For years as an entrepreneur and now as a mentor I’ve been frustrated by the current startup model. VCs aren’t interested unless you can build a billion dollar company but often angels’ pockets aren’t deep enough to finance a worthwhile company that could grow to $50 or $100 million a year in sales and be quite profitable. To me there’s been a sort of death valley between VCs and angels in which many great ideas simply perish.
The article on Business Insider, The founder of a beloved productivity app thinks the startup model is broken — here’s how he’s trying to keep the tech industry from ‘making the same 10,000 mistakes over and over again’ by Tory Wolverton illustrates just where the current startup model breaks down. Phil Libin is best known as founder of Evernote, an app I use every day, so maybe I’m a bit biased in his favor.
But he’s founded a new kind of company called All Turtles to solve the death valley problem. As Libin sees it there are two basic models for promoting innovation. The first is through the research efforts of the giant tech companies including Facebook, Microsoft, Google, and Apple. However, he sees these companies as being quite conservative and afraid of disrupting their core business. The second model is the current startup model, focused on creating new companies. And it’s that last phrase that made me go “aha!” Creating a new company requires skills that have absolutely nothing to do with invention or innovation: fund raising and recruitment.
Of his All Turtles incubator Lbin says:
“We’re indifferent toward companies,” “If some of these products then become independent companies, fine, that’s the best outcome, but they don’t have to.”
I really like Libin’s model of “products first, companies later” and I recommend you read the full article for the details of how All Turtles operates and the views from critics who believe separating product development from corporate development could cause problems.
Whether or not that’s accurate only time will tell. But in the meantime I salute Mr. Libin for developing a new model for creating innovative products without forcing their creators to choose either the big company R & D path or the VC-driven company creation path. There’s a middle way!