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No Exit
April 25, 2014 12:21 PM   Subscribe

Wired's Gideon Lewis-Kraus reports from the trenches of the Silicon Valley "ecosystem".

Via Hacker News. A longer (48 p.) version of the piece is available via the Wired app (free for subscribers) or on Kindle (not free, $2).

Lewis-Kraus also wrote the 2009 longform piece Tokeville in Harpers, about the marijuana-growing industry in northern California, and the 2012 book A Sense of Direction.
posted by Kadin2048 (79 comments total) 28 users marked this as a favorite

 
On the other hand, this makes me feel great about having a pink collar "career" in a large midwestern city. "At least I don't need to attract venture funding and I have my own house with my own room and everything, and I don't need to have Google 'hangouts' with brogrammers or provide 'paleo plates' for wealthy people," I find myself saying.
posted by Frowner at 1:01 PM on April 25 [13 favorites]


“Look,” he said. “The problem in 1999 was that to get $5 million you didn’t need very much.” He talked as though he were chewing on mouthfuls of nuts. “You needed one or two Stanford résumés, an idea for a prototype, and a live body to give the money to.” It’s hard to get that $5 million now in part because it’s so easy, as it was for Nick and Chris, to get $500,000, especially if you’re coming out of an accelerator. One way to look at it is that the $5 million that went to one company of 10 people in 1999 is now going to 10 companies of two people. “You’ve lowered the bar 10X.”

Which means you’re getting a lot of people starting companies who shouldn’t be starting companies. Another investor I talked to called this “buying a cheap call option on a guy who doesn’t know that’s what you’re doing”—on a guy, that is, who thinks you’re investing in his success, not betting on the high-risk, high-yield chances of it. You know the odds on any given company’s success are long, but that’s why you make a lot of bets. In the first dotcom boom, the risk was largely carried by the investors, but now the risk has been returned to the youth.
You know, I decided to go over my collection of poker books - they're a lot of fun to read, and engage the brain in figuring out the strategic and tactical considerations of the game on a considered and intellectual level. Back in the '90s, I had a Palm app that was a fairly decent card room emulator - the opponent AI's were enough to keep me on my toes, and I had a grand time trying out various combinations to see what worked.

I fired up Google Play to find something similar for my Android phone, and it's all live betting apps, with in-app purchases for "play money" that sure costs a lot of real money. Dozens and dozens and dozens of these apps. A few instructive apps to keep track of hand history and figure out probabilities (in order to cheat in those other apps), and two really terrible offline AI apps. I mean, I paid money for a backgammon game that can reliably beat me on the hardest level, I'd pay money for a decent Hold 'Em where I didn't need to buy chips or deal with being online and in card-shark themed MMO. Not available.

Silicon Valley is all about gambling and rent-seeking rip-offs, these days. Its time may be done.
posted by Slap*Happy at 1:17 PM on April 25 [28 favorites]


This article was great, and the madness it describes is also starting in London now.

“When you have an early-stage company,” he said, “there’s no time to hang out at a cool, trendy bar.” He was 23. The bar might have been cool and trendy in Miami in 2004.
posted by colie at 1:21 PM on April 25 [1 favorite]


Its time may be done.

I wish. Spare us these startup bores, for one thing.
posted by thelonius at 1:24 PM on April 25 [3 favorites]


It's really hard for me to understand the appeal of trying to "do a start-up" in the Silicon Valley sense. Isn't the point of striking out on your own that you don't have to subordinate yourself to a boss every day? What is the point if you're going to seek venture capital and thus replace one boss with another?
posted by enn at 1:29 PM on April 25 [3 favorites]


All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors. Instead of what you want to build—the consumer-facing, world-remaking thing—almost invariably you are pushed to build a small piece of technology that somebody with a lot of money wants built cheaply. As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design.
posted by twirlip at 1:35 PM on April 25 [40 favorites]


TLDR version: The inner workings of the dysfunctional start-up economy that replaced industrial manufacturing. Imagine if you will, arriving in at Ellis Island in America in 1907 with your entire family's fortune in silver spoons and you can't tell that everyone around you is trying to take all of your spoons away from you. That's pretty much how the article describes the startup culture.
posted by Nanukthedog at 1:37 PM on April 25 [2 favorites]


All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors...In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design.

On one hand, I think it's absurd to say something like this about kids who are, by any reasonable standard, succeeding immensely. If you're getting start-up capital for a business that's basically you and a few others guys and your big idea, you're doing pretty well. I mean, cry me a fucking river, you don't have as much fucking autonomy as you thought.

On the other hand, I hope this will show to such people that all the things they learned in college about exploitation under capitalism weren't actually irrelevant to their lives and the modern world. I doubt it, though.
posted by clockzero at 1:44 PM on April 25 [10 favorites]


What is the point if you're going to seek venture capital and thus replace one boss with another?

There's an unwritten but completely canonized playbook to the startup experience. And since it's unwritten it gets passed on by word of mouth. And who does the speaking? VCs, angel investors, people who stand to benefit from the system. The individual startup found are playing the same game as drug dealers - running long odds in hopes of a big payoff. But in truth most successful companies didn't use that method to start up.

So basically it's the desire for a big payoff, the appeal of a poorly understood scene and a lot of bad information.
posted by GuyZero at 1:44 PM on April 25 [12 favorites]


On one hand, I think it's absurd to say something like this about kids who are, by any reasonable standard, succeeding immensely. If you're getting start-up capital for a business that's basically you and a few others guys and your big idea, you're doing pretty well.

Good to see you're commenting without reading the article.

You're assuming most start-up kids in the initial couple of years make anything approaching a livable income. A lot of them don't. They're sleeping on couches and eating ramen in the hopes of a big break - a break which will probably never come. That's not "succeeding immensely."
posted by incessant at 1:51 PM on April 25 [5 favorites]


Although their bank account would dip to less than $800 before the first money hit, Bobby and Ullas would bring along a few more investors, and by the last week in February the total round would be jostling up against that $1.5 million target. And then, all of a sudden, three small but respected institutional funds—one of whom hadn’t bothered to return Nick’s calls in January—would practically beg to get in on the round. With Bobby and Ullas’ permission, they would let the round (still a large seed round, not a Series A) get oversubscribed and close with $2 million. The customer pilots that began in January would look even better than expected, and the big media concern that took the deep discount would begin the process of figuring out how to use them in other ways. By early March, when the money finally closed and the numbers were in, Nick and Chris would feel approximately 12 minutes of elation before the anxieties of fundraising were replaced by the anxieties of delivery, both of products to customers and of shareholder value to their new investors.
This is something of a big break.
posted by Llama-Lime at 1:56 PM on April 25 [2 favorites]


In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design.

I think renters in SF who aren't having venture capitalists shovel money at them probably feel similarly.
posted by bradbane at 1:57 PM on April 25


It's really hard for me to understand the appeal of trying to "do a start-up" in the Silicon Valley sense.

Plenty of young people work hard to become rockstars or pro-athletes, even though those career lottery-winners win a much smaller lottery than the world-changing silicon-valley lottery-winners.
Why would start-up megastardom have less appeal?
posted by anonymisc at 1:57 PM on April 25 [1 favorite]


I am sitting in an "accelerator" as I type this. It's an interesting place, and I helped write the business plan (a few years ago) that got the government funding that helps support it.

Most of the startup companies that are enrolled in the program here are trying to "cross the chasm" and commercialize technologies to create viable companies. The main form of funding is Angel Funding, as VC funding for tech companies doesn't really exist in Canada on a meaningful scale.

However, everyone knows that accepting VC funding is essentially relinquishing control of your creation, why you got into the business in the first place. There are people who think the "exit strategy" is what's most important, and sneer at the "mom and pop" or "lifestyle" businesses of tech companies that have relied on steady organic slow growth over the past 15 years.

The "mom and pops" are still around, but many of the "exit strategy" companies are not. The company is bought for IP, or for the dev team (cheaper than dev teams in Silicon Valley).

At the same time, Canada is not like the US. Culturally we're conditioned to think that mining coal or drilling for oil or cutting down trees is the way to build an economy. Accelerators, while trendy, are a way to jump-start a knowledge economy, at least here in up north.

Victoria BC, where I live, has really benefited from the growth of the tech sector. We have the lowest unemployment rate in Canada (4.5%), and a very high median household income $80,000.

Silicon Valley, while the global technology hub and primate, is pretty unusual. Seattle is a much more interesting city to look at. You have all these millionaires coming out of Microsoft and Amazon and similar companies wanting to do their own thing.

There is so much know-how and angel investing and ambition available in Seattle it's impressive (especially compared with its service-center neighbour Vancouver just to the north).
posted by KokuRyu at 1:59 PM on April 25 [12 favorites]


Slap*Happy: Silicon Valley is all about gambling and rent-seeking rip-offs, these days.

I think that's because the Palm Pilot market was tiny compared to the current smart device market. Here's the first wireless Palm Pilot in 1999, and it's black and white, low resolution - pretty much a business tool with some nice apps developed by people who probably enjoyed what they did, and might have made some money off of a few app sales.

Ten years later, there are stories from iPhone App millionaires, making their money off of $1-3 apps and in-app purchases. The whole app scene is drastically different. There is no comparison between the Palm Pilot days and the current "ecosystem." There's a stupid amount of money to be made, if you find your perfect mini-macro market - the game that mixes the right amount of success with a ton of failure, the chat/text app that somehow manages to succeed where so many others failed, and so many other weird little things that have boomed in the recent years. You don't need to build the killer apps or games to replace PhotoShop or MMORPGs, you just need to find something small that clicks with a broad range of people, and get them all to pay you a buck or two, and hopefully a few more dollars for a few add-ons.
posted by filthy light thief at 1:59 PM on April 25 [7 favorites]


It's really hard for me to understand the appeal of trying to "do a start-up" in the Silicon Valley sense.

It says it in the article: finance is for sociopathic douchebags and law is an outdated and unsure way to get the life of wealth and privilege these kids want. The bay area captures 40% of all venture capital in the US, so they come here and drink the koolaid that their app idea is the one that's going to change the world... if they could just get that next round of funding.
posted by bradbane at 2:01 PM on April 25 [2 favorites]


Eh, at least they're trying to change the world or at least make something that people find useful/novel, rather than trying to get really really good at moving a small leather object around a grass field, hoping they won't get too many concussions.
posted by aramaic at 2:05 PM on April 25 [2 favorites]


who thinks you’re investing in his success, not betting on the high-risk, high-yield chances of it.

I'm not sure if it's charmingly quaint or just annoying that the author thinks there's a difference.
posted by jpe at 2:12 PM on April 25 [1 favorite]


This article has a real end-of-the-world vibe to it
posted by hellojed at 2:16 PM on April 25 [3 favorites]


I don't understand how people find this any harder to understand than what happens 380 miles to the south, in the land of aspiring actors and agents trying to strike it big.
posted by Apocryphon at 2:50 PM on April 25 [10 favorites]


I'm not sure if it's charmingly quaint or just annoying that the author thinks there's a difference.

He's paraphrasing an investor there, isn't he?
posted by thelonius at 2:50 PM on April 25


This article has a real end-of-the-world vibe to it
posted by hellojed at 2:16 PM on April 25


Douglas-Coupland-ysterical
posted by GuyZero at 2:50 PM on April 25 [5 favorites]


I worked for a startup the last two and a half years, and though I wasn't in on it during the funding phase (I was just a regular employee), I still got to hear about the troubles and struggles our founders went through.

Part of me reading this reads about the troubles and tribulations and feels smug and self-assured that I chose my path of being a cog in the machine, because my life is so much less stressful and uncomplicated as a result. But of course, I have to be glad that there are people out there that do have the burning desire to create, to struggle, and not to settle for what's already out there. And not just because I got a job out of it, but also because people like that help make the world a more lively place. And that includes athletes, artists, as well as entrepreneurs and technologists.
posted by thewumpusisdead at 2:53 PM on April 25 [6 favorites]


Micheal O. Church calls it VCistan, and basically sees it as a collusion between the large tech companies, a bunch of well financed venture capitalists, and some serial company starters. With little upside for the coders.

Having described what VC-istan is and why I don’t like it, let me give a few comments on what it’s not. First, it’s not all of venture capital. I don’t consider biotechnology or clean energy to be part of VC-istan. The rules in those industries are different, because one actually has to know something about biology, for example, to launch a medical-device startup. The superficiality, ageism, celebrity culture, and lack of respect for hard work that characterize the current bubble crop are not found there; in fact, it’s the opposite, because there are objective goals to be met. VC-istan is focused on light technology, which I use to describe the marketing experiments using technology that, in 2013, seem to outnumber and outcompete (for funding and attention) true technology companies. In light technology, the sole technical challenge is “scaling”, which can be back-filled once flush with cash and able to hire the Valley’s best engineers; but the glory goes to the investors and founders who “had the vision”. So perhaps I might say, “venture-funded light technology” instead of VC-istan; the former sounds less pejorative; but VC-istan has fewer characters and it’s 10:40 at night so, fuck it, brevity wins.

What is it that marries VC-istan to light technology? After all, shouldn’t profit-maximizing venture capitalists go in search of meatier ideas that actually need the investment? Well, many do, and I’m not writing about them. I’m writing about the starfucker types who want to be profiled in business magazines, the ones who want social access more than success on the market, and who thereby sell out not only their own chances at success, but also human decency by creating the collusion and celebrity culture.

Where this ultimately leads is the Parable of the Bikeshed, or what Freud called the narcissism of small differences. People (even those in power) are generally willing to defer to the experts on the big, infrastructural, but usually aesthetically unpleasing (due to their complexity) matters, like how to design a nuclear power plant. “Just bring me the sausage; don’t tell me how it’s made.” On the other hand, on those matters that seem accessible, people form strong opinions. There is little power in the complex and objective, where those who are blatantly wrong will be punished regardless of who they are, and those who have knowledge generally got it through that rank-middling practice of working very hard; but much more power in the simple and subjective, over which simply having made the decision is victory. (The association of arrogant simplisticism with power seems to be present in literalistic religion, too. Notice how many historical deities had strong and explicit opinions about mandatory metaphysical beliefs and about gender roles; but said not a damn thing about how to make antibiotics, which would have actually been useful.) The consumer-oriented light technology that’s in vogue in modern VC-istan is a realm where it’s easy to debate what color to paint the shed, and that’s why it attracts the biggest narcissists.

Venture-funded light technology is, to put it bluntly, a multi-billion-dollar bike shed. In biotech, one can only fund companies whose founders actually understand the science, and pumping money into smiling, stylish idiots is equivalent to incinerating it. For a contrast, the upshot of VC-istan light tech is that any idiot can come up with a plausible scheme, which is much to the benefit of sad-but-established men who “see things in” mediocre but superficially attractive suitors.

One might prefer that this arrogance remain in light technology, which would render it fairly harmless and, in fact, useful. Light tech isn’t a bad thing. Often, it does a much better job at marketing real infrastructural improvements than the inventors ever could. It also can disrupt established and parasitic rent-seekers. I’m not a fan of Uber, a service used mostly because it confers the value of being able to say one uses it (i.e. is able to afford it) but I do welcome anything that threatens to take down the Medallion Mafia. The problem with light technology’s bubbles is that they overreach and, when they get beyond their natural territory, the marketing wizards become devastatingly incompetent. We see a once-great city ruined by absurd rents due to the complete inability of the supposed wunderkinder to solve the city’s biggest problem: housing scarcity. We see that horrific, Aspergerian foray into politics that is Mark Zuckerberg’s FWD.us (which I call “fweed-oos” because I refuse to call it “forward” anything). We see a whole society beginning to hate technology because a few hundred overprivileged celebrity jackasses (most of whom haven’t written code for decades, if ever) are going out and making a bad name for all of us. That’s bad for the future of technology. It’s bad for those of us who are coming up.

He wrote that two years ago, and it sounds like today.
posted by zabuni at 3:01 PM on April 25 [33 favorites]


its hard to tell whether Micheal O. Church is a madman with bouts of lucidity or a very perceptive person hovering on the brink of a paranoid-delusional breakdown. But this time I'll give him his (incredibly longwinded) point: venture funding is a market. The sellers are the startup kids. The buyers are angels and lower-tier VCs. The product is almost irrelevant, but as he says, it's just barely technology. And the market exists primarily because there are willing buyers. As long as there's money to be had, there will be new, barely-justifiable startups.
posted by GuyZero at 3:05 PM on April 25 [2 favorites]


I grew up programming, and the shiny utopian visions of things like Wired and Microserfs were hugely appealing, even the descriptions of insane working hours. What Wired is putting out these days I just find endlessly depressing.

I'm sure part of that is just getting older, but the descriptions of people's motivations for coding and building businesses are mostly totally alien to me. Things like the Oculus guys I understand, I get that, but working crazy hours like that for a crowd-sourced-cloud-based-drone-popsicle-delivery solution call Fabjingr or whatever? This, I do not understand.
posted by Jon Mitchell at 3:10 PM on April 25 [5 favorites]


Things like the Oculus guys I understand, I get that, but working crazy hours like that for a crowd-sourced-cloud-based-drone-popsicle-delivery solution call Fabjingr or whatever? This, I do not understand.

I think it's down to one of the things the guy points out in the article, now --- you're starting to attract the guys who would have gone to law school or worked for a big corporation, back in the day. The people who are very driven to be successful, but don't, in the end, have any particular preference for at what. Which is whole lot of people, really.

Well, I take that back --- these guys started out with a problem they really cared about solving, which they were passionate about. And then they got told no one was gonna give them any money to solve that problem. So, hang it up? Or pivot, and put your drive into making a successful business that you will get paid for? People want meaningful work, and one way to get it, if you don't derive meaning from the craft itself, is to strive for autonomy, to have the challenge be having a successful business and growing it.
posted by Diablevert at 3:30 PM on April 25 [2 favorites]


Micheal O. Church? Oh man, he's one of those guys who goes through life by blaming all his failures on everyone but himself.
posted by aspo at 3:38 PM on April 25 [1 favorite]


The OpenBSD Foundation will gladly take donations to improve libressl, but some money is just too expensive to accept. Sitting on (or more accurately, under) a million dollars in custom contracts creates what I will charitably call a priority inversion.
posted by flabdablet at 3:43 PM on April 25 [2 favorites]


I had no clue that the term VC-istan came from mchurch.

I use it all the time - it's a pretty great shorthand for what it describes - and now I feel kind of dirty.
posted by Itaxpica at 3:45 PM on April 25 [1 favorite]


On one hand, I think it's absurd to say something like this about kids who are, by any reasonable standard, succeeding immensely. If you're getting start-up capital for a business that's basically you and a few others guys and your big idea, you're doing pretty well. I mean, cry me a fucking river, you don't have as much fucking autonomy as you thought.

On the other hand, I hope this will show to such people that all the things they learned in college about exploitation under capitalism weren't actually irrelevant to their lives and the modern world. I doubt it, though.


Good to see you're commenting without reading the article.

You're assuming most start-up kids in the initial couple of years make anything approaching a livable income. A lot of them don't. They're sleeping on couches and eating ramen in the hopes of a big break - a break which will probably never come. That's not "succeeding immensely."


Well, let's get the tautologies out of the way: clearly, if you're not succeeding, you're not succeeding. If you're getting money invested in your company by people who think you might succeed, you're doing better than people your age who don't have jobs, or have jobs with no chance of real success, meaning financial stability and security. Which is most of your peers, if you're in your 20's.

I mean, let's speak plainly. We're talking about people who are starting companies, right? Who's supposed to be guaranteeing them a livable income when their plan is to succeed on the terms of the market itself? I'm not saying that they don't deserve to have security, but I don't see how one can simultaneously problematize a lack of autonomy as it relates to investors and the lack of guarantees that attends entrepreneurship. You can either take big risks and accept the consequences or play it safe, to the extent that anyone can in today's labor market. I just don't feel very sympathetic to the idea of taking big risks which entail huge opportunities and also wanting security.
posted by clockzero at 3:46 PM on April 25


I don't understand how people find this any harder to understand than what happens 380 miles to the south, in the land of aspiring actors and agents trying to strike it big.

There were some interesting comments in the HN thread (which impressed me; I figured it would be a lot of knee-jerk defense of the VC establishment, but apparently there are a lot of people over there with a bad taste in their mouths as well) making the analogy that Silicon Valley and startup culture are to San Francisco what Hollywood is to LA or Broadway is to New York.

It's basically an economic engine that sucks in young people who think that they're going to beat the odds, grinds them up, and uses them for fuel to keep the industry grinding along.

working crazy hours like that for a crowd-sourced-cloud-based-drone-popsicle-delivery solution call Fabjingr or whatever? This, I do not understand.

There's an entire generation of people in tech whose entire experience of the field is post dot-com-bubble, and who view it as a place where you go to make a lot of money. The early-90s Wired and Microserfs was largely a product of engineer-types who made their career decisions before the fast money got involved. They were happy to take all the pre-crash VC money, when it showed up, but (at least up through the later 90s) they probably didn't pick their major in college because they thought it would get them rich. The kids who wanted to make money were still being steered towards finance or law or medicine at that point, I suspect.

(Admittedly: In the late 90s, right before the crash, there was a wave of quasi-technical people who came in, stereotypically through crappy "web design" degree programs, and were just in it for the quick money. So it wasn't the crash per se that was the turning point.)

Today, and in some respects this shows how mainstream IT has become, I think there are a lot of people whose overriding motivation isn't so much a big idea that they're passionate about, but more that they want to "be" an entrepreneur, i.e. that "tech entrepreneurship" is a valid career path that one can choose, like being a doctor or lawyer or something. However, this leads to the rather crazy situations of people starting up companies before they really have an idea of what they're going to do, or trying one thing and then "pivoting" to do something completely different.

I wouldn't really care much either way, but it seems like this model results in a lot of effort by very skilled technical people -- like the MIT AI guy mentioned in the article -- being sold for pennies (in stock options) on the dollar, and being used to solve really trivial problems. In a previous generation someone like that might have been developing the transistor at Bell Labs or something, and now it's targeted email spam. The system as a whole may be a lot more efficient (I wouldn't want to pay Bell System prices for Internet service, although Comcast is certainly working on it) but it certainly seems to have local minima that aren't very pretty.
posted by Kadin2048 at 3:47 PM on April 25 [15 favorites]


I think there are a lot of people whose overriding motivation isn't so much a big idea that they're passionate about, but more that they want to "be" an entrepreneur, i.e. that "tech entrepreneurship" is a valid career path that one can choose, like being a doctor or lawyer or something.

Very much this. It's not true of every startup, but it's true of a lot of them.
posted by GuyZero at 4:03 PM on April 25 [3 favorites]


hey probably didn't pick their major in college because they thought it would get them rich.

Yeah, I think as you get into the 90s you get more consideration of money, but _not_ "instant millionaire/billionaire" thinking. I changed my major to CS halfway through college (in 1996) because I didn't want to go to grad school (previous major was biology) and I liked and was good with computers. But I had a lot of interests, I wasn't one of those people who had the passion for it from when they were 6. By then though it was already clear it was a good job financially, but the get-rich-quick stuff wasn't really a big part of it yet.

And if you avoid the startups, it can still be that. More so than when I graduated --- starting salaries at established companies are really good, and working for a big tech company is nothing like working for a startup. I actually did work at a couple startups in the late 90's / early 00's, and had a meh experience, which led to me switching to the big companies after a few years (and 2 failed startups).

One of the ways startups and some other companies sometimes exploit tech workers is by making them think you "should" only work in this field if its your burning passion, something you would do even without getting paid. Because after all, if thats true why do you care how much money you make or how many hours you make? Larger companies (which need more workers, and a more stable workforce) realize they can get some pretty skilled workers without needing people who will sacrifice everything else in their life.
posted by wildcrdj at 4:06 PM on April 25 [3 favorites]


It's really hard for me to understand the appeal of trying to "do a start-up" in the Silicon Valley sense. Isn't the point of striking out on your own that you don't have to subordinate yourself to a boss every day? What is the point if you're going to seek venture capital and thus replace one boss with another?

There are a lot of markets where investment simply isn't optional. Cash accelerates product development and distribution. And somewhere there's a competitor who is taking the money. And they'll have more money to invest in sales and marketing, more money to invest in research and development... you'll have to hope they fuck it up.

If you want to be an entrepreneur without playing the VC game, the strategy is to look for small problems. Problems whose solutions generate millions of dollars, not billions. Problems that aren't sexy. Problems that aren't cool.

I think there are a lot of people whose overriding motivation isn't so much a big idea that they're passionate about, but more that they want to "be" an entrepreneur

Those people definitely exist, but I don't think they get funded very often. They're the modern-day equivalent of people who claim to be writing the great american novel, but who haven't put in any of the work.
posted by grudgebgon at 4:13 PM on April 25


Is there a market in disillusionment? I would like to monetise it.
posted by vicx at 4:17 PM on April 25 [5 favorites]


who thinks you’re investing in his success, not betting on the high-risk, high-yield chances of it.
I'm not sure if it's charmingly quaint or just annoying that the author thinks there's a difference.
There's a maxim that goes something like this: A gambler makes bets, but an investor does absolutely everything in his power to improve the odds of the bets he makes. By being ultra-selective or by looking for synergistic opportunities or by offering guidance and/or connections, etc.

From that point of view, there is some difference. When a Warren Buffet invests in your company, its because he believes you're on your way up to bigger and better things. When Silicon Valley VC invests in your iPhone app company, they actually are expecting that you'll fail. They're looking to invest in 20 companies and get one hit. You're probably not the hit.
posted by Western Infidels at 4:19 PM on April 25 [5 favorites]


There does seem to be an awful lot of Silicon Valley floating around on the breeze these days. This article. Two or three different television programs. Makes me wonder if there's enough time to cash-out before the gravy train comes to a crashing halt.
posted by ob1quixote at 4:33 PM on April 25


See also Venkatesh Rao's Entrepreneurs are the New Labor.


Micheal O. Church? Oh man, he's one of those guys who goes through life by blaming all his failures on everyone but himself.

His criticisms sure seem to hit the mark pretty well. Though I suppose this doesn't exclude the possibility that he's using a sharp and observant mind to blame his failures/limits on others (self-delusion can probably be enabled by mental faculties as much as mitigated).
posted by weston at 4:48 PM on April 25 [1 favorite]


Umm, there are reasons to give up some control of your baby for $10M, but imho you're either in on the scam or poor if you give it up for $500k. Or maybe you're older and live in a country without a sane healthcare system.
posted by jeffburdges at 4:51 PM on April 25


There's a stupid amount of money to be made, if you find your perfect mini-macro market - the game that mixes the right amount of success with a ton of failure, the chat/text app that somehow manages to succeed where so many others failed, and so many other weird little things that have boomed in the recent years.

Yeah, this is gambling.

The Palm was a relatively tiny market, yet its ecosystem was a lot more fleshed out and mature than the modern smartphone market, despite its age. (Sorry, kids, the iPhone is 7 this year. The Amiga only lasted 7 years.) Everyone is going bust swinging for the fences instead of fleshing out the app ecosystem.

Finding a reliable income stream servicing an under-served niche is a sure-fire path to profit, but no-one is interested in putting in the money or time. There's BIG MONEY out there - the numbers say someone else will make it instead of you. The new school of VC doesn't care, and they expect you, as a small developer, not to care, either. They're just hoping you'll be a freakshow success like WhatsApp or Zynga.

Meanwhile, real innovation - or even a robust and diverse software market - is being starved of capital and talent.
posted by Slap*Happy at 4:55 PM on April 25 [2 favorites]


I dunno, I am a startup guy, and I sure prefer it to being a big company person. I have experienced both by selling one of my companies to a much much larger one. If you are at a good startup you feel like you are getting things done, I can do something next month to make payroll and save the company, there are not a lot of politics, etc... Granted I was a computer programmer since the 4th grade, and just came out of college right before the dotcom stuff so I really loved this stuff before it became so lucrative. I've had a very good experience with startups, with 4 out of 6 that I've worked for succeeding and 3 (and soon 4) out of 6 returning millions in exchange for my time. There are definitely a lot of pretenders there, or people trying to cash in on a gold rush. I'm sure that luck and right place and right time is a big factor in my medium startup success. However, while I cannot accurately predict whether or not a startup will succeed, I've never been wrong when I've looked closely at one and decided it would fail.
posted by ill3 at 4:56 PM on April 25


Hey, good for you. But survivorship bias.
posted by GuyZero at 4:59 PM on April 25 [6 favorites]


Yeah I've read Fooled by Randomness. I can tell you there are people (not necessarily saying myself) that serially succeed and serially fail, and there is more than luck at play. It's not like playing the stock market, there are more talented programmers, there are more talented sales guys, there are more talented marketers that tend to out perform the average or random.
posted by ill3 at 5:02 PM on April 25


I swear to Jeebus WIRED wrote a nearly identical piece ca. 1997. It was something like “Welcome to Pure Capitalism” Currently dredging the WIRED archives to find it…
posted by axoplasm at 5:04 PM on April 25 [2 favorites]


with 4 out of 6 that I've worked for succeeding and 3 (and soon 4) out of 6 returning millions in exchange for my time

See this is the part of me that completely fails to understand what the fuck "startup people" are talking about. 4 out of 6 succeeded - on what criteria? As in they continue on, to this day, as large, growing, successful, non-startup concerns (carry-ons, if you will)? Or as in they made a profit for investors then shut down? Or as in they were bought out by a larger concern? How did they succeed, exactly? Over what time-period?
posted by Jimbob at 5:08 PM on April 25 [2 favorites]


I think it's down to one of the things the guy points out in the article, now --- you're starting to attract the guys who would have gone to law school or worked for a big corporation, back in the day. The people who are very driven to be successful, but don't, in the end, have any particular preference for at what. Which is whole lot of people, really.

I'm taking a programming class right now and I was really struck on the first day by the vibe - I couldn't pin it down until I realized it reminded me absolutely of those types of guys... not at all the quiet, thoughtful, nerdy people in the class I took just a few years ago.
posted by maggiemaggie at 5:08 PM on April 25 [3 favorites]


See this is the part of me that completely fails to understand what the fuck "startup people" are talking about. 4 out of 6 succeeded - on what criteria? As in they continue on, to this day, as large, growing, successful, non-startup concerns (carry-ons, if you will)? Or as in they made a profit for investors then shut down? Or as in they were bought out by a larger concern? How did they succeed, exactly? Over what time-period?

I think many entrepreneurs would define success as returning more money for their time then they would have made working at similar job at an established company. However, while that is also true in my example, I am defining success as the product we built is still being used and valued. All 4 of those companies are still going concerns either on their own or part of a larger entity. In all 4 cases people still use the product we created everyday, in 3 of those cases millions of people use it everyday.
posted by ill3 at 5:14 PM on April 25 [2 favorites]


My startup is my side business. My main job is a cog in the wheel. What isn't even touched in this article is the ridiculous terms folks offer us for funding. Right now, we're bootstrapped and cash positive with a defined market, significant market potential. VC for us is the ability to hire on a few additional developers and DBAs, as well as a few inmplementation engineers to get our clients up and running faster. So VC is the way the business grows - because being cash positive doesn't mean that we can put in enough hours to continue with necessary growth.

So we've done incubators and accelerators, and each time that happens, we watch someone string us along for a huge share of. Equity for a useless cushion of cash. So the terms suck, and we turn me down, and we maintain a business, growing slightly, with a skeleton crew. But the pittance of money people want to fund with and the amount of equity they expect when it is offered.... HAHAHAHA....
posted by Nanukthedog at 5:26 PM on April 25 [1 favorite]


When I heard the learn’d VC,
When the proofs, the figures, were ranged in columns before me,
When I was shown the charts and diagrams, to add, divide, and measure them,
When I sitting heard the VC where he lectured with much applause in the TED conference,
How soon unaccountable I became tired and sick,
Till rising and gliding out I wander’d off by myself,
In the mystical moist night-air, and from time to time,
Look’d down in perfect silence at my Apple ][ emulator.
posted by RobotVoodooPower at 6:34 PM on April 25 [11 favorites]


So if the startup bubble is, well, bubbly as hell, should non-Silicon Valley people be worried? If the bottom falls out of this thing, what kind of reverberations might we expect in the larger economy? When the banks shit themselves in 2008 pretty much everyone seems to have felt that tangibly. I do not/cannot make a call as to whether the tech scene is on that kind of scale, though.

Truthfully, as a non-ProEconomist or VC, upper level movement of capital becomes a kind of incomprehensibly huge existential horror like Neil Degrasse Tyson gently telling me there are more atoms in my body than stars, where scale becomes meaningless and fanfic-spawned RPG systems get thrown in the trash. If the entire angel-investor class goes down in flames, what economic entities, if any, might it take with it?
posted by passerby at 6:51 PM on April 25


There have been a couple articles on the fact that it's pretty much a huge bubble.

The NYT
NPR
Marc Anderssen
New York Magazine
The Financial Post

Whether the bubble bursting should worry you is largely going to depend on how financial institutions react. If it's basically a bunch of VCs turning off the money tap, then the SF startup scene is probably fucked, but it won't reverberate outward. If, however, it gets to the point major companies with major investors start losing all value and stop investing and lending, then you're going to see some serious shocks to the economy.

I don't miss the startup scene at all. Not one bit.
posted by Ghostride The Whip at 7:21 PM on April 25


should non-Silicon Valley people be worried?

Yes. Previous SV busts (yes, 2001 was not the first) took down the national economy with it.

If the bottom falls out of this thing, what kind of reverberations might we expect in the larger economy?

Right now, it would be Really Bad - lending institutions are seriously gun-shy after the subprime debacle. An implosion of SV VC would rock everything up and down the banking industry.

If the entire angel-investor class goes down in flames, what economic entities, if any, might it take with it?

The good news? It will rise from the ashes like a phoenix. The bad news? It will take 3-5 years to reboot. White collar unemployment and wage stagnation the whole while.
posted by Slap*Happy at 7:23 PM on April 25


People who grow up sailing, who race each other's boats. The family cabin out in the woods. There's a subtle thread about class in this article which meshes pretty well with my own experience. It really does feel like the money is going in very tight circles sometimes.
posted by phooky at 7:31 PM on April 25 [10 favorites]


All the while, Martino’s ultimate warning—that they might someday regret actually getting the money they wanted—would still hang over these two young men, inherent to a system designed to turn strivers into subcontractors. Instead of what you want to build—the consumer-facing, world-remaking thing—almost invariably you are pushed to build a small piece of technology that somebody with a lot of money wants built cheaply. As the engineer and writer Alex Payne put it, these startups represent “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions,” doing low-overhead, low-risk R&D for five corporate giants. In such a system, the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design.
What the hell does this even mean? If start-ups are “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions” then employees of a public company are a distributed workforce assembled by shareholders. This is obviously not literally true, so what point is the author trying to make here?

the real disillusionment isn’t the discovery that you’re unlikely to become a billionaire; it’s the realization that your feeling of autonomy is a fantasy, and that the vast majority of you have been set up to fail by design

Of course the vast majority of "world-changing" ideas aren't going to work on their own. Even most modestly ambitious companies fail in the first year. Try to open an ice cream store – odds are, it will fail. This isn't some unique form of capitalism only practiced in San Francisco.
posted by deathpanels at 8:27 PM on April 25 [3 favorites]


Slap*Happy: "Yes. Previous SV busts (yes, 2001 was not the first) took down the national economy with it."

Compared with 2008, the 2001 recession / dotcom collapse was fairly self contained, and pretty light. There were only two quarters of negative GDP, and they were not even consecutive. And that was with 9/11 and Enron. Yes, it'll suck if you work for a startup that can't get the next round of financing it needs, and some people in SF will lose substantial savings. But I believe the VC's private partnership and focus on startups will isolate the effects from the broader economy. In contrast, if large investment banks with a diversity of financial functions (home mortgages, IPOs, bond issues, overnight lending) are holding shadow portfolios of worthless startups that make lending partners question whether they're bankrupt on paper, a startup collapse could jeopardize otherwise stable parts of the economy that depend on financing.

Of course, I look forward to the next ProPublica / This American Life collaboration proving me wrong ;)
posted by pwnguin at 8:53 PM on April 25 [3 favorites]


How the Internet Ecosystem Works
posted by homunculus at 9:46 PM on April 25 [2 favorites]


The amazing, mind-blowing thing about this to me is that these are all Internet companies. They're all working with, and in many cases building, technologies that allow people to work and collaborate from anywhere in the world. So why don't they use it? Why do these people need to all pack into the same city, living in flop houses and burning up their seed capital to pay rent?
posted by heathkit at 11:08 PM on April 25 [9 favorites]


A few reasons I can think of, which may or may not be true:

1) The act of actually writing code can be done anywhere, but pretty much everything else either needs to be done in person or benefits from being done face-to-face. That includes the mundane, like the daily stand-up meeting where you go over what you coded yesterday and what you plan to tackle today, and the important, like business meetings and fundraising and whatnot. Obviously not everything is done in person, but even being in the same time zone for a phone conversation is a benefit.

2) The types of people drawn to startup culture are also drawn to big cities with lots of action. Hell, lots of people in general are drawn to big cities with lots of action. More people to network with, more places to have fun, more ways to spread your (assumed) wealth, more hipster shops to buy stuff from, and so on. Being rich and successful in San Francisco has a cachet that being rich and successful in Des Moines does not. (Sorry to pick on you, Des Moines.)

3) Being around so many people like you has its own benefits. Services appear to cater to people like you. Running into like-minded people leads you to new opportunities for collaboration. Being around people like you means not being around people who aren't like you, who don't understand what you do, who don't understand why what you do is supposed to be important or disruptive or whatnot.

That's all just speculation. But obviously I think these are reasonable theories, so hopefully I'm right!
posted by chrominance at 11:30 PM on April 25 [2 favorites]


Why do these people need to all pack into the same city

The reason that startups make sense in the valley are mostly mundane.

You don't get do-overs and are on a tight schedule and thus communication is paramount - both in terms of ease and in terms of overhearing and so on. So locality matters a lot.

No matter how much you think you have covered, chances are there is some skill set that you missed. If you're in Idaho, how many of that resource are there? Three? And do they know they are rare? And finding that missing resource when you need it how long does it take?

As it turns out, while valley salaries are high, in talent poor areas it turns out that the real talent is no less expensive than in the valley. A friend who did a startup in Austin ran into this, and Austin is considered a tech town. The really good guys were just as expensive in Austin as in the Valley even if the average talent is far cheaper. Again, they know they're rare.
posted by rr at 12:13 AM on April 26 [1 favorite]


Reminds me of what it used to be like to go to Hollywood and try to become a star for a big studio. Same thing in terms of odds and how your "career" ends up not belonging to you.
posted by Vibrissae at 12:38 AM on April 26


What the hell does this even mean? If start-ups are “the field offices of a large distributed workforce assembled by venture capitalists and their associate institutions” then employees of a public company are a distributed workforce assembled by shareholders. This is obviously not literally true, so what point is the author trying to make here?

Doing a start up is hugely risky, and stressful. As the dude points out, these two guys had had successful careers. They have wives and girlfriends. Now they're working 18 hours chewing Tums like smarties and living on Ramen, and for what? For the lottery ticket, in part. But also for the chance to do something meaningful to them, to build something from an idea into a functioning company and own that. That's the thing that inspires highly successful, driven people to sacrifice so much to go out there and do this. What the author is pointing out us that that feeling of ownership is largely an illusion, because the people who control the purse strings have a tremendous amount of power to shape what kind of companies can actually be built, and they're only really interested in funding things they can already tell could help their own core businesses. So effectively these startups are doing the work that, in the 1960s, would have been done by a company's internal Research and Development department. Except instead of getting paid a generous salary to do intellectual challenging work and getting a gold watch and a pension at the end of it, you maybe get millions if one of the big boys likes your product, and if they don't you get nothing but a drained bank account and a gap on your resume.
posted by Diablevert at 4:37 AM on April 26 [4 favorites]


Why do these people need to all pack into the same city

Working remotely is only for things that don't matter, like education.
posted by Ralston McTodd at 5:26 AM on April 26 [2 favorites]


The amazing, mind-blowing thing about this to me is that these are all Internet companies. They're all working with, and in many cases building, technologies that allow people to work and collaborate from anywhere in the world. So why don't they use it? Why do these people need to all pack into the same city, living in flop houses and burning up their seed capital to pay rent?
First of all, San Francisco is a ridiculous bubble-driven housing market on par with NYC. Why spend $2500 a month to live in a closet when you could have a whole house for only $600 a month in remote parts of the Midwest? It doesn't make any sense rationally to pay that kind of money for rent, if you're a robot looking for an apartment anywhere in the United States, but people working in a certain industry tend to relocate to industry centers for very good reasons.

In this economy, you don't advance your career by staying with the same company for ten years and slowly climbing the ladder. Jumping between companies every 3-5 years, perhaps more often in some industries, is the way to move up, particularly for young people. Companies just do not put the kind of resources into career development and training that they used to, so if you land your first job at some software company and work there for a few years, you're likely to hit a plateau in terms of challenge and pay.

We also live in chaotic times, where layoffs are not distant apocalyptic events but regular occurrences. There was a round of layoffs two months into my first full-time job out of college (which I, thankfully, survived). My friend just got laid off from a job he started a month ago. Employers don't care. We are all hired guns to them. Remote employees are more likely to be laid off because it's so damn easy to get rid of them. Just stop sending them checks and they disappear. Poof.

Hence the danger of working remotely, hundreds of miles from the nearest large city. You might land a great remote job today, but if/when you get laid off tomorrow, you will have a terrible time trying to find a replacement job. If you live in or near a major industry center, you at least have a large pool to choose from when the bottom drops out. You're also much more likely to find a job through a friend, and if you don't live where you work, you won't make many friends at work.

So there's the job security angle. Also, not all startup employees are engineers. Business people need to be near the types of places where they can make deals to grow the business. Otherwise you rack up more expenses flying to places like SFO to meet with so-and-so from such-and-such. Business people tend to like having the engineers in the same office they're in for obvious reasons – accountability, ease of communication, and that old human bias of trusting a familiar face.

I don't know, reading the comments on this thread makes me think either everyone here is a bitter former start-up employee or none of you have ever set foot in one and are getting all your information from Mike Judge. A lot of perfectly sane, rational, professional people like working for start-ups, and not all of them are based in Frisco. For me, working for a small company beats the hell out of filling out timesheets and answering to some manager of middling intellect in a massive conglomerate. Sure, you can't work on literally whatever you want, because that is not how jobs work, but I have built important tools in a few hours at work that actually make my coworkers lives easier, and I have found that kind of work environment to be very nourishing for my soul compared to many of the alternatives.
posted by deathpanels at 6:15 AM on April 26 [6 favorites]


This is a topic that makes MetaFilter look like glorified newspaper comment section. I have to keep reminding myself that despite the borderline hateful comments (some of which have thankfully been deleted), MetaFilter is still the group of love able people with insightful views on many and varied topics.

It's also worth pointing out that there are people who like working at startups, and those that like working at large corporations, and there can be surprisingly little overlap between the two. At mega corp, you have a narrow, well defined task, whereas at the startup, you're doing everything that needs to be done and it's going to be changing.

Some of us thrive on the new experiences, the change, the unexpected, and some people thrive in a different environment. I remember trying to recruit one scientist that was not the startup type, and even after three beers and as many hours, neither of us had made any progress in convincing the other about where we were coming from. Only today can I look back and start to see that he saw more security in a large organization that had been around a long time, even if he was not more likely to have more job security than at a startup. It's the big name that counts, that gave prestige, whereas when he said he was working at a small company nobody had heard of, he'd get blank stares from friends and family. We just did not share the same set of values at all when it came to work environments.

I read this story, and see a slog, but it is also an adventure. Compare pitching your startup to writing a grant proposal, or going through corporate channels, and pitching wins every single time, in my book. It's interactive, it's exciting, it's high pressure but simultaneously low pressure, because any individual pitch is unlikely to work, but you only need a few out of many.

If one wants to build something new, there are few more exciting or fulfilling ways than doing it like this. You may have to bend a bit to investors, but that's only if you don't already have customers paying you, and if you can't convince your investors and you haven't convinced customers yet, perhaps it's not a bad thing to work together with the investor in the vision, rather than being unbending. This is all exchange, one doesn't get to demand a pool of money to play with and build with, so go back and forth and work together.

If this article painted a bleak picture with no upside, then perhaps this is not the path for you. Because the whole thing with taking risks is that you will feel those risks looming over you and sometimes the bad does happen. But there's also a freedom and a joy in confronting those risks and overcoming them, and in building something despite all the challenges. There's a joy in finding great people to work with, and then actually making something together. There's a freedom in being able to choose what you're working on, how you go about it, and in realizing that you can confront some new task, whether it's keeping the books or finding a trustworthy manufacturer of widgets for that key part in your product. And there are dark times and days or weeks filled with self-doubt and dread, but it's not all of it. Make all the snide comments you want about people being subject to the raw side of capitalism, and the SV VCs certainly are cut throat and vicious but as a whole they're practically socialists when compared to VCs in other areas. Early Silicon Valley companies were accused of being communist for how they distributed equity to mere employees. This is, sad to say, the closest example of anarcho-syndicalism in a community that I've found (though I would welcome counter examples!)

There are those who build great things without going through the wringer, like mathowie with MetaFilter. And there are exploitive startup situations that are terrible deals for employees or founders or both, but it's certainly not all of them, and we're in a happy time when there are enough productive startups that there's no reason to stick around at the exploitive ones, and the tech field is one of the least exploitive in the economy, a field where increased productivity and profits meant increased wages for labor.

So snark away, MetaFilter. This startup scene may seem bad, but it's not as bad as my previous endeavor, academia, which is a far more exploitive pyramid scheme with an elite class that actually read and teaches Marx yet seems incapable of applying those intellectual tools onto the situation with their own graduated student labor force.
posted by Llama-Lime at 7:40 AM on April 26 [6 favorites]


The really good guys were just as expensive in Austin as in the Valley even if the average talent is far cheaper.

So, if you are one of the "really good guys" then you can take home more money in Austin than SF. Unless you happen to be able to cash out enough on equity from your startup succeeding.

but I have built important tools in a few hours at work that actually make my coworkers lives easier

It seems like the idea that this opportunity is only available in specific places and only in startups is odd. This type of thing happens in companies all across the country every day.

I would be interested in reading some reporting about the varieties of companies starting in the valley. The differences would be interesting, especially tracked over time. Any sources for this type of thing?
posted by dglynn at 8:27 AM on April 26


Some of us thrive on the new experiences, the change, the unexpected

It's only recently that startups have become synonymous with change and innovation. Remember Bell Labs? Xerox PARC? The creation of the Internet? I remember when Steve Jobs and Dennis Ritchie died around the same time and everyone was talking about the awesome "start a business out of your garage" narrative; inventing C from your nice safe job at a big lab is the kind of story that's out of fashion right now, but there's nothing inherently less innovative about that kind of environment. We've scrapped the model that got us the transistor, Unix, and the Internet, we've conflated taking intellectual risks with taking risks with your finances, health, family, and future, and we have a bunch of social messaging apps to show for it.
posted by Ralston McTodd at 8:54 AM on April 26 [23 favorites]


Wow, do you really think that's remotely true? Such afactual posturing is very deceptive. There are equivalents of Bell Labs and Xerox PARC in Microsoft Research and other places. There are solid, infrastructural technology startups that get lots of funding, but perhaps not the media. Right now the Internet is the big media story, we're riding a wave of consumers having easy access everywhere, and social consumer apps get reported more because that's what the media has decided to report. Whose fault is that?

It's a huge mistake to conflate lurid media reports and the hype cycle of VCistan for everything that's going in Silicon Valley. There are plenty of startups where nobody risks their entire finances, health, or family, or future, while still taking the risk of getting a standard salary or not. There are places where brogrammers are not welcome, or not allowed to dictate culture. There are plenty of startups building foundational technology that the startups of the future will use.

And frankly, Bell Labs and Xerox PARC were far more exploitive of the innovators than the current crop of VCs. Bell Labs would give you a standard salary, maybe with a minor bonus, while capitalists at the top made a fortune.
posted by Llama-Lime at 10:06 AM on April 26 [1 favorite]


And just underscore how wrong those impressions are, the startup out of a garage was Hewlett and Packard, which was Steve Jobs inspiration. That was 1938.
posted by Llama-Lime at 10:23 AM on April 26 [1 favorite]


It's a huge mistake to conflate lurid media reports and the hype cycle of VCistan for everything that's going in Silicon Valley. There are plenty of startups where nobody risks their entire finances, health, or family, or future, while still taking the risk of getting a standard salary or not. There are places where brogrammers are not welcome, or not allowed to dictate culture. There are plenty of startups building foundational technology that the startups of the future will use.

I don't think any of the snark are negativity is being directed at startups like this. Whether fair or not, VCistan and brogrammers are getting an outsized representation in the media, and that's shaping how people view Silicon Valley.

But the startup where knowledgeable experts get together, build something new, and try to turn that into a business? I don't think anyone has a problem with that. But that's also not the store you tend to see on TechCrunch or Hacker News, and it's not the kind of bussiness that gets bought by Facebook for billions of dollars and makes headlines.

I think pretty much everyone in this thread that's hating on "startups" is really hating on VCistan, and specifically the predatory model of startup that doesn't distribute significant equity to employees and thrives on hype and promises of riches.
posted by heathkit at 10:50 AM on April 26 [2 favorites]


There are equivalents of Bell Labs and Xerox PARC in Microsoft Research and other places.

Microsoft Research has about 1100 researchers "across the world". Bell Labs had 30,000 employees in 2001 before it collapsed to about 1000 (I can't find anything on how many were researchers).
posted by Ralston McTodd at 11:24 AM on April 26 [3 favorites]


All other things being equal, I'd rather work as part of a team growing a small business, and I think that's apparent in my work history -- I've worked for three startups and contracted for two more. I agree that there can be a lot of energy, a lot of exhilaration involved in being part of building things up, and an opportunity to wear a lot of hats. I've recently interviewed with two startups. If they make the right offer, I may end up working for either of them.

But I'm also a critic. And glad that other critics are showing up and taking a bit of shine off the apple. It strikes me as true that in the internet/software startup world, the autonomy often runs from elusive to illusory, that most of the gains aren't going to the employed talent and you're lucky if your compensation ends up being market-competitive, that the risks founders take often aren't rewarded, and that much of the new stuff being created is more incremental than revolutionary where it's useful at all.

Several years ago when Will.I.Am was reported as saying "programmers are the new rock stars" I remember initially thinking this was laughable -- that there's no way that programmers as a category had really reached the level of celebrity and success that literal rock stars have. On some reflection, though, I realized that it's true that the garage company has achieved some degree of parity in the popular imagination/experience with the garage band.

And along with that, there's a parallel in the experience of those involved startups: it's sure a lot more fun to make music than it is to work a typical desk job, particularly with a group of bandmates that you like, and when you're young and ambitious, or possessed of a trust fund or other socioeconomic capital, or perhaps even just skilled and driven, why *not* try it out as a way of making it in the world?

But then again, perhaps there are parallels between the VCs and the labels.
posted by weston at 3:53 PM on April 26 [1 favorite]


The Most Expensive Lottery Ticket In The World
posted by weston at 5:01 PM on April 26


It's only recently that startups have become synonymous with change and innovation. Remember Bell Labs? Xerox PARC? The creation of the Internet? I remember when Steve Jobs and Dennis Ritchie died around the same time and everyone was talking about the awesome "start a business out of your garage" narrative; inventing C from your nice safe job at a big lab is the kind of story that's out of fashion right now, but there's nothing inherently less innovative about that kind of environment. We've scrapped the model that got us the transistor, Unix, and the Internet, we've conflated taking intellectual risks with taking risks with your finances, health, family, and future, and we have a bunch of social messaging apps to show for it.
Consumer facing brands get all the media attention because they play better with a knuckle-dragging primetime audience. There are plenty of startups dealing with big enough problems that will require the invention of significant technology. The recent wave of massive web companies has already given us interesting distributing computing technology, but you won't hear about it on CNN.
posted by deathpanels at 5:15 PM on April 26 [3 favorites]


I think what a lot of people think when they hear the words "Silicon Valley start-up" is "really? several billion dollars for a photo-filter company when the plant down the road profitably (if not insanely so) making wheel bearings just closed?"

Tech people are still confusing "eyeballs" and "users" with "sustainable". The Great Unwashed has shown time-and-again that while they may pay a token amount for some online services, they also will abandon them overnight to use a different service. If your company can be valued at $10B on May 1 and $10M on May 31, you're definitely not really worth $10B.

In this age of extreme wealth for a very few, it's pretty awful to hear about a "fart app" start-up purchased for $1B when, for a lot of us, even making in real dollars what we were making 10 years ago would be nice. In 1999 I made just as a number, 60% more than I make today, and with inflation that has to be more like I made twice what I make now back then.

The most annoying thing about start-ups is they seem to spawn libertarian douchebags by the dozen who mistake their "fart app brilliance" with actual smarts when it comes to society and government. Sigh...
posted by maxwelton at 7:05 PM on April 26 [4 favorites]


pwnguin: " the 2001 recession / dotcom collapse was fairly self contained, and pretty light. There were only two quarters of negative GDP, and they were not even consecutive. And that was with 9/11 and Enron."

Yes, but the larger economy got significant cash injections. The Bush II regime was busy spending/redistributing the Clinton federal surplus, and then running large deficits, while the Federal funds rate plummeted from just above 6% to 1%. Regulatory changes eased obtaining and then securitizing mortgages, which also injected vast amounts of cash into the economy.

Freshly deploying those strategies is not an option now.
posted by meehawl at 7:31 PM on April 26


I think what a lot of people think when they hear the words "Silicon Valley start-up" is "really? several billion dollars for a photo-filter company when the plant down the road profitably (if not insanely so) making wheel bearings just closed?"

Those wheel bearing can get made anywhere and probably get made a lot cheaper outside of the US. For better or worse no one outside of the US has the same track record of creating internet-based businesses. Some kid in jakarta could have created Instagram but they didn't.

In contrast to my cranky somewhat anti-VC comment earlier, the good news is that valley still creates "real" companies from time to time - the last bubble gave us VMWare which revolutionized server management. Who knows which companies from this bubble will end up becoming seminal. And these application companies that seem trivial are actually putting the latest infrastructure technologies into practice. It seems odd but the instagrams and whatsapps of the world are who lay the groundwork for sites like healthcare.gov.
posted by GuyZero at 10:50 PM on April 26


Some kid in jakarta could have created Instagram but they didn't.

Surely this is just straight-up American Dream philosophy?
posted by colie at 10:43 AM on April 27 [1 favorite]


We've scrapped the model that got us the transistor, Unix, and the Internet, we've conflated taking intellectual risks with taking risks with your finances, health, family, and future, and we have a bunch of social messaging apps to show for it.

This is not true on a number of levels.

1. Software engineering is not chemical engineering or materials science. The comparison to Bell Labs is, I think, a non sequitur. The comparison to Xerox PARC is better, but I think also misguided — Xerox kicked off this whole damn thing we're living through now. Complaining that we don't have another Xerox PARC is like complaining that we don't have another Dylan — we'll have another XP when we are again poised at the beginning of a technological revolution, not when we are 30 years into it.

2. There is a lot of innovation that's happening in big companies. The thing is a) it's "boring" innovation: new front-end frameworks, new databases that speed up complex queries, etc, and b) the work is often given away for free.

3. An analog to Bell Labs would be if Google created AngularJS and decided to license the tech instead of giving it away for free. The fact that they do not has to do with both the nature of the tech (trying to keep your front-end JS framework from the world is self-defeating) and the culture of the software engineering world.

4. Startups leverage this innovation to create new things. Those social messaging apps you deride are often built on the backs of the newest and coolest tech.


Also, critically, painting all of the output of Silicon Valley as "a bunch of social messaging apps" is a total BS narrative. There are lots of social messaging apps, sure, but there are so many other kinds of companies/apps/products being created out here. I'm working with a company building a web app for a pretty small industry that is currently stuck in the dark ages vis-a-vis tech. We're not going to be in your local paper or splashed across TechCrunch. But we're building on top of the best/newest (not always the same of course) tools and have a decent chance of changing some folks' lives for the better.

There's lots of folks like us out here.

I can't say this enough: don't buy the hype.
posted by wemayfreeze at 11:46 PM on April 27 [3 favorites]


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