Tech Bubble Formula
Pithy account from [1] in an article about the rise, fall, revival of Flickr:
Startups generally follow this cycle:
Founder has an idea or fever dream, based on imagined life experience that really came from video games and very sugary breakfasts.
Venture capitalist has money like water. Nobody knows why in particular these 5 mammals sit on a 100 billion dollar pile of cash, whilst another pretty cool mammal, me, has nothing. I imagine they have dozens of taps in the office constantly pouring cash. The taps have been pouring for so long now, that nobody remembers where it really comes from. All they know is that the rooms constantly overflow, so they have no choice but to randomly give it away. Preferably to something that doesn’t bring back even more money. That would make the situation worse. A thankless job. The heroes of our age.
Founder manages to raise enough money to buy a country, solve world hunger or build one penis-shaped space ship. Balls were already secured during the seed round. Thus helping with the overflowing rooms of cash.
Fund raising involves wearing a suit and saying the following words, in no particular order: disrupt. block chain. reinvent. at scale. machine learning. AR. And be in your 20s. Old farts be gone, go play Tetris.
Example sales pitch: Are you as frustrated as I am with tables? They don’t scale. Bring extra friends to a party…they don’t fucking fit. They were, like, where will we sit, bro? I don’t know. It’s, like, a table. Old tech. Have lots of mysterious items on a table and want to play a board game? No go. Doesn’t fit.
We will disrupt and reinvent tables. By decentralizing them into the block chain, everybody will have their own table. You will sit at a table when you want. There’s always room. With the power of machine learning, new tables will pop up as needed. It will also learn your preference for a round or square table. Using the AR Table Helmet™, users can see where their tables are, to prevent injury. Tables are subscription based, you can pause it should you want to stand for a while. We will never sell your table usage statistics to 3rd parties, because we care about you.
It usually doesn’t have to be this long. They were already nodding along at mysterious items on a table. Everybody has that problem. Like, what are all these random things doing on my table? What is their purpose? Who the fuck bought all this shit? And why, when I clear them, do they reappear the next day?
Another way to raise funding is to bring a pickup truck to the back door entrance of the VC office, on Thursday nights, around 10 PM. This is when the sweeping crew finishes clearing out the excess cash. They will even help to load it in. Be on time, otherwise it ends in the trash. That would be a waste. You’d have to wait another week.
Founder builds Minimal Viable Product, an optimistic term for something barely working created from a fusion of smell, pizza and 20 hour work days.
Hyper growth phase where the service is pushed at a loss.
Large user base established (because it was free anyway).
One or more additional funding rounds to repeat growth. Growth hackers are hired. Which never made sense to me. If something is growing, you don’t want to hack it. You want to leave it alone.
Enormous user base established.
Founder sells out.
New owner is to figure out how to actually pay the bills and in the process will kill or corrupt the service, which may take years.
Founder feels guilty about selling out and the service being corrupted. Founder is sad.
Founder continues rest of life as a progressive beacon of supreme morality, a very rich one. Founder publishes book. You should buy this book to learn how you too can be a great human being.
