Unbridled Entrepreneurism

Y Combinator had its semiannual demo day earlier this week, where many of the 63 startups in this batch showed their stuff to investors and press for the first time. It was the largest demo day so far. And they did the same show two days in a row so more people could come.

What struck me about the day wasn’t that so many companies were launching, or how awesome more than a few of them were. Unlike most events like this, the audience wasn’t mostly paying attention to their phone or laptop or tablet. It was more like the audience at a movie theater – quietly watching with their full attention. People like Marc Andreessen, Roelof Botha, Ashton Kutcher, Demi Moore, Ron Conway and others there, too. And people didn’t flock to them like they usually do. It was all about the new companies.

It hasn’t always been like this. Just a few years ago when I started TechCrunch new startups launching tended to do it in my living room or back yard during one of the monthly parties at my house. I’m being quite serious – see this old post, for example. That’s my living room, and those pictures show companies launching right there. Once the parties got too big we moved to other venues – the last one had 600 people and my house was a wreck afterwards. Someone was coding on top of my washing machine, and a very stoned VC was passed out on my couch because he couldn’t find his car keys (turned out they were in his pocket, but we searched my yard with flashlights for an hour).

Things have changed. Gotten bigger. Lots more money, which means lots more PR people, VPs of business development and marketing managers. By 2007 I was hoping for a downturn. A line I remember writing: “Times are good, money is flowing, and Silicon Valley sucks.”

But also things have gotten better. Mobile has exploded. Big companies are hiring/buying like crazy to avoid the Microsoft disease and stay relevant, and cloud services like Amazon Web Services have, again, drastically dropped the time and money costs needed to get an idea from your brain to launch. In the late 90’s it cost $3 million. In 2005 it cost $100,000. Today it costs $15,000, with money left over for lattes.

It’s not just the cost of launching that’s changed, either. Companies also routinely piggyback on Facebook, Twitter and Google for new users, pre-packaged with lots of demographic and other data. Both ends of creation process have become exponentially less expensive and difficult.

Which means more ideas get tried. It seems like the same percentage – about 10% – end up doing something interesting. So we have an explosion of creation and a steady failure curve. The result is lots and lots and lots of more useful stuff being built.

I’ve written about my thoughts on entrepreneurism before. This post – Are You A Pirate? – really sums up my feelings there. More and more people are giving it a serious try. With costs so low and with companies like Y Combinator to provide further platforms for mentorship, funding and marketing, There’s a bit of a perfect storm going on.

When does it end? What’s driving a lot of the demand are Google, Facebook, Zynga, Twitter and many other companies being aggressive about acquiring these companies. The money comes in and much of it immediately gets recycled back into new startups and new ideas that then go on and compete, fight, win and lose in the arena of entrepreneurism.

It’s a strikingly beautiful thing. Chaotic and at times messy, but beautiful. Entrepreneurism unbridled.

There are many things that keep Silicon Valley disruptive. The most important thing is fresh blood – new people with lots of energy, new ideas and absolutely no concept of the “way things are done.” The kind of person who sees a wall and thinks “Do I climb over it or do I tear it down,” but never thinks “Oh, I can’t go past, someone tell me what to do next.”

Y Combinator and others have found a way to attract these types of people, and then give them everything then need to succeed or fail (and then try again). It was one of those moments that really made an impression on me. Everything is just getting started. We are still at the beginning. We’re in for the ride of our lives.

Image credit: George L Smyth