Down in the Valley

The Valley’s Vicious Cycle: Raise, Get Acquired, Repeat

"I believe that Silicon Valley is like Las Vegas, except they make you pass a number of tests before they let you gamble."
diego The Valleys Vicious Cycle: Raise, Get Acquired, Repeat

Mr. Basch (Photo: LinkedIn)

If anyone is familiar with the Valley’s success method du jour, it’s Diego Basch. Mr. Basch founded IndexTank, a hosted search tool that was acquired by LinkedIn in 2009. Today, he hit the front page of Hacker News with a post about how to exploit Silicon Valley “for profit (and maybe fun).”

Mr. Basch’s parable is a familiar one: An average Joe goes to Silicon Valley, raises money even though he doesn’t really agree with the VC’s philosophies, builds a company with the express intent of getting acquired by a larger company, sells the company and makes bank. Only then does he finally have enough money of his own to build something he actually cares about.

Mr. Basch’s tale of Joe Founder exposes some key flaws in the Valley’s current culture. Aside from the founders just looking to spit out a one-off product, sell it and retire at 25, there are people out there who want to build something meaningful but can’t corral the capital or resources to actually do so without first engaging with this cycle.

The discussion on Hacker News is pretty spirited, though the following comment did make us almost spit out our coffee: “$6m really isn’t that much these days. Might get you a nice house in the Silly Valley and a few years of living expenses, but that’s not “set for life” money if you’re in your 20s.” Ugh.

Anyway, at least we’re not alone in our jadedness here at Betabeat. “Here’s to cynicism and hustling,” Mr. Basch closes. Indeed.

Follow Jessica Roy on Twitter or via RSS. jroy@observer.com