Startups Have Bigger Things to Worry About Than MicroHoo!

I am definitely late to the party in praising Marc Andreessen's incredibly great Blog. That said, my failure to extoll the virtues of Marc and his dead-on insights is not the result of me personally arriving late at the lovefest. I have been thrilled to read Marc's uniformly interesting and well-reasoned insights since blog post #1. I just haven't had the right opportunity to suck up to Marc and tell him how much I care. Thankfully, that moment has come!

If you are as big a Techmeme addict as am I, you have probably noticed this little discussion going on in the blog world about the would-be Microsoft/Yahoo merger. I have never seen a single issue take over Techmeme so completely. And the discussion about MicroHoo! or YahooSoft! has been pretty overwhelmingly damning of Microsoft and its proposal in general. A friend of mine recently referred to Microsoft as the Big Bad Wolf, which I think pretty much sums up what tech commentators have to say about the deal. But out of the increasingly loud chants of "Burn the Witch" came a voice of dissent (reason?) -- Marc Andreessen self-titled "contrarian view" (the full title is "Silicon Valley after a Microsoft/Yahoo merger: a contrarian view") poses, well, a contrarian view.

In six broad points, Marc argues that with or without the MicroHoo! deal, nothing has changed in Silicon Valley. There are lots of startups out there. There are lots of acquirers out there. But, more importantly, there are millions of steps between the two and a preoccupation with the contraction or expansion of the potential pool of acquirers distracts from the real job at hand, which is building meaningful companies. I am tempted to quote Marc in his entirety on this point (you should definitely go read it all) but I think this chunk sums it up well -- Marc writes:

Building your startup with a goal of getting acquired is foolishness anyway, in my opinion. Smart people disagree with me on this, but I'll make my case in two points:

* Big companies don't want to buy startups that want to get bought. Instead, big companies buy startups that have built something of value that they decide is important to them.

* You can't possibly guess what things of value big companies are going to want to own in one or two or three years. The world is changing too fast -- witness the Microsoft hostile bid for Yahoo itself! -- and besides, big companies are Moby Dick and you can't understand the reasoning behind their decisions anyway.

Combine those two points with the fact that no big company buys that many startups each year anyway, and it's easy to see that the odds of you successfully anticipating something that a big company is going to want in the future and then actually selling your company to them -- as your strategy -- is a very risky proposition that is highly prone to failure.

Precisely! Not only is this the right answer to concerns about a Microsoft/Yahoo! merger, this has also been my answer to concerns about a recession. Startups have too many things to worry about along the path to creating a meaningful business for these macro trends to be more than a distraction. They may have an impact on timing -- when you may or may not get bought or go public -- but they rarely if ever have an impact on your ultimate success.

Marc's "contrarian" view concludes, "Your job is exactly the same as before: build something people want, scale it up, make sure it's defensible, and make sure you can make money with it. Build a company you are proud of." Right on, Marc. That's a great summary of how I view my job every day. That should be my VC credo: to find, fund and build companies to be proud of! And nothing about MicroHoo! or the subprime debt crisis is going to change how I go about that. So carry on Silicon Valley. We've got a lot of hard work to do building great companies. Everything else is just a distraction.

Comments

[GraemeThickins]

great post, Dave....and who cares if you're late to the party?

better to be good than fast

[https://me.yahoo.com/a/6gt0jAEGpMNpuvucrp6K37Lqu6b6hOc-#25f82]

Very insightful. As an wannabe entrepreneur, the Marc Andreessen's quote, "build something people want, scale it up, make sure it's defensible, and make sure you can make money with it." reads like a poem.

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