Maybe because the products suck and there are very few business models for software? I'm gonna focus on the software product segment, and my evaluation might be flawed, but I think that software is an inherent race to the bottom for three important reasons:
1) Dependence on proprietary software is at best a short-term support boon, and in the majority of cases a crippling liability when the vendor changes support terms or goes under (personal experience talking).
2) Open source software is a slow but inevitable creep towards feature-matching and quality that has borne ample fruit already.
3) As ephemeral information with near-zero material cost other than labor, software finds most low-hanging fruit quickly, while higher-hanging fruit attract the formation of non-profit foundations to continue development; there just aren't many more interesting software products to offer.
Working business models in the tech industry seem to revolve around the provisioning of hardware because buying software just isn't an appealing proposition to customers in most cases.
Sure, LLMs are interesting software, but they're a perfect demonstration: Open source LLMs already exist and gather huge momentum when released; the field is still so new that novel and efficient solutions are not the exclusive realm of proprietary research; and because of these factors, business models can't revolve around interesting model capabilities so much as provisioning the hardware they run on.
There are plenty of B2B opportunities where it just doesn't make sense for an open source competitor to emerge. There are plenty of hobbyist programmers willing to work on operating systems. Accounting systems? Way fewer. International export compliance? Zero.
There is plenty of opportunity in boring, unsexy niches. We have enough CRMs and Jira clones though.
As someone working in a niche area, I can confirm. It's shocking how little tech adoption there is in my industry. Plenty of low hanging fruit.
However I still sympathize with the parent comment. The niche-industry-exception state of affairs will become less true over time. And then you're left with the same set of incentives (minus dedicated hobbyists).
Even with a zillion Jira clones, Jira is doing quite well and growing. Maybe one day some OpenJira clone thing will be dominant but it could be 10-20 years, which is about how long it took Postgres to rise to relevance alongside Oracle
Meh? I think there’s a good amount of 2021 unicorns with poor fundamentals raising on hype and froth over growth numbers but burning cash, but there’s also plenty of 2021 unicorns with good business fundamentals with very long runways. I don’t think any of the figures in the article are an indictment of software as a business model. The unit economics & distribution potential remains very strong. But what’s the point of doing an IPO in a market that’s clearly down on tech? You’d only want to do it for legitimacy or you need the cash and can’t get good terms from private investors. Much better move to chill and wait for the vibes to improve.
Note my perspective is colored by working at 2 SF unicorns that had (Airbnb) / have (Notion) a long duration from founding to IPO or from unicorn to IPO. Airbnb seems to be doing okay, so does Notion… neither business ever went off the deep end burning cash for quick growth numbers to wow speculative investors.
I would gladly work for less money for a small company doing something valuable in the real world with realistic ideas about steady, healthy growth. They're tough to find though.
Isn't it expected? With the high interest rates, how can insane valuations be kept?
Also it means that ~15% of them still go public and that's good stats. Many others will just keep existing as going concerns, bringing profits to investors. In perverted mind of a VC that qualifies as failure, but it really isn't.
Quite a magnificent prediction. [0] Those valuations were never going to last.
> Due to the abundance of companies floating on the markets, This decade will introduce a long awaited tech crash that will reset and purge those companies unable to turn a profit. It will get harder for startups to seek capital since most of FAANG and other established companies with strong portfolios will move into novel industries that will invade their market share.
Electric cars, and to a more limited extent, smartphones are both beneficiaries of the development of batteries and rare earth magnets. Smartphones, from the dull but vital investment in wireless infrastructure. This also explains why the boom in e-bikes waited until the past few years, despite the level of demand that would have been obvious to anybody, and the minimal support tech needed to make them work.
Those did not emerge from these unicorns, except maybe OpenAI. (Tesla was already public prior to this. Smartphones didn't come from a VC-backed startup.)
Apple did NOT create the smartphone. When the iPhone released in 2007 it was a feature phone- no app store and famously missing featured like copy and paste. Besides Palm who you have mentioned there was Symbian and Windows Mobile which each had third party after market apps available.
Indeed Apple did not invent the concept of the smartphone. But by all accounts the first iPhone was absolutely considered a smartphone, based on its superior hardware, advanced operating system, and fully-functional web browser.
You seem to be equating "smartphone" with "has third party apps", but that isn't the defining characteristic of "smartphone" based on any common usage.
Besides, when the iOS App Store was launched ~1 year later, the original iPhone was able to use it.
I had a Nokia n95 at the time. It also had superior hardware and a fully functional web browser. Yes the iPhone was attractive at the time but not initially a smartphone and certainly not the first
I did not say iPhone was the first, I said the opposite. And again, your definition which equates "smartphone" with "has an app store" simply differs from widespread usage of the term.
Both the n95 and original iPhone were widely considered to be smartphones at the time! Examples:
Apple & Android took the smartphone from something that belonged in a businessman’s belt holster to something that lives in the pocket of every person on the planet who can afford it, from niche to ubiquity. For sure they did not invent “phone with store”, but they did create or strongly participate in a complete change of the market that left the earlier players - Windows Mobile, BlackBerry, Nokia, etc buried six feet under.
No, I think there was little benefit besides overinflated tech salaries and founders cashing out in tech unicorns. Smartphones are products of Big Tech, EVs a handful of startups (Tesla, Rivian, Lucid).
Most recently, Silicon Valley is a grift ecosystem (fueled by zero interest rate policy) masquerading as innovation and a load bearing component of the economy. We can do without unicorns, the world will be better off for it (and legit value will need to be demonstrated vs fairy tale valuations).
(VC as an asset class has poor returns, VC funds make their fees throwing darts pretending to be thought leaders when it’s mostly luck, etc)
Smartphones at least are absolutely crippled by being locked down by user-hostile app stores and rent schemes. Instead of uplifting us, they've made us angry crackheads. I think the valley is a risk to humanity's survival at this point.
LLMs and electric cars simply have zero impact on my life, and I imagine that other people would have had few issues coming up with the latter.
Agree with your first point, but Ev’s are starting to have a impact on local air quality… just because you don’t have one Dosent mean you don’t benefit
No, obviously not. Smartphones are a mixed blessing, I'm not sure we're better off with the little distraction machines, but both them and electric cars were things that could plausibly have developed more slowly, deliberately and thoughtfully over time without being "juiced" by distorted market incentives. They could have developed by companies simply evolving phones and cars over time.
They are quite useful as GPS/camera/general info lookup devices.
But virtue of having web browsers they also channel social media. Having social media come in through our phones does make it worse, but it was already bad even on laptops. (Writing this on a social media site using my phone is kind of funny).
1) Dependence on proprietary software is at best a short-term support boon, and in the majority of cases a crippling liability when the vendor changes support terms or goes under (personal experience talking).
2) Open source software is a slow but inevitable creep towards feature-matching and quality that has borne ample fruit already.
3) As ephemeral information with near-zero material cost other than labor, software finds most low-hanging fruit quickly, while higher-hanging fruit attract the formation of non-profit foundations to continue development; there just aren't many more interesting software products to offer.
Working business models in the tech industry seem to revolve around the provisioning of hardware because buying software just isn't an appealing proposition to customers in most cases.
Sure, LLMs are interesting software, but they're a perfect demonstration: Open source LLMs already exist and gather huge momentum when released; the field is still so new that novel and efficient solutions are not the exclusive realm of proprietary research; and because of these factors, business models can't revolve around interesting model capabilities so much as provisioning the hardware they run on.