Hunting Eyeballs and Selling Out. Rethinking the modern model of entrepreneurship.
By Michael D’Antonio
From Adam Smith and Henry Ford to Mark Cuban and Steve Jobs, historically market makers and entrepreneurs have plied their trade by making something and bringing that thing to market. This may seem naïve, sophomoric or even nostalgic given the current entrepreneurial environment of audience-building-in-the-hopes-of-being-bought. But for millennia, the duty and obligation of the entrepreneur has evolved into a different value proposition – to provide a good or service that builds value via users that achieves an end in a more effective and/or efficient way.
This paradigm has been ruptured by a decade and a half of the convergence around “getting bought.” The conversation has been dominated by a small number Cinderella stories who built an audience but not necessarily a viable business. These case studies have become famous (and some infamous). From Instagram and Twitter to WhatsApp. The entrepreneurial landscape is littered with companies that have not yet realized profitability, rather, have courted a huge player to buy them at an attractive or even obscene multiple because they built up a sizable audience.
While this new perspective fosters innovation, there are serious potential consequences. First, it says you don’t have to be profitable – just popular. It says you no longer have to compel consumers to pay for offerings – just find interested third parties. It rewards only those who reach masses. It empowers those who can raise significant dollars. And, in turn, it may stunt the very fabric upon which millions of small businesses and local entrepreneurs are born.
For every WhatsApp there are thousands of wannabe’s that haven’t even gotten close to their first round of Series A financing. The fiction we sell to the world (and sometimes ourselves) about the viability of the get rich quick punch out is dangerous. Perhaps simply not true. The data doesn’t support it. These are the exceptions, not the rule. And although they make for great editorial copy and stories we love to talk about, they often yield the worst business plans.
It seems the current generation of entrepreneurs has internalized this fiction and are trying to take their shot at the golden ring. The result could be generation of business owners running entities whose sole goal is simply to be devoured by one of few huge players. To win the Silicon Valley lottery. Sure these business often espouse a purpose and strategic vision, but time and again, we see the same situation play out – no clear revenue stream, no product or service offering that can be monetized, or no sweat equity to build a business. They usually don’t make anything except noise. And the foundational truths of Smith, Ford, Cuban and Jobs remain just that – foundational and true.
Durable businesses need to provide more than a co-opted audience. They also need to aspire to more than being bought by a digital sugar daddy. While developing and advancing a viable model and being bought at some point are not mutually exclusive, that latter shouldn’t be conflated with the actual business case.
As history has taught us, we mature and evolve, and repeat. No doubt, after this cycle comes to end, a new equilibrium will set in.
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