# The Madness of Valuation in Entrepreneurship The evolution of valuation-focused culture in the startup world - **Source:** [Both Sides of the Table](https://bothsidesofthetable.com) - **Published:** 2022-12-12 - **Topic:** [Entrepreneurship](https://brifing.si/c/entrepreneurship) - **Original article:** - **On Brifing:** https://brifing.si/s/d277b45c-4471-4e5a-8bbd-aab1f292ec86 ## The Beginning: The Passion for Problem Solving In the 1990s, entrepreneurship was shaped by a passion for problem-solving and creativity. Programmers were excited about bringing their ideas to life. There was no money-driven approach; everything was built on innovation and creating solutions. ## The Internet Revolution and the Golden Age With the rise of the internet in 1994-95, a new era began. The first internet companies were founded, and everything seemed possible. Entrepreneurs strived to solve new problems and bring their creative ideas to life. ## Money and the Valuation Craze By the late 1990s, a valuation-focused culture emerged with IPOs and instant wealth. Valuations inflated by unreasonable metrics deeply impacted the entrepreneurial ecosystem. The concept of a 'new economy' became prominent during this period. ## The Dot-Com Bubble and Its Burst The dot-com bubble burst in 2001, rendering valuations meaningless. Entrepreneurs began focusing on revenue models and cost structures. This period highlighted the importance of building real products. ## The Rebuilding Process Between 2001 and 2007, entrepreneurs focused on product development, pricing, and customer service. Unnecessary expenses were avoided, and sustainable business models came to the forefront. ## A View from the Venture Capital Side The 2008 global financial crisis deeply affected the venture capital world. Financing came to a halt, and many startups collapsed. However, this period offered new VCs opportunities to learn and grow. ## The Era of Sustainable Growth From 2009 to 2015, entrepreneurs focused on building sustainable companies. Developing new products and increasing revenue were key goals. Valuations were tied to performance metrics. ## The Unicorn Era and Cultural Shift The term 'unicorn,' coined by Aileen Lee in 2013, referred to companies valued at $1 billion. Over time, this concept became a symbol of rapid growth and irrational valuations. ## Zero Interest Policy and Easy Money Over the past seven years, the Federal Reserve's zero interest policy and easy money flow have shaped the entrepreneurial ecosystem. Hedge funds, family offices, and other investors turned to startups for high returns. ## Looking to the Future The valuation-focused culture in the entrepreneurial world needs to give way to sustainable growth and real value creation. The future belongs to companies focused on fundamental business principles. ## Sources covering this story - https://bothsidesofthetable.com/praying-to-the-god-of-valuation-7f6758ba3b16?source=rss----97f98e5df342---4 — --- _Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._