With a nod to @fredwilson again, this is something I’ve spun out from a side discussion from his most recent post here: http://www.avc.com/a_vc/2012/01/understanding-twitter.html. In it is a video with a Dick Costolo Q&A. In the comments “Facebook User” observes that Dick talks about making a business that will be around for decades. Fred talks about portfolio company meetup.com and its commitment to becoming a long-term entity. Leaving aside what that means for investment strategies, I want to look at what it says about startup culture.

I’ve thought about writing a piece on startup hubs for a while (and how ludicrous the idea of localising internet based companies should be) and I think this resonates to an extent. I think I’ll leave the geography aside for now, however.  

I refer on Fred’s site to Hunch. Hunch was a company based on personalised purchase recommendations. When it was purchased last year by Ebay, Michael Arrington’s uncrunched.com described its 3 year life prior to that point as a “long time”. I remember being shocked at the time, both that it had been described that way, and that so few other people were shocked.

It seems to me (as an outsider) that many startups (not referring directly to Hunch) in the Valley and in other startup hubs are little more than product development departments waiting to find a company. Essentially they’re ideas which are filling gaps in larger company’s portfolios, ready for acquisition. Almost no thought is given to how these businesses will run should they make it to the long term without being snapped up.

That may be unfair, and a sweeping generalisation, but I think it’s starting to become the image and the expectation of the tech startup scene. We constantly read about the rapid growth of one company or another. We listen to talk of hockey-stick growth. We applaud the latest exploding zeitgeist. These, after all, make good copy. “Silicon Valley” has become synonymous with these swift success stories. I worry that we are too obsessed by the froth and churn we see to understand the currents beneath.

Almost every day, I see a location pitching itself as the next “Silicon Whatever”. Either that, or some hapless politician appealing for help in creating a local digital revolution, and transplanting a piece of SV wholesale. As if declaring yourself with a Silicon-alike moniker could make it true. These locations and ministers are missing a very big truth; namely that the froth isn’t Silicon Valley. Make it past the surface, and you see 50 years of accumulation of technical knowledge and expertise. You see a history built on semiconductors and transistors, of an aggregation of engineers. Trying to (and yes, I’m totally running with this metaphor) transplant the froth without the substance beneath will just equal burst bubbles.

Committing to creating a digital business hub is not a short term endeavour. If it’s possible, recreating the kind of infrastructure that allowed SV to evolve will take decades. This is what the emphasis should be on. This is the thing that politicians should be desperate to emulate. For all the headlines they grab, the quick-flip startups aren’t something that should be desired - they are, by definition short term. If anything we need to be focused on how we can create long term growth both in individual startups and in a larger macroeconomic sense. Can we focus on long termism long enough to generate the froth?

JB