14 ms·

What does it mean for American innovation to be backed by oil wealth?

199 points by dsr12 7y ago

timwayne16 7y ago
I need karma)
krn 7y ago
> Uber. WeWork. Flexport. Slack. MapBox. DoorDash. What do all of these hip American companies have in common, other than appearing regularly in tech headlines (and, now, being leading indicators of a tech bubble)? > They are - or were at one point - all backed by SoftBank’s Vision Fund, an enormous venture capital fund run by Softbank, a Japanese holding company. If many of these startups might not have reached IPO without the investments by Softbank, then maybe they don't have such a good business model after all? At least, that's my first thought after thinking what Uber and WeWork have in common.
- m_ke 7y ago
  Unfortunately most of the companies in this generation of "unicorns" are being pumped and dumped by VCs. This idea that you can buy your way to a monopoly, get large market share like Amazon and Google,then figure out how to profit from your position in the market will backfire spectacularly and public investors will have to pay for it.
  - ISL 7y ago
    have to is a strong statement. Public investors need not buy a single share of a mis-valued stock.
    - human20190310 7y ago
      I'm genuinely impressed with the public's judgment on this; Uber's stock is generally falling, and Slack is settling into the same trajectory.
    - cloakandswagger 7y ago
      That's the problem: Approximately half of the US stock market is made up of passive funds like index trackers which make up a large percentage of American 401k and retirement plan portfolios. As soon as a company IPOs they enter into the portfolio of millions of passive investors, who unwittingly become bagholders for companies like Uber and WeWork that have no sound fundamentals or viable business model. The market has become very distorted due to this and a myriad of other reasons. Everyone is gunning to find the next winning unicorn lotto ticket without any regard for fundamentals in a sort of collective pump-and-dump scheme. Thankfully there was a glimmer of rationale with Uber and Lyft's failed IPOs, and I expect WeWork's will be even more disappointing.
      - rmah 7y ago
        Major market index funds do not buy into recently IPO'd stocks because such stocks are not in major market indexes. While pension funds may buy in a little, most will not because recently IPO'd stocks are considered highly volatile and thus outside the remit of their investment objectives. Everyone is not gunning to find the next "unicorn lotto ticket". Lots are, but they are a minority of the money in the equity markets. Further, the equity markets are much smaller than the debt markets (i.e. bonds) these days. Do not mistake press attention (they go after the exciting stories) for actual market activity.
        tomp 7y ago
        Last but not least, some indexes (e.g. S&P 500) have recently changed requirements so that most tech IPOs (which usually have two classes of stocks, one "insider" class that has a lot of votes, and one "general" class that has few (if any) votes) would be ineligible (existing members of the index were grandfathered in).
      - wbl 7y ago
        Index funds don't move capital allocations. Active investors do.
      - m_ke 7y ago
        Even before the IPO you have VC firms raising billion dollar funds from pension funds and endowments to pump up their donkeys. A down round doesn't really matter when you're taking a 2.5% management fee on billions of dollars.
  - Ididntdothis 7y ago
    “This idea that you can buy your way to a monopoly, get large market share like Amazon and Google,then figure out how to profit from your position in the market” This idea doesn’t seem to go away. In the 90s it was the same. Whoever would sell dog food on the internet first would own the market and keep it forever. Reality turned out differently.
    - AndrewKemendo 7y ago
      The scale is what changes. In the 90s it was a single website for a single product line. That model got disrupted by the "platforms" which dominate. It's unclear what is going to disrupt platforms.
      - Ididntdothis 7y ago
        Probably smaller, leaner players will disrupt things like Uber. They have way too much money to spend to be efficient.
- deleted 7y ago
  [deleted]
mc32 7y ago
Saudi wealth is seeking to diversify, so its using its patrimony to seek alternative income streams to oil. So good for Saudis. This fund is seeking opportunity in many places, among them SV. That’s also a good thing, for the most part. In short, I don’t see it being so negative that it comes from oil. It’s funneling research away from oil
- luckylion 7y ago
  > I don’t see it being so negative that it comes from oil. I don't believe that's the actual problem. If it was Norway investing its oil money, this wouldn't be an issue. It's oil money from a state that is very much not aligned with the values SV companies claim.
  - jonfw 7y ago
    I guess you and I have different ideas about SV company values! I think that SV has very lax attitudes on censorship and data collection, and frankly I think that some of these companies practices would be much better accepted by the ruling parties Saudi Arabia than in most of America
    - luckylion 7y ago
      Possibly. But the values they claim are very different from the Saudi values. I'm not here to judge whether they are virtuous or not, just pointing out that the article wasn't about "oil money" as "money made from oil" but specifically about oil money coming from countries that are openly opposed to the values SV claims to stand for. I'm sure that the argument would be the same if the money SA invests didn't stem from their oil exports but from Hajj tourism.
  - bennylope 7y ago
    Are those SV companies aligned with the values they claim?
- save_ferris 7y ago
  You don’t see it as a negative that SV has received billions in investment money from a Saudi prince who had a journalist brutally dismembered in the Saudi embassy in Istanbul?
jofer 7y ago
One thing to point out: Oil is still _huge_ when it comes to investment and sheer amount of financing available. Anything involving large-scale finance will have oil money involved in it in some way. Frankly, even at the height of the tech boom, the tech industry has never had significant capital available compared to the oil industry. I've worked in both... Folks in tech think 100 million in capital is a lot. In oil, that doesn't even qualify as a project that needs sign-off by upper management. (The last project I managed had a ~$200 million per year budget. I was a low-level peon 5 years out of grad school in charge of it because it wasn't considered a large enough project budget-wise to give to someone experienced. There are a few caveats around this -- the discretionary budget was on the order of 10 million and the rest was fixed through long-term contracts, but still...) Significant investments in the energy industry are measured in tens of billions per project. Profits from each of those projects are in the trillions, but spread out over 20-100 years. As a result, a big chunk of the finance industry is directly or indirectly tied to oil. There aren't many funds that don't have money somehow invested in or sourced from the energy industry.
- throwaway66920 7y ago
  I was at an iron works a while back where I learned that an industrial grade blast furnace was, ballpark, $100 billion. This was built 100 years ago. That day I decided I just didn’t and wouldn’t ever understand capital markets.
  - markbnj 7y ago
    > I learned that an industrial grade blast furnace was, ballpark, $100 billion. That seems like a very large number for the construction of any industrial installation. Just poking around the net the numbers I found were $220/ton of pig iron produced, and another source that claimed a $2.5b cost in 1980 and $5b today. If the $220/ton figure is accurate a $100b blast furnace would be producing 455m tons of pig iron a year. According to wikipedia a modern furnace can produce about 5-6m tons per year.
  - dekhn 7y ago
    that doesn't make any sense. the capital to build, and operating expenses, aren't anywhere near $100B (direct costs). $100M makes more sense.
otterley 7y ago
TL;DR: Saudis invest in VC funds; we don't really know what specific impact that has on the funds' or recipients' behavior.
novon 7y ago
Kind of short-sighted that the US government is essentially giving the keys to AI innovation and the military (check POTUS’ latest tweets) to Saudi Arabia’s blood hungry elite. More reasons to use what remains of our democracy to change course.
sharadov 7y ago
Salman knows that the future is tech, and he's doing the strategic thing by moving Saudi money into other industries and outside of the country.
- theklub 7y ago
  “My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel”
  - codeulike 7y ago
    Had to look that up, interesting. https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum
rossdavidh 7y ago
Comes close to an important point, and then misses it completely. The problem is not that Saudi money would get them influence at new U.S. tech companies. The problem is that Saudi money is getting pushed into "tech" companies that have unsustainable business models, and this is sucking all the oxygen (e.g. available developers) from other projects that could accomplish more. Imagine two startup ideas. One, could be profitable, and eventually turn into a $100million company that does something useful. The other, will never be profitable, but makes promises of being worth $40billion. Which one gets the (inexperienced VC) money? The second. Which one would be a long-term bonus for the U.S. economy? The first. That is the problem; too much money from Softbank (much of that from S.A.) pushes all the developer and other resources into goofy ideas that will end up going bust, instead of more rational ideas that could be long-term useful.
- golergka 7y ago
  Well that just means that a rational investor would make a killing amid this chaos, wouldn't he? So, we have to assume that for the last decade, not a single VC in the industry have been rational enough to pick up easy money everybody else is overlooking?
  - wayoutthere 7y ago
    There has been too much easy money flying around the VC world for the last 30 years that people have literally forgotten how to operate any other way. People have lived entire careers in this environment, so the rational move for them is the current status quo. But the paradigm is shifting. Where will we end up? My money is on early 20th century style oligarchic capitalism, but that’s not a very appealing proposition for a lot of people.
    - tossAfterUsing 7y ago
      > My money is on early 20th century style oligarchic capitalism I've been enjoying the historical context in this book. I'm not surprised to be liking the book, but i'm pleased to be getting a better understanding of what the early 20th century space was like. https://www.goodreads.com/book/show/36448501-the-bitcoin-standard https://www.goodreads.com/book/show/36448501-the-bitcoin-sta...
dekhn 7y ago
I second the author's recommendation to read The Prize by Daniel Yergin. Was very illuminating.
daksatech 7y ago
Not only is Saudi oil money flowing into SV; it's also been flowing into US higher education institutes and media companies. Some ways they buy influence with that oil money: https://www.opindia.com/2016/03/money-talks-and-walks-even-in-the-virtual-world-of-twitter/ https://www.opindia.com/2016/03/money-talks-and-walks-even-i...
codeulike 7y ago
This article is about Saudi Arabia, not about oil per se. Link should use the proper title of the article, which is "Silicon Valley runs on Saudi - What does it mean for American innovation to be backed by oil wealth?"
Hominum 7y ago
Oil wealth comes with a lot of baggage.
shay_ker 7y ago
A lot of FUD, but no evidence that Saudi investors are using their influence to make tech companies do bad things. If you follow the money, you'll likely find a questionable source. Americans benefit from US military raining drone strikes in other countries. By being an American citizen, are you tacitly approving drone strikes? No. By paying taxes that fund drone strikes, are you tacitly approving drone strikes? No. Taking Saudi investment is not tacit approval of their atrocities. There's certainly a higher level of geopolitical tension there, though. I don't really know what the US could to answer (make more money?), but I don't think the tech companies themselves can do much about this, they're mostly pawns in a larger game of chess. If the US wants to regulate these investments, then by all means. Lobby for that if you're really worried.
- wffurr 7y ago
  Actually, paying taxes that fund drone strikes on civilians means you have blood on your hands. I wish more people realized that...
  - prewett 7y ago
    That's a pretty unhelpfully polarizing statement for something that is a matter of opinion, or at least situational. Suppose you are a citizen of a country (through no choice of your own) that uses public taxes to <immoral action>. Further suppose that you have no ability to influence how your taxes are spent. You have to pay taxes, but it's not at all clear that you are morally complicit for the immoral actions taken with them. You could argue "well you shouldn't pay taxes". Well, then you lose your liberty via jail or worse. Is that better than being arguably morally complicit? And, are you putting your actions where your words are? Are you not paying your taxes, or are you accepting blood on your hands?
    - wffurr 7y ago
      I am voting against politicians who are pro-war, which is sadly almost all of them.
  - ibeckermayer 7y ago
jbottoms 7y ago
Innovation in America is essentially dead. First VC's don't know a good product when they see one, and they won't do due diligence on new products. So, they look to the tech companies that control the markets. Second, the services the tech giants are providing result in "soft GDP" dollars. We need VC's to be more community aware, and stop chasing cotton candy. WeWork is a rent seeker that has inserted another layer into the rental arbitrage process. That does not help the U.S. economy.
- ibeckermayer 7y ago
  What do you mean by “they look to the tech companies that control the markets”?
  - jbottoms 7y ago
    VC's want to keep their risks low, they are more like investment bankers than true VC's. If someone approaches them with a seemingly good idea, they will want to unload it after a development period and realize a 10:1 return. So, they will first talk with a couple of the big companies and try to "pre-sell" the concept without giving away too much of tge secret sauce. In essence, VC's are captive by the tech giants, just as are most professors, and university curriculums.
blunte 7y ago
The apparent carelessness with which Softbank throws its money around makes sense with this revelation. It's not so different from some of the really over-the-top projects funded by oil money with respect to real estate (particularly real estate "created" in the sea).
Animats 7y ago
Uber. WeWork. Flexport. Slack. MapBox. DoorDash. What do all of these hip American companies have in common, other than appearing regularly in tech headlines (and, now, being leading indicators of a tech bubble)? The big ones bought market share by losing money? Uber is not a "tech company". Uber is a taxi company with delusions of grandeur. WeWork is a landlord.
- wil421 7y ago
  Uber’s lawyers would like a word with you. They aren’t a taxi company or in the business of ride sharing. Uber is a digital marketplace company. It’s laughable how delusional they are: >In fact, several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces. https://www.uber.com/newsroom/ab5-update/ https://www.uber.com/newsroom/ab5-update/
isoskeles 7y ago
> But, if we do some major, major rounding, and assume that the tech industry is the sum of its top companies, at $1 trillion/year, $45 billion is about 5% of the industry. > So, what happens when 5% of any industry is controlled by parties that are not direct shareholders? This seems like an odd comparison to force arrival at a number as high as "5%", not including the rounding. Why would you compare a single investment of $45B to annual revenue? Control would imply ownership, so I'd expect the comparison to be to the summed market cap of those companies, which is obviously higher than $1T.
eeZah7Ux 7y ago
Billionaires investing on "unicorns" aka buying monopolies means increasing inequality. It the whole point of their strategy. Uber is an especially good example.

199 points by dsr12 7y ago

I need karma)

krn 7y ago

> Uber. WeWork. Flexport. Slack. MapBox. DoorDash. What do all of these hip American companies have in common, other than appearing regularly in tech headlines (and, now, being leading indicators of a tech bubble)? > They are - or were at one point - all backed by SoftBank’s Vision Fund, an enormous venture capital fund run by Softbank, a Japanese holding company. If many of these startups might not have reached IPO without the investments by Softbank, then maybe they don't have such a good business model after all? At least, that's my first thought after thinking what Uber and WeWork have in common.

m_ke 7y ago
Unfortunately most of the companies in this generation of "unicorns" are being pumped and dumped by VCs. This idea that you can buy your way to a monopoly, get large market share like Amazon and Google,then figure out how to profit from your position in the market will backfire spectacularly and public investors will have to pay for it.
- ISL 7y ago
  have to is a strong statement. Public investors need not buy a single share of a mis-valued stock.
  - human20190310 7y ago
    I'm genuinely impressed with the public's judgment on this; Uber's stock is generally falling, and Slack is settling into the same trajectory.
  - cloakandswagger 7y ago
    That's the problem: Approximately half of the US stock market is made up of passive funds like index trackers which make up a large percentage of American 401k and retirement plan portfolios. As soon as a company IPOs they enter into the portfolio of millions of passive investors, who unwittingly become bagholders for companies like Uber and WeWork that have no sound fundamentals or viable business model. The market has become very distorted due to this and a myriad of other reasons. Everyone is gunning to find the next winning unicorn lotto ticket without any regard for fundamentals in a sort of collective pump-and-dump scheme. Thankfully there was a glimmer of rationale with Uber and Lyft's failed IPOs, and I expect WeWork's will be even more disappointing.
    - rmah 7y ago
      Major market index funds do not buy into recently IPO'd stocks because such stocks are not in major market indexes. While pension funds may buy in a little, most will not because recently IPO'd stocks are considered highly volatile and thus outside the remit of their investment objectives. Everyone is not gunning to find the next "unicorn lotto ticket". Lots are, but they are a minority of the money in the equity markets. Further, the equity markets are much smaller than the debt markets (i.e. bonds) these days. Do not mistake press attention (they go after the exciting stories) for actual market activity.
      - tomp 7y ago
        Last but not least, some indexes (e.g. S&P 500) have recently changed requirements so that most tech IPOs (which usually have two classes of stocks, one "insider" class that has a lot of votes, and one "general" class that has few (if any) votes) would be ineligible (existing members of the index were grandfathered in).
    - wbl 7y ago
      Index funds don't move capital allocations. Active investors do.
    - m_ke 7y ago
      Even before the IPO you have VC firms raising billion dollar funds from pension funds and endowments to pump up their donkeys. A down round doesn't really matter when you're taking a 2.5% management fee on billions of dollars.
- Ididntdothis 7y ago
  “This idea that you can buy your way to a monopoly, get large market share like Amazon and Google,then figure out how to profit from your position in the market” This idea doesn’t seem to go away. In the 90s it was the same. Whoever would sell dog food on the internet first would own the market and keep it forever. Reality turned out differently.
  - AndrewKemendo 7y ago
    The scale is what changes. In the 90s it was a single website for a single product line. That model got disrupted by the "platforms" which dominate. It's unclear what is going to disrupt platforms.
    - Ididntdothis 7y ago
      Probably smaller, leaner players will disrupt things like Uber. They have way too much money to spend to be efficient.
deleted 7y ago
[deleted]

mc32 7y ago

Saudi wealth is seeking to diversify, so its using its patrimony to seek alternative income streams to oil. So good for Saudis. This fund is seeking opportunity in many places, among them SV. That’s also a good thing, for the most part. In short, I don’t see it being so negative that it comes from oil. It’s funneling research away from oil

luckylion 7y ago
> I don’t see it being so negative that it comes from oil. I don't believe that's the actual problem. If it was Norway investing its oil money, this wouldn't be an issue. It's oil money from a state that is very much not aligned with the values SV companies claim.
- jonfw 7y ago
  I guess you and I have different ideas about SV company values! I think that SV has very lax attitudes on censorship and data collection, and frankly I think that some of these companies practices would be much better accepted by the ruling parties Saudi Arabia than in most of America
  - luckylion 7y ago
    Possibly. But the values they claim are very different from the Saudi values. I'm not here to judge whether they are virtuous or not, just pointing out that the article wasn't about "oil money" as "money made from oil" but specifically about oil money coming from countries that are openly opposed to the values SV claims to stand for. I'm sure that the argument would be the same if the money SA invests didn't stem from their oil exports but from Hajj tourism.
- bennylope 7y ago
  Are those SV companies aligned with the values they claim?
save_ferris 7y ago
You don’t see it as a negative that SV has received billions in investment money from a Saudi prince who had a journalist brutally dismembered in the Saudi embassy in Istanbul?

jofer 7y ago

One thing to point out: Oil is still _huge_ when it comes to investment and sheer amount of financing available. Anything involving large-scale finance will have oil money involved in it in some way. Frankly, even at the height of the tech boom, the tech industry has never had significant capital available compared to the oil industry. I've worked in both... Folks in tech think 100 million in capital is a lot. In oil, that doesn't even qualify as a project that needs sign-off by upper management. (The last project I managed had a ~$200 million per year budget. I was a low-level peon 5 years out of grad school in charge of it because it wasn't considered a large enough project budget-wise to give to someone experienced. There are a few caveats around this -- the discretionary budget was on the order of 10 million and the rest was fixed through long-term contracts, but still...) Significant investments in the energy industry are measured in tens of billions per project. Profits from each of those projects are in the trillions, but spread out over 20-100 years. As a result, a big chunk of the finance industry is directly or indirectly tied to oil. There aren't many funds that don't have money somehow invested in or sourced from the energy industry.

throwaway66920 7y ago
I was at an iron works a while back where I learned that an industrial grade blast furnace was, ballpark, $100 billion. This was built 100 years ago. That day I decided I just didn’t and wouldn’t ever understand capital markets.
- markbnj 7y ago
  > I learned that an industrial grade blast furnace was, ballpark, $100 billion. That seems like a very large number for the construction of any industrial installation. Just poking around the net the numbers I found were $220/ton of pig iron produced, and another source that claimed a $2.5b cost in 1980 and $5b today. If the $220/ton figure is accurate a $100b blast furnace would be producing 455m tons of pig iron a year. According to wikipedia a modern furnace can produce about 5-6m tons per year.
- dekhn 7y ago
  that doesn't make any sense. the capital to build, and operating expenses, aren't anywhere near $100B (direct costs). $100M makes more sense.

otterley 7y ago

TL;DR: Saudis invest in VC funds; we don't really know what specific impact that has on the funds' or recipients' behavior.

novon 7y ago

Kind of short-sighted that the US government is essentially giving the keys to AI innovation and the military (check POTUS’ latest tweets) to Saudi Arabia’s blood hungry elite. More reasons to use what remains of our democracy to change course.

sharadov 7y ago

Salman knows that the future is tech, and he's doing the strategic thing by moving Saudi money into other industries and outside of the country.

theklub 7y ago
“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel”
- codeulike 7y ago
  Had to look that up, interesting. https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum

rossdavidh 7y ago

Comes close to an important point, and then misses it completely. The problem is not that Saudi money would get them influence at new U.S. tech companies. The problem is that Saudi money is getting pushed into "tech" companies that have unsustainable business models, and this is sucking all the oxygen (e.g. available developers) from other projects that could accomplish more. Imagine two startup ideas. One, could be profitable, and eventually turn into a $100million company that does something useful. The other, will never be profitable, but makes promises of being worth $40billion. Which one gets the (inexperienced VC) money? The second. Which one would be a long-term bonus for the U.S. economy? The first. That is the problem; too much money from Softbank (much of that from S.A.) pushes all the developer and other resources into goofy ideas that will end up going bust, instead of more rational ideas that could be long-term useful.

golergka 7y ago
Well that just means that a rational investor would make a killing amid this chaos, wouldn't he? So, we have to assume that for the last decade, not a single VC in the industry have been rational enough to pick up easy money everybody else is overlooking?
- wayoutthere 7y ago
  There has been too much easy money flying around the VC world for the last 30 years that people have literally forgotten how to operate any other way. People have lived entire careers in this environment, so the rational move for them is the current status quo. But the paradigm is shifting. Where will we end up? My money is on early 20th century style oligarchic capitalism, but that’s not a very appealing proposition for a lot of people.
  - tossAfterUsing 7y ago
    > My money is on early 20th century style oligarchic capitalism I've been enjoying the historical context in this book. I'm not surprised to be liking the book, but i'm pleased to be getting a better understanding of what the early 20th century space was like. https://www.goodreads.com/book/show/36448501-the-bitcoin-standard https://www.goodreads.com/book/show/36448501-the-bitcoin-sta...

dekhn 7y ago

I second the author's recommendation to read The Prize by Daniel Yergin. Was very illuminating.

daksatech 7y ago

Not only is Saudi oil money flowing into SV; it's also been flowing into US higher education institutes and media companies. Some ways they buy influence with that oil money: https://www.opindia.com/2016/03/money-talks-and-walks-even-in-the-virtual-world-of-twitter/ https://www.opindia.com/2016/03/money-talks-and-walks-even-i...

codeulike 7y ago

This article is about Saudi Arabia, not about oil per se. Link should use the proper title of the article, which is "Silicon Valley runs on Saudi - What does it mean for American innovation to be backed by oil wealth?"

Hominum 7y ago

Oil wealth comes with a lot of baggage.

shay_ker 7y ago

A lot of FUD, but no evidence that Saudi investors are using their influence to make tech companies do bad things. If you follow the money, you'll likely find a questionable source. Americans benefit from US military raining drone strikes in other countries. By being an American citizen, are you tacitly approving drone strikes? No. By paying taxes that fund drone strikes, are you tacitly approving drone strikes? No. Taking Saudi investment is not tacit approval of their atrocities. There's certainly a higher level of geopolitical tension there, though. I don't really know what the US could to answer (make more money?), but I don't think the tech companies themselves can do much about this, they're mostly pawns in a larger game of chess. If the US wants to regulate these investments, then by all means. Lobby for that if you're really worried.

wffurr 7y ago
Actually, paying taxes that fund drone strikes on civilians means you have blood on your hands. I wish more people realized that...
- prewett 7y ago
  That's a pretty unhelpfully polarizing statement for something that is a matter of opinion, or at least situational. Suppose you are a citizen of a country (through no choice of your own) that uses public taxes to <immoral action>. Further suppose that you have no ability to influence how your taxes are spent. You have to pay taxes, but it's not at all clear that you are morally complicit for the immoral actions taken with them. You could argue "well you shouldn't pay taxes". Well, then you lose your liberty via jail or worse. Is that better than being arguably morally complicit? And, are you putting your actions where your words are? Are you not paying your taxes, or are you accepting blood on your hands?
  - wffurr 7y ago
    I am voting against politicians who are pro-war, which is sadly almost all of them.
- ibeckermayer 7y ago

jbottoms 7y ago

Innovation in America is essentially dead. First VC's don't know a good product when they see one, and they won't do due diligence on new products. So, they look to the tech companies that control the markets. Second, the services the tech giants are providing result in "soft GDP" dollars. We need VC's to be more community aware, and stop chasing cotton candy. WeWork is a rent seeker that has inserted another layer into the rental arbitrage process. That does not help the U.S. economy.

ibeckermayer 7y ago
What do you mean by “they look to the tech companies that control the markets”?
- jbottoms 7y ago
  VC's want to keep their risks low, they are more like investment bankers than true VC's. If someone approaches them with a seemingly good idea, they will want to unload it after a development period and realize a 10:1 return. So, they will first talk with a couple of the big companies and try to "pre-sell" the concept without giving away too much of tge secret sauce. In essence, VC's are captive by the tech giants, just as are most professors, and university curriculums.

blunte 7y ago

The apparent carelessness with which Softbank throws its money around makes sense with this revelation. It's not so different from some of the really over-the-top projects funded by oil money with respect to real estate (particularly real estate "created" in the sea).

Animats 7y ago

Uber. WeWork. Flexport. Slack. MapBox. DoorDash. What do all of these hip American companies have in common, other than appearing regularly in tech headlines (and, now, being leading indicators of a tech bubble)? The big ones bought market share by losing money? Uber is not a "tech company". Uber is a taxi company with delusions of grandeur. WeWork is a landlord.

wil421 7y ago
Uber’s lawyers would like a word with you. They aren’t a taxi company or in the business of ride sharing. Uber is a digital marketplace company. It’s laughable how delusional they are: >In fact, several previous rulings have found that drivers’ work is outside the usual course of Uber’s business, which is serving as a technology platform for several different types of digital marketplaces. https://www.uber.com/newsroom/ab5-update/ https://www.uber.com/newsroom/ab5-update/

isoskeles 7y ago

> But, if we do some major, major rounding, and assume that the tech industry is the sum of its top companies, at $1 trillion/year, $45 billion is about 5% of the industry. > So, what happens when 5% of any industry is controlled by parties that are not direct shareholders? This seems like an odd comparison to force arrival at a number as high as "5%", not including the rounding. Why would you compare a single investment of $45B to annual revenue? Control would imply ownership, so I'd expect the comparison to be to the summed market cap of those companies, which is obviously higher than $1T.

eeZah7Ux 7y ago

Billionaires investing on "unicorns" aka buying monopolies means increasing inequality. It the whole point of their strategy. Uber is an especially good example.