September 30, 2023

This article is part of the On Tech newsletter. You can sign up here to receive it on weekdays.

The myth of Silicon Valley does not leave much room for companies that neither celebrate frenzied successes nor spectacular outbreaks. But to fully understand the tech industry and make sure its goals don’t get out of hand, we need to talk more about the companies that are in the middle.

You probably know the myth I am referring to. There are wild stories of companies that emerged from almost nothing and grew into Apple, Facebook or Uber. Then there are the horror stories of startups that burned brightly and spectacularly flopped like the first iteration of the office rental start-up WeWork and the blood testing company Theranos.

These polar opposites are the startups that people write books and make films about. The untouchables and the unforgivable are the images we have in mind of technology companies.

But most life is not made up of success or failure, it’s the muddy in-between, and that goes for most startups too. There’s a huge middle ground of overlooked young tech companies that are definitely not winners, but neither are they losers.

I’m talking about companies like Dropbox, Box, and Cloudera who were once hot enough to make the covers of business magazines and who survived but barely set the world on fire. They are neither whales nor minnows. Dropbox, a digital file storage service, is worth about as much as Levi Strauss.

Buying their stocks didn’t make a lot of people super rich. Cloudera, which sells software for companies to manipulate their data, agreed on Tuesday to sell the company at a share price well below what a major investor paid when Cloudera was a relatively young start-up in 2014, B. of an enterprise software company are worth about the same or less than on the trading days 2018 (Dropbox) and 2015 (Box). The technologies of these companies either turned out to be not very relevant or they were replaced with something better.

There are a lot of startups that took off during the tech boom after the financial crisis, made oohs by techies and pelted tons of money, went public, and then … eh. You’re OK. Others were sold or quietly disappeared.

(One caveat: I would have put Square in the middle until the last year or so, when its technology, including digital storefronts for small businesses, proved critical during the coronavirus pandemic. That shows that businesses are sometimes growing fast can switch great, or from meh to dead.)

The problem is, people in and around technology like to scold companies, IT’S GOING TO BE HUGE, and then hardly mention them unless they are going to be stars.

Ignoring the meh center should matter to all of us for two reasons. First, it is a missed opportunity to understand what went right and what went wrong. I joked on Twitter that there should be a Midas list for more, based on the annual Forbes ranking of the most successful start-up investors. And why not? People and companies that failed to live up to the hype could teach us lessons.

Second, excluding the center distorts the image of Silicon Valley and reflects a detrimental tendency to view anything but a world-changing idea that is barely noticeable. This creates a perverse incentive to overdo anything new and overlook start-up ideas that could lead to worthy but unspectacular companies.

I wish just OK got more attention. Shooting the moon in Silicon Valley can lead to Google and Facebook. It can also lead to WeWork and Theranos. I don’t want more to be the goal, but I also wish that the in-between wasn’t so invisible.