The Golden Age of Startup Introspection


Nina Frazier | Flickr

It’s easy to believe we’re living in the golden age of startups. If you live in a tech hub like San Francisco or Seattle or a cultural magnet like Austin or Portland, that’s the water you’re swimming in. But the data doesn’t always bear out this perception. Startup formation in the U.S. has actually been declining slowly and steadily since the 1980s, according to The Wall Street Journal.

How can that be? It might be a side-effect of the demographic moment, with boomers heading into retirement and millennials not quite hitting their company-founding stride. Some businesses blame new regulations passed in the wake of the 2008 financial crisis — though the decline started well before those changes. Maybe its just a sign of a maturing national economy.

We’re fooled into thinking that startups are on the rise because we read and write so much about them. Our golden age of startups is more like a golden age of startup consciousness: We may not be starting as many new companies as we did in the past, but we’re doing so with far more self-awareness. Taking notes and learning from our mistakes? Sure. But if you’re of a cynical bent, you might also catch the scent of startup narcissism.

Y Combinator Wants to Build A City Like a Startup

Ben Huh, the entrepreneur who founded the meme-crazy Cheezburger Network, is joining Y Combinator’s New Cities project (TechCrunch). The effort, which Y Combinator announced this past summer, aims to apply the startup accelerator’s disrupt-and-scale philosophy to the realms of urban planning and development, looking for new ways to build new cities.

In a post announcing the project, Y Combinator’s Sam Altman and Adora Cheung wrote, “We want to build cities for all humans — for tech and non-tech people. We’re not interested in building ‘crazy libertarian utopias for techies.’” Still, the project at this point is both ambitious and vague. It’s certainly heartening to see tech-industry elites turning their problem-solving energies toward intractable real-world problems like affordable housing and diversity. The lessons learned in building new companies might well offer useful pointers to those building new cities.

But talking about cities as “the ultimate full-stack startup” only underscores the top-down, parachute-in nature of this latest Silicon-Valley-Saves-The-World scheme. Huh’s commitment to the project is only for six months, which feels more meme-like than city-scale. Cities are made of people who settle there for the long haul, and those people have their own ideas and rights and free will. It’s tough to imagine any city-building effort succeeding unless it starts there.

Obama’s GovTech Report Card

Was the recent South by South Lawn event, in which the Obama White House invited the spirit of tech-culture entrepreneurship into the heart of the Beltway, the start of something new — or the high-water mark of a trend that will now ebb? Jenna Wortham in The New York Times write that the event felt like a swan-song for Obama’s embrace of a “nation of makers.”

Whether or not you accept Wortham’s argument that Obama was the “first digital president,” there’s no question that he gave Washington a sometimes forced injection of Silicon Valley ideas and people. How much of that will outlast his term? And, more important, how much of it actually made a positive difference?

Inevitably, Big Government interfaces more easily with Big Tech than with small-bore startups. We can see the embrace of government and the tech industry as an accelerant to economic growth or an aggravator to inequality. It could make government more efficient at spending our tax dollars, or more efficient at surveillance. In the end, as Wortham argues, it’s virtually impossible to take advantage of the good stuff that tech has to offer without getting the bad, too.

Pay CEOs More, and Get Less

Three professors looked at 1500 large companies over two decades and found that the higher a leader’s compensation, the worse the company performed — both in the stock market and in its own ledgers (Forbes).

Wow! But also: Huh? The study argues that overconfidence is to blame. These CEOs come to believe in their own superpowers and end up making costly and destructive strategic errors, particularly in the realm of mergers and acquisitions. The longer these CEOs run their firms, the worse things get — perhaps because over time they can put allies in board seats and protect their jobs even when their performance lags. Sounds like a ripe area for reform. Clawbacks? CEO term limits? Caps on the ratio of CEO pay to median pay? Let a hundred experiments bloom.

Four Pieces of Advice For My 20-Year Old Self

“What advice would you give your 20-year old self?” is one question NewCo editor-in-chief John Battelle asks each interviewee in NewCo Shift Dialogs. Here are his own answers. A taste: “Let go when you know it’s time to let go… The truth is, sometimes more people get hurt when you hold on for too long.”

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