The VCs managed to sell Uber to each other and then even to other VCs. The valuation is in the Billions. It qualifies as a bona fide Unicorn. But Uber has never turned a profit, nor ever shown revenues of any consequence. It raised money like mad, ran Silicon Valley investment community PR campaigns and used the money it raised to launch research projects in sexy areas that VCs just drool over. Self-driving cars, delivery of packages (like people, except not!), delivery of ice-cream, UberMaps (they did that twice), all either failures that shut down or underperformers. Self-driving cars is still a work in progress but lawsuits from original co-investor Google may have hampered that development. Uber suffered from a horrible management culture, forcing its CEO and other key executives to either resign or leave in protest. Sexist, misogynist, and improper labor practices have plagued the company. All of this came to a head this Summer, along with a deluge of bad press. And yet, the valuation remains around $50B, down from a high of $68B before the scandals. But Uber, VC investment, and its failures worldwide are delineated on its Wikipedia page.
Uber is a unique case in point. Worth noting: even unicorns suffer management and revenue deficiencies.
Most VC-backed startups fail. But that’s not to say that VCs make bad picks (or that they don’t, either). It’s because most startups in general fail. Lack of funding, lack of proper tech, marketing, sales, biz dev, financial planning, legal advice, or other essential planning and early development has rung the death knell of many a startup. Not all entrepreneurs (the beloved darlings of the tech press) have what it takes to get past the honeymoon phase of “garage startup.” That gets old fast. It takes grit and determination.
And then there’s the Great Idea. When it’s time for a Great Idea, it usually isn’t just one bright mind having that light bulb go off over their head. The idea hits lots of people in many places around the same time. They may have a different execution or manner of presentation, but the basic concept is generally similar.
It’s like chocolate chip cookies or pizza toppings. Somebody thought up the chocolate chip cookie. And so did someone else. Now look at the dozens of choices of chocolate chip cookie brands. Same goes for Pepperoni, sausage, peppers, mushrooms, onions, olives, even anchovies, or pineapple as toppings on pizza. Someone at some time thought up each one of those. Now they are standard, to be found at pizzerias everywhere. Well, maybe not the anchovies or pineapples.