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I thought the Silicon Valley cycle was more like: 1.) Near the end of the boom cycle, the smart tech investors stop playing the game as valuations get out of w
by somethoughts 4y ago
I thought the Silicon Valley cycle was more like:
1.) Near the end of the boom cycle, the smart tech investors stop playing the game as valuations get out of wack and puts money into reserves.
2.) The dumb tech investors, that joined at the later stages of the boom, play as long as they can and then the write downs start happening.
3.) The incumbent tech companies also start slowing down and letting go of people indiscriminately and the top talented engineers now become free agents who sell their highly appreciated stock options.
4.) No longer beholden to golden handcuffs, the free agents are free to execute on their side projects while living off their stock option cash-outs and severance. And many perhaps even convince former coworkers who are bored and struggling through multiple rounds of indiscriminate layoffs as well as other engineers laid off from the competition and other flailing startups to join them on this new "cool idea".
5.) The next generation is born as the business plans and prototypes around those "cool ideas" start to come together and the smart VC money sees more realistic valuations.
- frozenport 4y agoNot clear if the next generation is formed from from over paid "free-agents" executing on their side projects.
- somethoughts 4y agoOf the 30K FAANMG employees laid off thus far in Silicon Valley, it will just take a handful of them to lead the next generation. Not to mention the fully vested, two decades of FAANMG experience veterans now free to try their hand at full time angel investing.
- EGreg 4y agoThat last part is key!
- cloutchaser 4y agoHow are sequoia funds doing these days? If your point would be correct it would suggest these types of old VCs have already gotten their money out in some insider trading phase. They didn’t. And they just lost $400m on just FTX. Their portfolio is massively down too. How is SoftBank doing? The biggest of them all? They are at record losses. Despite your Marxists leanings, life is not about exploitation and rich vs poor. It’s an easy assumption to make, but it’s completely wrong.
- somethoughts 4y agoSince this cycle lasted so long there has been dumb money in the game for awhile (i.e. SoftBank, Tiger). Actually since so many pension funds and endowments were chasing yield, as you mention even some of the smart money like Sequoia succumbed and became dumb money to make fees.
- _hypx 4y agoI do wonder how much this next generation of innovation will be captured by Silicon Valley investors. A lot of "cool ideas" are either not particularly monetizable, or about stopping existing monetization of products. For instance, turning social media into something closer to non-profit, akin to how Wikipedia works, would be a huge benefit to society.