| > The problem is that some of the investors care more about becoming celebrities and "virality" than the laborious process of building real technology companies and getting rich slowly. Investors care about making a return on their investment, plain and simple, so they invest in companies that resemble other successful companies. Silicon Valley investors saw the success of Facebook and Twitter and they want to replicate that success. Not only that, but social network companies look like good investments because they're relatively inexpensive to build, and signs of their eventual success or failure show up at an extremely early stage. The problem isn't that VCs are evil or stupid or fame-hungry or conspiratorial. The "problem" is that social media companies still look like good investments. You could accuse VCs of being uninspired and unoriginal, trying to repeat their last big success over and over, but that's how it works. And as long as college kids are building the social media apps that get initial traction with other college kids, they're going to get funded. Complaining won't do anything. As long as social media looks like a good investment (i.e., until it deflates or until something better comes along), VCs will continue to milk it. Once it becomes a bad investment, they'll all go chasing the ball to wherever its headed next. I agree, it's unfortunate that the money isn't being funneled into something more innovative or meaningful. Rap music annotations and disappearing photos and a website that helps you rent out your spare bedroom are being heralded as some of our greatest tech success stories. Frankly, that's pathetic. |