REFLECTIONS ON WEB 2.0... BUILDING A COMPANY TO LAST?
I touched on this topic on Friday, but there have been some good posts on the recent startup activity by Brad Feld, Tom Evslin, and Fred Wilson.
So much of what I’m seeing in Web 2.0 are - at best - what Fred calls “second derivatives.” VCs are once again throwing money at this stuff just to “get in the game” – I saw a quote somewhere from a VC that said something to the effect of “if the company can’t identify its four likely acquirers, I’m not interested in it.” This is craziness and – like all irrational things – will end badly for many VCs (and unfortunately for the entrepreneurs they back.)
This isn’t an attempt to throw cold water on the current enthusiasm around web-based applications. I think it’s extremely exciting, a ton of fun to be involved in, and hugely interesting to play with. However, there is a big difference between building companies that have value vs. simply creating incremental features. As you look at your business, think about where the fundamental value is. If the answer is “I’m just hoping to get bought by GAMEY” (one of Google / AOL / Microsoft / eBay / Yahoo), think harder. (full post)
I agree with Brad. My principles and definition of entrepreneurship couldn't lead me to build to flip. I believe if you're going to start a company, it should be with a goal to create lasting value and a sustainable business model. If you get bought out along the way, great for you as long as it was a real company.