Two of the higher profile technology incubator programs – Y Combinator and Tech Stars – recently announced their graduating classes (read about them here and here), and in looking at the companies, I saw, yet again, some reminders of the 1999-like frenzy that the technology industry is currently experiencing.
A few thoughts:
- Not everything needs to happen online; some things (eg. grocery shopping) satisfy a ton of people in their offline incarnation
- Lots of things are already online and don’t need a new vendor. Just because you call yourself the Airbnb of vacation rentals doesn’t mean that VRBO, the very successful existing vacation rental website, needs to be “disrupte.”
- Vertical slicing doesn’t work online. It turns out that the Yelp for contractors is Yelp.
We saw this back in 1999: remember “vertical portals?” Yahoo for gays was PlanetOut, and that didn’t work out too well at all. Vertical slices sound good on paper, but they just don’t work; online it’s just too easy to move from site to site to get what you want. We also saw in 1999 the dot-coming of everything. “We’re going to take your garden online!” Umm, no, you aren’t.
The article about the Y Combinator class even admitted that these companies aren’t world changers, but “perhaps they’ll save a headache or two.” When this is the best that a boosterish tech reporter can come up with, you’ve got problems.
Thoughtbasket 
This won’t be the first flippant reaction to Y Combinator and it certainly won’t be the last. You know what the armchair guys said about the iPod? It would never sell and that Steve Jobs was a hack. You’re as wrong as those guys.
All startups start in this nascent, somewhat laughable state. But they make money, they grow, and then they aren’t something to laugh at anymore. It’s prescient that you mention that the dot-commers were wrong… because they weren’t. It’s that those ideas are now becoming reality now, only this time with reasonable cap tables, fundamentals to their unit economics, and they actually make money. Color may have smacked of 1999-esque excess — but it rightly died because it didn’t grow and it didn’t make money.