Nov3
Tech VC Culture of Excess

Tech VC Culture Of Excess

Posted by Guest Blogger

Because tech culture is now mainstream culture in many ways, it’s normal that people want to jest or mock its tendency for excess from time to time. However, there has been a noted backlash recently for some of the more egregious examples of investment being used to start tech companies that seem superfluous, in bad taste, or just downright silly.

There have been several high profile examples recently of this culture of excess producing companies that purport to disrupt something that doesn’t need disrupting. The founders of “Bodega” experienced widespread condemnation when they set out to disrupt mom and pop corner stores (turns out, everyone actually really likes mom and pop bodegas and doesn’t want them to be disrupted) while Juicero, the juicing company with accompanying hardware and app, went under when it came to light that you didn’t even need the expensive hardware they were selling in order to squeeze juice out of the packet. After its demise, Vanity Fair called Juicero “a symbol of Silicon Valley myopia and venture-capitalist optimism run amok.”

Then there are the examples of existing tech companies “innovating” around something that, well, already exists. Airbnb seems to have gone full circle by announcing they will be partnering up with developers to create rental apartments under their brand. As one Tweeter pointed out: “This is a hotel. You’re building a hotel.” Similarly, Lyft seems to have innovated a shuttle service which appears to be strikingly similar to the concept of riding a bus. When Uber unveiled a similar service, Quartz noted the concept sounded “pretty comparable to what buses do, with their ‘stops’ that people ‘walk to’ and ‘wait at.’ (In Uber jargon it’s apparently known as ‘prioritizing human heuristics over purely system algos.’)”.

Many people say these companies are proof of a bubble. Because there is so much VC money floating around, entrepreneurs don’t have to create good or unique ideas anymore—they just have to create a place where investors can put their money. While the result of this situation can verge on the ridiculous—and make for some teasing on Twitter—the backlash to these companies seems to suggest that the era of disruption for the sake of it is over.

So how can would-be entrepreneurs and even investors respond to this moment? The first would be thinking more critically about the what and why of disruption—not just the how. For example, did the world need another way to make premium, overpriced juice with a machine that costs $400, pushing it far out of reach financially for the majority? With numerous juicers, cold pressed juice companies, and a limited market of people who can afford fresh juice in the first place, the answer to that question was probably no. If not an outright no, then it certainly wasn’t a big enough problem to inject more than $100 million of investment —as was the case with the now-defunct Juicero.

Indeed, founders and investors increasingly need to be asking themselves about the problem they are intending or attempting to solve. If it’s a problem for a very small niche of well-heeled techies, it’s more likely that your highly-funded idea is going to raise the ire of those who are sick of the tech world’s excesses. And if your goal is to create a company for a very small niche of users, then the money you earn should match the scale of the problem. There, the responsibility lies with investors too. Being more diligent and discerning about where they put their money will also help stem the tide of short-lived companies who have a lot of cash and not a lot of longevity. It is the responsibility of both parties to think critically about what they are funding and what they are making.

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