I wasn’t going to link to the Richter Scales’ awesome “We’re In Another Bubble” video, but after reading Mike Arrington’s thoughtful big-picture post today, I thought it would be an appropriate counterpoint. Together, his article and that video define the yin and yang of the whole crazy technology startup game.
Here’s an excerpt of Arrington’s post on the shadow of the dot-com crash and how the impact still affects people today:
Entrepreneurs who didn’t go through the crash don’t carry that burden. They don’t have memories of looking their employees in the eye as the laid them off. They were never trashed on F*ckedCompany for making ridiculously stupid decisions. Basically, they’re optimists, as any entrepreneur should be. They have no baggage.
And as a result they do exactly what they should do – they take big risks and hope for a big payoff. For the venture capitalists it’s even more important. They need one or two big wins in every fund to generate enough profits to keep their limited partners happy. A gun shy entrepreneur may not take appropriate risks at appropriate times, and the chances for success plummet.
I’m definitely a bit tainted myself. What I saw happen to startups in the first bubble makes me hesitant to raise money (we never have), hire too many people, or generally spend money (our offices are still in my house). I think less about growing the business sometimes than I do about losing what we’ve built so far. That’s part of the reason why I hired Heather as CEO to take over the business side of things. She’s conservative, but knows when its time to take risk and grow the business.
My interactions with Edgeio, a company I co-founded and which went into the deadpool last week, were similar. It seemed like every board meeting I was saying the same thing – stop spending money, stop hiring, stop. I was out voted, and the company followed its own path. The fact that they ultimately failed, though, doesn’t mean I was right. The investors felt that the time to spend and try to grow was now. It doesn’t matter that Edgeio failed, what matters is that it is the right approach if you are trying to make something big. If you want to be conservative, don’t be a silicon valley entrepreneur.
I don’t blame Arrington one bit, because I completely understand that mindset. Fear of failure is poisonous. You can tell yourself any kind of lies you want in an effort to justify your choices to yourself, but if you can’t remember the last time you swung for the bleachers and took a big risk on something, then you’re probably a victim too.
Which is not to say that this video isn’t also true. Some excess and stupid choices are a necessary part of the process. Remember the normal distribution curve? Outliers in both directions are inevitable.
If you live and work in the Valley, this is the life you chose — the excess and the fear, the hits and the misses. You need to be able to take it all in stride, because sooner or later it’s going to be your turn to be the hero, and the goat.
I like to think I can handle it all, but I know I still have work to do in not letting fear shut me down. What about you?
UPDATE 12/15: Sadly, the video’s not on YouTube anymore. Here’s some background on why.