We had a lot of fun when our neighbor Brad Garlinghouse, CEO of YouSendIt, dropped by and got on his Soapbox earlier this month. You might remember Brad from his days at Yahoo, where he wrote the now famous Peanut Butter Manifesto. While it was great hearing the story behind the memo, one thing that really stuck with us was when Brad talked about startups buying into their own hype.
Don't Be Another Groupon
Before Brad got on his soapbox, he chatted with Forbes about whether we were living in a second Dot Com Bubble. He said to the magazine that sometimes he doesn't know how certain startups will make money or even "live up to their private market valuations." He added:
There is something unhealthy happening in Silicon Valley where people are most focused on the hype cycle than building a great experience for their customers.
We asked Brad to elaborate on his comment during his Soapbox. He said we touched a nerve, but in a good way. It's a topic that Brad is passionate about. He sees a problem where some startups are more focused on getting their round of financing than actually building a product, or at the very least a prototype. As he put it:
[The] product they've built is around Series A financing and they built all this hype around financing. Put all that hype and energy around building something beautiful and usable that serves a need and solves a real problem.
We live in a very select bubble where there are a group of companies that are the "cool kids," said Brad. He even wagered that some of them won't be as successful as we thought. Case in point, Groupon.
Groupon was once hot stuff. It was valued at more than $12 billion before going public. However, the company's stock continues to plummet and the valuation is now around $3 billion. Behind the scenes, things remain turbulent for Groupon. CEO Andrew Mason recently got the boot and his duties were split between two board members.
Brad said two years ago everyone was itching to work at Groupon. So much so that Brad was worried he might lose employees. Yet, as Brad said:
Now here we are. Who wants to work at Groupon?
What Brad is really getting at is that you can't focus too much on the hype. What's important is building the best product and service you can, one that serves a need and solves a problem. Hype can only get you so far before it bursts in your face like a soap bubble.