The Silicon Valley venture-capital firm (VC) is under intense pressure from its limited partners (investors) to fund as many startups, and ultimately earn as high a return, as possible. In this high-testosterone endeavor, each VC constantly races its rivals to discover, back, and launch the next Google.
Accordingly, VCs are spread so thinly, sitting on too many boards, that they have neither the time nor expertise to thoroughly screen entrepreneurs’ ideas and business plans — instead allowing them to experiment and fail multiple times until something sticks.
In addition to being financially suboptimal, these rapid-fire, mulligan-oriented transactions kill something critical: branding. In fact, branding is extinct in Silicon Valley.
Branding is the art & science of articulating a jargon-free value proposition — before building a product — one that people react to, remember, and repeat. Alas, Silicon Valley is awash in forgettable, indecipherable jargon and ephemeral trends.
Building Companies About Nothing
On 04.26.12, Lizette Chapman penned a revealing piece in the Wall Street Journal about the latest trend in techdom: pivoting, another term for the jargon pile. Wrote she: The founders who change products and markets between one and three times raise more money than those who don’t, according to Startup Genome Compass of San Francisco. This defies all logic.
Jeff Bercovici of Forbes amplified Chapman’s article by characterizing this flavor-of-the-month trend as a “Seinfeld moment”: building companies about nothing!
Pivoting is what a politician does: in chameleon-like fashion, he replaces yesterday’s slogan with one that resonates better today — to raise cash and get votes. In essence, he stands for and commits to nothing, the antithesis of branding.
Because VCs are in such a funding rush, largely in preselected spaces like “social media” rather than according to what consumers actually want and need, startups are no longer expected to know what products to build. Instead, they assemble teams and rent offices, then figure out the rest, on the fly. Huh?
What happened to doing your homework BEFORE starting a company, aiming before firing? That’s so yesterday. Perhaps VCs have too much of other people’s money to chase too few good ideas. Just saying.
Imagine engaging an architect to design your house, approving his plan, getting financing, hiring the general contractor, breaking ground, then watching these folks “pivot” your plan — and your cash — to oblivion. You can’t.
Tweaking is one thing, but completely and repeatedly changing course is another. Yet, this is Silicon Valley’s current MO — and why branding is extinct here. It’s no mystery that nebulous cloud computing originated in Silicon Valley.
Yes, some companies like Instagram will make it via lucky pivoting, but most won’t. In fact, VCs are teaching prospective entrepreneurs to fail by becoming companies about nothing.
Rx from the WhiteNoise Doctor™
The only way to convince another that your company is about something is to believe it yourself, with conviction and PROOF that you’re solving a real problem — for someone who doesn’t live in Silicon Valley.
If, however, you pivot three times after raising seed capital, to attract more capital, you don’t know and never knew why your company exists — other than to get the VC’s check.
So, what will you do, now that you have the cash, pivot three more times until nobody can fathom your reason for being?
Cisco did this, then had to cut 10,000 jobs before getting back to basics. Cisco ignored the fundamentals of branding at great cost to its shareholders and employees.
Branding is extinct and won’t appear any time soon — unless and until Silicon Valley ceases to operate by the current VC-driven model.
© 2012 Marc H. Rudov. All Rights Reserved.
About the Author
Marc Rudov is a branding advisor to CEOs,
producer of MarcRudovTV, and author of four books