Color got some big print recently. Not for technological advancements, mind you. Color is highly regarded as the quintessential poster child for the tech bubble, and their excesses were covered in the New York Times. Color raised $41 million, doesn’t seem to have a lot of active users, and has already gone through one founder. You know what makes VCs and angels happier than an active user base? Seeing a half pipe skate park at a portfolio company that makes no money. Color has one, apparently.
I could be biased. My experience working in startups began in 2006. If the vibrant startup scene today resembles the parties from the movie “Old School”, the startup scene then resembled “The Hangover”. Unlike now and the scene in 1998, a startup existed to make money. Not theoretical YouTube money that eventually turned into a pot of gold in five years. Few banked on being bought by behemoth publicly traded companies who couldn’t innovate their ways out of a paper sack, and those who did had experience doing so. You didn’t have to be making money at that moment in time, but if you didn’t have a viable business model, you didn’t exist. Period.
One of the best speeches I have ever seen was actually an impromptu speech by Wil Shipley at GitHub’s CodeConf. In it, Shipley expressed his frustrations with the all too common question VCs ask: “What is your exit strategy?” Shipley’s answer was simple. “Code until I die.” He cited Larry Page, Sergey Brin, and Jeff Bezos as examples of entrepreneurs who made more money sticking with their respected companies than selling them.
That’s the big difference between what I see now and what I experienced in 2006. Back then, there was no “startup lifestyle”–you just worked at a software company. We had to work hard because there were very few handouts. Every hire mattered, every dollar counted, and every new and retained user was a win. It wasn’t about the “exit strategy”. It was simply about delivering value to people. The reality of successful startups hasn’t changed according to data from the National Venture Capital Association, but our perception of how to obtain this success certainly has.
Seeing these types of startups is like watching those guys who think they are going to eat a bunch, get really fat, and then magically turn it into muscle somehow. Now I suppose it works for some people but for the most part, they just turn out like beefcake Cartman. Yuck.