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Silicon Valley has horrible role models

Published by on Aug 8th, 2011, 15 Comments

As you wake up to this post chances are the world economy is looking unpleasant and at the core of the storm is an issue I think is unnecessarily woven into the fabric of Silicon Valley and the technology world as a whole. The issue is an insane attitude towards money and business, and in our case we have adopted it through idolizing Silicon Valley types.

As you read this the world is suffocating on American debt issues and at the same time some pimple-faced kid that hasn’t ever run a business or even made a penny in his life is being offered millions of dollars in VC to get that next great idea off the ground. It’s more than likely that the kid will burn through all of the cash and his business will fail. Ironically when he fails the community will congratulate him because in this industry failure for some crazy reason is good.

So basically the motto is grab as much borrowed money as you can lay your hands on, as young as you possibly can and if you fail… it’s okay. More crazy is that making money is not even really something most people in Silicon Valley are interested in, they just want to get acquired and drive off into the sunset.

Young kids building new start-ups today look up to the likes of Mark Zuckerberg for inspiration, when in fact they should rather be standing in awe of the guys down the road developing websites and applications for local businesses for money. Mark Zuckerberg and any other Silicon Valley douche-bag you can think of are the worst role-models for kids because they teach kids bad habits.

What happened to the real entrepreneurs? Remember those guys? Yes, The guys that built real businesses and not money burning doomsday devices! I miss those guys… because you could always learn a lot from them.

I recently started a services business and realized how many good lessons kids today could learn about business from doing simple services work: Everything from acquiring new skills like marketing, business management, development… but most importantly learning how to make money instead of borrowing it.

I am sincerely not impressed by the hotshot attitude that is laying waste to brilliant young minds and millions of dollars every year, what we need to go back to is being impressed by the real bootstrapping and business building attitude that we take for granted and even consider boring.

Comments

  • nicharry

    So Jason, you’re telling me that you don’t read techcrunch, you don’t follow startups, you’re not impressed with guys your age proving it can be done? Oh and lastly, you’re telling me that you would not sell your startup to someone for a ton of money? Come on, youre being naive and idealistic and a flat out liar.

    You’re also not being open and honest as the author; don’t you have a startup of your own? Wouldn’t you take funding if you thought it was good enough to make it? Maybe you’re ideas just aren’t good enough to be bitten by the bug of ambition?

    Either way, I call this one naive-baiting.

  • http://twitter.com/thatgerhard Gerhard

    Between this article and the one about Techcrunch (written by Richard Oakley) I have a feeling this might be a very South African feeling. I think as a 3rd world country we don’t want to make debt, hell we don’t even want to think of making debt if we can help it, where the 1st world just doesn’t seem to care about that sort of thing. The boys in the Silicon Valley seem to think that the millions they owe to the VC is someone else’s problem.

    Should I ever be in that position, I would be genuinely be concerned for my employees and overall financial sustainability of my company. The Silicon Valley guys doesn’t seem to care about that at all. I think that venture capital firms should concentrate on giving money only to people who’s ideas have the ability to completely change the way we use the something instead of every person who can build a basic site. That should be a good start.

  • http://adii.me Adii Pienaar

    I think you make a couple of valid points and I agree with most, especially:

    1) I too would like to see entrepreneurs going back to bootstrapping, because I think that this nurtures a much better environment of solving problems creatively.

    2) Online we’ve seen too many funding announcements being touted as successes. Many of the ideas that gets backed though have no real business plan and much less a way to create a profitable & sustainable business.

    That said, I don’t think that the existing “Silicon Valley model” is broken though. I’m more than happy to continue growing our bootstrapped business in an organic way. I have a certain risk appetite and while I could be going crazy in terms of M&A (which we could fund from cash reserves or sign a deal with one of the many private equity firms that have approached us for funding), I’m happy to continue in our own way. What happens in Silicon Valley doesn’t influence me *and* it makes for good reading (sometimes). :)

    I also believe that there are some incredible ideas which would’ve not seen the light had it not been for the gambling exercise which is early stage seed funding. It may not be my personality or appetite to get involved in such businesses, but that doesn’t suggest that the approach is broken. Many entrepreneurs are riding that bandwagon at present, but just as many entrepreneurs are building the “real” business that you speak of. To each his own, I guess.

  • Anonymous

    I don’t think Jason is talking about now wanting to get funding but the reasons you get funding for. It’s all about value I think and if you are in it just to get cash and “drive off into the sunset” then the value you add is not really worth it (maybe why America is in its situation).

    It’s the same with the Techcrunch article, he (Jason) actually says in it that you should scroll further down the page to the interesting stuff past all the “x acuired y for 1 billion dollars”.

    If you’re in it just for the acquisition then I for one don’t care about you. If you in it and need funding to get to the next level then you don’t get the “Silicon Valley douche-bag” title.

  • http://twitter.com/shotbeak Simon de la Rouviere

    I think it goes both ways imho. The Mark Zuckerberg types have fascinating stories. The Google guys + Mark Zuckerberg were an incredible inspiration for me to get into the web. They were young and ambitious and they made it through! That’s inspiring! If they can do something to change the world, I can too!

    However, I do agree that these figures get idolised and a lot of guys forego crucial business 101 (marketing, how to handle support, basic accounting and cashflow management, HR, etc). Here, in South Africa, this is what we need more than the silicon valley model (fund and acquire, fund and acquire): solid foundations on sound business practices.

  • Yossi Hasson

    I hate sensationalism for sensationalism sake. If you’re going to make a point, justify it with data otherwise it’s just an unqualified opinion. Who are these real entrepreneurs that you speak of that just bootstrapped their idea into a fortune? What makes them so remarkable?  Can it be done in every industry? What about Adrian Gore – is he that real entrepreneur you speak of? Could Discovery have succeeded without the R10 million they raised? I’m sure you use Google daily. Those same pimple faced kids you speak of so eloquently in your article about raised $25 million to get their idea going. They too had no idea what it takes to run a company but somehow built one of the most impressive ones the world has seen.  Capital is a necessary ingredient in starting a company, the message that you’re only a real entrepreneur if you start your business with no or very little capital is not only bad advice, in many cases, it’s wrong.

  • Anonymous

    Let’s be fair Nic, when you got into building Motribe you already had a wealth of experience from working in the industry, you had a Rhodes education behind your name and you had insight into the business. You took just enough VC to get started and within a couple of months you were profitable. Hardly the type of person I refer to in this post.

    Not all VC is bad, this is not my point. My point is as long as we idolize young dumb college drop outs with zero idea how to run a business and every now and again hit the Acquisition lottery then we are setting ourselves up for disaster. There is not much to learn from those types of guys other than risky and bad behaviour.

    I respect real businesses and the people who build them, so as a result I am more impressed by the guy selling Joomla temlates than Tom Anderson.

  • Anonymous

    Of course this is my opinion, it’s an opinion piece. Don’t misconstrue this post to be an attack on raising capital – if it was I would have titled it as such and it would have been alot more sensational. There are lots of guys that raise capital and actually build businesses, and that is admirable. At the same time there is also a hell of a lot of them that get nowhere.
    Raising VC is an opportunity to do great things, it is not itself an accomplishment.

  • Anonymous

    “there are some incredible ideas which would’ve not seen the light had it not been for the gambling exercise which is early stage seed funding” – agreed, and like a casino there are a couple of winners and tons of losers.

  • http://myfreeweb.ru/ MyFreeWeb

    Jason Fried > Mark Zuckerberg.

    Bootstrap. Start charging on the day one. Don’t make free web apps.

  • Anonymous

    I appreciate the point that you’re making about using capital as a means to an end. I just want to know from you which tech entrepreneur has brought a bigger change to the industry, never mind the world, than Zuckerberg?

    I’m no fanboy, and I hardly use Facebook these days. But you cannot deny the impact that this has had.

  • http://www.builtneat.com Jason Adriaan

    no doubt, but as I said elsewhere in this thread… it’s a high risk crazy game and only a few folks come out ontop.

  • Amanda

    I think you’re giving way more credit than is due here. Profitable does not equal success. If I buy an orange for R1 and sell it for R1.01, was it worth the effort? Would VC be happy with that? Maybe if I sold a million oranges yes. But VCs aren’t in it to break even.

  • Amanda

    Couldn’t agree more. Arrogance has no place in meaningful, long term success.

  • Amanda

    You’re absolutely right Jason. Some of the people in the comments below have never put their own money on the line because they believed in their idea, or themselves, enough to put their money where their (big) mouths are.

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