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Why Tech Bubbles Won’t Ever Exist Again
And Where Great Ideas Come From
Ali HamedAli Hamed in On CoVenture
People often ask if the tech world is in a bubble. It’s sort of an obligatory question asked before investing or fundraising. But I think the question is posed through an incorrect framework.
I believe it’s more important to analyze what industry a tech company is disrupting—and where that industry currently stands. The Internet is being used to tackle vertical industries, not tech itself. I’d even argue that the companies being founded today are often not even “tech companies” —rather, they are “tech-enhanced” or “Internet-based.”
They are solving market problems (does anyone want this?) as opposed to technical problems (can this even be built?). With the evolution of popular libraries, scalable technologies and tools that have streamlined the building process, designing a product that reaches market-fit is more difficult than coding a new app.
Today—the business cases Internet startups are solving are far more nuanced—and those companies are being founded by entrepreneurs who have unique insight on a broken system. Chris Dixon asks founders: “why do you see a problem that no one else does?” It’s a great question and points to how industry-specific startups have become.
The founders of Warby Parker found an oligopoly in the eyewear market—which they broke through. The founders of Sabre realized how distributed the booking platforms of major carriers were, and the founder of Uber understood that the taxi marketplace (which involved a lot of running around and hand waving) was inefficient.
This means that founders no longer need to be recent graduates of Stanford’s Computer Science program. Rather, they need to be those individuals who have unique insight into a particular industry, and understand how it works.
Searching for an Idea
Try to have a vision for the future—what do you think the world will look like in 5-10 years. Then think about the world you live in, work in, and are exposed to: are there pieces in that world that make no sense? Are there problems you are encountering every day?
School principals and substitute teachers had no way of finding each other, aside from ad-hoc phone calls and application processes: EnrichedSchools’ founder had been an administrator at a school, had done TFA, and solved a problem she saw every day.
Hotels in Africa had no way of promoting themselves to an online marketplace: Globa.li decided to solve that problem. The company’s founders had sold their last travel business, and were the right people to take on the job.
Women were buying incredibly expensive dresses for one-time events: That made no sense. In came Rent the Runway
Kids were growing out of clothes, and those used clothes were rendered useless: Threadflip
These are all problems that are non-technical, and founded by people who don’t meet your standard “tech-nerd profile.” They were founded by people with real insights, unique perspectives and an ability to execute.
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