Silicon Valley's startup founder problem

October 3, 2013: 10:22 AM ET

Everyone in the Bay Area seems to think they can start their own tech companies. They can't. Welcome to the world of the "wantrepreneur."

young business couple in a cafeFORTUNE -- In places like Boston and New York, they could be called "wantrepreneurs," but here in Silicon Valley, they're just "wannabes."

They're the poseurs who think all it takes to be a startup founder is sauntering up to the bar at San Francisco's 21st Amendment or cracking open their laptop at Palo Alto's Coupa Café and calling themselves one. And dear god, they're everywhere -- so ubiquitous it's like a localized, vocational epidemic of World War Z-esque proportions.

I'm not talking about the hardworking folks who live and breathe their ideas, sleeping on shared office sofas, paying themselves just enough to scrape by. I mean the rest. Ask them what they do, and they'll say they're working on a startup. Ask them what the startup is, and the answer can be comical. One first-timer said he was still working on the idea, that he'd think about it, and that he'd get back to me. Well, thanks, buddy, but people don't say they're mothers or fathers before they even have kids.

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Others have ideas, but they're rip-offs of already-successful companies or just nonsensical. When another passenger on the morning light rail pitched me the "Airbnb for medical scrubs," I just about spit out my coffee. Others still prefer the Silicon Valley nightlife too much and "innovate" far too little for anything quality to get made. They're like the worst kind of D-lister -- they just don't know it yet.

"Wannabe entrepreneurs with laptops hog up the physical and digital bandwidth of the Valley right now," griped one entrepreneur, whose company was acquired by Google (GOOG) for millions. "It's almost an excuse to be lazy and put yourself in charge of something," agrees another co-founder. His own three-year-old venture counts Google Ventures as a backer.

Tech is so hip, movies like

Tech is so hip now, movies like "The Internship," a fictional look at the Google intern experience, get made.

Why this "wantrepreneurial" epidemic? Like it or not, Silicon Valley is the early 21st-century embodiment of the American Dream. Unemployment in the Bay Area remains lower than the state and national average. Tech companies big and small are hiring en masse. Stories abound of crazy perks rarely offered in other industries. And general interest outlets like Vanity Fair now routinely run feature-length profiles on folks like Instagram CEO Kevin Systrom. Hell, in the case of Mark Zuckerberg, even non-fictionish Oscar-winning movies, based on non-fictionish bestselling books, are made about their success. Tech is so hip now, even celebrities like Justin Bieber -- too young to know Netscape isn't some dating app -- call themselves investors.

The popularization of tech is a good thing in some ways. Now, more brilliant people with brilliant ideas who work hard, persevere, and have luck on their side are getting the recognition they deserve. That's encouraging for the next generation of genuine entrepreneurs. Trouble is, now for every Zuck, there are many more who serve little more value than industry flotsam and jetsam.

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That it's relatively easy for startups to raise money nowadays is no secret. It's why angel investors complain of too much "dumb capital." "You have people signing deals offering unbelievably insane terms to early stage companies that haven't validated their product at all," 4-Hour Workweek author and angel investor Tim Ferriss told me recently. Ferriss may take a break from angel investing because of that.

"Wantrepreneuralism" also materially affects tech companies. "It dilutes the talent pool, because now there are five venture-funded companies in San Francisco who do laundry and dry cleaning services," says Matt Mickiewicz, co-founder of the recruiting startup Hired.com. (Mickiewicz would know: Nearly 600 companies, including Facebook (FB), Twitter, and OpenTable, (OPEN) look to his online marketplace to recruit new employees.)

Some wannabe will read this and wonder, "Whoa, who is this guy?" I'm just a 30-year-old tech writer with neither the brilliance or the chutzpah to risk it all on a good idea I believe in. But I spend a lot of time around those who do, and sometimes, I walk away inspired. Less inspiring? Those who think typing away at a café, commiserating over a beer, even raising some money, makes them a founder.

Let's not kid ourselves: In name maybe, but not in spirit.

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About This Author
JP Mangalindan
JP Mangalindan
Writer, Fortune

JP Mangalindan is a San Francisco-based writer at Fortune, covering Silicon Valley. Since joining in 2010, he has written on a wide array of topics, from the turnaround of eBay to the evolution of net neutrality. A graduate of Fordham University, Mangalindan has also written for GQ, Popular Science, and Entertainment Weekly.

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