July 21, 2016
Gary Vaynerchuk is just too much of a businessman not to complain about the models that most startups depend on today. And, in his typically restrained manner, he recently voiced his opinion on the most recent episode of Recode Media with Peter Kafka. “Everything you do is predicated on raising your A,” he begins, adding more about the crisis of fake businesses in 2016’s startup economy:
“There’s nobody building a startup business anymore. Everybody’s creating a startup financial machine. I cannot wait for the armageddon that is going to put out 97 percent of these fake entrepreneurs. This is the greatest era of fake businesses, ever.”
Vaynerchuk plans to witness a big bust in the near future: Startups with inflated valuations will crash as they fail to locate a viable method of turning that valuation around into a suitable revenue stream. It’s a view we’ve certainly reported on in the past, and recent news doesn’t disagree: VCs are starting to prioritize larger startups over the unproven little guys: Uber closed a $5.6 billion round in the last quarter, taking an entire 28 percent of all funds raised that quarter, according to Pitchbook.
“A lot of super angels made money, and then we thought we were all so fucking smart. I’m going to lose so much money in this last six or seven years betting on companies that have no chance, because I wasn’t able to diagnose early enough that we were creating a culture, that every student on Earth decided, ‘I’m not going to get a job! I’ve got an idea!’”
The complete interview covers plenty of tech and marketing practices that qualify as “common sense” but that are often ignored or disdained by the tech community — banner ads are the standout example — despite the fact that they accomplish some goals very well. The bottom line: Building a brand and an audience for a dependable revenue stream are the ABCs of business, and that won’t change, even if “fake businesses” do.
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