Somewhere along the way, “tech industry” became synonymous with “startups.” (Roughly defining startups as early-stage companies reliant on venture funding, not profitable, without major partners.) And while we’d never want to ignore startups entirely—after all, they do sometimes drive innovation and address problems larger companies never will— we’ve been doing some soul searching lately on whether we’re a little too startup obsessed.
Here’s a few reasons why it’s worth considering shifting our focus:
Startup Funding No Longer Holds the Weight it Once Did
Due to changes in financing over the last few years, with the growth of seed stage, crowd and angel investment, it’s now fairly easy to get funding, even for a mediocre idea or one with no real business plan—in fact, VCs invested more money last quarter than any since Q2 2001. Take a quick look at the growth of seed stage investors between 2010-2013, powering this trend:
So funding’s no longer a validating signal of anything, other than having an idea—and today, there are more than ever of those floating around.
Mid- and-Later Stage Companies Are the Ones Most Likely to “Change the World”—Not Startups
We talk a lot about “changing the world” in the tech community, and as cliched as it is, it can be a real thing—just ask Google or Facebook. However, it’s not until a company reaches a certain size where that actually becomes feasible. And while every company that wants to change the world begins as a struggling startup, until they can successfully grow, it’s just an aspiration—not an inevitability.
It’s not really a surprise that even TechCrunch, while still closely associated with covering the startup ecosystem, has expanded its coverage far beyond startups and incremental product news, and more toward tech behemoths such as Samsung, Alibaba and Google—or companies headed that way, like Box. While new startups are potentially interesting, it’s rare for them to actually impact our lives in meaningful way.
Third/Fourth Round Funding is Where the Real Magic Happens with Companies
By the very nature of not being new anymore, Series C/D companies often lose their “sexy” factor—at least from an outsider’s perspective. However, there are fascinating and important things happening at these companies that we should be discussing but rarely do—issues like re-educating the market post-product shifts, recovering from business crises, founders leaving the company (or being kicked out), breaking out against other established market players and so forth.
Despite this, the tech chatter seems to focus the majority of its conversations on early-stage issues like securing funding and finding a co-founder. Ignoring issues that will help companies in later stages of life succeed does a disservice to them, and us.
Some of the Most interesting Things Happen With “Middle-Aged” Tech Companies
We bring all this up because we recently had an “aha” moment as an agency, when we realized that—for the first time ever—none of our clients are startups, at least not in the traditional sense. It was an exciting realization, because it means we have a chance to shepherd companies through their growth phase, and help tell stories about businesses that are not just saying they want to make a dent in the world, but are actually doing it.
One great example of a company in this “middle age” is our client RockYou, one of the earliest game developers on Facebook. We initially worked with them when they were a true blue startup, ushering them through their A-C round. But the market shifted and the company had years of very public struggles. Years later, we’re working with them again just as they’ve become profitable and have found a successful business model, with advertisers clamoring to get in front of its premium in-game ad network, and established gamer communities clamoring for their attention. Another example is Code School, which has grown organically (and without a dime of funding) to become one of the largest code education sites in the world by giving very high-quality content away for free.
In our very biased opinion, there’s a lot the tech community can learn from the RockYous and the Code Schools of the world, despite not truly being young startups anymore. These are companies that have proven their staying power, and most importantly have products people actually love and use…even pay for!