The possible solution?
Reversing the Decline in Big Ideas
by Max Marmer | 10:00 AM July 18, 2012
Many venture capitalists are up in the arms because their returns are down, their funds are drying up, and there appear to be a declining number of entrepreneurs pursuing big ideas.
They’ve turned to blaming angel investors for encouraging “an entire generation of entrepreneurs [to build] dipshit companies and hoping that they sell to Google for $25 million.” They say, “this ‘think small’ attitude is driving entrepreneurs who may otherwise build the next Google or Microsoft to create something much less interesting instead.” And this has implications for the whole ecosystem because, “then everyone loses. No IPO. No 20,000 tech jobs. No new buyer out there for the startups that don’t quite make it.”
Unfortunately, venture capitalists have mixed up their causality. Angel Investors are not the reason more entrepreneurs are thinking small. More entrepreneurs are thinking small, because the costs to starting a company have fallen so dramatically that there is now a whole new class of entrepreneurs creating companies. The founders starting “dipshit companies” are not the same types of founders who would be starting the next billion dollar companies.
These founders don’t want to change to world. They just want to make enough money to provide for their family, buy a car, or earn their freedom. These people are the information economy’s mom and pop business owners, just more technologically leveraged and profitable than their brick & mortar predecessors. Instead of starting restaurants and hairdressers they build coupon apps that are used by thousands of restaurants and hairdressers.
The only way out of this innovation gridlock is an expansion in founding team diversity. I believe the missing piece from the DNA in the founding teams of transformational companies is now the domain expert, who has deep insight into the industry they are trying to disrupt.