The Technology Sniff Test
As we were riding the Citibike down 9th Avenue early one morning, the exhaust fumes from the buses heading into the Lincoln Tunnel conjured up memories of London and the early morning smell of the traffic exhaust there. Funny how certain smells can almost fool the senses and transport one to a different time and place. It also got us to thinking about New York and San Francisco/Silicon Valley, which will never cultivate certain big city smells of either New York or London.
Technology recently saw two multi-billion dollar exits: Dollar Shave Club and Jet.com – both of which were acquired by large corporations – Unilever and WalMart, respectively. This does give one pause to consider the types of businesses that gestate best in Silicon Valley – the Ubers and Airbnbs and yes, even Theranos’s of the world: companies that do tend to run into regulatory issues and even tax issues, given the European Commission’s recent ruling against Apple, and Amazon and Google are also in their sights; companies with a certain amount of hubris, if not a shoot-first-ask-questions-later attitude. These are companies that aim high and go big, although in the case of Theranos, well, it doesn’t always work out as planned, and the company crashed hard.
The Grand Central Tech piece that we cited last week notes that “The gulf between the corporate world and the startup world is shrinking from both sides… Much was made of a “funding slow down in 2016”, but from our view, more than any slow down, the rules changed. For startups, successfully raising a Series A now increasingly requires not just growth statistics (i.e. users), but revenue growth and the existence of large, scaled customers.” Which, in case no one ever mentioned it, is the basic foundation for building a business.