Some Work of Noble Note

May Yet Be Done

Idea-driven vs. Knowledge-driven

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There have been too many articles exploring the shift of the cultural center of gravity from New York to San Francisco.  (Appropriately, a lot of the hand-wringing comes from sources like the New Yorker and New York magazine.)  But these articles tend to be culturally focused, even the ones purporting to compare the finance and tech worlds.  They answer questions like, “is tech douchebaggery the new finance douchebaggery?” or “do writers need to live in San Francisco?”

These articles will occasionally wonder what the implications are for society when its best and brightest are choosing to go build sexting apps.  A website called FirstWorldProblems.biz exposes just how nonsensical many of these “problems” are that startups are trying to address.  (Examples include “I can never come up with enough cool music for my parties” or “I just have too many social networks for me to keep track of.”)  None of them really contemplate the question at any length.

I finally came across an article that actually dwells on the problem of the brain drain, looking not just for why people join startups, but spending real time looking at cultural, sociological, and business implications of this new world order.  Writing for the New York Times Magazine, Yiren Lu doesn’t actually take a position on whether this is good or bad; in fact, the article’s lack of agenda gives it the pleasantly “purpose-less” feel of a meandering late-night conversation with friends.  But in this one piece, Lu exposes a number of different motivations and characteristics of the techie ecosystem and I can’t help but draw out my own implications.

“Tech is no longer primarily technology driven; it is idea driven.”

This is a dramatic idea that touches on what could end up becoming the single biggest trend in labor economics for the coming century.  What Lu means, obviously, is that the “tech” industry is being pushed forward by people who have great ideas, but not necessarily any “technical” (I should say “scientific”) know-how.  It’s not that innovation is lower quality now, but it’s that the bar has been set way lower for those attempting to become innovators.  The process of creating a “tech company” has become easier the same way that blogging made the process of publishing your writing a lot easier.  Sure, it means there’s a lot more crap out there that’s being published, but it doesn’t preclude some great stuff from being published either.

Snapchat and Instagram are great examples of idea driven vs. technology driven success stories.  Neither company is / was coming close to being technologically innovative; in fact, engineers talk about being able to build the product in a matter of weeks.  But a year or two after founding, they’ve become Silicon Valley unicorns.  (Ironically, the term “unicorn” itself is quickly becoming commonplace in the Valley.)  Admittedly, companies have always existed and grown without dramatically innovating within their sector – just like there have always been terrible books that were published.  But we’ve reached the stage where anyone can start a company and as a result, everyone IS starting a company, using existing resources like AWS and Facebook APIs to make up for lack of depth in knowledge.

The world is now idea driven

Though Lu’s article doesn’t cover it, her statement about “idea driven” vs. “technology driven” (i.e., “knowledge driven”) is true for the non-“tech” space too.  I’ll stop with the “tech” in quotes bit but you get my point – technology is defining every single industry out there so to classify something as “tech” vs. “non-tech” is to look at the world through the lens of the 1990s.  Ideas vs. knowledge…that’s a dichotomy ripe for meditation.  What it says is that creating things – i.e., companies – doesn’t require the qualifications that it used to.

  • You don’t need to be a certain age to earn the credibility required to get a loan from a bank or investor – you can just use Kickstarter.
  • You don’t need any land on which to locate your company’s physical headquarters – you just need a webpage and email address to be a real business in the mind of your customers.  In fact, people distrust companies that don’t have websites, more than they distrust companies without physical headquarters.
  • You don’t need servers – just use AWS.
  • You don’t need to hire a PR / marketing firm – just be funny on Twitter or YouTube.
  • All of the above means that you don’t need any depth of knowledge to find a true problem to address – the reduced cost of building companies means you can find any problem out there, no matter how miniscule, and begin building something to respond to it.  It’s understandably depressing to some people that the best and brightest now take the “easy” or “fun” route of building something of questionable value in an oddly irreverent Valley culture, rather than take the harder route of building something of real value, whether within existing institutions or even on their own.

Birchbox, a subscription lifestyle and grooming products business, has achieved its traction powered entirely by ideas rather than radical technology.   Its only innovation is applying a wholesaler and subscription model to hygiene product samples.  Other than that, it’s your standard ecommerce business.  Birchbox’s tagline (“Discover your next everything”) is about as first-world of a problem as it gets.  How many people ever fretted about not knowing what brand of makeup remover to buy?  Nonetheless, because it’s so much easier to build a company today, the co-founders were able to parlay a low-priority, whatever-the-opposite-of-mission-critical-is problem into a great online brand.  This isn’t to say that co-founders Hayley Barna and Katia Beauchamp should have gone into PhD-level biomedical research instead of putting their resourcefulness to use mailing perfume samples.  On the contrary, I love Birchbox and look forward to it every month.  Instead, my point was just to raise one example of an increasingly common success story that creates a problem that needs to be solved, rather than solving an existing one.

Conclusion

That it has never been easier to build a company is commonly accepted wisdom these days.  From an infrastructure perspective, everything is there for the taking.  Instead, the danger is to let the lowered barriers serve as an invitation to be lazy.  Prestige and excitement are great; but in the rush to experience both, don’t compromise on your own standards for value creation.

Lu does a good job of in her article is teasing out what motivates young people to choose the startup route.

“Part of the answer, I think, lies in the excitement I’ve been hinting at. Another part is prestige. Smart kids want to work for a sexting app because other smart kids want to work for the same sexting app.”

The new factor I want to highlight is that this movement towards startups at any cost is almost inevitable, given the economic conditions for starting a business.  It’s not just that shared services like AWS helps you build a company, it’s that lowering the barriers to entry to start a business in the first place lowers the threshold for what the problem is that you want to solve.  You want to build a website that exists solely for people to pin pictures of concepts they like?  Do it.  It doesn’t matter that this problem is almost laughably first-world.  It doesn’t matter that you’re only just finding ways to figure out economic value.   It’s easy enough to build and there are billions of credulous dollars eager to support you.

As a result, the brain drain is very real.  The best and brightest college graduates aren’t going into medicine or research; when they decide to become engineers, they find themselves starting apps that don’t really solve problems the way the previous generations’ engineers did.  The lowered bar to start companies – and the new prestige and glamour of the startup world – is sucking away talent from the finance world as well, something Kevin Roose touches on in his book Young Money (and in a very funny article for the New York Post).  Admittedly, the majority of the population probably doesn’t think that high financiers are adding any more value to the economy either, but slaving away as a banking analyst adds more tangible value to the economy than building the umpteenth new SoLoMo app.

All of this may sound negative, but to go back to my earlier analogy, the advent of blogging helped many good writers who would never otherwise find a medium for their publishing.  Similarly, you could focus on how much easier it is to build terrible companies, but you miss the point about how those same barriers are lowered for great ideas AND great technologies as well.  The world is now idea driven.  The bar has been lowered.  Just don’t let your own personal standards be lowered in the same way.

Author: AJ

I'm an education enthusiast, growth equity investor, and MBA student at Wharton.

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