'VC lemmings' chase old success; new iPhone a GPS boon
VC LEMMINGS: Successful Internet companies inevitably inspire copycats - many of them funded by venture capitalists hoping to achieve similarly stellar results. David Aronoff, an investor at Flybridge Capital Partners in Boston, dubs this the "venture capital lemming effect." But Aronoff thinks that it's nearly impossible to deliberately duplicate the "lightning in a bottle" trajectory of companies like Facebook, Google, or MySpace.
If you look at the VC lemming effect, these three companies have led to hundreds of millions of dollars chasing scores of web-mobile-social-networking-video-location based-mashup start-ups. Of this phalanx of companies, there are several potential candidates in the on-deck-winners-circle, like Digg, LinkedIn, and Twitter.
And in the anti-winners' circle, companies like Akimbo, and a host of others I'd rather not name for fear of VC reprisal, but look at TechCrunch's 2007 or 2008 Deadpool for a long list. While not all these companies received VC funding as their first capital or any VC funding at all, many did. I struggle to find (m)any examples of companies that have used initial VC funding to create successfully viral models. Why is this the case? Obviously, I don't know for sure, but I think it has something to do with the type of discipline and inertia that comes with venture financing.
I am not at all suggesting that VC funding is antithetical to exploration and entrepreneurship, but I am suggesting that in the case of consumer focused offerings, maybe startups need more "unsupervised" or "less-supervised" time to bake and test their value, without the implied or actual pressure that a formal financing by venture capitalists bring.
I doubt my pondering will stop any VCs from continuing the blistering pace of investment in consumer Internet projects, but if I am right, the results of those investments will!
LOCATION, LOCATION, LOCATION: With navigation systems linked to a global positioning system becoming more prevalent in cars, Boston venture capitalist Bijan Sabet predicts that GPS technology will soon play a bigger role in other kinds of consumer electronics. Apple's second-generation iPhone could be a catalyst, Sabet writes.
These days, I'm seeing more and more location-based ideas, prototypes, and full-blown applications. But this time I think the timing is just right to put this in users' hands. The 3G iPhone is going to be the catalyst for location-based services. It's going to start out very simple. Imagine no longer having to enter where you are in Yelp or other local sites (weather, news, movies, etc).
But that's only the start. I want to know where my friends are in real time.
I want to know about groups. I want to get in on games, hikes, etc. I want you to see all of the cool and interesting people that make it to OpenCoffee in Cambridge.
The list goes on and on. Location-based services are coming. And I'm thrilled about the possibilities.
INNOVATORS COME IN THREES: Entrepreneur (and former Lotus executive) Pito Salas points readers of his blog to an increasingly popular Cambridge tech event, Web Innovators Group. This month's gathering, set for July 15, features networking and demos from three early-stage start-up companies: Zeer, Totspot, and WebNotes. The companies focus on user reviews of food products, private Web pages for kids, and Web page annotation, respectively.
If you live in the Boston area and are in the tech business, you should check out the more-or-less monthly Web Innovators gathering sometimes referred to in shorthand as WebInno. For all of y'all who suffer from the Boston-isn't-as-cool-as-Silicon-Valley syndrome, I strongly recommend you check out the next WebInno. salas.com
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