Tech investors have a "copy paste mentality" that is fueling a dangerous boom in on-demand startups
"There's a little bit of FOMO ventures happening," said Shervin Pishevar, a partner of Sherpa Venture and an early investor in Uber. "That's part of the boom, bust cycles."
Pishevar, speaking at the On Demand Conference, warned that a lot of the U.S. market is already saturated by consumer on-demand startups. Pishevar himself has invested in a lot of them: Uber, Munchery, Airbnb and TaskRabbit to name a few.
These are startups that are commanding multi-million-dollar valuations, or in Uber's case, billions. But, depending on the specific market, it may be too late for many investors and entrepreneurs to cash in.
Pishevar cautioned against acting on your FOMO and grabbing on to the tail-end of a trend, because you may end up getting wacked.
If you are investing in the tail end of a trend the tail has a habit of whipping you off as fast as the trend tends to bend.
- Shervin Pishevar (@shervin) May 11, 2015
The on-demand economy evolved out of what Pishevar called "the village economy" mentality, one that establishes trust between parties and allows for easy payments. These are traits of economies you see in small towns where everyone from hairdressers to doctors make house calls, and the level of trust is already established.
When applying that to business, the on-demand economy took off by focusing on the points of friction in a consumer's every day life.
"The front end of the tail is driven by much more consumer driven needs. That's what people need multiple times a day, transportation and food," Pishevar said. "There's probably not a great opportunity to do the next on-demand shoe shining."
Instead, Pishevar said that entrepreneurs - and investors - need to focus on unique opportunities and products that are born out of frustrations. Pishevar, who was the son of a taxi driver, saw Uber as one of those opportunities.
Pishevar said there are still opportunities for innovative services, citing healthcare and other vertical industries that haven't been tapped for on-demand services yet.
But he said warned that simply applying the on-demand model to any industry would not guarantee success.
"The copy paste mentality of some investors and entrepreneurs - be careful of that," Pishevar said. "Do something that is unique to you, not because someone else's journey is mirroring it."
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