The death of Silicon Valley.

Someone Called Paul Graham  talks about mistakes that kill startups.

Reason 1.   I think he is totally wrong,  just look at me.
Reason 2.   Wrong again..  look at all the companies outside the USA doing stuff.

he goes on to list 18 more reasons.

If we define a startup as  “New business venture”  then hundreds of thousands of people on the Internet qualify for this definition.     There are maybe 100 backed VC companies a year on the net ?

Up until  last year or so the only companies that had a chance of making it big were VC backed companies.  But as technology costs fall and it gets better at the same time the number of things that small 1 person companies can do rises expotentially.    We are going to get to a point in the next 3 years were many of the top 100 companies can be run by someone working at home  with little to no help.    I’d say within 20 years someone can clone what google does today and run it off a single machine at home.

my point to all this is beginning about 2 years ago  everyone and their dog could start to create a website online and build a huge business and run it in their spare time  or even full time.    Before this time the only way to create a successful site was to hire a lot of people.     What we are seeing is the long tail of the internet being empowered to create sites.   

I imagine a world in a couple of years from now,  where your mom or dad could create a Site and compete with you.   We aren’t there yet,   we have just gone from only VC funded entities have the ability to create  large companies, to small bands or individual programmers having the ability to create big companies.  Many many business models are going to change as a result of corporations having to compete with  companies of 1 -10 people.  This in turn dramatically reduce the importance of Silicon Valley.

25 Responses to “The death of Silicon Valley.”

  1. Daniel Says:

    I absolutely agree man, he is “DEAD WRONG”.

  2. Andy Arnott Says:

    Call me crazy but I have never heard of this guy, and I too think he is dead wrong. His points may have been true in the 90’s but are dated in todays market.

  3. Priit Says:

    I think most on his points are true. Very true.

  4. Mayo Says:

    Well, he’s actually right in part of it🙂

    Number 1
    I agree totally with you!!

    Number 2
    You have to be in a hub, i presume you are in Montreal or Toronto, right?
    Well i’m here in Croatia and i couldnt dream of running web site
    like yours, frist: too little people (100000 households on internet),
    too little buying power i.e. not so much money from advertising,
    not too big possibility to run website from home (on 192kbit upload
    you can’t run some data intensive website🙂
    This means i will have to transfer to some city hub like London,
    Amsterdam or Toronto (i don’t like New York or LA🙂

    Number 3
    You yourself got into very competitive field, where was your mind, i mean
    put on your head to compete with the BIGGEST and win, i mean ARE YOU CRAZY :)))))) But look at you, if THIS IS NOT ONLY A MARKETING GIMMICK and i believe it is not a gimmick (you running yourself this website without VC backing and selling us I did it MYSELF bullocks and actualy having one!🙂

    Well many people reading and watching about your success will want to emulate you and someone will succseed, it will only be a bunch of people who will be able to do it properly, the rest 99,999% will FAIL, becouse you need tech ability, you are math wizard Markus as i understand on your talking about prime number calculations, so yes you need tech background
    and i don’t see my mom and dad so soon competing in the internet industry.

    Number 4:

    As i said: many will try to copy your modus operandi and fail miserably, like you copied matchmaking companies, you are just one of thens of thousands who actually made it, but you made it becouse of No. 2: you are in Canda, and can easely enter US market, we have the same matchmaking system here in Croatia, they WERE popular, like you WILL be popular (you said it your self it’s a diminishing returns industry), but they didn’t become multimillionaires, nor will ever be (not even in Croatian Kunas🙂

    Well rest of Graham’s ramblings are just PAST prestent, let them R.I.P. there will be some fools who will bash in several TENS OF MILLINS bucks inside and die miserably (like you said for one matchmaking company who bashed in 60MM$US in last two years – they’r hitory :))



  5. JayW Says:

    I think some of his points are valid but he’s living in the 90’s.

    My first dotbomb venture in 1998 had $40mm in VC funding with 25% of it spent on hardware/software/connectivity/programming.

    Over the last three years I’ve launched and sold two sites/companies on an average monthly budget of $4,000 that gave me three times the processing power and 10 times the bandwidth that I had during the 90s.

    Things are changing fast and guys like Paul are falling further and further behind.


  6. Aston Says:

    This guy is on crack.


  7. Paul Graham on Why Startups Fail « //engtech Says:

    […] Marus from PlentyOfFish disagrees with Paul’s reasons. But he missed the One True Rule that overrides them all “make something users want” and you don’t have to worry about the rest of the rules.🙂 […]

  8. Mayo Says:

    Paul Graham is not on crack.
    He and his friend made one of the culprit of
    90’s web with their WYSIWG interfaces that
    blow out all others: if you don’t like what you
    get, then f#ˇk off! maner.

    Why do you think Yahoo’s gave them 45MM$US,
    for horsecrack??! :))

  9. Neal Says:

    I wouldn’t be so quick to dismiss Paul Graham’s point. VC is crticial for breaking through the noise of your competitors (marketing). You didn’t have to worry about this because you started at that perfect apex where Google AdSense had just become viable and no one else knew it yet. YOu were free when no one else was. I wonder if you could do it again in another industry without such a competitive advantage? Marketing is very important without such an advatnage and it can be very very expensive.

  10. M. Says:

    Neal, its in the VC’s best interests to keep people thinking these things and believing them. That’s how they keep their leverage over new companies.

    Timing is everything, but the best marketing in the world still can’t make up for that. Look at as an example. They have exposure from TV stations and newspapers all across Canada… and according to Alexa, they don’t have much more traffic than POF! And I heard their marketing budget is around $20 million.

    Markus: A question many of us have is How Can Find a Technology Guy/Gal as sharp as you? The fact you’re running this massive site on such little hardware… it seems like something that few others can even concieve of? Where would you suggest we start to look?

  11. Mayo Says:

    ASP.NET v2.0 as Markus is using OR …. something that has “e” in its name :))))))

  12. Mayo Says:

    Only problem M. is that Markus is JUICING to the MAX!

  13. Chris Says:

    All this time I thought Markus was running PHP.

  14. M. Says:

    So where do you find an programmer than can achieve this? Or can it be done in PHP, or Perl?

    I know it can’t be done in ColdFusion! That’s what we’ve built our small apps.

  15. Mayo Says:


    Do You know who is running ColdFusion??
    HeHe… MySpace

    Good thing Rupert is behind, MySpace can’t go bust,
    but when they loose the edge – and they certainly will
    they’r gonna sink like stone (well not anytime soon but
    they will :))))
    HeHe all that Juice…. if Markus had got in the train besides
    MySpace he would run it i think on 100 servers, and not 10,000🙂
    (i think they are not using that much, but sooner or later they will)

  16. Marc Says:

    As usual Markus, I agree with you. This guy is so steeped in Silicon Valley… he’s stewed. Same old ho-hum VC speak as far as I can tell. These guys think the history of business is ten years of Business 2.0 back-issues and that’s their whole world. After 30 years, you’d think they’d find someone else to jock other than Apple founders, Steve and Woz. Oh, that’s right, they have Sergey and Larry. These guys think a couple special cases are the rule rather than the exception (the VC business model). Never mind the 150 years of growth through the industrial revolution (read technological) started by individual entrepreneurs which is still alive and well today… and still accounts for the vast majority of economic productivity around the US and the world. I read some of his other stuff, and I always get a laugh about how they think all the brainpower in the world gravitates to northern California. These guys always brag about how they have all these ‘smart’ people. They don’t have people that are any smarter than anywhere else. They have PRIVELEDGED people from PRIVELEDGED backgrounds. There is a big difference between intelligence and priveledge. These guys never see it, but they have to keep selling it with the same tired examples. They do a good job selling themselves and their story to the casual observer, but that’s how they maintain those cushy capital inflows.

  17. Markus Says:

    Myspace runs but some kind of funny version of it for parts of the site. That is why the pages look like cold fusion pages.

    I taught myself a few years ago, I haven’t worked anywhere else, just alone in my bubble so i really have no clue where the “good programmers” are or what most developers are doing.

  18. Ali Says:

    Markus != Rule, Markus== Exception

  19. Dave Evans Says:

    These comments exhibt the lack of clue density I’ve come to recognize from people who think VC are full of it. I can tell most of you are technologists from your arguments. Total knee-jerk reaction showing blazing ignorance and unwillingness to open your mind to other points of view. Scary that some of you will be running Google out of your basement in a few years, as if that was possible.

    And I’m not a big fan of VC myself, just to be clear but I finding myself reading VC blogs more often these days for the insight that I need to build businesses. VC can be seen asaA necessary evil or valuable partnership, that’s why there is “good money” and “bad money.”

    Why the anger towards someone who has clearly been through it all and is trying to share their experience in insight? Take some time to read Paul’s other writing. He’s written amazing articles about the Valley and startups. This one was very insightful, warts and all. I would think people would welcome the ability to learn from someone who has been in the trenches for years. Check out Brad Feld’s blog as well, great stuff for entrapreneurs. Paul made some great points about making smart business decisions and avoiding common and not so common pitfalls. Also look at Fred Wilson’s blog.

  20. Mayo Says:


    The problem is that most of us are loners, just like
    Markus is🙂

    I am not prone to collaborate with many people, i was
    burned several times before (although not realted to tech
    industry), so now i am prone to go and develop everithing
    I admit i am a control freak, but i will be enjoing LOL🙂, to
    patch my code on the run in some sunny island here in Croatia,
    hearing the servers and the code litteraly scream from the traffic
    it will come through and then juicing some more from the cycles.

    As for the VC’s, i will feel better to run from bootstraps to MM’s
    – than to take MM’s and end up with bootsraps🙂 LOL!
    You only respone to YOURSELF AND YOUR CUSTOMERS! They are
    No. 1 besides your family, CUSTOMERS and NOT some CHAIRMAN
    COMITEE who will be willing, eager and prompt to showe you from

    That are my 2 cents, if they even worth that much…🙂

  21. Mayo Says:

    One more thing,

    I think that being one-man-band enriches you,
    you start all alone, build business bit by bit, learn
    all the tricks of trade, know how your software breads,
    how hardware is breading, do your own accounting,
    marketing, PR,….
    When you see that you understand what you are doing,
    and you see gradual increasing profit you go further enhancing,
    building, listening.
    If you see more profits after that, you again REPL.🙂

    And then … you decide if you want to become next Amazon,
    eBay, Google, MySpace, Digg or whatever…🙂

    I don’t know how Markus is dealing with it, but it seams,
    he’s doing it extremely well, especially the PR part.🙂

  22. Mayo Says:

    Here is one interesting thing how 50-something WASP guys can run you’r company to ruins (although the founder wasn’t any wiser):

  23. As perdas de emprego: O Vale do Silício: Perspectivas « ATer: Criação de Sites Says:

    […] The death of Silicon Valley. « The Paradigm Shift […]

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