Silicon Valley!

Silicon Alley!

Silicon Beach!

Silicon Forest!

Silicon Prairie!

“It’s in the trees!
It’s coming!”

When will the startup gold rush fever end?

I have been trying for 8 years, with varying degrees of success, to encourage people to stop heeding the false prophecies of certain (not all) Get-Rich-Quick Venture Capital investment vehicles, and instead seek out the truly thoughtful innovations that have the potential to bring as much social value as fiscal value to the marketplace and communities in which we exist today.

It’s time for us all to stop playing this game of “my vaporware is shinier than yours”, and try to sincerely help inventors, innovators, and other creative business builders develop the types of sustainable business propositions that can build workforces, communities, steady revenue streams, and the types of long-term economic stability that was once the hallmark of great nations. It requires time, humility, and perseverance. It requires collaboration, vision, and generosity.

Watch this clip featuring Bernie Sanders. You need not agree with his every political position to recognize the veracity of his observations herein. It applies to our approach to so many facets of life and society:

“The truth is, at some level, that we are in this together… The truth is at some level when you hurt, when your children hurt, I hurt. And when my kids hurt, you hurt. And it’s very easy to turn our backs on kids who are hungry, or veterans who are sleeping out on the street, and we can develop a psyche, a psychology which is “I don’t have to worry about them; all I’m gonna worry about is myself; I need to make another 5 billion dollars.”

So I believe that when we do the right thing, when we try to treat people with respect and dignity, when we say that that child who is hungry is my child, I think we are more human when we do that, than when we say “hey, this whole world, I need more and more, I don’t care about anyone else.”

For the past 7 years I have been aggressively promoting the notion of sustainable business development, and campaigning against the fad of Venture Capital infused vaporware growth. Valuations based on nothing but ideas and Powerpoint (or Prezi) presentations might lead to a successful lightning IPO or other lucrative short term result, but the Piper must be paid, else the music stops. Those left holding the bag at the end of the short dance are left with little but debt and shattered dreams. This is not the way to build and sustain long-term innovation pipelines, or quality workforces, let alone support the dreams and aspirations of sincere emerging entrepreneurs. The terms “serial entrepreneur” and “unicorn venture” just piss me off.

graves

So many businesses have been encouraged to scale super fast, disregarding the absence of solid structural, brand, and product foundations. Their Towers of Babel have been raised with alarming speed, designed to look impressive, and promising extraordinary views and world-class functionality, yet delivering very little of substance. Investors have repeatedly relied upon the advice of brokers whose only interest has been swift maximization of returns, and nobody seems to have spent much time worrying about employees, product sustainability, solution viability, brand audits, or anything else that would underpin a business proposition designed to last beyond year 3.

This is why I decided 7 years ago, to stop working with clients seeking aggressive short term returns, instead of measurable and sustainable growth milestones. This is why I no longer invest in flashy business propositions, but instead in people. This is why I only mentor businesses willing to invest in their long term narrative, as opposed to the short term climactic scenes to which so many startups and larger organizations seem to still be aspiring.

When the State of Oregon recruited me last year to set up a business ecosystem supporting Digital Storytelling startups, some members of my new Board wanted to replicated “conventional” VC incubator and accelerator models. I resisted, and was thrilled that enough members of the Board accepted my vision, as well as my alternative business plan. As a result, we were able to help launch and build twice as many companies as had been required by the government, and nearly all of them continue to exist and grow today. The growth is at a rate that permits adaptation and management of both expected and unexpected challenges and opportunities, whilst protecting the people and assets around which the businesses operate. It saddens me when I hear of talented people or great ideas imploding under the weight of the overly ambitious aspirations of impatient investors. We cannot build sustainable new industries this way. I’m convinced that my model works. My proof is logic based, and has examples. I sincerely hope that the example set by companies such as Zirtual, Goodmail, Secret, Springpad, Outbox, Wahooly, and the hundreds of thousands of other companies that fail due to high churn, overly aggressive growth, and other errors in judgment, will soon set enough of a precedent that market practices will correct themselves, and more than a few of us will see the merits of more responsible investment, mentoring, and sustainable business development.

Innovation is alive and kicking! Crowdfunding is going strong! As long as funders keep in mind that they are essentially giving their money away to unproven concepts that offer no guarantees whatsoever, this continues to be an exciting facet of product development. Every time I worry there might be a backlash against the latest failed initiative, along comes something reinvigorating.

Yesterday the Tile App raised 13406% (yes I wrote that correctly!) of its crowdfunding goal, using an open-source platform developed by a company rejected by Kickstarter.

OK. Let’s stop there and review:

Kickstarter and Indiegogo are probably the two best-known crowdfunding sites. Conventional wisdom would suggest that if you are trying to fund your latest invention, you strive to secure Angel investment, VC funding, or a place for your fundraising campaign on one of these sites. Otherwise, you risk wallowing in the shadows of conceptual anonymity. Kickstarter has done much to validate the concept of crowdfunding, but there exist limitations to the concept, some unforeseen, and some self-imposed. Cameron Robertson and Paul Gerhardt, the co-founders of apigy, a small startup with one product, discovered this when they tried to launch their invention, Lockitron. Kickstarter rejected the product as not conforming to its parameters of eligibility, and many inventors have already reacted to this setback by giving up. However, apigy adopted the age-old formula of “Mountain, Get Out Of My Way”, and promptly developed their own independent crowdfunding campaign and platform, successfully raising in excess of 1000% of their goal in less than 24 hours. The parameters they set for themselves, and communicated to prospective funders, promised a more transparent and accountable productization flow, and Lockitron units began shipping this week.

Stop. Rewind yet again:

So far, we have a company that could not benefit from the emerging model of crowdfunding, as it existed, and therefore opted to secure their own crowdfunding by developing their own platform. Brave and resourceful! Yet why stop there? Once apigy saw how successful their campaign was, they determined that everyone should have the opportunity to tailor-make their own crowdfunding campaign, and thus was born Selfstarter, “an open source starting point for building your own ad-hoc crowdfunding site”.

Fast Forward:

Tile is billed as “the world’s largest lost and found” and the info video on its funding page (developed using the Selfstarter solution) ably clarifies its value proposition, if perhaps leaving certain gaps unfilled.

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Extant the obvious questions such as “will this drain my phone’s battery”, “can my account be hacked or disabled, in much the same scenario as a car alarm?”, or “what happens if my dog swallows the damn thing?”, this is a compelling innovation, and the swift and overwhelming response from the netizens has underscored this. Is this, however, an anomaly? A unique small square solution in a world of convoluted and half-baked concepts? Not if the Kite Patch has anything to say about it!

 

A small Riverside CA company recently raised well over 200% of its crowdfunding campaign on Indiegogo, in only 4 days. It’s product? Another small square solution, though addressing a completely different “lost” constituency: the millions who die from malaria and other mosquito-borne diseases.

As I consult to organizations around the world, I am often straining to convince more conventional NPO development officers to rebalance their fundraising resources away from their current 90% foundation/corporate support models, and more toward the massive grassroots funding ecosystem that always swells up when human beings are forced to recognize how close we all really are to one another. Strained and shattered economies are effective if painful unifiers (though admittedly not 100% unifying!), and the success of crowdfunding campaigns, both commercial and NPO, clearly supports my long-espoused belief that individual donors, sponsors, and funders represent a far more powerful ecosystem of fiscal support than previously believed, and the tools developed by Kickstarter, Indiegogo, and now Selfstarter are greatly facilitating the connection between a given product or solution and its prospective supporters. Indeed, while the economy may be strengthening somewhat in certain parts of the globe, the infrastructure established by these sites and tools does not seem to be dissolving, as it may have in the past, but rather is strengthening and expanding. There will undoubtedly be hiccups and disappointments along the way, be it for the developers or the backers, or both. The opportunities far outweigh the challenges, however, IMHO, and I am excited to see what comes next, and interested to see how the VC and brand sponsorship communities manage to accommodate and adapt to this model.