Luke Johnson Doesn’t Understand Tech
Luke Johnson, the well known restaurant entrepreneur and investor, wrote a piece in the Financial Times yesterday, ‘Zuckerberg wannabes squander careers’ (free registration needed), essentially saying that Facebook, Amazon and Google are huge exceptions and that no other tech company has grown fast and made profits, and are a complete waste of everyones time and money. What rubbish. He’s right that many fast growth tech companies fail; but a lot go on to become very large, profitable businesses, in a massive variety of fields. Just rattling a load off the top of my head, without much thought: Zynga, Etsy, MindCandy, Palantir, Craigslist, Paypal, Ebay, Gumtree, Lovefilm… a tiny number of companies which prove him wrong.
In Luke’s area of expertise - hospitality - his assertions I’m sure are completely correct. I wouldn’t know - he’s the expert in that area, not me. He’s *not* an expert in technology businesses. Therefore it makes complete sense for him to say he would never invest in them. But to conclude from that that they’re useless investments for anyone, and that entrepreneurs shouldn’t bother pursuing them, is both wrong and irresponsible.
Even his examples of failures were successes by many counts:
Warp speed businesses that rise in vertiginous fashion usually decline in a similar manner. The web encourages many entrants, but also seemingly unassailable monopolies – until they are not. For online users are fickle: look at the collapse of social networks MySpace and Bebo.
Bebo and MySpace created millions of dollars of wealth for their founders and investors. Not too bad. Every year, there are more and more of his ‘exceptions’. Investors who understand technology and are prepared to invest in start-ups have the potential to make big returns. The fact that the failure vs success rate in tech is different from hospitality just means that different investment criteria and knowledge are needed.
The rise of the web and the decreasing cost of technology means that it *is* possible for entrepreneurs to quickly try out new ideas and businesses at minimal cost and risk, with huge potential net benefit. Start-ups created in the last few years are adding thousands of jobs. The world needs more of this - not less.
Zuckerberg wannabes: I salute you!
