500Startups founder Dave McClure on why we should stop emulating Silicon Valley and two big tips for new startups

500Startups founder Dave McClure says startup ecosystems around the world should stop trying to emulate Silicon Valley, especially if their markets don’t compare in size to the US or China.

“People tend to put Silicon Valley up on this pedestal like everything’s awesome and perfect, but I would still say we don’t always understand what we did,” McClure tells Tech in Asia.

“So trying to recreate that ecosystem in other places, particularly other emerging markets that aren’t as big as China and the US — that’s still very imperfect.”

McClure says the sheer size of China’s market “with a lot of fast followers” makes it a unique space for a startup to operate in.

“If you come up with an interesting market concept, there’s going to be 20 other competitors in the next year,” he says.

“Over here [in China], it might be a 100 or [200] competitors.”

Don’t copy the “wrong shit”

In line with this, McClure says new founders should try and refrain from jumping on hot new trends just because it happens to be the most exciting thing in the moment.

“I think some people just copy the wrong shit,” he says.

“There’s always an over fascination with new trends, and some people get hyped up on the new trends before they understand really what the potential is.”

Scale responsibly

And before early-stage startups invest in resources and staff, they should strongly consider purpose and timing, says McClure.

“I think sometimes there’s an emphasis on hiring people and scaling up just for scaling up’s sake before there’s a real sense whether there’s a real product market fit and whether the unit economics are working,” he says.

“That can lead to a lot of wasted capital and negative cashflow businesses, a lot of competition where the margins are slim to none.”

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