| Investor funded/investor-driven businesses ("startups" in the Silicon Valley sense) are not businesses in the classical sense - they are financial products. The startup company is the product, sold to investors. The company grows its value by growing the value of its assets, which is the shares in the company, by creating and growing the perceived value in the company's technology, team, products or services, in a growing market of increasing investor interest, even if those products and services are never delivered, sold, or offered to customers for profit or in any manner. For an investor-driven / funded business (the Silicon Valley-style tech startup), growth is most important as measured in growth of the company's value. The actual products or services of the company are just by-products of what is needed to support that growth and provide a mission, if the startup even needs to deliver those products or services at all in order to increase its value to current and future investors. The startup company's market are investors. The market demand is determined by investor demand in a particular industry sector or interest area where there are current and future investors. Demand in that industry sector is defined by the potential interest of later stage investors or public markets in that industry sector. It is also determined by the solutions in which the company aims to offer products and services, whether or not the company currently does or will in the future. Since the market are investors and investors are driven by the potential for future investor interest and demand, investors are very much driven by publicity and "hype" as it serves to increase the current and future value of their share of the financial product, the shares in the startup. Current and future value have very little to do with the products or services the company offers now or in the future other than create a perception of value in the company's assets. |
Shows all the factors at play here:
* Company founded by kids who know / knew nothing about the space
* Investors who smell money opportunity and see an opportunity for asset value inflation
* Invest in the company, rush to multiple rounds, based on hype
* Company goes "public" using scam/sham SPAC approach (yet more proof of "startup" as financial product)
* Then the company goes bust after it goes to market because the whole thing was just asset inflation, and when the bubble pops, it goes poof
- I also find it curious that Techcrunch calls these obvious startup-as-financial product companies Upstarts and not Startups. A distinction without a difference in many cases.