The era of billion-dollar valuations for shiny, sexy startups — factors that used to attract VC money — may be over.
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There’s a good chance you haven’t heard of Farmers Business Network (FBN). It sounds like a generic professional organization for the agriculture industry, which it’s not, but what it’s really doing isn’t exactly mind-blowing, either: FBN is a social network that lets farmers pool and compare data and that offers seeds to its users at discounted rates.
Social networks are nothing new; professional organizations have long offered discounts to members, and unless you work in agriculture, you’re probably losing interest in what I’m saying. But, hang in there for just a minute, because while FBN might sound boring to you, it’s certainly captured the interest of investors.
Yes, investors gave $110 million to what you might describe as a massive Facebook group for people who work in agriculture. FBN co-founder Charles Baron described his organization to Forbes simply as the digital version of the type of smalltalk farmers share at the supply store. But it’s a great business idea because it solves very real problems for its market, even if those problems seem boring to the general public.
You’ve probably heard the old adage that if everyone you know thinks your business concept is crazy, you’re probably on to something great. I’m going to have to disagree with that. I think that if everyone thinks your idea is crazy, that’s probably because it doesn’t mesh with reality. There are exceptions, of course, but “exceptions” are just that; they’re rarities.
The rule (as opposed to the exception) isn’t Airbnb. The rule is Farmers Business Network. The rule is the hard work you’re doing to solve a specific problem you’ve thoroughly researched — a problem that morning talk shows probably don’t care a whit about.
The truth is, however, that boring business ideas are oftentimes the best ones out there. And venture capitalists know it. Sure, VCs will still be drawn to a startup that’s building some kind of amazing robot technology, but there are also entire VC firms dedicated to investing in startups that are building far less buzzworthy tools for customers like construction companies and government agencies.
The opportunities in legacy industries
What construction, government bureaucracy and other areas commonly thought of as boring have in common is that they’re struggling to keep up with the times. Construction is a $10 trillion sector known for spending zilch on information technology. Government agencies are notoriously bureaucratic and slow to adopt new tools. Sometimes the solution for these sectors just involves taking something that’s already common in newer industries and translating it for the legacy ones.
Salesforce is a great example of an organization solving a boring problem. In 1999, when CEO Marc Benioff founded the company, customer relationship management (CRM) tools were clunky and often required hardware and software to have been installed previously.
Benioff’s groundbreaking idea was simply that CRM technology shouldn’t be so hard. That’s why, today, Salesforce hosts, maintains and updates the software it sells to customers. The success of the solution shows in its numbers: Salesforce has an almost $60 billion market cap and an annual revenue approaching the $10 billion ballpark. It’s a massive company, yet the average consumer hasn’t got a clue what it does.
“Boring” isn’t new.
“Boring” isn’t some new thing that’s suddenly in; it’s something that’s worked for a long time. Plus, boring things aren’t always, well …. boring. They might just be specific and misunderstood.
The Farm Business Network has the potential to solve significant problems that aren’t boring, but at the same time aren’t well understood outside of agriculture. The network’s data comparisons can save farmers money by showing them the costs of different brands of seeds and those seeds’ yields. By selling seeds at lower prices and with greater transparency, this three-year-old startup is poised to ruffle the feathers of huge companies like Monsanto that have long held a lot of power over farmers.
Something else you also might not guess about FBN — a company centered on an industry as far removed from Silicon Valley’s beating heart as you could imagine — is that its founders actually come from tech’s ivory tower. CEO Amol Deshpande was a partner at Kleiner Perkins for six years; before that, he did a stint in fish farming, according to Forbes. His cofounder Charles Baron, who oversees product, worked on alternative energy projects at Google. (Oh, and speaking of boring companies, Google doesn’t support itself through its coolest projects — its cash cow has always been advertising. Snore.)
So, FBN and its “Facebook for farmers” focus could actually turn into a big deal, with connections to major players in the tech industry. And at the same time, this company might not become a household name. But you know what? It’s okay if this startup still doesn’t get the whole world talking, because FBN isn’t a crazy idea that needs to grab everyone’s attention. It just happens to be a solution that looks like it’s going to work.
So, what does this mean for entrepreneurs? Perhaps the big takeaway is that the era of billion-dollar valuations for shiny, sexy startups is over. Venture capitalists have learned that maybe they shouldn’t give $1.5 million to an app that only sends the word “yo” to friends. Or give $118.5 million to a company whose juicer can be circumvented with your own two hands.
VCs today are looking for companies like this — boring ones that have the potential to change the world, even if no one notices. That’s why you should feel good that you’re solving problems that many people have, even if people’s eyes glaze over when you tell them your mission. Solving boring problems may not get you fame and adoration, but it might just be your best and most direct path to success.