Two classes of technology startups are doing well these days, pulling down enormous valuations and aggregating top talent in Silicon Valley.
The first is applications that have strong self-reinforcing and highly scalable growth mechanisms. These are generally the messaging, photo and sticker-focused services that can at least theoretically reach more than a hundred million global users.
The second is services that monetize extremely well at the unit level, allowing them to buy growth while remaining profitable. These are the real world services and virtual games than can churn out meaningful revenue. You might think of Uber or Airbnb as well as certain gaming companies like Riot Games.
The bifurcation represents a new reality about growth. Once subsidized by channels like search, social networks and app stores, growth is getting more expensive as the marketplace for attention has become more competitive and the tools for allocating spend have become more sophisticated.
