Teach Me How to Startup

Hot New Startup Trend: Trying to Make Money

"More founders are tackling ‘boring’ problems that generate cash.”
Screen shot 2013-03-27 at 10.10.46 AM

This painting of Ron Conway was a gift from Steve Jobs’ wife. (Photo: Twitter/b_c_g)

Yesterday, Y Combinator (Silicon Valley’s ur-accelerator) hosted its biannual Demo Day at the Computer History Museum in Mountain View.

As cofounder Paul Graham announced last fall, YC downsized both the number of startups and the size of the investment in this current class. And fears that the accelerator bubble is about to pop were not lost on the 47 startups who presented, nor the 500 or so investors in attendance.

Where the buzziest startups once commanded valuations of up to $20 million, “now the higher end is closer to $10 million, and the financial terms of the investment deals have shifted slightly for the benefit of investors,” reports the Wall Street Journal. (Perhaps to loosen checkbooks, they started serving booze earlier in the day this year.)

Indeed, like their more established brethren, the hottest trend among YC’s early stage companies seemed to be (wait for it) generating revenue! The Journal says Demo Day offered “further proof that the social-networking craze has died down and more founders are tackling ‘boring’ problems that generate cash.”

Guess bored founders will have to get their kicks from checking their bank balance–and still existing in a few years.

Where the pitch decks of yore could be counted on for bubblicious slides on market size, the ones presented yesterday also highlighted money-making metrics:

“Don Dodge, a startup investor and well-known ‘developer advocate’ for Google, said today’s startups are more focused than ever on revenue—as evidenced by the large revenue-growth charts most of them showed off during the presentations to investors. In prior years, founders focused more on the number of people using their service, he said.”

So what did all this emphasis on practicality amount to? Copying proven business models instead of pie-in-the selfie-sky ones, according to CNET.

This batch wasn’t entirely lacking innovative ideas, however. There was “everything from a “Kayak for insurance” to a service that promises to help people divorce amicably.

But PandoDaily’s representative failed to notice an appreciable difference:

“While Y-Combinator made changes over the past year, there wasn’t a whole lot different about the companies this time around. Less money did not, YC partner Jessica Livingston claims, result in greater fiscal austerity. ‘It’s not like they were really irresponsible to begin with,’ she says. More squishy was the outward impression each company emitted: some attendees told me there was a greater sense of founder modesty.”

As revolutions go, disrupting egoes ain’t half bad.

Follow Nitasha Tiku on Twitter or via RSS. ntiku@observer.com