Silicon Valley has become especially good at turning software, the highest margin product ever, into many of the worst performing businesses imaginable. With few exceptions, the amount of money being lost by the leaders of the new school is absolutely staggering.


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8 thoughts on “

  1. Jason, enjoying your writings.
    I am a minimum wage earning security guard, age 53.
    Can you write a post for folks not in the tech industry that would maybe like to start a business and run it ethically?
    Barry

    1. Hey Barry,

      not Jason, but there are two books that helped me quite a bit.

      #1 Getting Real by Jason Fried and David Heinemeier-Hansson
      #2 The $100 Startup

      I liked both because they were about taking action today and about being smart and clever in what you pay attention to when starting out.

  2. I’ve worked at three VC backed startups in the current boom cycle, and the last two were losing millions with little hope of ever being profitable. My most recent company was losing over $4 million every month!

    It was so frustrating to be part of a business that was focused singularly on growing revenue, while ignoring negative unit economics and any sort of expense management.

    The senior executives felt that growth was the metric investors cared about and, if they didn’t spend to get it – mostly by acquiring customers with facebook ads – that they wouldn’t be able to show a hockey stick revenue chart and raise their next round. Can’t make this stuff up! Keep preaching Jason, it’s a breath of fresh air.

  3. One other point. The biggest web companies, Google and Facebook, are hugely profitable. A few of the early “unicorn” startups of this boom, like AirBnB, will also likely be hugely profitable.

    But, as more and more VC funding has flooded in, and as the web and mobile platforms have matured, I think we’ve ended up with a huge tranche of tech companies that have far worse economics and that are built on weak economics (i.e. Fab).

  4. But but but…we need another 6 people in Marketing! We need another 4 Customer Success reps! I need to hire a new team to manage that new vertical we want to get into! #idiocy

  5. I just ran into this: http://blog.samaltman.com/how-to-be-successful, and was thinking of your post here. These Silicon Valley folks don’t seem to realize that the approach that they’re chasing there is almost always going to lead to failure (survivorship bias).
    Anyway, I couldn’t even get myself to read through that entire piece… So came here instead to see what’s new on your blog 🙂

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