May, 11th, 2022

For a long time, limited partners (LPs) have been pouring tones of money into VCs and these into startups that had a focus on advanced technology. The promises of exponential businesses through synergies exploitation were utterly sexy. But there was a problem: under delivery. Now, there is a perfect storm about to hit a lot of tech startups that will lead to an oligopoly of providers - the survivors, those few who have done business right, will be the real unicorns (whichever their valuations).

Most of our original peers, hot startups highly funded, have gone bankrupt some years ago already. I remember having to justify our advisory board why we considered those to be our competitors when they had millions in funding and hundreds of employees while we went all down for bootstrapping. A priori, the comparison looked too ambitious. And we were ambitious. But not stupid. There were a couple of arguments that made us think we could beat them at any project, any time:

1. Applied science judgement: most tech opportunities imply innovation and most innovation implies applied science which is not a well understood game. Pouring money into a company, like those peers, didn't mean they could reach applied science judgement - machine learning, learning-adaptive machines, economics, change resistance, game theory, small-data-matters-too, regulation, transparency, model risk minimization, synergies exploitation, creativity, credibility, eloquence... It is more likely that you will be fooled by someone who pretends to have it. And this person will typically try to hire someone wishing she knows better just to become her broker with the senior management. At this point, these startups become pretty much incumbents.

2. Timing: the only difference with the incumbent is that these startups are short of time while incumbents benefit from previously gained momentum. But the momentum of the latter, i.e. the momentum of these startups' clients, also means silos, politics, legacies and change resistance. Hence, ad-hoc solutions and patience are a must. And precisely that, patience, is what investors don't have.

So these were the reasons why we soundly thought we could play the game better than such peers - we had a right to win. In fact, we were further betting that our widely media covered peers were born to die in 3 to 4 funding rounds, really. They were successful to the eyes of many (marketing) yet they were set to struggle delivering for both clients and investors.

Still, even if we were right, we knew that marketing is such a powerful tool that no matter how many times we had to remove peers from our list there was always going to be a new hot company adding noise in the industry while going through the same whole cycle.