Who does not work, that PR: children's games with "blowing bubbles" and "selling air" end

    imageRecently, the venture world has been stirred up by the story of the extolled Silicon Valley startup Theranos , whose scientific ambitions have been questioned by the Wall Street Journal.

    Elizabeth Miss Holmes founded Theranos in 2003 to develop blood test tests that would take just a few drops instead of her usual plasma tubes. Miss Holmes was able to persuade several large investors, including Oracle CEO Larry Ellison, to invest a total of $ 400 million in her company. The project was valued at $ 9 billion.

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    The Wall Street Journal claims that Theranos exclusive technology is underdeveloped and is used only in a small number of tests conducted by the company. Theranos refutes allegations of scientific fraud and fraud. If the suspicions are confirmed, the company may be on the verge of bankruptcy. According to the authors of the investigation, such an outcome will sober up many technology investors and make them selectively treat potential investments.

    Michael Moritz, founder of Sequoia Capital, saidthat most unicorn startups that have reached $ 1 billion or more are priced too high. He reproaches startups for the desire to remain private companies, as this gives them the opportunity to improvise when developing a product, attract talented people with options and hide from scrutiny by predatory competitors.

    Today, the list of “unicorns” includes already almost 150 companies, and about half of them got there only in 2015.

    Most investors care little about what will happen to the projects that they pump up with money in the next ten years. Fund indicators, which depend on high-profile outputs, are important to them in the first place. And exits, in turn, in a good half of the cases do not occur because of the uniqueness of the often unprofitable product, but due to the well-developed methods of shuttle diplomacy among the largest investors in Silicon Valley, writes Renata Akhunova , head of the American office of the Life.SREDA venture fund .

    At the same time, the founder of the Andreessen Horowitz foundation, Marc Andreessen, is convinced that startups “unicorns” and the entire IT industry have been underestimated since the 2000s.

    He also claims that these are not IT companies against becoming public, and the public market “just doesn't like” technology companies. He constantly tries to pull them apart, knocking them off the innovative course of development.

    In addition, his position as a whole is shared by President of Y Combinator Sam Altman.

    Be that as it may, we often see massive reductionshighly successful IT companies. On the one hand, they explain this by the rapid variability of demand and demand for certain projects, adaptation to market requirements. On the other hand, they often create entire units to simply experiment. True, this is more typical for large companies. We are witnessing revelations, inappropriate behavior of the founders in dealing with investors.

    If we assume that public attention is naturally drawn only to those companies that try to be visible, then another hypothesis is possible. In the “cheaper” and less visible companies, approximately the same processes take place - reduction, exposure, experimentation, reformatting. But, as usual, everyone is more concerned with “pop stars”.

    Experts can talk for a long time about whether companies are overestimated or underestimated. But if a company invests most of its money in marketing and publicity, then the product will not get better or will not be released at all.

    In this case, such companies are simply “selling air”, as Ms. Akhunova writes. Investors do not invest in a company so that they are spent on attracting other investors. From this point of view, it is not the amount of the attracted amount that is decisive, but the distribution of the company's costs, the setting of priorities.

    Although it can not but rejoice that startups will have to work harder and take their projects more seriously, because business can only be called that which brings money. The trend of selling air to investors at all levels seems to be drawing to a close, Renata Akhunova concludes.

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