Last night I had a dream…or maybe a nightmare. I was attending some kind of startup camp for young companies, but when I say “camp,” I mean it: there were hundreds of entrepreneurs packed into some kind of rustic log cabin/ski lodge, the crowd buzzing with conversation about base technologies, revenue models, and partner strategies.
Then came the bears.
Out of nowhere, a couple dozen grizzly bears attacked the crowd, mauling these young startups as they scrambled for their lives. Down hallways, up on bookcases, under stairs—entrepreneurs were in a state of complete panic, some clustering together for strength, others trying to escape on their own, others being ripped to shreds. The room was in total chaos as the bears tore the place apart.
Now I’m no prophet, but my dream made me think about some data points running through the startup community lately:
1. Marc Andreessen’s recent comment at the Web 2.0 Expo about raising capital in expectation of a “nuclear winter.”
2. A growing number of “companies who can” pulling down monster valuations while stockpiling cash (Ning, Slide, Meebo).
3. A growing number of startups—often with only a consumer-focused, advertising-based revenue model and one or two features—having to choose between death, fighting it alone, or partnering with/acquisition by other “Feature 2.0” startups to try and cobble a more robust offering together.
Those options from #3 look a lot like what that room full of entrepreneurs in my dream did when they were attacked by bears. I guess the brain tends to process a fear of marauding bears similarly, whether they are of the flesh-and-bone variety or the market variety.
Moreover, fear alone—rather than actual bears—can often drive the same behavior. This principle of expectation driving behavior applies across environments broadly (otherwise who would care about the VIX, a measure of expected market volatility around options on the S&P 500, a.k.a. the “fear” index). Whether or not expectations will create a broad bear market reality is still up in the air, but what is clear is that for some startups, expectations are influencing behavior locally as if a "bear attack" were coming.
Rather than end with gloom & doom, I should add that my dream was simply a composite of my last couple of days in the Valley--which were terrific--fused with the usual fear/anxiety components generated by the normal nightly activation of the amygdala and anterior cingulate areas of the brain during REM sleep (see page 214-215 of David J. Linden's entertaining book The Accidental Mind if you're curious). Yesterday I listened to about 50 pitches from a wide range of startups at the PlugandPlay Expo in Sunnyvale. Jason Kincaid on Techcrunch already noted the packed house at the event, which is undoubtedly the source of my dream’s general setting (I should note that the PlugandPlay facilities are excellent—I have no idea where the rustic ski lodge came from). I found the companies—from social applications to in-video advertising—interesting and their founders optimistic and engaging.
As for the bears: I could try and make some sweeping predictions about the market, about how many of these “Feature 2.0” companies are about to face the options in #3 above, but that and $1 will buy you a PBR at my local golf course. Instead, I’ll just note that the night before the PlugandPlay Expo I watched Will Ferrell’s movie Semi-Pro in my hotel. Grrrr.
(Note: yes, it's true that Dewie the Bear recently killed a trainer. Very, very sad.)
