Subscribe » Issue #50, Mar-Apr 2014 Mag Cover
Idealog—in the ideas business

A web wasteland of acqui-hires and lame-duck startups

Silicon Valley is Motown and the web a hit factory, says GigaOm's Stacey Higginbotham.

The debate over whether or not Silicon Valley is in a bubble might not be the right question. Instead, we may want to ask whether the fundamental principles of tech investing are shifting, as technology becomes more of a consumer phenomenon. For all the talk of the long tail, the big money is in sites and services that capture a large user base. So how does venture capital and angel investing change to support this model? And should it?

Success in this realm isn’t like success in the old-school Silicon Valley world of building chips or enterprise software. The product still matters, but the audience isn’t the few technically or business-savvy experts at a large company that is evaluating your wares for a multimillion-dollar deal. Today it’s selling to the billion people on Facebook, hoping they will give you a click, a tweet or five minutes of their time to be monetised in the form of ads.

Maybe if you’re good you can build a business actually selling apps, but the name of the game is still driven by hits. The internet has become a wasteland of lame-duck startups and acqui-hires that couldn’t make it to the next level in popularity. The winners seem to be those who can rise to platform status, and it seems for many segments of the web, much like in The Highlander, there can only be one.

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