It's refreshing to see someone admit up-front that its just about the money (flip). Hearing founders talk over and over again about how they want to change the world when their primary motivation is status gets old.
Albert Camus once said "Every revolutionary ends up becoming either an oppressor or a heretic." From this presentation, it looks like Steve Blank has chosen to go the heretic route. Wide distribution first, worry about monetization later? Engineering a financial transaction from the beginning? I'm a long way from Chicago, but I can still hear Jason Fried's head exploding.
Personally, I suspect Steve is right, but only over the very short term. We've got a nascent tech bubble (and a commodities bubble, and a booming stock market) because our central bank's glued to a zero-interest-rate policy, and is further stimulating the economy through quantitative easing - pumping about $3B a day into the economy through bond purchases. All that cash has to go somewhere, and it is - anywhere it can get higher yields than the bond market.
This economic stimulation is all being done to keep the economy healthy in the face of unprecedented federal deficits - but it's a house of cards, and it'll explode as soon as foreign investors want higher rates for the privilege of holding American bonds. When this happens, the tech bubble goes away, and any company pursuing a bubble strategy is hosed. At that time, having a bootstrapped startup generating decent cashflow will look pretty good - not as good as selling during a bubble, but a hell of a lot better than not selling after a bubble.
That's why I'm curious about the timeframe in Steve's slides. Why does he think the bubble period ends in 2014? Three years is a pretty short timeframe for generating massive hype, getting huge, and flipping a company - is this advice even actionable?
Fantastically succinct market analysis and reality check.
Continuing the aside: Going short in 1998 would have been too soon, 2001 Q2 too late. Countless startups have flipped in the past few years after only a year or two of growth. There's ample time to build something valuable and flip it in the next few years. History repeats itself but that won't help us predict the market.
There should be an asterisk at the of the title Steve Blank's SXSW talk saying:
While new rules are in place for the new bubble they only apply to startups operating in the bubble. All other startups should continue following the rules for their respective sphere. Entrepreneurs should continue to start startups in any sphere.
He talks about four paths to startup liquidity. I hope he noted the latter doesn't replace the former. It should seem obvious but in the world of the new iPad making the original iPad a paperweight, I don't think it is. I'd argue for the continued validity of the former business models.
Interesting way of looking at it - the startup -is- the prototype. Then against I suppose that's why they're called startups. If they had longevity then the name would be misleading. haha
