The one who doesn’t work is being promoted: children's games with “blowing up bubbles” and “selling air” end

Recently, the venture world has stirred up the story of the lauded Silicon Valley startup Theranos , whose scientific ambitions were challenged in the investigation of the Wall Street Journal.

Elizabeth Miss Holmes founded Theranos in 2003 to develop tests for blood tests, for which only a few drops of blood would be enough instead of the usual plasma tubes. Miss Holmes was able to persuade several large investors, including Oracle head Larry Ellison, to invest a total of $ 400 million in her company. The project was estimated at $ 9 billion.

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The Wall Street Journal claims that the exclusive Theranos technology is incomplete and is used in only a small number of tests conducted by the company. Theranos refutes the assumption of scientific deception and fraud. If suspicions are confirmed, the company may be on the verge of bankruptcy. According to the authors of the investigation, such an outcome will sober up many technological investors and force them to be selective about potential investments.

Michael Moritz, the founder of Sequoia Capital, said that most of the start-ups, "unicorns", reaching $ 1 billion or more, are rated too high. He blames startups for wanting to remain private companies, because it gives them the opportunity to improvise when developing a product, attract talented people with options and hide from close scrutiny by predatory competitors.

Today, the list of "unicorns" includes almost 150 companies, and about half of them got there only in 2015.

Most investors care little about what will happen to the projects that they pump money in over the next ten years. First of all, the fund's indicators, which depend on loud exits, are important for them. In turn, in a good half of the cases, the exits are not due to the uniqueness of the often unprofitable product, but due to the well-developed methods of shuttle diplomacy among the largest investors in Silicon Valley, writes Renata Akhunova, head of the US venture fund office .

At the same time, Marc Andreessen, founder of the Andreessen Horowitz Foundation, is confident that startups are “unicorns” and the entire IT industry since the 2000s, on the contrary, have been underestimated.

He also claims that these are not IT companies to become public, and the public market itself “just does not like” technology companies. He is constantly trying to pull them apart, knocking off the innovative course of development.

In addition, his position is generally shared by Y Combinator President Sam Altman.

Anyway, we often see massive cuts in successful IT companies with high marks. On the one hand, they explain this by the rapid variability of demand and demand for certain projects, adaptation to market requirements. On the other hand, they often create entire subdivisions to simply experiment. True, this is more typical for large companies. We are witnessing disclosures, inadequate behavior of founders in communicating with investors.

If we assume that public attention is naturally drawn only to those companies that try to be visible, then another hypothesis is possible. In more “cheaper” and less visible firms, approximately the same processes take place — contractions, exposures, experiments, reformatting. But, as usual, everyone is more concerned with “pop stars”.

Experts can talk for a long time about whether companies are overvalued or undervalued. But if a company invests most of its money in marketing and publicity, then the product will not be better for it or will not be published at all.

In this case, such companies are engaged in simply “selling air,” as Ms. Akhunova writes. Investors do not invest money in the company in order to spend it on attracting other investors. From this point of view, it is not the amount of funds raised that is decisive, but the distribution of the company's expenses, the prioritization.

Although it can not but rejoice that startups will have to work more and take their projects more seriously, because only money can be called a business. The tendency to sell air to investors of all levels seems to be coming to an end, Renata Akhunova concludes.