are starving in third world countries….someone has created a for-profit that gets them food from first world countries efficiently. Forget the world with widespread disease….someone has created a for-profit that efficiently gets vaccine and education to everyone. Forget the world where individuals are destroying the environment…..someone has created a for-profit incentive program to be environmentally conscious.
While these things may not have been created yet, how far away are they? My guess is just a few years until we see them. Why? Because our youngest generations are growing up with a sense of social responsibility to something bigger then themselves. While they will miss the generation of enlisting in the armed forces during wartime, some would argue that they have the potential to be our nation’s greatest generation. Are you willing to bet against them?…..