13 ms·

The Problem With Silicon Valley Is Itself

299 points by jmjerlecki 15y ago

jonnathanson 15y ago
This article raises a lot of interesting, disquieting thoughts about the Valley and its startup/VC culture. But change isn't going to come from within, because there is no present incentive for change. Why should VCs stop pushing for quick acquisitions and exits, when they're making damned good money on those exits? Why should founders want to stray from the prevailing model, when the prevailing model minimizes their risk and increases their chances of big paydays (not to mention repeat performances)? In a lot of ways, today's system seems to be working remarkably well for its participants on both sides of the equation. Arguably better than previous iterations of Valley culture and systems have. It seems reasonable to hypothesize that the system is designed to reward its participants, and perhaps even at the expense of users or the "greater good" -- however narrowly or broadly we want to define that term. But this is just a hypothesis until we can substantiate it. Are there other regions, within and without the US, breaking SV's stranglehold on game-changing innovation? Has a competitive innovation-generating model arisen to challenge, if not shake up, the SV model? It's almost impossible to measure the success of SV's "greater good" on absolute terms, and as such, we must search for relativistic points of comparison. Measuring SV today versus What SV Could Be is fruitless without a tangible example of the latter, or else a prescriptive model of some sort.
- stcredzero 15y ago
  How about starting something like YC, but adapted for and conducted in emerging markets?
- ippisl 15y ago
  If you look at robotics(which is probably a game changing field as the PC or more), Boston is a big robotics cluster , Pittsburgh is another. silicon valley is definitely not a robotics leader.
  - protagonist_h 15y ago
    this is mostly because the best robotics labs are in that area (MIT and CMU) and guys like Rodney Brooks and Hans Moravec live in that area.
stcredzero 15y ago
It’s all relative of course, but the problems facing well-educated young people in San Francisco are certainly different from that of entrepreneurs in emerging markets. How about a program where entrepreneurs are given a chance to live and work in cities in emerging markets for 6 months? At the end of this time, they can submit an application for a startup in that market, and if accepted, receive another 3 months room and board and $16,000 in seed money.
- forensic 15y ago
  Most people don't want to live in 3rd world countries. Why do people expect programmers to be Jesus? When doctors, plumbers, daycare workers, and bus drivers start targeting the 3rd world market I will too. I'm getting really sick of all these bloggers telling other people to do something meaningful. Take your own advice before telling me to donate my life to charity.
  - r00fus 15y ago
    Emerging markets are all 3rd world? Brazil is an emerging economy, would you rate it as a 3rd world country? Don't dilute the point with your logical fallacies.
    - forensic 15y ago
      "Emerging market" is a euphemism for "developing country" which is a euphemism for "third world" Brazil is technically part of the 3rd world. I enjoy visiting poor countries as much as the next guy. But I don't want to raise my kids there or work there for very long. (Maybe as an adventure in my early 20s) Like every other normal human, including Brazilians, I want to have a good life. As a highly educated, highly intelligent person born and raised in the 1st world, why should I sacrifice all the comforts and enjoyments of civilization that my ancestors worked so hard for to please some bored blogger? Would Brazilians sacrifice for me? No. They don't give a fuck about me, and neither does this blogger lady. So I am unconvinced by all the appeals that I go work some unprofitable job in some shithole country because Silicon Valley isn't "exciting" enough.
Aloisius 15y ago
The author seems to conflate YC with all Silicon Valley startups. This is clearly not the case and I would argue that if you are looking for big, world-changing ideas and only considering YC companies, you're looking in the wrong place.
- pg 15y ago
  Actually you should expect to find them disproportionately often at YC, because our structure (investing a small amount in a lot of startups) makes it in our interest to take the biggest risks.
  - goldmab 15y ago
    That would be true if your investing structure were the only variable. I think Aloisius is talking about the YC culture. You have said that the idea doesn't matter nearly as much as the personalities of the founders. The implication is that founders are laborers with special skills who can produce a valuable commodity: start-ups.
    - pg 15y ago
      As far as I can tell the founders' personalities are about the same as in the Valley generally. If there's a difference imparted by YC, it's that they're more confident. But confidence usually makes people more willing to take risks, not less.
      - qq66 15y ago
        Not always. I know many people whose "confidence" was predicated on success -- such as being accepted to Harvard, Y Combinator, medical school, whatever. As a result they felt compelled to be successful -- and ended up doing things like becoming a lawyer or selling their company for $1 million because they were too afraid of being "failures."
      - ntoshev 15y ago
        For the startups to be less of a commodity, perhaps you could look for some sort of unique perspective on the world that founders should have. It seems Google founders had a lot of that. This may not help with the returns though; maybe more money are there to be made from commodity startups than truly disruptive ones.
PaulHoule 15y ago
To be fair, Silicon Valley "lean startups" can't get into many of the markets that are out there. For instance, I know some folks who'd like to build a new kind of nuclear reactor that uses molten Thorium salt as a fuel. The kind of system could produce all the energy you use in your life with a ball of Thorium that you could hold between two fingers. It would probably cost these guys $500M just to fill out the paperwork to build a test reactor... Even Silicon Valley investors don't want to spend that much cash. if you think the RIAA is bad just try the NRC.
- pnathan 15y ago
  There is a fairly deep difference between a software startup and a 'hardware' startup. The fundamental difference - IMO - is the 'get off the ground' capital. Non-labor initial outlay for some hackers to build a software system is well under 100K. To put together a chemistry lab takes well over 100K (or so I have been informed). Imagine having to spend 100K just to have a spot where people can work. Those costs of course start to spiral heavily upwards as you get more and more high-tech in your hardware. Then, if you're setting up startups for the hardware world, what's the ExpectedValue of your ROI. Batting average ain't going to be great. So the incentives are skew compared to the software world. That said, I'd love to be involved in the software side of nuclear energy. Among other things, you can't rely on your memory as a given, since it is more prone to corruption.
  - gedejong 15y ago
    Boulderdash. It completely depends on the kind of software system you are building. Do you need formal methods? Do you need complicated mathematical tests? Do you perhaps need to acquire patents or 3rd party software? Extensive domain analysis can take months, even years. Complicated systems can take years to design, implement and deploy. It all depends on what you are making. So far, the startup world seems to be in a goldrush with devestating results (both for investors, as well as participants). The article is right: why are these developers not making better simulation software? Why are they not creating the next iteration of mission critical control systems? Two words: gold rush. So, if you talk about 'a software system', you should specify the bounds. Failing to do this, I have no choice but to diagnose you with yet another case of Silicon Valley gold fever.
ziadbc 15y ago
The 'problems' described here are actually the mechanisms of why SV works. Yes, there are lots 'me too' startups out there. However, in any thriving ecosystem there will be a trend toward replicating success, and rabid competition. Furthermore, these startups don't represent the vision of where the founder wants to take the company, but just a miniature vs of the startup for what is possible today with the small amount of resources they have. As these startups gain traction, their vision will expand, and their innovation will as well. Some will die off, and a few outliers will emerge. Not every company becomes Facebook or Google, it's logically impossible for every startup to be an outlier.
pg 15y ago
She seems unclear in her own mind what she thinks the problem with SV is, because this seems to be a combination of all the standard brickbats people throw at the startup world (I wouldn't even say Silicon Valley, since these complaints apply equally well to any startup anywhere): that a lot of startups are "derivative" (like Google was); that startups tend to have exits (investors need them structurally, but founders like them a lot too); that startups solve trivial problems (like writing Basic interpreters for computers used by a few thousand hobbyists); etc.
- Locke1689 15y ago
  I also think that the criticism that startups are not "big-thinking" enough is more appearance-based. She may be more impressed if startup pitches read like research papers and less like, well, startups. However, there are a number of problems with conflating research problems with startup opportunities, one of the first being that the startup field is now a lot smaller than it was. She talks about Stanford and Harvard students as though they're the best of the best and while it's true that recent graduates may have great potential, what you really want for research-level efforts is domain experts. It usually takes years to become a domain export -- far longer than the typical beginning-phase startup. There are also a number of major problems with funding straight research efforts just from an expected-value point of view. Even Google was mostly working with known quantities (i.e., the exploratory research had already been done) when it started. If the result of a year-long startup effort is "turns out this is impossible" that's pretty bad. Basically, there's a sweet spot for startups in a fiscal and informational sense and I think it will always tend to sound a little less impressive given that context.
  - pnathan 15y ago
    It usually takes years to become a domain expert Very true. Suppose you know coding when you're 25. Then you have even more years to study a domain and be able to apply your computational skills to the cutting edge and have that deep domain knowledge to pull off an amazing solution.
  - Apocryphon 15y ago
    I would read a research paper-styled startup pitch for Color.
nhangen 15y ago
This is also a problem for users, who sink time into supporting/using a service only to have it yanked out from underneath them. Right now I'm averaging 5x daily deal emails per day. I can't stop subscribing fast enough. The valley is very insular, and IMO it doesn't get out often enough. To make matters worse, any time I argue this with my friends in SF, they get very defensive. The valley is becoming the popular kid in school, for all of the wrong reasons.
WorkInKarlsruhe 15y ago
Ugh, what a rancid, judgmental article. His arguments about changing the world are stale. The problems of a Silicon Valley person are quite different from the problems of someone in an emerging market, such as rent of like $3000/month, and so it makes no sense for someone in Silicon Valley to address an emerging market that has no chance of covering costs of living back home. The people in the emerging markets are quite capable of helping themselves, and don't need privileged, naive Americans to step in and show them how backwards they are (ironically, most other societies are more socially advanced, even if they are technologically backwards, and could teach the Americans how to actually achieve quality of life without technology). [And if you are going to step in, please read Schumacher's "Small is Beautiful", and pay attention to his arguments for intermediate technology (i.e., you don't dump differential equations on someone still learning algebra).] If showing someone how to best locate the nearest cupcake shop makes customers happy, then that is a virtuous reason for a startup to exist. It is silly and judgmental to say that people are wasting their talents because they focus on the materialistic first-world problems rather than desperate emerging-world problems. It is about making customers happy, employees (and founders) happy, and investors happy. The question should be: are the founders actually happy doing the work they have chosen? If not, then it is a mistake. Perhaps what the author is really trying to say is that people are focused on getting rich quick off trivial business plans, which will be easily commodotized, or will have hardly any market, causing failure and loss of the investor's money. There is some merit to this sentiment given some of the examples he gave.
- Apocryphon 15y ago
  Perhaps what the author is really trying to say is that people are focused on getting rich quick off trivial business plans, which will be easily commodotized, or will have hardly any market, causing failure and loss of the investor's money. There is some merit to this sentiment given some of the examples he gave. I'm almost certain that is her ultimate angle.
vlad99 15y ago
What SV needs to do is help the GDP go boom so they can chip in enough tax money to cover NASA's expenses for their groundbreaking discoveries. +1 if you agree!
grandalf 15y ago
If you credit yourself with being able to identify "game changers" among early stage startups, then you're crediting yourself with more wisdom than the VC community. Even VCs acknowledge that they are wrong a large percentage of the time.
- pg 15y ago
  Yes. If she's right, she's certainly better than me at picking winners. I thought Airbnb was a bad idea when we funded them.
  - pja 15y ago
    Were they an "invest because they look like good people to invest in" choice then pg?
    - pg 15y ago
      Yes. We funded them because we liked the founders.
- aaronblohowiak 15y ago
  " there’s only two, out of two hundred, I think are game changers. " -- 1% seems high to me, but it seems to surprise her.
  - neelm 15y ago
    AirBnb seems like a startup is getting significantly more success. Why this person considers them to be more innovative than many other startups however shows I think a bias towards selecting a winner after its already won. There are plenty of amazing, innovative startups in terms of their vision and technology that will ultimately fail. That's the nature of the business. I think her problem is she just doesnt have the right deal flow, and doubt she has been part of or witnessed up close a game changer. There are startups in the Valley that are working on microbial fuel cells, flow batteries, microwave radar, tumour selective drugs, computational photography, nano-controlled membranes for unprecedented efficient water purification, stream processing algorithms, optical computing, immersive UIs, gasification, robust computer vision, RF plasma lighting sources, novel financial transactions, high efficiency combustion engines, compressed air storage, green plastics, ML for genetic applications, next gen EDA for <25nm structures, and of course shoedazzle. I think the issue is her dealflow and perspective. coming to SV for 6 months assuming you're going to see game changers when most VCs for 10 years dont is poor judgement.
tptacek 15y ago
Stupid YC companies with all their stupid IPOs. At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and fourth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can. Normal people call this "talking shop". Get a bunch of doctors together sometime and see if they're talking about changing the world.
- deleted 15y ago
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- CodeMage 15y ago
  I believe her point was that she expected to hear tech entrepreneurs "talking shop" about tech, rather than about "entrepreneurship". To follow your analogy, it's as if you heard a bunch of doctors discussing how many patients they had last week, instead of interesting cases among those patients. I don't live anywhere near the Valley nor am I an entrepreneur, so I can't either agree or disagree with her points, but I confess that I would've had similar expectations in her place.
  - tptacek 15y ago
    Yes. I'm saying: you're more likely to hear them talking about patient numbers, or bitching about billing systems or medicare reimbursements.
    - timr 15y ago
      You might hear them complaining about medicare reimbursement, because that's (sadly) part of the daily life of a doctor. You don't often hear them talking about Kaiser's quarterly revenue numbers, or who gave whom a loan to go to medical school, or how Stanford is totally dominating the regional market for organ transplants (or whatever). I know a lot of doctors, and a lot of entrepreneurs, and I'll take the medical shop-talk any day of the week, because doctors are primarily interested in medicine, not business. It's unique and refreshing when you meet an entrepreneur who is primarily interested in something other than money.
deleted 15y ago
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tlb 15y ago
Startups often seem like clones (of Groupon or whatever) when you only get the one-sentence explanation of what they do. But there's always a much deeper difference in goals, strategy and tactics when you get to know them. I don't know any Groupon clones. Groupon's operation is complex and subtle, and there are lots of related things that are also promising.
- wheels 15y ago
  CityDeal was about as close as you can get to a full-on clone schlepped to another market. If the stories I've heard are to be believed, they actually sent people to become interns at Groupon to do reconnaissance. Granted, it was from the Samwers, who both are not Silicon Valley and are famous for cloning American startups. (They've done it with Airbnb now too.)
  - phil 15y ago
    I think the Samwers are the exception that proves the rule, since their ventures seem explicitly designed as clones. The strategy is the same, it's just been translated into German.
  - tlb 15y ago
    Maybe, in the same sense that Volkswagen is a clone of Ford. Adapting a successful idea to a new market is interesting and hard, and often results in new ideas.
invalidOrTaken 15y ago
This makes me think of ridiculous derivative startups like BankSimple. We've had banks for thousands of years. Why do we need another? Everyone knows Bank of America is innovating daily in retail banking, especially in customer service. Plus, think of everything subsistence farmers are doing with Windows Mobile phones! Oh, wait.
mburney 15y ago
This article makes a good point. The problem is not that startups are derivative or solving trivial problems. The problem is that the whole startup process has been manufactured and scaled to the point that it has lost its intrigue and stifled its innovation. Apple, Google, and Microsoft were outsiders when they were startups. Current SV incubator teams are more like elite in-crowd communities, safe and insular.
- jeffreymcmanus 15y ago
  Wrong, wrong, wrong. Nobody thought that Apple, Google or Microsoft would be game-changers when they were in the startup stage. When Apple and Microsoft were in the startup stage, their customers were hobbyists. When Google was in its startup stage, it was clear to everybody that they would never be anything more than a modest compliment to what Yahoo offered. If every startups were to listen to this author, nothing would ever get done. We'd spend our lives trying to "change the world" without making the millions of incremental improvements that are necessary for the world-changing stuff to happen.
  - mburney 15y ago
    My point isn't to agree with the author that every company should try to be a game-changer. In fact, too many SV companies already think that they are game-changers before they've even launched anything. That's part of the problem. My point is that when you have the startup process manufactured and replicated into a kind of meta-startup (like YC), at a certain point the goals of the founders become more about conforming to the community and impressing each other rather than creating a genuine product. Obviously not all YC startups are like this, but any time something grows and scales, there is a danger of it losing its original purpose.
    - Apocryphon 15y ago
      My goodness. You know what this means? This is essentially Peter Thiel's argument against college applied to startup incubators. Think about it- these incubators are giving startup folks aid and guidance that past generations of never had. This is essentially creating a new elite who instead of going to Harvard and getting a leg up, are going to YC and getting a leg up. In neither case are the kids scrapping together in a garage, driven only by their own vision and living hardscrabble until they can score their first angel investor.
ChuckMcM 15y ago
So she lives in San Francisco for 6 months and feels qualified to explain what is 'wrong' with Silicon Valley? (which is nominally the Santa Clara Valley btw) I've lived (and worked) in the actual silicon valley for over 25 years and I can tell you that evaluating the area based on a 6 month snapshot is worthless. In 1984 I was Intel and the 'problem' was that there wasn't any real use for personal computers. A 1024 x 768 color CRT monitor was huge and cost about $3,000. Running at 640 x 480 in monochrome with a 'Hercules' graphics card didn't come close to the experience you could get with a decent minicomputer 'workstation.' But a workstation cost $50,000 and up. In 1994 I was at Sun Microsystem (the Liveoak project, aka Java) and I would have told you that the 'problem' was that you couldn't do business over email and without an economic engine what would fund all the work. I told Eric Schmidt (who owned Sun Labs at the time) that so called 'e-commerce' was where all the money would be in 1995 and if Sun wasn't able to participate it was toast. (sounds pretty lame in retrospect, but they did sell a lot of servers to Amazon :-) In 2004 I was at NetApp (after having my startup acquired by a company which would later be folded into Motorola in a deal which was reminescent of one of those trades in baseball where you get cash and a draft pick and oh by the way this guy over here.) I would have told you that the problem was that technologists had been pushed aside by MBA types who had lasered in on the 'rent seeking' business model and killed off innovation along the way. There isn't a 'problem' with Silicon Valley, it simply exists like a beaker sitting over a bunsen burner. Over time different chemicals are available in the beaker and sometimes something magical happens, and sometime noxious fumes come out, but the place is an engine. A lot of startups are endo-thermic with respect to cash but a few are wildly exo-thermic. Often times the by products of those become the ingredients of the next round of innovation. I'm not sure the author has had time to appreciate that while she may have encountered dozens of GroupOn clones, she seems to have missed that there are dozens of GroupOn clones. If you were in, say Minneapolis, how many GroupOn clone startups are there? Energy makes reactions possible, the SF Bay area is full of energy (and resources) which makes it easy to create a new company. That the companies that have currently been created are boring to you is merely a side effect.
- schwabacher 15y ago
  I am from Minneapolis and we have at least two Groupon clones. I think this says more about the abundance of Groupon clones than it does about startups in Minneapolis.
jonmc12 15y ago
Arbitrage vs Innovation - consider that startups that are using technology to make an existing market more efficient are profiting due to arbitrage of technology. Consider that startups that are using technology to create a new form of value are innovating. Technology arbitrage is kinda boring, but can have big rewards. I imagine the profit distribution among these startups looks kinda bell curvish. Technology innovation and commercialization is a different game - here you have a few big winners effectively creating new paradigms, followed by technologies that may add marginal value in a large number of markets. Its part of any economy to have a mix of those who arbitrage and those who innovate. Silicon Valley is no different.. in fact, you could argue that the arbitrage plays are necessary to create the funding environment that can facilitate technology innovation. I find it a useful lens for understanding the startup infrastructure. To further refine the lens, you can look at through the asset class that each startup is attempting to create (personal reputation, team, tech, users, profits, strategic value) - Elad Gil has a good blog on this http://blog.eladgil.com/2011/01/m-ladder-position-your-startup-to-sell.html http://blog.eladgil.com/2011/01/m-ladder-position-your-start.... So, I see what the author is saying, but really I think she is looking through the wrong lens. Funded innovation sits at the top of a complex economic ecosystem of interconnected, evolving pieces.
- minimax 15y ago
  Are you saying "arbitrage" when you actually mean "incremental improvement"?
  - jonmc12 15y ago
    No, I was using the word in an economic context. Specifically the action of capturing value in one market with a technology that has been proven in another market. Groupon clones, Social game companies, etc However, I believe incremental improvement is a fitness criteria of technology arbitrage.
    - minimax 15y ago
      An arbitrage trade is a risk free transaction that involves buying something at one price and then immediately selling it at a higher price. How does creating a Groupon clone fit into that model? How do you get from imitation to arbitrage?
thingsilearned 15y ago
SV startups I've always felt are significantly less derivative than any other business that I've ever known. 99% (or whatever) of businesses started are another bank, Mediterranean restaurant, carpet cleaning company, franchise, etc. that are exact clones or nearly anyway of the same company in the next town over. If by her scale there is no innovation in SV and YC then its just not happening anywhere. She's just dealing with an unrealistic expectation of the speed and efficiency of innovation.
localhost3000 15y ago
isn't it really that web startups are "easy" and hard-tech startups (hardware, biotech, alt.en, pharma etc.) are...well, hard? (I mean this relatively speaking, of course) -- It takes close to zero education to sit down and create a product on the web (how many of us were building websites when we were 12? yup.) - hell, we're even now questioning the value of a college degree... To create Halcyon Molecular, on the other hand, you need world-class scientists culled from top universities with years or even decades of experience (never mind all the liquid capital you need). It's simply a different ballgame entirely. With this marked difference in entry requirements, of course the web-app startups outnumber the Halcyon's 1000 to 1. Is that a problem? Well, maybe. But is it a surprise? Absolutely not.
lisper 15y ago
Anyone who thinks there is no innovation or risk taking in the Valley, contact me. I can point you to tons of companies that are keeping the old traditions alive. Those on the leading edge always attract wannabes and pretenders when they succeed, and when the success is big enough the wannabes and pretenders can overwhelm those on the leading edge. That doesn't mean they've gone away, it just means you have to look a little harder to find them.
arram 15y ago
I was at the barbecue and can say that she took some license with the conversations there. I (and others I've asked) didn't hear anyone asking who was going to acquire x company, etc. The entire article comes off as condescending and self righteous. The suggestion that your company isn't worthwhile if you're not solving 3rd world problems is absurd. As is the notion that founders who are in it to make money are misguided. This sort of thing is typically said by someone with money - in this case a VC.
- rdl 15y ago
  Why was she at this bbq?
- guiseppecalzone 15y ago
  I was at the BBQ as well. I didn't realize it at first, because the BBQ she describes is completely different from the BBQ I attended. I'm so perplexed, it leaves me wondering if this is ethical journalism. "At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and forth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can."
  - kul 15y ago
    Sigh. Another inconsistency. Asking how many users you have is another way of asking what impact you're having.
    - argv_empty 15y ago
      A company's having many users/customers is a type of impact, yes.
- garbowza 15y ago
  She said "real world" not "3rd world", which certainly adds different context.
dusklight 15y ago
What I think the real problem is entrepreneurs who are primarily looking for money/recognition don't look for problems that need to be solved, they look for problems that can be solved. I would love to see more cross disciplinary startups instead of companies solving problems using purely software.
jjm 15y ago
I want to exit so I can have enough money to not worry about if something I work on or come up with isn't 20 years ahead of it's time putting me in the poor house. I worked in big corp thinking I could make a change but that didn't happen. Reached the top technically, and that was it. So I can't blame these guys as I know some of them think like I do. However, like any good thing you can get caught up in it and forget why you started it in the first place.
fecklessyouth 15y ago
As an ignorant observer, I feel like the Silicon Valley has to avoid becoming Wall Street--billions of dollars given to geniuses to make a profit while filling an existing but trivial need that truly helps a small portion of the population.
iamwil 15y ago
Most of the time, game changers don't look like game changers when they first start. So they're often dismissed as being trivial. It's true for anything that we depend upon today. cars, radio, tv, computers, internet, social networks, twitter, etc. Most people, investors (and myself) included, are also not the most imaginative bunch. You can't hope to raise money from things that are more than one hop away from things that they know. And lastly, innovation from a startup's perspective, is almost never a brilliant flash of insight. It's usually a gradual iterative process of discovery and learning that looks like a brilliant flash of insight in hindsight, especially to people re-telling the story. Everyone wants to hear about what was going on when the meteoric rise was happening (relatively short time), as opposed to all the time spent laying the ground work and exploration and deadends beforehand (relatively long time). You can only hope to do iterative discovery before breaking the ground somewhere. What the author complains about lack of innovation is really just what innovation looks like on the ground--feeling around in the dark. You have a better chance of finding something if you work from where you know, rather than just taking a giant hop. And really, innovation is never immediately obvious. It usually is just an inkling--a tickle. On a macro level, innovation has flashes in the number of people that are working on it. Lots of people are doing groupon "clones" because it's still an area where variants are to be explored. If you think about us as a colony of ants, we're all looking for food (ideas), and once we find some, we'll exhaust that before looking for more. Where there is food is likely to be more food. It's not exactly a bad strategy.
- fijiaaron 15y ago
  Just because you can't tell what a game changer is in advance -- and that you might even consider it trivial at first -- doesn't mean that you can't tell what is geniunely trivial too.
barce 15y ago
Some universities and clever ads have brainwashed non-technologists like Ms. Way into thinking that software do a lot of things that they do not really do. In some cases, the illusions are lies; in other cases, these folks are hoodwinked into believing that what software can do is done without much effort.
mbesto 15y ago
I can personally relate to this perspective as someone who doesn't live in the valley but follows it very closely. Ultimately I think what the author is trying to say is that there is a lot of "disgust" (I'm trying to use that term loosely) about the current problem solving that is being produced out of the valley. Is it a problem that I walked by an old friend at a restaurant and didn't realize we knew each other? Oh, there's an iPhone app for that!? There is a difference between satisfying a market and actually solving what is to be considered a real life problem. I do think the current nature of the valley is that of "Wouldn't it be cool if I could..." rather than "My life would be substantially better off if I could..." I suspect this is what she is trying to highlight. So this begs the real question - what do we consider to be real life problems? For an upper class American a problem may be that you were unable to figure out the name of the last song played on the radio and for poor villagers in Africa it's having no access to water. Is solving one person's problem more advantageous than another?
- Apocryphon 15y ago
  I think there is a notion that there is a finite quantity of innovation, or rather innovators- and if the economic environment favors photo sharing apps and so on, most innovators would rather try to make a quick buck putting their efforts and using their skills to solve "first world problems." And so the ultimate condemnation is that smart people are wasting their resources on issues that are of less social value than issues in the less advantageous world.
forensic 15y ago
This author sounds to me like she wants Silicon Valley to entertain her. She sees the valley not as a normal participant in the Western economy, but rather as some kind of vehicle for the creation of her utopia. If you're going to condemn people for not sacrificing their lives for the Africans, why start with programmers? When doctors, lawyers, plumbers, bus drivers, real estate agents, elementary school teachers, civil engineers, security guards, 7-11 owners, and bloggers stop trying to make money, I will too.
- me2i81 15y ago
  Right, and there are various startups in and out of Silicon Valley working on humanitarian projects. The funding model is quite different, based mostly on grants. That kind of funding is even more fickle than VC money, and nobody expects to get rich. The people I know in that sector have no problem recruiting talent if there's enough money to provide reasonably stable (but somewhat paltry) paychecks. Lots of people want to save the world, even geeks.
Harj 15y ago
"The problem is that it’s all about the money; it creates emphasis on Y Combinator startups to quickly exit or IPO." This sentence makes no logical sense, quick exits and IPO's are the antithesis of one another - there has to be an emphasis on one or the other, not both. It's based on a false premise anyway, the Start Fund has had no impact on how founders choose to run their companies. Since she's talking about investor incentives, I presume she thinks there's an emphasis on IPOs. If this were true, it'd directly contradict her argument, I struggle to think of any world changing companies that didn't IPO. "organizations like Y Combinator attempt to marginalize, commoditize or manufacture a process that is inherently risky." I'm not sure how we marginalize the process. Perhaps she should have asked some YC founders whether we've ever presented the startup process as anything other than the brutal, risky slog that it is.
hxf148 15y ago
I'm working on a startup (http://infostri.pe http://infostri.pe) that is way out side of SV and we feel it. I have no idea what it's like to be there in person but I imagine it would be a lot easier to meet, know and get interest from people if we were. Getting noticed as a super small (but tenacious) outsider to SV is.. difficult. That I do know.
deleted 15y ago
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dr_ 15y ago
The article becomes a bit absurd when it makes the implication that entrepreneurs may settle for cheaper locales like Chile or Cabo (I just returned from the latter and trust me although it's beautiful it's anything but cheap). Success depends not only on the abundance of VCs but also the available talent pool, experienced attorneys, landlords who get it, accountants, etc.
grellas 15y ago
Coming to Silicon Valley and expressing dismay that the typical founder is single-mindedly focused on profits and liquidity events is a little like showing up at Rick's and expressing shock at all the gambling going on. It is all well and good to pass judgment on what you see, but what did you expect? Nothing fundamental has changed in SV over the years and the Valley has no need to justify itself.
saygt 15y ago
This is nothing unique to Silicon Valley. A hub of any kind attracts opportunists of all qualities and intentions without discrimination.
protagonist_h 15y ago
One big thing the author overlooks is how first-world technologies tend to eventually "spill-over" into the third-world where they find their uses. Just look how Facebook and Twitter are bringing democracy to the Middle East. Yes, these things were created to solve problems of an American yuppie, but people in the poorer parts of the world find how to apply them to solve their problem. It's hard for an American entrepreneur to build a startup which solves problems of the developing world, because they are not exposed to those problems. You can only solve problems you understand.
epynonymous 15y ago
"At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and forth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can." right on!
- epynonymous 15y ago
  i always believe in necessity being the mother of invention. a lot of what happens today is more synthetic and calculated seemingly: how fast can i grow this, it's not about how well i can build this to solve a problem, though building things well may be a driver of growth, it isnt the focal point for a few of these companies. the tofu example in the article was perfect although most likely fictional, but there are lots of these types of companies sprouting up.
generators 15y ago
LOL!!! this is quite universal statement. anything can goes. The problem with (%s) is Itself.% ( any random person , location , company ). LOL!!! stupid peoples.
neilk 15y ago
Hey, maybe the OP isn't exactly the most informed. But you can't argue that Tim O'Reilly doesn't know what the Valley is all about. And he's said some similar things. http://news.cnet.com/8301-13577_3-10045321-36.html http://news.cnet.com/8301-13577_3-10045321-36.html If I can "pivot" this discussion a little... as part of my job I've interacted a lot with Ward Cunningham, who invented wikis, helped invent Agile methodology, started people talking about design patterns, etc. This guy didn't exactly do any market research when he invented the wiki. He didn't throw up a landing page with a coming soon graphic. He didn't validate the concept with Google Ads. He didn't impress investors, or even customers. In fact it's likely that no one would have ever invested in the concept. He created something that, based on his experience and judgment, that he thought users needed. Turns out he was right. Maybe this kind of inspiration isn't productizable, which is why SV shies away from it. But is there no room for this sort of thinking? Even Google began in an academic environment, not in the business world. It seems to me that entrepreneur-thinking can get you only so far. Every really successful entrepreneur I know -- and I know a fairly high number -- has been a little bit crazy, and had ambitions far beyond monetization. Some of them ended up making a lot of money almost by accident. In our time, the hackers rebelled against the suits and are now running their own companies. A magnificent achievement. But is it going to be the final irony, that hackers are now going to think and act like suits? http://www.flickr.com/photos/caterina/158124358/ http://www.flickr.com/photos/caterina/158124358/
- Apocryphon 15y ago
  Gates, Jobs, Ballmer and Wozniak were supposedly rebels against Big Blue. So, history repeats.
  - neilk 15y ago
    Perhaps I did not explain my point clearly enough. Gates, Jobs, and Ballmer are all businesspeople. Only Woz is the kind of engineer I was discussing.
    - Apocryphon 15y ago
      But... but they're the nerds who triumphed! The pirates of Silicon Valley! This messes up my hagiography in all sorts of ways!
zackelan 15y ago
> I’ve interviewed around two hundred startups and there’s only two, out of two hundred, I think are game changers. Breaking news: only 1 in 100 startups will significantly change the world. Film at 11.
fady 15y ago
@ChuckMcMm @sendos great points. i've been in sf for 5 years and can vouch for how much energy, resources, and passion is in this city. i've never seen so many happy people working away at their jobs, living the life as a san franciscan; paying crazy rent but living in a great city enjoying the pleasures it has to offer. i know this because i'm doing the same thing. it seems no matter where you go everyone is connected with their mobile devices, talking about the next start-up, using the next groupon clone's deal, eating/drinking at the local hip spots, etc.. etc.. the locals use the local goods. seems like it does not stop there. im connected to all the people + their followers, friends, etc. online, while im at work! people here get things done, and enjoy it too. PG recent article comes to mind.. the author forgets that silicon valley has connected people in a way that one cannot even begin to imagine. i think people are happier with their web apps, sharing tools, social networks, etc.. i feel the article makes good points, but to say the problem is with silicon valley is rubbish. its with humans. silicon valley has done nothing but changed peoples lives and continues to be the hub for new ideas.
h4x0r111 15y ago
just want to chime in real quick: she's a smart brit plus she's hawt.
NY_Entrepreneur 15y ago
Okay, I'll bite at this flame bait: First, sorry to be 'sexist', but the pattern is far too strong to ignore: For some reason, maybe part of some of the old teachings and/or attitudes of the Roman Catholic church, heavily in Western culture women are supposed to want to dedicate their lives to 'saving the world'. A belief is that, if they dedicate their lives to saving the world, then the world will be obligated to save them and will. Indeed, it is common for such a woman to be 'married' more strongly to their church or saving the world than to their actual husband. That is, she is married to her husband but 'commits adultery' with her church or the whales. Also, the women are supposed to regard money as something they are supposed not to be interested in. Indeed, a belief is that if they do have have money, then they will no longer deserve to be cared for by the world and, thus, will have a big net loss. In addition, there is a belief that any woman who does anything that results in making money is somehow doing something immoral and, thus, causing her, again, no longer deserving to be cared for by the world. If the above points seem absurd to you, then I congratulate you on hearing these points finally now instead of later. I hate to say this, but basically on these points I'm standing on rock solid ground. Believe me, I came to understand these points only very slowly and reluctantly and at enormous cost. Let's not go into all it cost. But, I can tell you, it's far too common for such a woman, with a loving husband, a house, three small children, busy at home, in a job, and at church, to attend a lecture on some need on the other side of the planet and, then, to give up everything to rush to the other side of the planet to address the need. One women I know even wrote a book about her effort along these lines, and I could, but won't, give you the author and title of the book. I kid you not: A LOT of Western women are out to 'save the' world, whales, environment, polar bears, kitty cats, puppy dogs, poor people in countries X, Y, Z (mostly NOT their own countries), etc. E.g., even the movies understand as in the remark in the second 'Jurassic Park' movie: "80% women, Greenpeace". So, she's out to save the world and is upset because SV is not. Okay, now lets set aside her point about saving the world. I'd make another point about 'finance': Yes, we would value a company based on 'discounted future cash flows'. But we nearly never have any way to know about cash flows very far into the future. So, net, a lot of financial evaluation is based on just the latest data, adjusted for 'variance'. Are the short term traders making a mistake? They are watching many times a second and will sell at the first evidence of a change in the status of the company and, thus, don't get caught when the price falls. If the cash flow indeed lasts, then the short term traders will again be doing the right things. VCs and their entrepreneurs can't sell in a fraction of a second, but, still, a short term horizon for evaluation seems to be ground into pricing in finance. So, that she is concerned about short term pricing is nearly inevitable. Next, that there are clones for GroupOn is not an example of something silly about SV: Instead, GroupOn is quite obviously vulnerable to a different clone in each of Peoria, Paducah, and Pleasantville. Indeed, a clone in Peoria might have better connections with the businesses in Peoria and have an advantage. Net, the many clones of GroupOn are mostly due to what GroupOn is doing instead of SV. So, why can GroupOn have such a high market capitalization? Because of the practice of pricing companies based only on very recent data. I would have another objection about SV: I can believe that the biomedical VCs know what they are doing. I believe that the 'problem sponsors' at NSF, NIH, DARPA, ONR, etc. know very well what they are doing. But for the information technology (IT) VCs, I ROFL and then crying. The incompetence is astounding, outrageous, off the wall, out of some Alice in Wonderland, beyond belief. Actually, YC is a grand exception: Most or all of the partners actually have some solid qualifications in IT. Otherwise, we're looking at history majors who got an MBA, worked in 'management consulting', 'development', 'marketing', analyzing stocks, and, thus, accumulated "deep domain knowledge". What a LAUGH: They don't know the first thing about IT, even the old stuff, and they have not a clue about evaluating things for the future. What technical IT founder would want to hire one of these ignorant, arrogant blowhards? These blowhards are not qualified to do anything technical, teach a technical course in a university (or even high school), write a technical paper, review a technical paper, get a research grant, etc. Again, at biomedical VC, NSF, NIH, DARPA, ONR, and YC, the situation is wildly different. The non-technical situation in VC IT is so uniform that I have to look for a single cause, and my guess is that the situation is not due just to the VCs but to their LPs. It's very much as if some of the leading LPs wrote the criteria for each of seed, Series A, B, and C rounds on one side of a 3 x 5" card and insist that the VCs follow these criteria. In particular, the criteria demand that the VCs just ignore the 'secret sauce'. What to pay attention to? Seed round: Look at the prototype software and estimate if many users will like it and give their 'eyeballs'. Series A: Have the number of unique eyeballs per month at at least 100,000 and growing rapidly. Series B: Have revenue growing rapidly. Series C: Have earnings, and buy a chunk of the company based mostly just on the earnings and exit possibilities. For any estimate of building a serious company, ignore that. At an IT VC table, without YC, now tough to find an A. Viterbi or G. Moore on either side of the table. That 3 x 5" card IT VC criteria explains the trivia she sees. On this point, I agree with her.
newobj 15y ago
It's ironic, or whatever the word that we mean to say when we incorrectly say "ironic", that GroupOn started off as a "change the world" kind of thing (ThePoint) and then pivoted into "just" a trivial deals site. Also that it's a product of Chi-town, not SV.
buyx 15y ago
consumers in the USA clearly want to play Angry Birds, whereas in some African countries consumers are more likely to be searching for their nearest Malaria drugs clinic. Yes malaria is a huge problem in some African countries, but in case some Rovio staffmember reads that and suffers an existential crisis, here's an anecdote to make them feel better: My 3 year old nephew loves Angry Birds, and got his nanny to play it with him. She was intrigued by it, and started learning how to use a mouse, launch Chrome, and launch and play Angry Birds. This is a 30 year old black South African woman from a rural area, with no prior experience of computers, who was forced to leave school in Grade 9, because of a lack of funds, who began learning a new skill. Will she pursue it? I don't know. Will she encourage her own children to become computer literate, maybe buying a cheap computer for her children to play with? Quite possibly. But it wasn't some World Bank funded outreach program that got her using a computer, it was Angry Birds.
chrischen 15y ago
> "But for every Airbnb and Udemy there are always more Netflix, Evernote and Spotify clones." She clearly has not spent much time using or even understanding what the companies (Moki.tv, Noteleaf.com, or earbits.com) do... because those are not even close to clones.
ChrisBeach 15y ago
Author makes some valid observations but misses something important. Who's changing the real world today? People like Bill Gates, putting billions of dollars into the fight against malaria. What process generated that wealth?
csomar 15y ago
Made me suspicious about her claim of other countries start-ups hub. I checked the Chile ones, and well, they are just poor. I picked two start-ups randomly: Askbot (http://askbot.org http://askbot.org) which is an awfully designed clone to StackOverFlow. The other start-up I picked is AI Merchant (http://www.aimerchant.com/ http://www.aimerchant.com/) which does commodities exchange in a lower abstraction level. The realization, however, is very poor. I prefer the Silicon Valley clones and crap.
Enlightenment 15y ago
What has happened to web sites is what happened to rap, just the same shit over and over, but with a new name on it.
Enlightenment 15y ago
What has happened to web sites is what happened to rap, just the same shit over and over, but with a new name on it.

299 points by jmjerlecki 15y ago

This article raises a lot of interesting, disquieting thoughts about the Valley and its startup/VC culture. But change isn't going to come from within, because there is no present incentive for change. Why should VCs stop pushing for quick acquisitions and exits, when they're making damned good money on those exits? Why should founders want to stray from the prevailing model, when the prevailing model minimizes their risk and increases their chances of big paydays (not to mention repeat performances)? In a lot of ways, today's system seems to be working remarkably well for its participants on both sides of the equation. Arguably better than previous iterations of Valley culture and systems have. It seems reasonable to hypothesize that the system is designed to reward its participants, and perhaps even at the expense of users or the "greater good" -- however narrowly or broadly we want to define that term. But this is just a hypothesis until we can substantiate it. Are there other regions, within and without the US, breaking SV's stranglehold on game-changing innovation? Has a competitive innovation-generating model arisen to challenge, if not shake up, the SV model? It's almost impossible to measure the success of SV's "greater good" on absolute terms, and as such, we must search for relativistic points of comparison. Measuring SV today versus What SV Could Be is fruitless without a tangible example of the latter, or else a prescriptive model of some sort.

stcredzero 15y ago
How about starting something like YC, but adapted for and conducted in emerging markets?
ippisl 15y ago
If you look at robotics(which is probably a game changing field as the PC or more), Boston is a big robotics cluster , Pittsburgh is another. silicon valley is definitely not a robotics leader.
- protagonist_h 15y ago
  this is mostly because the best robotics labs are in that area (MIT and CMU) and guys like Rodney Brooks and Hans Moravec live in that area.

stcredzero 15y ago

It’s all relative of course, but the problems facing well-educated young people in San Francisco are certainly different from that of entrepreneurs in emerging markets. How about a program where entrepreneurs are given a chance to live and work in cities in emerging markets for 6 months? At the end of this time, they can submit an application for a startup in that market, and if accepted, receive another 3 months room and board and $16,000 in seed money.

forensic 15y ago
Most people don't want to live in 3rd world countries. Why do people expect programmers to be Jesus? When doctors, plumbers, daycare workers, and bus drivers start targeting the 3rd world market I will too. I'm getting really sick of all these bloggers telling other people to do something meaningful. Take your own advice before telling me to donate my life to charity.
- r00fus 15y ago
  Emerging markets are all 3rd world? Brazil is an emerging economy, would you rate it as a 3rd world country? Don't dilute the point with your logical fallacies.
  - forensic 15y ago
    "Emerging market" is a euphemism for "developing country" which is a euphemism for "third world" Brazil is technically part of the 3rd world. I enjoy visiting poor countries as much as the next guy. But I don't want to raise my kids there or work there for very long. (Maybe as an adventure in my early 20s) Like every other normal human, including Brazilians, I want to have a good life. As a highly educated, highly intelligent person born and raised in the 1st world, why should I sacrifice all the comforts and enjoyments of civilization that my ancestors worked so hard for to please some bored blogger? Would Brazilians sacrifice for me? No. They don't give a fuck about me, and neither does this blogger lady. So I am unconvinced by all the appeals that I go work some unprofitable job in some shithole country because Silicon Valley isn't "exciting" enough.

Aloisius 15y ago

The author seems to conflate YC with all Silicon Valley startups. This is clearly not the case and I would argue that if you are looking for big, world-changing ideas and only considering YC companies, you're looking in the wrong place.

pg 15y ago
Actually you should expect to find them disproportionately often at YC, because our structure (investing a small amount in a lot of startups) makes it in our interest to take the biggest risks.
- goldmab 15y ago
  That would be true if your investing structure were the only variable. I think Aloisius is talking about the YC culture. You have said that the idea doesn't matter nearly as much as the personalities of the founders. The implication is that founders are laborers with special skills who can produce a valuable commodity: start-ups.
  - pg 15y ago
    As far as I can tell the founders' personalities are about the same as in the Valley generally. If there's a difference imparted by YC, it's that they're more confident. But confidence usually makes people more willing to take risks, not less.
    - qq66 15y ago
      Not always. I know many people whose "confidence" was predicated on success -- such as being accepted to Harvard, Y Combinator, medical school, whatever. As a result they felt compelled to be successful -- and ended up doing things like becoming a lawyer or selling their company for $1 million because they were too afraid of being "failures."
    - ntoshev 15y ago
      For the startups to be less of a commodity, perhaps you could look for some sort of unique perspective on the world that founders should have. It seems Google founders had a lot of that. This may not help with the returns though; maybe more money are there to be made from commodity startups than truly disruptive ones.

PaulHoule 15y ago

To be fair, Silicon Valley "lean startups" can't get into many of the markets that are out there. For instance, I know some folks who'd like to build a new kind of nuclear reactor that uses molten Thorium salt as a fuel. The kind of system could produce all the energy you use in your life with a ball of Thorium that you could hold between two fingers. It would probably cost these guys $500M just to fill out the paperwork to build a test reactor... Even Silicon Valley investors don't want to spend that much cash. if you think the RIAA is bad just try the NRC.

pnathan 15y ago
There is a fairly deep difference between a software startup and a 'hardware' startup. The fundamental difference - IMO - is the 'get off the ground' capital. Non-labor initial outlay for some hackers to build a software system is well under 100K. To put together a chemistry lab takes well over 100K (or so I have been informed). Imagine having to spend 100K just to have a spot where people can work. Those costs of course start to spiral heavily upwards as you get more and more high-tech in your hardware. Then, if you're setting up startups for the hardware world, what's the ExpectedValue of your ROI. Batting average ain't going to be great. So the incentives are skew compared to the software world. That said, I'd love to be involved in the software side of nuclear energy. Among other things, you can't rely on your memory as a given, since it is more prone to corruption.
- gedejong 15y ago
  Boulderdash. It completely depends on the kind of software system you are building. Do you need formal methods? Do you need complicated mathematical tests? Do you perhaps need to acquire patents or 3rd party software? Extensive domain analysis can take months, even years. Complicated systems can take years to design, implement and deploy. It all depends on what you are making. So far, the startup world seems to be in a goldrush with devestating results (both for investors, as well as participants). The article is right: why are these developers not making better simulation software? Why are they not creating the next iteration of mission critical control systems? Two words: gold rush. So, if you talk about 'a software system', you should specify the bounds. Failing to do this, I have no choice but to diagnose you with yet another case of Silicon Valley gold fever.

ziadbc 15y ago

The 'problems' described here are actually the mechanisms of why SV works. Yes, there are lots 'me too' startups out there. However, in any thriving ecosystem there will be a trend toward replicating success, and rabid competition. Furthermore, these startups don't represent the vision of where the founder wants to take the company, but just a miniature vs of the startup for what is possible today with the small amount of resources they have. As these startups gain traction, their vision will expand, and their innovation will as well. Some will die off, and a few outliers will emerge. Not every company becomes Facebook or Google, it's logically impossible for every startup to be an outlier.

pg 15y ago

She seems unclear in her own mind what she thinks the problem with SV is, because this seems to be a combination of all the standard brickbats people throw at the startup world (I wouldn't even say Silicon Valley, since these complaints apply equally well to any startup anywhere): that a lot of startups are "derivative" (like Google was); that startups tend to have exits (investors need them structurally, but founders like them a lot too); that startups solve trivial problems (like writing Basic interpreters for computers used by a few thousand hobbyists); etc.

Locke1689 15y ago
I also think that the criticism that startups are not "big-thinking" enough is more appearance-based. She may be more impressed if startup pitches read like research papers and less like, well, startups. However, there are a number of problems with conflating research problems with startup opportunities, one of the first being that the startup field is now a lot smaller than it was. She talks about Stanford and Harvard students as though they're the best of the best and while it's true that recent graduates may have great potential, what you really want for research-level efforts is domain experts. It usually takes years to become a domain export -- far longer than the typical beginning-phase startup. There are also a number of major problems with funding straight research efforts just from an expected-value point of view. Even Google was mostly working with known quantities (i.e., the exploratory research had already been done) when it started. If the result of a year-long startup effort is "turns out this is impossible" that's pretty bad. Basically, there's a sweet spot for startups in a fiscal and informational sense and I think it will always tend to sound a little less impressive given that context.
- pnathan 15y ago
  It usually takes years to become a domain expert Very true. Suppose you know coding when you're 25. Then you have even more years to study a domain and be able to apply your computational skills to the cutting edge and have that deep domain knowledge to pull off an amazing solution.
- Apocryphon 15y ago
  I would read a research paper-styled startup pitch for Color.

nhangen 15y ago

This is also a problem for users, who sink time into supporting/using a service only to have it yanked out from underneath them. Right now I'm averaging 5x daily deal emails per day. I can't stop subscribing fast enough. The valley is very insular, and IMO it doesn't get out often enough. To make matters worse, any time I argue this with my friends in SF, they get very defensive. The valley is becoming the popular kid in school, for all of the wrong reasons.

WorkInKarlsruhe 15y ago

Ugh, what a rancid, judgmental article. His arguments about changing the world are stale. The problems of a Silicon Valley person are quite different from the problems of someone in an emerging market, such as rent of like $3000/month, and so it makes no sense for someone in Silicon Valley to address an emerging market that has no chance of covering costs of living back home. The people in the emerging markets are quite capable of helping themselves, and don't need privileged, naive Americans to step in and show them how backwards they are (ironically, most other societies are more socially advanced, even if they are technologically backwards, and could teach the Americans how to actually achieve quality of life without technology). [And if you are going to step in, please read Schumacher's "Small is Beautiful", and pay attention to his arguments for intermediate technology (i.e., you don't dump differential equations on someone still learning algebra).] If showing someone how to best locate the nearest cupcake shop makes customers happy, then that is a virtuous reason for a startup to exist. It is silly and judgmental to say that people are wasting their talents because they focus on the materialistic first-world problems rather than desperate emerging-world problems. It is about making customers happy, employees (and founders) happy, and investors happy. The question should be: are the founders actually happy doing the work they have chosen? If not, then it is a mistake. Perhaps what the author is really trying to say is that people are focused on getting rich quick off trivial business plans, which will be easily commodotized, or will have hardly any market, causing failure and loss of the investor's money. There is some merit to this sentiment given some of the examples he gave.

Apocryphon 15y ago
Perhaps what the author is really trying to say is that people are focused on getting rich quick off trivial business plans, which will be easily commodotized, or will have hardly any market, causing failure and loss of the investor's money. There is some merit to this sentiment given some of the examples he gave. I'm almost certain that is her ultimate angle.

vlad99 15y ago

What SV needs to do is help the GDP go boom so they can chip in enough tax money to cover NASA's expenses for their groundbreaking discoveries. +1 if you agree!

grandalf 15y ago

If you credit yourself with being able to identify "game changers" among early stage startups, then you're crediting yourself with more wisdom than the VC community. Even VCs acknowledge that they are wrong a large percentage of the time.

pg 15y ago
Yes. If she's right, she's certainly better than me at picking winners. I thought Airbnb was a bad idea when we funded them.
- pja 15y ago
  Were they an "invest because they look like good people to invest in" choice then pg?
  - pg 15y ago
    Yes. We funded them because we liked the founders.
aaronblohowiak 15y ago
" there’s only two, out of two hundred, I think are game changers. " -- 1% seems high to me, but it seems to surprise her.
- neelm 15y ago
  AirBnb seems like a startup is getting significantly more success. Why this person considers them to be more innovative than many other startups however shows I think a bias towards selecting a winner after its already won. There are plenty of amazing, innovative startups in terms of their vision and technology that will ultimately fail. That's the nature of the business. I think her problem is she just doesnt have the right deal flow, and doubt she has been part of or witnessed up close a game changer. There are startups in the Valley that are working on microbial fuel cells, flow batteries, microwave radar, tumour selective drugs, computational photography, nano-controlled membranes for unprecedented efficient water purification, stream processing algorithms, optical computing, immersive UIs, gasification, robust computer vision, RF plasma lighting sources, novel financial transactions, high efficiency combustion engines, compressed air storage, green plastics, ML for genetic applications, next gen EDA for <25nm structures, and of course shoedazzle. I think the issue is her dealflow and perspective. coming to SV for 6 months assuming you're going to see game changers when most VCs for 10 years dont is poor judgement.

tptacek 15y ago

Stupid YC companies with all their stupid IPOs. At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and fourth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can. Normal people call this "talking shop". Get a bunch of doctors together sometime and see if they're talking about changing the world.

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CodeMage 15y ago
I believe her point was that she expected to hear tech entrepreneurs "talking shop" about tech, rather than about "entrepreneurship". To follow your analogy, it's as if you heard a bunch of doctors discussing how many patients they had last week, instead of interesting cases among those patients. I don't live anywhere near the Valley nor am I an entrepreneur, so I can't either agree or disagree with her points, but I confess that I would've had similar expectations in her place.
- tptacek 15y ago
  Yes. I'm saying: you're more likely to hear them talking about patient numbers, or bitching about billing systems or medicare reimbursements.
  - timr 15y ago
    You might hear them complaining about medicare reimbursement, because that's (sadly) part of the daily life of a doctor. You don't often hear them talking about Kaiser's quarterly revenue numbers, or who gave whom a loan to go to medical school, or how Stanford is totally dominating the regional market for organ transplants (or whatever). I know a lot of doctors, and a lot of entrepreneurs, and I'll take the medical shop-talk any day of the week, because doctors are primarily interested in medicine, not business. It's unique and refreshing when you meet an entrepreneur who is primarily interested in something other than money.

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tlb 15y ago

Startups often seem like clones (of Groupon or whatever) when you only get the one-sentence explanation of what they do. But there's always a much deeper difference in goals, strategy and tactics when you get to know them. I don't know any Groupon clones. Groupon's operation is complex and subtle, and there are lots of related things that are also promising.

wheels 15y ago
CityDeal was about as close as you can get to a full-on clone schlepped to another market. If the stories I've heard are to be believed, they actually sent people to become interns at Groupon to do reconnaissance. Granted, it was from the Samwers, who both are not Silicon Valley and are famous for cloning American startups. (They've done it with Airbnb now too.)
- phil 15y ago
  I think the Samwers are the exception that proves the rule, since their ventures seem explicitly designed as clones. The strategy is the same, it's just been translated into German.
- tlb 15y ago
  Maybe, in the same sense that Volkswagen is a clone of Ford. Adapting a successful idea to a new market is interesting and hard, and often results in new ideas.

invalidOrTaken 15y ago

This makes me think of ridiculous derivative startups like BankSimple. We've had banks for thousands of years. Why do we need another? Everyone knows Bank of America is innovating daily in retail banking, especially in customer service. Plus, think of everything subsistence farmers are doing with Windows Mobile phones! Oh, wait.

mburney 15y ago

This article makes a good point. The problem is not that startups are derivative or solving trivial problems. The problem is that the whole startup process has been manufactured and scaled to the point that it has lost its intrigue and stifled its innovation. Apple, Google, and Microsoft were outsiders when they were startups. Current SV incubator teams are more like elite in-crowd communities, safe and insular.

jeffreymcmanus 15y ago
Wrong, wrong, wrong. Nobody thought that Apple, Google or Microsoft would be game-changers when they were in the startup stage. When Apple and Microsoft were in the startup stage, their customers were hobbyists. When Google was in its startup stage, it was clear to everybody that they would never be anything more than a modest compliment to what Yahoo offered. If every startups were to listen to this author, nothing would ever get done. We'd spend our lives trying to "change the world" without making the millions of incremental improvements that are necessary for the world-changing stuff to happen.
- mburney 15y ago
  My point isn't to agree with the author that every company should try to be a game-changer. In fact, too many SV companies already think that they are game-changers before they've even launched anything. That's part of the problem. My point is that when you have the startup process manufactured and replicated into a kind of meta-startup (like YC), at a certain point the goals of the founders become more about conforming to the community and impressing each other rather than creating a genuine product. Obviously not all YC startups are like this, but any time something grows and scales, there is a danger of it losing its original purpose.
  - Apocryphon 15y ago
    My goodness. You know what this means? This is essentially Peter Thiel's argument against college applied to startup incubators. Think about it- these incubators are giving startup folks aid and guidance that past generations of never had. This is essentially creating a new elite who instead of going to Harvard and getting a leg up, are going to YC and getting a leg up. In neither case are the kids scrapping together in a garage, driven only by their own vision and living hardscrabble until they can score their first angel investor.

ChuckMcM 15y ago

So she lives in San Francisco for 6 months and feels qualified to explain what is 'wrong' with Silicon Valley? (which is nominally the Santa Clara Valley btw) I've lived (and worked) in the actual silicon valley for over 25 years and I can tell you that evaluating the area based on a 6 month snapshot is worthless. In 1984 I was Intel and the 'problem' was that there wasn't any real use for personal computers. A 1024 x 768 color CRT monitor was huge and cost about $3,000. Running at 640 x 480 in monochrome with a 'Hercules' graphics card didn't come close to the experience you could get with a decent minicomputer 'workstation.' But a workstation cost $50,000 and up. In 1994 I was at Sun Microsystem (the Liveoak project, aka Java) and I would have told you that the 'problem' was that you couldn't do business over email and without an economic engine what would fund all the work. I told Eric Schmidt (who owned Sun Labs at the time) that so called 'e-commerce' was where all the money would be in 1995 and if Sun wasn't able to participate it was toast. (sounds pretty lame in retrospect, but they did sell a lot of servers to Amazon :-) In 2004 I was at NetApp (after having my startup acquired by a company which would later be folded into Motorola in a deal which was reminescent of one of those trades in baseball where you get cash and a draft pick and oh by the way this guy over here.) I would have told you that the problem was that technologists had been pushed aside by MBA types who had lasered in on the 'rent seeking' business model and killed off innovation along the way. There isn't a 'problem' with Silicon Valley, it simply exists like a beaker sitting over a bunsen burner. Over time different chemicals are available in the beaker and sometimes something magical happens, and sometime noxious fumes come out, but the place is an engine. A lot of startups are endo-thermic with respect to cash but a few are wildly exo-thermic. Often times the by products of those become the ingredients of the next round of innovation. I'm not sure the author has had time to appreciate that while she may have encountered dozens of GroupOn clones, she seems to have missed that there are dozens of GroupOn clones. If you were in, say Minneapolis, how many GroupOn clone startups are there? Energy makes reactions possible, the SF Bay area is full of energy (and resources) which makes it easy to create a new company. That the companies that have currently been created are boring to you is merely a side effect.

schwabacher 15y ago
I am from Minneapolis and we have at least two Groupon clones. I think this says more about the abundance of Groupon clones than it does about startups in Minneapolis.

jonmc12 15y ago

Arbitrage vs Innovation - consider that startups that are using technology to make an existing market more efficient are profiting due to arbitrage of technology. Consider that startups that are using technology to create a new form of value are innovating. Technology arbitrage is kinda boring, but can have big rewards. I imagine the profit distribution among these startups looks kinda bell curvish. Technology innovation and commercialization is a different game - here you have a few big winners effectively creating new paradigms, followed by technologies that may add marginal value in a large number of markets. Its part of any economy to have a mix of those who arbitrage and those who innovate. Silicon Valley is no different.. in fact, you could argue that the arbitrage plays are necessary to create the funding environment that can facilitate technology innovation. I find it a useful lens for understanding the startup infrastructure. To further refine the lens, you can look at through the asset class that each startup is attempting to create (personal reputation, team, tech, users, profits, strategic value) - Elad Gil has a good blog on this http://blog.eladgil.com/2011/01/m-ladder-position-your-startup-to-sell.html http://blog.eladgil.com/2011/01/m-ladder-position-your-start.... So, I see what the author is saying, but really I think she is looking through the wrong lens. Funded innovation sits at the top of a complex economic ecosystem of interconnected, evolving pieces.

minimax 15y ago
Are you saying "arbitrage" when you actually mean "incremental improvement"?
- jonmc12 15y ago
  No, I was using the word in an economic context. Specifically the action of capturing value in one market with a technology that has been proven in another market. Groupon clones, Social game companies, etc However, I believe incremental improvement is a fitness criteria of technology arbitrage.
  - minimax 15y ago
    An arbitrage trade is a risk free transaction that involves buying something at one price and then immediately selling it at a higher price. How does creating a Groupon clone fit into that model? How do you get from imitation to arbitrage?

thingsilearned 15y ago

SV startups I've always felt are significantly less derivative than any other business that I've ever known. 99% (or whatever) of businesses started are another bank, Mediterranean restaurant, carpet cleaning company, franchise, etc. that are exact clones or nearly anyway of the same company in the next town over. If by her scale there is no innovation in SV and YC then its just not happening anywhere. She's just dealing with an unrealistic expectation of the speed and efficiency of innovation.

localhost3000 15y ago

isn't it really that web startups are "easy" and hard-tech startups (hardware, biotech, alt.en, pharma etc.) are...well, hard? (I mean this relatively speaking, of course) -- It takes close to zero education to sit down and create a product on the web (how many of us were building websites when we were 12? yup.) - hell, we're even now questioning the value of a college degree... To create Halcyon Molecular, on the other hand, you need world-class scientists culled from top universities with years or even decades of experience (never mind all the liquid capital you need). It's simply a different ballgame entirely. With this marked difference in entry requirements, of course the web-app startups outnumber the Halcyon's 1000 to 1. Is that a problem? Well, maybe. But is it a surprise? Absolutely not.

lisper 15y ago

Anyone who thinks there is no innovation or risk taking in the Valley, contact me. I can point you to tons of companies that are keeping the old traditions alive. Those on the leading edge always attract wannabes and pretenders when they succeed, and when the success is big enough the wannabes and pretenders can overwhelm those on the leading edge. That doesn't mean they've gone away, it just means you have to look a little harder to find them.

arram 15y ago

I was at the barbecue and can say that she took some license with the conversations there. I (and others I've asked) didn't hear anyone asking who was going to acquire x company, etc. The entire article comes off as condescending and self righteous. The suggestion that your company isn't worthwhile if you're not solving 3rd world problems is absurd. As is the notion that founders who are in it to make money are misguided. This sort of thing is typically said by someone with money - in this case a VC.

rdl 15y ago
Why was she at this bbq?
guiseppecalzone 15y ago
I was at the BBQ as well. I didn't realize it at first, because the BBQ she describes is completely different from the BBQ I attended. I'm so perplexed, it leaves me wondering if this is ethical journalism. "At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and forth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can."
- kul 15y ago
  Sigh. Another inconsistency. Asking how many users you have is another way of asking what impact you're having.
  - argv_empty 15y ago
    A company's having many users/customers is a type of impact, yes.
garbowza 15y ago
She said "real world" not "3rd world", which certainly adds different context.

dusklight 15y ago

What I think the real problem is entrepreneurs who are primarily looking for money/recognition don't look for problems that need to be solved, they look for problems that can be solved. I would love to see more cross disciplinary startups instead of companies solving problems using purely software.

jjm 15y ago

I want to exit so I can have enough money to not worry about if something I work on or come up with isn't 20 years ahead of it's time putting me in the poor house. I worked in big corp thinking I could make a change but that didn't happen. Reached the top technically, and that was it. So I can't blame these guys as I know some of them think like I do. However, like any good thing you can get caught up in it and forget why you started it in the first place.

fecklessyouth 15y ago

As an ignorant observer, I feel like the Silicon Valley has to avoid becoming Wall Street--billions of dollars given to geniuses to make a profit while filling an existing but trivial need that truly helps a small portion of the population.

iamwil 15y ago

Most of the time, game changers don't look like game changers when they first start. So they're often dismissed as being trivial. It's true for anything that we depend upon today. cars, radio, tv, computers, internet, social networks, twitter, etc. Most people, investors (and myself) included, are also not the most imaginative bunch. You can't hope to raise money from things that are more than one hop away from things that they know. And lastly, innovation from a startup's perspective, is almost never a brilliant flash of insight. It's usually a gradual iterative process of discovery and learning that looks like a brilliant flash of insight in hindsight, especially to people re-telling the story. Everyone wants to hear about what was going on when the meteoric rise was happening (relatively short time), as opposed to all the time spent laying the ground work and exploration and deadends beforehand (relatively long time). You can only hope to do iterative discovery before breaking the ground somewhere. What the author complains about lack of innovation is really just what innovation looks like on the ground--feeling around in the dark. You have a better chance of finding something if you work from where you know, rather than just taking a giant hop. And really, innovation is never immediately obvious. It usually is just an inkling--a tickle. On a macro level, innovation has flashes in the number of people that are working on it. Lots of people are doing groupon "clones" because it's still an area where variants are to be explored. If you think about us as a colony of ants, we're all looking for food (ideas), and once we find some, we'll exhaust that before looking for more. Where there is food is likely to be more food. It's not exactly a bad strategy.

fijiaaron 15y ago
Just because you can't tell what a game changer is in advance -- and that you might even consider it trivial at first -- doesn't mean that you can't tell what is geniunely trivial too.

barce 15y ago

Some universities and clever ads have brainwashed non-technologists like Ms. Way into thinking that software do a lot of things that they do not really do. In some cases, the illusions are lies; in other cases, these folks are hoodwinked into believing that what software can do is done without much effort.

mbesto 15y ago

I can personally relate to this perspective as someone who doesn't live in the valley but follows it very closely. Ultimately I think what the author is trying to say is that there is a lot of "disgust" (I'm trying to use that term loosely) about the current problem solving that is being produced out of the valley. Is it a problem that I walked by an old friend at a restaurant and didn't realize we knew each other? Oh, there's an iPhone app for that!? There is a difference between satisfying a market and actually solving what is to be considered a real life problem. I do think the current nature of the valley is that of "Wouldn't it be cool if I could..." rather than "My life would be substantially better off if I could..." I suspect this is what she is trying to highlight. So this begs the real question - what do we consider to be real life problems? For an upper class American a problem may be that you were unable to figure out the name of the last song played on the radio and for poor villagers in Africa it's having no access to water. Is solving one person's problem more advantageous than another?

Apocryphon 15y ago
I think there is a notion that there is a finite quantity of innovation, or rather innovators- and if the economic environment favors photo sharing apps and so on, most innovators would rather try to make a quick buck putting their efforts and using their skills to solve "first world problems." And so the ultimate condemnation is that smart people are wasting their resources on issues that are of less social value than issues in the less advantageous world.

forensic 15y ago

This author sounds to me like she wants Silicon Valley to entertain her. She sees the valley not as a normal participant in the Western economy, but rather as some kind of vehicle for the creation of her utopia. If you're going to condemn people for not sacrificing their lives for the Africans, why start with programmers? When doctors, lawyers, plumbers, bus drivers, real estate agents, elementary school teachers, civil engineers, security guards, 7-11 owners, and bloggers stop trying to make money, I will too.

me2i81 15y ago
Right, and there are various startups in and out of Silicon Valley working on humanitarian projects. The funding model is quite different, based mostly on grants. That kind of funding is even more fickle than VC money, and nobody expects to get rich. The people I know in that sector have no problem recruiting talent if there's enough money to provide reasonably stable (but somewhat paltry) paychecks. Lots of people want to save the world, even geeks.

Harj 15y ago

"The problem is that it’s all about the money; it creates emphasis on Y Combinator startups to quickly exit or IPO." This sentence makes no logical sense, quick exits and IPO's are the antithesis of one another - there has to be an emphasis on one or the other, not both. It's based on a false premise anyway, the Start Fund has had no impact on how founders choose to run their companies. Since she's talking about investor incentives, I presume she thinks there's an emphasis on IPOs. If this were true, it'd directly contradict her argument, I struggle to think of any world changing companies that didn't IPO. "organizations like Y Combinator attempt to marginalize, commoditize or manufacture a process that is inherently risky." I'm not sure how we marginalize the process. Perhaps she should have asked some YC founders whether we've ever presented the startup process as anything other than the brutal, risky slog that it is.

hxf148 15y ago

I'm working on a startup (http://infostri.pe http://infostri.pe) that is way out side of SV and we feel it. I have no idea what it's like to be there in person but I imagine it would be a lot easier to meet, know and get interest from people if we were. Getting noticed as a super small (but tenacious) outsider to SV is.. difficult. That I do know.

deleted 15y ago

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dr_ 15y ago

The article becomes a bit absurd when it makes the implication that entrepreneurs may settle for cheaper locales like Chile or Cabo (I just returned from the latter and trust me although it's beautiful it's anything but cheap). Success depends not only on the abundance of VCs but also the available talent pool, experienced attorneys, landlords who get it, accountants, etc.

grellas 15y ago

Coming to Silicon Valley and expressing dismay that the typical founder is single-mindedly focused on profits and liquidity events is a little like showing up at Rick's and expressing shock at all the gambling going on. It is all well and good to pass judgment on what you see, but what did you expect? Nothing fundamental has changed in SV over the years and the Valley has no need to justify itself.

saygt 15y ago

This is nothing unique to Silicon Valley. A hub of any kind attracts opportunists of all qualities and intentions without discrimination.

protagonist_h 15y ago

One big thing the author overlooks is how first-world technologies tend to eventually "spill-over" into the third-world where they find their uses. Just look how Facebook and Twitter are bringing democracy to the Middle East. Yes, these things were created to solve problems of an American yuppie, but people in the poorer parts of the world find how to apply them to solve their problem. It's hard for an American entrepreneur to build a startup which solves problems of the developing world, because they are not exposed to those problems. You can only solve problems you understand.

epynonymous 15y ago

"At a BBQ last week with a group of Y Combinator graduates, the conversation went predictably back and forth, sounding something like this: What batch were you in? How many times did you pivot? How much did you raise? From who? How many users have you got now? What’s your growth rate? Who’s going to acquire you? It’s never about the technology or impact it’s having, it’s about the game of entrepreneurship; getting users, funding and exiting as quickly as you can." right on!

epynonymous 15y ago
i always believe in necessity being the mother of invention. a lot of what happens today is more synthetic and calculated seemingly: how fast can i grow this, it's not about how well i can build this to solve a problem, though building things well may be a driver of growth, it isnt the focal point for a few of these companies. the tofu example in the article was perfect although most likely fictional, but there are lots of these types of companies sprouting up.

generators 15y ago

LOL!!! this is quite universal statement. anything can goes. The problem with (%s) is Itself.% ( any random person , location , company ). LOL!!! stupid peoples.

neilk 15y ago

Hey, maybe the OP isn't exactly the most informed. But you can't argue that Tim O'Reilly doesn't know what the Valley is all about. And he's said some similar things. http://news.cnet.com/8301-13577_3-10045321-36.html http://news.cnet.com/8301-13577_3-10045321-36.html If I can "pivot" this discussion a little... as part of my job I've interacted a lot with Ward Cunningham, who invented wikis, helped invent Agile methodology, started people talking about design patterns, etc. This guy didn't exactly do any market research when he invented the wiki. He didn't throw up a landing page with a coming soon graphic. He didn't validate the concept with Google Ads. He didn't impress investors, or even customers. In fact it's likely that no one would have ever invested in the concept. He created something that, based on his experience and judgment, that he thought users needed. Turns out he was right. Maybe this kind of inspiration isn't productizable, which is why SV shies away from it. But is there no room for this sort of thinking? Even Google began in an academic environment, not in the business world. It seems to me that entrepreneur-thinking can get you only so far. Every really successful entrepreneur I know -- and I know a fairly high number -- has been a little bit crazy, and had ambitions far beyond monetization. Some of them ended up making a lot of money almost by accident. In our time, the hackers rebelled against the suits and are now running their own companies. A magnificent achievement. But is it going to be the final irony, that hackers are now going to think and act like suits? http://www.flickr.com/photos/caterina/158124358/ http://www.flickr.com/photos/caterina/158124358/

Apocryphon 15y ago
Gates, Jobs, Ballmer and Wozniak were supposedly rebels against Big Blue. So, history repeats.
- neilk 15y ago
  Perhaps I did not explain my point clearly enough. Gates, Jobs, and Ballmer are all businesspeople. Only Woz is the kind of engineer I was discussing.
  - Apocryphon 15y ago
    But... but they're the nerds who triumphed! The pirates of Silicon Valley! This messes up my hagiography in all sorts of ways!

zackelan 15y ago

> I’ve interviewed around two hundred startups and there’s only two, out of two hundred, I think are game changers. Breaking news: only 1 in 100 startups will significantly change the world. Film at 11.

fady 15y ago

@ChuckMcMm @sendos great points. i've been in sf for 5 years and can vouch for how much energy, resources, and passion is in this city. i've never seen so many happy people working away at their jobs, living the life as a san franciscan; paying crazy rent but living in a great city enjoying the pleasures it has to offer. i know this because i'm doing the same thing. it seems no matter where you go everyone is connected with their mobile devices, talking about the next start-up, using the next groupon clone's deal, eating/drinking at the local hip spots, etc.. etc.. the locals use the local goods. seems like it does not stop there. im connected to all the people + their followers, friends, etc. online, while im at work! people here get things done, and enjoy it too. PG recent article comes to mind.. the author forgets that silicon valley has connected people in a way that one cannot even begin to imagine. i think people are happier with their web apps, sharing tools, social networks, etc.. i feel the article makes good points, but to say the problem is with silicon valley is rubbish. its with humans. silicon valley has done nothing but changed peoples lives and continues to be the hub for new ideas.

h4x0r111 15y ago

just want to chime in real quick: she's a smart brit plus she's hawt.

NY_Entrepreneur 15y ago

Okay, I'll bite at this flame bait: First, sorry to be 'sexist', but the pattern is far too strong to ignore: For some reason, maybe part of some of the old teachings and/or attitudes of the Roman Catholic church, heavily in Western culture women are supposed to want to dedicate their lives to 'saving the world'. A belief is that, if they dedicate their lives to saving the world, then the world will be obligated to save them and will. Indeed, it is common for such a woman to be 'married' more strongly to their church or saving the world than to their actual husband. That is, she is married to her husband but 'commits adultery' with her church or the whales. Also, the women are supposed to regard money as something they are supposed not to be interested in. Indeed, a belief is that if they do have have money, then they will no longer deserve to be cared for by the world and, thus, will have a big net loss. In addition, there is a belief that any woman who does anything that results in making money is somehow doing something immoral and, thus, causing her, again, no longer deserving to be cared for by the world. If the above points seem absurd to you, then I congratulate you on hearing these points finally now instead of later. I hate to say this, but basically on these points I'm standing on rock solid ground. Believe me, I came to understand these points only very slowly and reluctantly and at enormous cost. Let's not go into all it cost. But, I can tell you, it's far too common for such a woman, with a loving husband, a house, three small children, busy at home, in a job, and at church, to attend a lecture on some need on the other side of the planet and, then, to give up everything to rush to the other side of the planet to address the need. One women I know even wrote a book about her effort along these lines, and I could, but won't, give you the author and title of the book. I kid you not: A LOT of Western women are out to 'save the' world, whales, environment, polar bears, kitty cats, puppy dogs, poor people in countries X, Y, Z (mostly NOT their own countries), etc. E.g., even the movies understand as in the remark in the second 'Jurassic Park' movie: "80% women, Greenpeace". So, she's out to save the world and is upset because SV is not. Okay, now lets set aside her point about saving the world. I'd make another point about 'finance': Yes, we would value a company based on 'discounted future cash flows'. But we nearly never have any way to know about cash flows very far into the future. So, net, a lot of financial evaluation is based on just the latest data, adjusted for 'variance'. Are the short term traders making a mistake? They are watching many times a second and will sell at the first evidence of a change in the status of the company and, thus, don't get caught when the price falls. If the cash flow indeed lasts, then the short term traders will again be doing the right things. VCs and their entrepreneurs can't sell in a fraction of a second, but, still, a short term horizon for evaluation seems to be ground into pricing in finance. So, that she is concerned about short term pricing is nearly inevitable. Next, that there are clones for GroupOn is not an example of something silly about SV: Instead, GroupOn is quite obviously vulnerable to a different clone in each of Peoria, Paducah, and Pleasantville. Indeed, a clone in Peoria might have better connections with the businesses in Peoria and have an advantage. Net, the many clones of GroupOn are mostly due to what GroupOn is doing instead of SV. So, why can GroupOn have such a high market capitalization? Because of the practice of pricing companies based only on very recent data. I would have another objection about SV: I can believe that the biomedical VCs know what they are doing. I believe that the 'problem sponsors' at NSF, NIH, DARPA, ONR, etc. know very well what they are doing. But for the information technology (IT) VCs, I ROFL and then crying. The incompetence is astounding, outrageous, off the wall, out of some Alice in Wonderland, beyond belief. Actually, YC is a grand exception: Most or all of the partners actually have some solid qualifications in IT. Otherwise, we're looking at history majors who got an MBA, worked in 'management consulting', 'development', 'marketing', analyzing stocks, and, thus, accumulated "deep domain knowledge". What a LAUGH: They don't know the first thing about IT, even the old stuff, and they have not a clue about evaluating things for the future. What technical IT founder would want to hire one of these ignorant, arrogant blowhards? These blowhards are not qualified to do anything technical, teach a technical course in a university (or even high school), write a technical paper, review a technical paper, get a research grant, etc. Again, at biomedical VC, NSF, NIH, DARPA, ONR, and YC, the situation is wildly different. The non-technical situation in VC IT is so uniform that I have to look for a single cause, and my guess is that the situation is not due just to the VCs but to their LPs. It's very much as if some of the leading LPs wrote the criteria for each of seed, Series A, B, and C rounds on one side of a 3 x 5" card and insist that the VCs follow these criteria. In particular, the criteria demand that the VCs just ignore the 'secret sauce'. What to pay attention to? Seed round: Look at the prototype software and estimate if many users will like it and give their 'eyeballs'. Series A: Have the number of unique eyeballs per month at at least 100,000 and growing rapidly. Series B: Have revenue growing rapidly. Series C: Have earnings, and buy a chunk of the company based mostly just on the earnings and exit possibilities. For any estimate of building a serious company, ignore that. At an IT VC table, without YC, now tough to find an A. Viterbi or G. Moore on either side of the table. That 3 x 5" card IT VC criteria explains the trivia she sees. On this point, I agree with her.

newobj 15y ago

It's ironic, or whatever the word that we mean to say when we incorrectly say "ironic", that GroupOn started off as a "change the world" kind of thing (ThePoint) and then pivoted into "just" a trivial deals site. Also that it's a product of Chi-town, not SV.

buyx 15y ago

consumers in the USA clearly want to play Angry Birds, whereas in some African countries consumers are more likely to be searching for their nearest Malaria drugs clinic. Yes malaria is a huge problem in some African countries, but in case some Rovio staffmember reads that and suffers an existential crisis, here's an anecdote to make them feel better: My 3 year old nephew loves Angry Birds, and got his nanny to play it with him. She was intrigued by it, and started learning how to use a mouse, launch Chrome, and launch and play Angry Birds. This is a 30 year old black South African woman from a rural area, with no prior experience of computers, who was forced to leave school in Grade 9, because of a lack of funds, who began learning a new skill. Will she pursue it? I don't know. Will she encourage her own children to become computer literate, maybe buying a cheap computer for her children to play with? Quite possibly. But it wasn't some World Bank funded outreach program that got her using a computer, it was Angry Birds.

chrischen 15y ago

> "But for every Airbnb and Udemy there are always more Netflix, Evernote and Spotify clones." She clearly has not spent much time using or even understanding what the companies (Moki.tv, Noteleaf.com, or earbits.com) do... because those are not even close to clones.

ChrisBeach 15y ago

Author makes some valid observations but misses something important. Who's changing the real world today? People like Bill Gates, putting billions of dollars into the fight against malaria. What process generated that wealth?

csomar 15y ago

Made me suspicious about her claim of other countries start-ups hub. I checked the Chile ones, and well, they are just poor. I picked two start-ups randomly: Askbot (http://askbot.org http://askbot.org) which is an awfully designed clone to StackOverFlow. The other start-up I picked is AI Merchant (http://www.aimerchant.com/ http://www.aimerchant.com/) which does commodities exchange in a lower abstraction level. The realization, however, is very poor. I prefer the Silicon Valley clones and crap.

Enlightenment 15y ago

What has happened to web sites is what happened to rap, just the same shit over and over, but with a new name on it.

Enlightenment 15y ago

What has happened to web sites is what happened to rap, just the same shit over and over, but with a new name on it.