We aren’t at a “low point” in startup quality

3 May

I watched Chamath Palihapitiya’s talk at TC Disrupt the other day.  His contention essentially is that there are too many startups focused on superfluous problems, many of them “first world problems,” rather than audacious companies focused on solving big problems.  I think he’s misreading the situation.  

The problem today isn’t that the quality of startups has declined.  I don’t have the data, but my sense is that the aggregate number of “high quality startups” – i.e. those focused on innovative solutions to big problems – has not in fact declined.  

Rather, what’s happened is that barriers to starting a company have fallen drastically in the last 5 years and therefore you’ve seen huge increase in the total number of companies being formed.  Many of these are focused on narrower problems and/or iterations of other startups (a new social media aggregator, another mobile messaging app, etc.)  

The fact that there’s more crap in the system doesn’t mean that the volume of quality has declined, it just may be a smaller proportion of the overall pie.  Whether or not this is desirable is a different question that I won’t get into here. 

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