We need fitter finches

Wednesday, 24 September, 2014

How big is the tech bubble? Last week in the Wall Street Journal, venture capitalist Bill Gurley said startup investors are taking on a level of risk not seen since the dotcom bubble days. Marcus Wohlsen has followed up in Wired with Money Is Pouring Into Tech Like It’s 1999 — And That’s Not Good. Cash quote:

Gurley recalled a recent trip to the Galapagos Islands and the book he read, Beak of the Finch, a study of evolution in action among birds of the islands. During El Niño years, Gurley said, floods bring massive food surpluses, allowing the finch population to explode. The problem, he said, is the excess resources mean individual finches needn’t be as hardy to survive. When food levels return to normal, many of them die.

In the same way, Gurley said, too much cash in the startup economy means weaker companies can survive without having to generate cash for themselves. In a post praising Gurley’s remarks, high-profile venture capitalist Fred Wilson said he too worries about his own portfolio companies, some of which are burning millions each month. He says he’s pushed back on excess spending, in effect trying to encourage fitter finches.

Finch of the Day: Kinvey. The headline says it all: Kinvey nets $10.8M in new funding to boost sales to mobile-obsessed enterprises.

Filed in: Technology

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