How Many Tech Startups Are Empty Shells?

It’s widely accepted that most tech startups will fail. Perhaps the core business proposition didn’t pan out, or the execution was flawed, or the initial success foundered on poor management, or another startup scaled up fast enough to suck up all the oxygen in the room–there are many reasons a startup with a fair chance at success can fail.

But what if many if not most of the current batch of startups have zero chance of succeeding because they’re nothing but empty shells of gaseous public relations? Coder Daniel C. recently shared his experiences interviewing at numerous tech firms, both established firms and startups.

Here are Daniel’s observations:

When I first got into the high-tech field, I thought it was the only place that was safe, in other words, I really thought everyone was innovative and cutting edge. But now I am seeing something you probably have already seen being in the S.F. Bay Area, which is that a lot of companies in the high-tech sector are clueless and full of it.

I have recently been on several job interviews with high tech startups and they are the wierdest interviews. They give me a bunch of blather about their company, but they don’t ask me any substantial questions about my technical expertise. Then they tell me within 24 hours that I just don’t have enough experience as they would like.

Many of these companies reach out to me like I am their buddy, no formal introduction, “hey, dude, can we talk?” Some of them like to use the F word in their outreach, which totally turns me off. I think they have innovative confused with lack of professionalism.

Of the ten-plus job interviews I have been to in the high-tech field, only two actually gave me a coding challenge to prove my skills. I actually have a lot of esteem for those two companies (one of them is in London) because at least they assessed my hard skills via practical application. The rest I have no clue how they are coming to their conclusions based on a unfocused ten-minute talk about nothing.

In fact, I am noticing most of these companies are not even reviewing my portfolio, which is leading me to develop questions for them such as “Which one of my apps did you enjoy most?”

Anyway, I shared this with you because if you have any knowledge of anything similar, I would love to see an article on it. I have a hunch a lot of these companies lack direction and are probably not really drumming up a lot of business. A lot of good public relations, but not necessarily a steady stream of clients.

Thank you, Daniel, for sharing your experiences and for raising a number of key points.

The key metric for startups now is not revenues or paying clients–it’s their valuations–as in Unicorn valuations of $1 billion or more.

The number of ‘unicorns’ in tech is booming (Business Insider, Oct. 2015)

But valuations that aren’t based on revenues, paying clients and profits are notoriously prone to collapse. It is far easier to convince a venture-capital wannabe with millions of investor dollars to fund a PR-heavy startup than it is to actually build a business with paying clients, rising revenues and profits.

No wonder we’re seeing accounts like this:

Top Silicon Valley VC Laments: Startups Being Funded Are “Mostly Crap & Largely Worthless”

Bubbles always seem permanent to those living within them. How many startups are empty shells filled with glitzy PR designed to appeal to VC newbies anxious to find the next Facebook? Perhaps far more than the financial media cares to admit.

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  • Silverado

    It was in 2000 or was it 2001?? The year the tech bubble popped? I’m wondering why that was my first thought after reading this. On second thought, no I’m not…

  • diogenes

    If these businesses are about “capitalizing” prospects of profit, they are no different than common stock per se in that respect. See Part 2.1 of my Distribution of Wealth in America now being published here.

  • I run a tech start up with web sites, apps and patents, which is more than many startups can say. I interact with the same people Daniel is talking about and I can confirm his description. The whole vc proposition is subjective, its about fittng the right mark zuckerberg in a t shirt image and being well liked by people with a lot of money. WhatsApp is a perfect xample of a guy who was choen to succeed and made a bilionaire eventhough WhatsApp had never made a profit. . And its a numbers game, you have to keep throwing your hat into the ring. Most of the presentations out there are given by 25 year olds with an untested idea on a web page. And they do get a million dollars or more.