Ask HN: Are startups diluting their own market?

Seen that first hand happen. Someone at old work was enamored with "startup world". Read too much HN perhaps... Then came up with an idea for a startup. Right off the bat, could tell it was a forced idea. It was like they sat down and given a task of "come with an idea of a startup in 5 minutes" and they came up with one. It just seemed, well ... artificial. You can almost tell how they went about it in their head "Ok maybe Uber, but like for dogs. So they can go to a park play chase...". It was that kind of thing. However, the amazing thing is it didn't matter! They convinced management to spend money on him and his startup. I believe they are still bankrolling him and his idea 3 years later, while everyone there looked at each other with a look disbelief.

One can argue the startup is good enough, if you can convince some investor to invest in it. You don't need customers, a good idea, profitability, a market, etc etc. You need a dumber investor than you, who will bankroll you and you are done. After that you can always claim you were a CEO of a startup for the rest of your life, and do talks and presentations about it, put it on your resume and so on. It just feels good, you are part of something cool and exciting.

I would say that yes, startups (as a whole) are likely diluting their own markets. When a startup notices a real pain point and tries to solve it, but cannot make a sustainable business out of it, it shakes the customers' trust in trying an unproven company. This can have negative consequences.

Think of it this way: currently, people have faith in the 'startup brand'. A potential customer's internal monologue may be something like: "Oh a startup is trying to solve this problem that I have? They're probably doing something really innovative and they're inevitably going to build a successful company because of it." After the same customer gets burned a couple times by a new company shutting down, they're not going to be as likely to put their faith in the next new company that comes around the block. The 'startup brand' to them comes to mean a bunch of naive kids who will fail in the next year or so. Even if this company can do it better than before, it may not be worth the risk of frustration/headaches/delays that using the old startups' software has caused them in the past, so they choose to not try the new product. This makes user acquisition a lot harder, and I'd imagine that it would be a net negative (when compared to a scenario where the weak startups didn't try to start a company).

It doesn't matter there are other 10^n distracting ideas, the real need of consumers will still be there.

For example, Theranos may be a distraction, but that doesn't change the underlying problems and demand for better healthcare.

There are just so many decent looking projects being posted to Product Hunt every day, and even traditionally crappy-looking mainstream sites like Paypal, GoDaddy, or ESPN actually look decent these days. I just can't imagine a successful new startup that doesn't have solid design people... Not just back end devs who 'have an eye for design', but devs who can fire up a vector tool and make custom graphics if they need it.