“Slow Technology” Movement
We talk a lot about two types of startups. The raging success and the flaming failure. There is a middle category. The $1 to $5 million per year startup. At a recent startup event I was discussing a specific company just like this with a friend. They are 4 years old and do around $1.5 million a year in recurring revenue. “Oh yeah, that’s the WORSE case scenario. Too big to kill so you can’t just shut it down and try again for real success.” I know he’s hardly alone in that thought process but that struck me as kind of crazy.
It used to be that these types of startups didn’t exist. Couldn’t exist. You had to raise a lot of money just to get going. You usually had a big burn. You either made it big or you flamed out. Maybe you were good enough to get traction and become profitable but not hit it out of the ballpark. Well, the larger VC’s wanted their 7 and 8 figures back and sold you off to any warm blooded bidder they could find. Better to get your deadwood off their portfolio/books.
Now startups are much smaller and take less money. Products and services are much more niche and vertical. Four full time developers can make an impressive product and can make a good living once they start generating over $250,000 to $300,000 a year. Startup incubators are churning out these 2 - 6 developer startups all over the country all the time. A lot of them fail. Some of them become the next AirBNB. What about all the others? Are they the crazy Uncle of the family? We all know they’re there but don’t talk about them?
Perhaps incubators have created the “slow technology” movement without realizing its happening. They still talk in the “Rule the World” language of large commercial organizations. However, I suspect they’re producing a lot of the new type of technology company described above. Small, focused technology companies that employ people in a financially sound, balanced lifestyle type of way. They serve smaller (niche) markets than technology companies have in the past. People work hard but also feel well rewarded and very connected to their output by seeing real end user interaction and feedback.
One thing is for sure. If we’re going to seed these hungry twenty year olds with $30K to $100K we’d better begin to rethink how we want to treat the $1.5 million recurring business they build in 3 to 4 years time. If they sold for 4x revenues that’s a very nice return % wise. If they never sell they’ll have it better than 95% of the other 20 and 30 somethings they meet in this world. Today I think they’re viewed as “the WORST” I think that will change.