Why would the venture industry be any different?January 15th, 2009 View Comments |
Is commenting the new blogging?
Umair Haque, Asleep at the Wheel of Creative Destruction:
The lack of new industries, markets, and categories is the great accelerator of the macropocalypse.
… Imitation – not innovation – is woven into the fabric of the 20th century venture economy. Why are venture investors failing to seed new industries and markets? Because venture funds invest not just in all the wrong places, ignoring clear supply and demand signals – but, worse, in all the wrong and same places. Where one pioneer invests, a slew of imitators follow, and so tremendous amounts of cash are poured into the same business design or market space – ad exchanges, social networks, and blogging/vlogging platforms to name just a few recent fads. That striking homogeneity reflects an almost total lack of strategic imagination by venture players.
Highlighting one of the five cited economic challenges from the follow-up post, Five Problems Venture Capitalists Should Have Solved (But Didn’t):
Business models for public goods. Here’s the paradox of the digital economy: digital goods are also public goods. So how do we capture value from them? It’s a tough problem – but most venture funds haven’t even tried most of the emerging solutions (here are some: turn goods into services, amplify scarcity, and democratize pricing). What does it say when a band – Radiohead – is better able to break new ground in developing business models for public goods than venture investors?
My comment:
Why would we expect the venture industry to be any different than other industries, any more forward-thinking, any less susceptible to imitators, any more driven by incentives and the systems they create?
We don’t tend to create new industries and markets until we have to; venture capital and “professional entrepreneurship” is still a relatively nascent industry and has been able to grow without needing to make tough choices or tough changes.
Venture investing isn’t dead; it’s just at that point in the cycle where creative change is needed. It’s just a bit more obvious to you than most.
I’ve personally met many people that are creating new models for venture and economic development; they are testing, pursuing and creating new paths not because the paths are proven but because they see a range of opportunities. I would be surprised if a “new DNA” didn’t emerge.
Closely related: Supporting early-stage ventures: How do you help someone fish?
January 15th, 2009 at 12:44
>'Why would we expect the venture industry to be any different than other industries, any more forward-thinking, any less susceptible to imitators, any more driven by incentives and the systems they create?”
It's a great question. Should we expect it? I think there are two ways to think about it.
The first is that, obviously, like any human or community VCs are limited by what they know. So, they get a pass (like the rest of us) in that very general sense.
But, the second is that VCs, absolutely, should be expected to have an extra or enhanced window built into their worldview. Their job is to see what's coming – and more importantly, what's needed – and invest in it to make it happen.
Clearly, there are VCs who have done that since day one and a new breed who are now innovating at the edges.
As a group, though, I'd have to agree: lame. These are the people that, as a special type of business athlete, were supposed to be leading us into the future, and, if they've been trading that responsibility in, and enormous opportunity, for short-term profits, and to avoid innovating in a webby world, then no wonder they killed their golden goose.
Sadly, it was the world's golden goose, too.
The upside is that it's a big wake-up call for past, present, and future VCs, and a signal to all that, huh, maybe “we are the ones we've been waiting for.”
February 27th, 2009 at 10:47
[...] All industries go through cycles of creative destruction and resurrection: why would venture capital be any different? [...]