Sarah Lacy wrote a long post about “mafias” and those that ensued once companies such as Google, PayPal and so forth became successful. Feel free to go read it. It’s kinda long but worth the time. Nevertheless, here is the paragraph that I feel is the money quote:
Or maybe they’re all idealists who want to change the world. But each of these companies has a big sense of mission. None of them started from building a cool app or site for the founder and his friends, they all started to solve a big problem. And what’s more: That problem isn’t typically a new problem. This is where you get these companies biggest haters: The people who say Quora is just Yahoo Answers, the people who say Instagram beat Path before it got the chance to get started, the people who look at Asana and see yet another collaboration software play.
The above part of the post and the following section completely summarizes why these “mafias” exist and work:
And like Facebook, companies like Asana, Path and Quora are trying to solve problems that are inherently social. Not social in the capital-S SOCIAL MEDIA! sense of the word, rather social in the sense of the messiness that results from people trying to interact online and bringing all the messy aspects of human interaction, communication and relationships with them. They are problems that machines can’t purely solve and people can’t purely solve, and each of these companies tries to use both to solve them, rather than Google’s slavish love of the algorithm or Yahoo’s early belief in directories and curation. They are all likely problems that have no one solution, but a long road of getting closer.
When you ask me what I like about venture capital and why I again, no matter how hard I try not to, get jealous about not being in the Valley, it’s this. This is what makes being part of the start-up scene so exciting. This is what makes you really feel at times that you’re working with rockstars. At the same time, this is what’s making our lives ever more difficult in the venture community, especially here in Europe. And, this is why you can’t ignore the “mafias” that have establshed themselves and that will continue to be formed. They are tied together and forming around big ideas and real problems which they are solving. They have the money to throw at these problems and their connections are stellar.
I see a lot of companies come and go. Few and far between are those that come and pitch us with an idea that not only wants to go big but also really is solving a big problem. As a VC, you can only be successful long term if you have a couple such hits in your career trajectory. It’s the Skypes, Googles, Amazons, PayPals, YouTubes and eBays that make the VC world go round. If you’re not tied into one of these “mafias” you sure are going to be missing a lot out there.
If, as an entrepreneur, you’re asking yourself whether you should talk to VC’s, think about the above. Truly think about this the sentence from Sarah: “messiness that results from people trying to interact online and bringing all the messy aspects of human interaction, communication and relationships with them.” I can’t bear but to adamantly agree that this is where the future opportunities are. The online world remains messy. We as people interacting remain messy. Combine the online world with interaction of people amongst themselves and you can’t resolve everything with algorithms. At the same time, the network of connections necessary to get in the door at a VC is messy. If you can get your foot in the door of a “mafia”, you’re life will sure be easier and the financing route easier to navigate.
People will be spending ever more time online. I’ve been writing about this for years. With the growth of mobile internet use, people will always be connected and they want to use technology to make their lives easier. The enterprise is finally catching on to developments like Twitter and Facebook. Employees want to interact with their coworkers at the office just as they do with their network of private friends. It’s all merging whether we like it or not. The same goes for the networks of angels, investors and entrepreneurs. It’s melding into small groups, yes “mafias!” (It’s been repeated a million times in this post for effect! Bear with me.)
I believe we’re going to see even more such “mafias” emerge out of the Valley. We have a couple small mafias emerging here in Europe too. I don’t like when they close everyone out and horde the profits for themselves but it’s inevitable. You better get used to it and ultimately, start a mafia of your own. Just remember one thing…..we can skip the “Mafia Wars!”
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