The Long Head of Startups

Congratulations and good luck to my friends Mike McCue, Angus Davis, and the others at Tellme. I’ve been excited about this company since I met with the founders at the early stage of the startup, 6 or 7 years ago. Mike and co. deserve a lot of credit for weathering the dotcom bust, and emerging changed but stronger. Most people still don’t appreciate the deep significance of what they are doing, merging telecom and the Web at the infrastructure level. I hope this works out well for both Tellme and Microsoft; as with any acquisition, time will tell.

I’d still love to have seen Tellme try to realize its grand vision as an independent company, but the reality is that’s tough to do. It’s cheaper than ever to start a tech company today, because so much of the platform is already out there and standardized, and so many of the tools are free or nearly so. On the other hand, it may be harder than ever to reach escape velocity as an independent actor. Not just to go public, although that’s also not easy any more, but to become a major player in your own right. Google and Salesforce.com are the last two I can think of, and both started well before the end of the prior bubble. The stakes are higher, the scaling issues are tougher, and the landscape is more crowded.

In other words, if you graphed the fitness landscape for today’s startups, you’d see a mirror image of the famous long tail curve. Lots of companies coming in, at very low cost, but a higher and taller mountain than ever to scale at the back end. Very few companies will reach the last local optimum, where we find YouTube, Skype, and Tellme — the billion-dollar (or nearly) acquisition. Maybe no one will scale the final cliff. That’s different than the environment of the last boom, where the landscape looked more like the traditional bell curve.