I always thought billion-dollar valuations were driven by unstoppable meteoric growth in huge markets.
Think the early days of Facebook or Google, Priceline and eBay for sure, particularly in their earlier days, and perhaps add a few others carefully to the list. Massive valuations were once the reward for massive month-over-month growth, usually in the range of 5 to ten percent per month, whether measured in dollars or users.
Sadly very few startups sustain that kind of growth for anywhere near as long as they sustain their sky-high valuations.
How quickly did Myspace come and go, or the near-identical Globe.com years earlier? Where went the rapid user growth of Twitter and Groupon and Living Social, among many others? While it may aspire to do so, Amazon likely recognizes that it can’t ever be the world’s only retailers.
It's remedy: new delivery systems, Amazon Web services, content production and more to assure its ambitions and revenue growth are never labeled “tame.” And while Google sees a leveling-off of its massive search ad revenues, the 84 other businesses they’re investing in heavily will likely drive its growth engine for many years to come.
The first crack in the rocket ship that was Groupon came in Boston, one of its first markets, where both retailers and Groupon users were soon fleeing in droves. A June 2013 Yipit study showed that less than 45% of Groupon merchants would ever return.
Groupon stock won’t likely return, either, from a peak of $30+ to a recent close under $8.
Speaking of tameness, most business people remember good ol’ messenger services, gritty small businesses that sent sketchy folk around town on bicycles for $10 a ride or less. Is local package delivery, reportedly Uber’s next great conquest, a bold, innovation or merely a pr activity?
One of the world’s most highly-valued startups du jour, Uber’s York City value proposition for its low-end UberX is at least tame if not sadly unimaginative: “cheaper than a New York City taxicab!” Hardly the mantra of a great, disruptive company.
The solutions are clear, but by no means easy. If you’re not a passionate, tenacious, driven entrepreneur willing to work 90+ hours a week while confronting a high failure rate, update your resume and get a job!
If you’re serious and your startup is guilty of sameness, lameness or tameness, blow it up!
Do something dramatic to differentiate your company in customers’ eyes and offer them lasting value. Recognize that virtually every good startup idea is “out of the building,” between the ears of your customers—the only people whose opinions truly matter.
Embrace those customers, talk to them, and build something really great that customers will crave by the millions, not thousands, for years not months. Build products they’ll tell friends about eagerly and use themselves again and again.
It’s the only way to build a great company, and the best way to keep the startup bubble inflated.
About the author
Bob Dorf is among the world’s leading Lean Startup and Customer Development experts, who trains and coaches startups throughout the world, with a particular focus on Latin America. Bob co-authored the Startup Owner’s Manual, a global bestseller, with startup legend Steve Blank. Now in 18 languages, the Manual details every step in transforming an idea into a repeatable, scalable, profitable business. Bob focuses particularly on training programs for the startup educators, coaches, and investors, and has done so repeatedly in Mexico, Colombia, Brazil and many more. Hes also an Entrepreneur-in-Residence at Columbia Business School. Earlier, Bob founded seven startups--“two homeruns, two base hits, and three tax losses.” His 30+ angel investments delivered 7 IPO’s and six disasters. Learn more at www.bobdorf.nyc or contact bob via firstname.lastname@example.orgWebsite