What would you say to someone who believes there are too many startups, & that they’re the next big bubble?

Shumyla Jan ‏@shumylajan: What would you say to someone who believes there are too many startups, & that they’re the next big bubble?


I would say, “why are you worried about that?”

In 1993 I suggested to a friend of mine, Danny Sleator, that he turn his hobby (an online chess server which is now thriving at chessclub.com almost 20 years later) into a business. We started to pursue it. I had some code ideas which I started to implement on the game server. But then I lost interest. I got bored. I used all sorts of excuses to justify not being a part of it. I wanted to play games all day, hang out with my friends, read, write, and just in general screw around. I also liked watching TV a lot. So I gave up.

I told myself, “that’s it. I’m sick of doing startups” (it was my second), “from now on I’m just going to take easy jobs and focus on what I love doing.” I was just not ready yet. So I made excuses for myself and tried to place those excuses into the world as if they were one piece of a large jigsaw puzzle where the final picture was starting to become clear.

You are worried about a bubble? How come? Ask yourself if you are afraid to do a startup because you are afraid you will fail? This has nothing to do with the number of startups out there. The biggest startups ever often started in the depression or the recent recession. Microsoft was started at the peak of a recession arguably far worse than the one we experienced. Those entrepreneurs didn’t ask themselves: “Oh, there’s a Depression happening. I better wait until the world is a better place.”

You make the world a better place by having a good idea, being healthy, and helping customers make their lives better through the effectiveness of your product and execution on delivering that product. The macro environment has nothing to do with your success or failure but everything to do with the excuses you tell yourself.

You make the world a better place by not focusing on excuses, or poverty, or troubles, but on solutions, creativity, and your own health.

I know it’s scary to do a business. And the world is dead set against you cutting free from your shackles so you can do the business you want to do. There’s worries about taxes, about the government, about global warming, about mortgages, about Europe, about China, about “too many startups”, about how poorly Facebook’s stock did after the IPO. And on and on. You can give yourself a thousand excuses.

When I was a kid in the 1980s a lot of my friends would give up on their high school work and start smoking, taking drugs, whatever, because they justified that: “the world could go any day in a nuclear war, so I might as well have fun now. Why do homework?”

That was a great excuse. I even believed it somewhat.

It’s ok for you to believe there are too many startups. But don’t be afraid to add one more by throwing your own into the mix.

Now, as for the meat of your question: “is there a bubble?”

A bubble occurs when the prices for an asset go up today simply because…they went up yesterday. No other reason. People rush like a herd and try to catch the wave before the inevitable fallout that everyone knows will occur. Everyone thinks they are smart enough to avoid being the last man standing in the game of financial musical chairs.

That is not what is happening now. Instead, after a decade of generational malaise caused by the dot-com bust, 9/11, Worldcom, Enron, housing bust, financial crisis, high unemployment, you are starting to see entrepreneurs coming out of the caves with more excitement and in greater numbers than ever. This doesn’t create a bubble but does the exact opposite. It creates more ideas than ever as the initial ideas “mate” with each other to create newer, better ones. It creates jobs. It creates opportunities to make money and to create real wealth and jobs. It makes our lives better. It makes people happier.

Think of 1999. Or 1998. Were we in a bubble? Was the Internet a scam? Clearly not: Cisco, Apple, Amazon, Ebay, Priceline, Google, Facebook, Twitter, are just a few examples where the Internet has changed our lives for the better and forever. We are on the Internet now for a significant percentage of our waking lives. There was no bubble. There was innovation. And although there were a lot of startups then and a lot of money both made and lost, ultimately the technology developed change the world and if you stop with the excuses for a moment, perhaps your technology will change the world as well.