The Unreliable Startup
how silicon valley is building a culture of instability
I have already voiced a pretty strong opinion against free online services, but I want to take it step further today and dive into how silicon valley’s standard lifecycle is harming people and slowly destroying the industry.
I spend a lot of time on the internet — it’s my job after all. I frequently stumble across little projects and startups that interest me. Often times I’ll sign up for their mailing lists in order to keep tabs on what they are doing. And about once a month, sometimes more, I’ll receive an email from a startup that they sold or are shutting down. The emails are usually written in an elated tone in the case of a sale — after all if someone is buying them they must have done well, or at least be smart to be acqui-hired. And of course the founders are able to cash out on all their hard work. Sidenote, they are shutting down the service, here’s how to export your data.
I can’t be the only one that feels like this is vastly irresponsible. Tech startups enter the game with a very high chance of failure when they take on venture funding (which most do). They take the money and hire employees, market their services. And in order to keep operating, they need to raise more money once what they have runs out. If their numbers are not bordering on exponential, they will not receive more money (venture capitalists are looking for big returns, not what they derogatorily refer to as “lifestyle businesses”) and instead will be forced to sell or shut down the service. It’s treated as a game. Given this many resources, how many people can we get to use and depend on our service? If you get the most, you could win big!
The problem is that it’s not a game, and the currency they are dealing with is actual people. When a startup gets “users”, these are real people that actually use and often value the service. Often times the users would even be willing to pay for it. It can become an important piece of how they run their business or enjoy their lives. But for the people running the startup, they are just numbers, tiny ticks on the score card. And if things don’t add up, which they do not most of the time, ah well, call it a learning experience, shut down the service, and move on.
But what happens to all the people that depended on the service? They are all left high and dry. Suddenly, a critical part of their business infrastructure is no longer maintained, or will shut down in a month. Suddenly, the place they stored their writing and sent it out to their audiences has evaporated. Suddenly, the way they listen to music, or read the news when they get home from work is gone. The service they stored all the things they wanted to read or watch later is no longer holding on to that information. The tool they spent hours learning how to use has crumbled to dust. And all they get as a consolation is the ability to “download their data” and either an excited notification that the founder of the service is now rich, or a melancholy admission that the business simply cannot be sustained.
How many times will people allow this to happen before they stop relying on startups, knowing that chances are in a couple months or years it will be pulled out from under them? Much like we learn when friends or acquaintances are unreliable and stop relying on them for things, it will only take so many shutdowns or sales before the public starts to realize that startups cannot be trusted. And at that point, the industry will be in bad shape.
Starting a business that people rely on cannot continue to be treated as a game, with people as disposable resources. In order for the innovation to continue moving at the pace it is today, we need to find a way for businesses to be created that are reliable and responsible, and consider that “users” are not simply a statistic but are actual people. It’s not an easy problem to solve by any means, but it absolutely is one that we need to be thinking about.
Photo is the shutdown message from bop.fm, who I just received an email from today notifying me that they had been purchased. I didn’t actually use the service, but I’m sure many people did and were disappointed.