CNET: Sean Parker Thinks Silicon Valley Is In Trouble

Hiring is a huge challenge right now in Silicon Valley, and I think it’s starting to show in the quality of startups. Some of them look like 1999 all over again.  Companies with viable ideas and solid revenue streams (like where I work) are  competing for talent with startups that pivot multiple times so they can find something that sticks, which is stupid product development.

Very few of these ideas are sustainable for the long term. I think it’s criminal to a certain point because they’re gambling with other people’s money, some of whom shouldn’t be angel investors.

There’s nothing wrong with working for a company that has a great business model, viable revenue stream, and is either close to  profitability  or very profitable. Especially if it’s an idea that actually provides a valuable service to end users (one of the reasons I like working at Jobvite).

Not everyone’s going to hit a home run. Most strike out — that’s the reality. Making sure you’re taking good swings is what counts.

Sean Parker made some interesting comments at a conference this week.  Some of his comments:

A lot of the best talent in a particular domain is not necessarily the correct talent to be starting a company. So there’s a lot of fantastic engineers who really shouldn’t be product people, really shouldn’t be founders, and there’s a lot of founder product people who really shouldn’t be engineers.

Understanding your place in the ecosystem and the value you’re able to bring gets lost and distorted when there’s so much money sloshing around, and everyone you know is pushing you to go and start a company.

There’s a sense of entitlement that I’ve never seen before in Silicon Valley among people who work for a big company for a while and make a lot of money. They think the next step for them is to start a company. That’s often exactly the wrong thing for them to do. They will likely squander their own fortune or waste someone else’s money.

Any great engineer these days, who has a good pedigree, can go and get a $250,000 or $500,000 check and start a business and they’re probably not qualified to do so.

They think they’re going to build a prototype and that’s enough. They need to be focused on building a team, and it doesn’t have to be a team of seasoned execs. It needs to be team of people who can perform all the functions necessary to run a business. I learned that the hard way–by starting companies that didn’t necessarily have a complete team.

I think that the lesson in all this is that while this can sometimes work, it much more closely resembles gambling than it does investing. The result is going to be a lot of lost capital, but the most deleterious affects is the dispersion of human talent, human capital. The dispersion of human talent to a huge number of startups–none of which is executing with the right product or have the right team members to really succeed.

And the good businesses find themselves competing not just against Facebook and Google and Dropbox and Groupon for talent. They’re competing against literally thousands of startups, most of which will never succeed.

Google bought 27 companies last quarter and a lot of them are talent acquisitions, in some cases paying $1 million an engineer. That can’t last forever. There’s way more startups getting founded now than there are companies than Google and Facebook want to buy.

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