When you live and work in Silicon Valley, it’s easy to get caught up in trends billowing from within the echo chamber. Around here, the availability of capital resources helps trends popularize and commercialize faster than anywhere else in the world. From the outside, it seems today’s latest trend is tomorrow’s IPO practically overnight (discounting, conveniently, the 10+ years of persistence required of entrepreneurs along the way). As Paul Graham has noted time and time again, most successful companies always seem like bad ideas at first. This makes it difficult for entrepreneurs and investors to endure the pain required to turn these seemingly “bad ideas” into successful companies. By that definition of success, those companies wouldn’t even make it onto a list of trends in the first place.
As an entrepreneur, it’s difficult to track trends without getting caught up in them. Trends are usually indicators, albeit imperfect ones, of what’s ahead in part because investors and customers are behind them. Here are the recent entrepreneurial trends from Silicon Valley:
1. Products And Platforms For Engineers
Today, many companies are targeting – at least initially – engineers. Engineers make up a majority of the active and early adopter community online and they can provide the early boost necessary to achieve a critical mass. Your grandma may be on Facebook FB +2.29% but she’s likely not paying for new online services like the more technically-savvy online population. In recent years, services like Github have helped further the needs of a thriving early adopter market that’s technical and willing to spend money. As a bonus, this audience is also well-connected which helps startups and entrepreneurs targeting them gain traction faster than other products. This has become especially true with the help of communities like Hacker News and Reddit. Infrastructure, revision control and APIs may not be “sexy” but they have a paying, trendsetting audience that’s willing to spread the word.
2. Technical Teams (Still) Rule The Valley
This is perhaps the longest running trend but it’s worth noting nonetheless. Without a doubt, business acumen is an important aspect when building and scaling a viable long-term business but, at their core, most Silicon Valley companies that build extreme value for customers tend to be technical from the ground up. There are very few other ways to create a lot of value in a short period of time than with technology and software. Technology is hard to get right and execution speed can often make the difference between success and failure. All things being equal, you can typically outdo competition and create larger barriers to entry by applying additional technical prowess than you can with added business prowess (at least in the early days). Technical teams that can execute well will attract and retain more customers and better partners. Of course this depends on your business but here in Silicon Valley it applies to almost every company whether you are selling beauty products or creating next generation databases. Y Combinator’s Paul Graham has repeatedly proven this in practice, focusing his investments almost exclusively in technically-inclined teams that are building “something people want”.
3. “Big Data” And Machine Learning
This trend is another example of approaches that aren’t new and have only recently become trendy again. Today, if you mix big data or machine learning in some way you will certainly get additional attention from investors and the press. Yes, there are many well-known companies (especially advertising related ones) turning these technologies into huge profit-generating businesses i.e. Google GOOG -0.19% and Facebook FB +2.29%. Unfortunately, there are fewer startups that have enough data to turn themselves into a profit-generating machine (at least for now). With that said, there are companies using data to tackle important problems and doing well; companies likeFactual and OnDeck Capital. While many investors remain bullish on this trend, the theory is much more exciting than the reality.
4. Automated Personal Finance
I’ve written about recent financial services trendsbefore so I won’t rehash it further here. As people get more comfortable mixing their hard-earned money and new technology, we’ll see a growth in personal financial technology companies that will attempt to automate our financial lives. Fromretirement investing to paying off debt (our company) and everything in between. We are seeing control and transparency shifting directly to the customer, a trend that will certainly continue strong in the coming years.
5. The “Sharing Economy”
Whether you buy into the hype or not, there is a growing trend around a new “sharing economy.” If you’re an entrepreneur who follows ongoing challenges, you know these companies have often had an early, difficult legal history but are now thriving. Companies like ZipCar (hourly car sharing) and LendingClub(peer to peer lending) had a difficult time getting off the ground initially but have since helped pave the way for newer companies like AirBnb, TaskRabbit,Etsy and Uber. Now there are a variety of “AirBnb for X” and “Uber for Y” companies addressing new verticals. This trend is promising and appealing because it’s based on the same principles that helped turn the Internet into such a success. Arguably, Ebay EBAY -0.36% was the first successful “sharing economy” pioneer helping people connect with, buy from and sell to, strangers on the Internet from all over the world. Here in Silicon Valley it’s unlikely you can find someone who hasn’t tried Uber or AirBnb; the “Sharing Economy” is strong here in Silicon Valley – a powerful trend that will likely continue.
6. Better Communities And Support For Entrepreneurs
Last but not least, this trend is one of the more exciting ones for new entrepreneurs here in Silicon Valley. Accelerators and incubators (like Y Combinator, TechStars and 500 Startups) as well as prominent investors likeFred Wilson have helped open up what was once a world only accessible to industry insiders. Standard investment terms are now publicly available and resources like AngelList and Kickstarter make fundraising more accessible (for both investors and entrepreneurs). Some have even speculated this new, transparent fundraising model could significantly impact the venture capital industry in the years to come. Other resources like Quora provide entrepreneurs with an authoritative online community for entrepreneurs. As an entrepreneur, building a team around a common vision is hard enough, so the availability of additional insights and a supportive community is powerful. It’s less lonely when you hear from entrepreneurs-turned-investors like Marc Andreesen using their authentic voices to demystify the challenges of an entrepreneur building a successful company. The additional support from Y Combinator and other entrepreneurs who “pay it forward” continues to help our team at ReadyForZero as well.
Look forward to hearing your thoughts on these and other trends.
