There is really and truly a problem. I've worked full-time for several start-ups (I'm working full-time for one now) as well as consulted for several more. I've also networked with a lot of startup founders and know many other people in the industry. From my limited experience it seems endemic - the kinds of people who flock to this apparently easy money are the kinds of people solely focused on winning the startup lotto quick. Not the kind of people focused on building good businesses. This means you get all sorts of short-sighted approaches to things. When those are inevitably frustrated by complicated realities (eg. when business isn't as easy as people were led to believe by movies and books) you then see founders/managers scramble to justify these bad practices. I've watched companies loop like this until all their funding went down the drain and then the founders go and do it again somewhere else. It's one of the big myths that needs to get busted - Adam and Jamie we need you! I'm trying to do my small part on the daily.
It sounds like people are trying to built something that just good enough to be bought by Facebook, Google, Microsoft or Yahoo so they can bailout, perhaps give a few talks and may rake in a few thousand Twitter followers.
That's exactly what they're doing. It's called "an exit strategy", and apparently any self-respecting startup ought to have one.
A lot of things about the products we see become clear when one realizes that the primary focus and goal of a exit-seeking, toilet-paper[0] startup is to get bought for a lot of money, period. The product itself is a lie, it doesn't matter what happens with it - its only task is to attract new users fast - i.e. be growing, which is a proxy for "we could be profitable in the future". If the startup maintains this growth long enough, there's an increasing chance that someone will come and buy the company. The product gets killed, founders write some audacious blog posts in which they thank their (former) users for giving them the opportunity to have those coctails at the acquihire party ("it was our journey, we couldn't make it without you..."). Everyone is happy, except the users, who get screwed. Again. Live. Die. Repeat.
Of course most of the toilet-paper startups won't sustain growth long enough and will just disappear somewhere along the way.
I sometimes wonder why we (as users) keep tolerating this. People lying in our faces that they care about us and our problems, that the product is really meant to help us. Fool me once, fool me twice... but we've been fooled since the dot-com and we still haven't learned.
