Micah Baldwin thinks that Silicon Valley is dead:
As returns became outsized, more and more investment dollars entered the space. Founders that were looking to build truly innovation “ding the universe” type companies were getting pushed out by people worrying about the exit before even starting.The givers (innovators) are getting replaced by the takers ($$$) and it’s strangling Silicon Valley.
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It’s sad. I have lived, off and on, in Silicon Valley my entire life. I started my first “business” when I was nine in response to my parent’s inability to pay for a movie. I have a group of friends that will spend time thinking about innovative solutions/inventions to problems from the silly to the sublime. Innovation still exists in Silicon Valley, it’s just drowned out by Techcrunch funding posts.
And it’s dying. We may soon be surpassed (as a Northern California kid, this really hurts me to say) by LA. Or Austin. Or worse, NY. *shudders*
Okay, couple of things to start here. First, fuck you, New York is awesome. Second, let us not overstate the notion that the original Silicon Valley founders were primarily interested in just making things. HP didn’t become a behemoth by accident, Steve Jobs was famously a terrible human being on pretty much every measure, and Bill Gates was just as famously a ruthless business person.
But there is a measure of truth to the complaint. There really has been a change in the kinds of companies and business plans that dominate Silicon Valley. For all of their faults, companies like Apple, HP, Microsoft and Google really where inventing or at least perfecting radically new things that made our lives noticeably different (whether or not they made them noticeably better is a much more complicated argument). And while being a monopoly would have been nice for Apple, Microsoft and Google, it wasn’t absolutely necessary to the survival of their business. Neither of those two things really holds true anymore.
Let us take Uber, for example. Uber, until the fact that it was apparently run by your local MRA chapter finally caught up with it, was valued at approximately a gajillion dollars. It had this stratospheric valuation despite the fact that it had invented no new invention, developed no new process, discovered no new discovery. It was a taxi company that used and app to hail a taxi and ignored regulations that other taxi companies had to follow. Now, aside from the rampant law breaking, there is nothing wrong with being a taxi company. I have taken many taxis in my life and am quite appreciative of the fact that they exist. But Uber didn’t get to be worth a bajillion dollars because it was a slightly better taxi company. No, it got to be a worth a megajillion dollars because investors expected it to end up being the only taxi company. There is no path to profitability for Uber outside controlling the lion’s share of the taxi market across the country, and potentially across the world, investors were counting on that and betting on that happening.
And Baldwin is right: that is a departure from the way things used to be. Baldwin is even right that this could be seen as “takers”– people interested in extracting value – replacing “givers"– people interested in creating value – as the drivers of Silicon Valley. But Baldwin is wrong if he thinks this is a cultural change, or something that could have been prevented. This is the natural end point of any dynamic, creative spot in a modern economy. The system is set up to encourage extractors to take over from the generators.
Our economy incentivizes the extractors. By allowing a system where wealth inequality can rise to such enormous levels as ours, our system makes outsized, lopsided collection a primary goal and obtainable goal of economic activity. Anti-trust is no longer a functioning concept in our legal system. Network effects make monopolies easier than ever to achieve, the decline of labor’s ability to claim the benefits of their work and the legal and cultural shift to protecting shareholder value above all other stakeholders creates a set of incentives that make extraction, not creation, the desired play. Winning, therefore, can be measured exclusively through money because it is so easy to accumulate an almost unlimited amount of it. Conversely, the penalties for not having money are so dire - -the US safety net basically does not exist – that losing becomes an even more frightening prospect.
The system, not the culture, is the problem. Silicon Valley cannot change this without changing the economic system and any attempt to approach the issue without changing the economic system just isn’t taking the problem seriously. You cannot fix the problem with Silicon Valley, nor can you expect those problems to not migrate to Austin or New York, through “innovators” and business people suddenly deciding that they will be like they used to be. Because the system the live and work in pushes them to be exactly what they are. Fix that, take on that, or you are just indulging in useless nostalgia.