
Silicon Valley: A Reality Check - gbear605
http://slatestarcodex.com/2017/05/11/silicon-valley-a-reality-check/
======
hvs
This is a good article for pointing out the some of the great work going on in
SV and why it's an engine for innovation.

That said, the Juicero was ultimately panned because it was a bag squeezing
machine (and not a very good one), but it is also the sort of cynical ploy
that requires a wifi-connection to "check the expiration date" when we all
know it was to enforce their DRMed juice packets. The investors weren't upset
that it was a ridiculous product, they were upset that it was suddenly not a
Keurig-style landfill-stuffing nightmare that they could charge ridiculous
sums to people for DRMed juice.

To paint SV with the Juicero brush is unfair, but let's not pretend there
aren't tons of people (and VCs) in SV that would kill to get funding (or fund)
just that sort of product.

~~~
x2398dh1
That's precisely what SV has become - an engine for innovation, rather than a
set geographic area. About 6-7 years ago people started referring to San
Fransisco as, "Silicon Valley," which, geographically is not true, but it has
become accepted because people know that both areas follow a particular brand
of innovation. The culture and ways of creating certain types of business
models which may have originated largely in Silicon Valley have spread to
other areas, much as the London-based capitalist thinking of the 1600s-1700s
has now spread across the globe, or the Dongguan-based capitalist legal
structure has spread across China since the 1980s.

The term, "Silicon Valley," doesn't even make sense anymore as there are no
longer any silicon fabs left in Silicon Valley. When you have all sorts of
cities and places around the US saying, "We'll we're the silicon valley of X,"
or "We're Silicon Prairie." What they are literally saying is, "we're going to
start up a bunch of silicon fabs in this region," but what they are actually
saying is, "we aspire to be super innovative and follow this particular brand
of ethos and culture."

Technological capability tends to be spread out over the world, and teams tend
to work remotely. The author of this article is not even based in Silicon
Valley, he claims to be based in the midwest. I am not based in Silicon Valley
but I work with people from there all the time. I also work with people in
Denver, Idaho, Montana, Minnesota, Chicago, etc., who are interested in this
innovative industry. Wrapping ones identity up in a particular city-based
geographic region to an excessive degree is almost as bad as being an outright
nationalist. This city-nationalist way thinking prevents the free flow of
ideas.

When people attack Silicon Valley in the news or blogs, they are creating a
thesis against the idea of software and internet-based business models as a
whole, rather than a geographic region.

~~~
rm_-rf_slash
I disagree. Silicon Valley represents a distinct form of tech capitalism,
characterized by the 10x firms and sky-high valuations of products that have
yet to make a cent in profit.

Tech capitalism has a different tone in other places. A friend of mine works
remotely for a company based in the Midwest, and the corporate/VC culture is
worlds apart from Silicon Valley/San Francisco.

~~~
FussyZeus
While this comment is perhaps a little more cynical that I would've gone with,
the fact is that a whole lot of the most valuable SV companies have never
turned one bit of actual profit. When regulations finally come about that put
the lid on a lot of the personal information market, a whole lot of these
companies are going to have to find a way to make money that doesn't involve
scraping user's information, and I think that will be a red letter day for a
lot of these companies.

------
ajobaccount2017
I think that Juicero articles have nearly nothing to do with Juicero and a lot
to do with the growing sentiment against SV.

While there are many good examples in OP's blogpost, most people are familiar
only with the past and present unicorns and how they operate.

So there is the story of Uber that is going on: an immoral company with
abusive management, avoiding taxes, exploiting employees and killing local
business. It may be the biggest factor in this.

Another factor may be that people are becoming more and more aware and wary of
the main modus operandi of the SV internet companies: data hoarding.

My point is that Juicero story happened, because people are looking for
reasons to dismiss SV, not because Juicero did something exceptional. Unless
the reasons for the sentiment are addressed, it probably won't go away.

~~~
watwut
Another factor is backslash against "change the world" bs where every company
framed itself as a bunch of saviors saving us all. You was anti-tech outcast
if you disagreed, so it stayed bottled up and once someone breaks it, everyone
wants to add his piece.

------
amirmansour
The part about the rockets is off. SpaceX is based in Hawthorne, CA, which is
in the Los Angeles area. LA has a high density of aerospace engineers, which
is one of the reasons Musk based SpaceX there.

Source: Worked there.

~~~
doctorcroc
The spirit of the article was to praise the fruits of SV culture, in which
Elon Musk is a revered leader. But yeah, if you want to be pedantic, yes space
x is in Southern california.

~~~
yardie
If you include companies who aren't in SV in an article about SV. What's the
point? I guess any startup that is SV funded is assumed to be a SV startup?

~~~
SimbaOnSteroids
Maybe it's a stretch but anything Elon could be seen as an off shoot of the
successes of SV. He started and sold Zip2 and PayPal there. He used the money
from those ventures to start SpaceX and invest in Tesla. Also iirc much of the
capital for these ventures comes from SV players.

------
betageek
"When Silicon Valley screws up, people who want a pointless Wi-Fi enabled
juicer get a pointless Wi-Fi enabled juicer. Which by all accounts makes
pretty good juice."

Nope. Silicon Valley screwing up has real world consequences. All the "wifi
juicer" startups are taking up resources - money, people, time, materials -
that would be better spent elsewhere. One of the biggest problems the valley
has is that it wants to keep it's 'hey, we're just insanely great guys having
some inconsequential fun' image while ignoring it's real world impact.

~~~
cousin_it
Yeah, it was weird reading that argument from Scott, who long ago proposed
using dead children as a unit of currency:
[https://web.archive.org/web/20160318104428/http://www.raikot...](https://web.archive.org/web/20160318104428/http://www.raikoth.net/deadchild.html)

~~~
RodericDay
Scott Alexander is the kind of writer that found his niche reassuring wealthy
liberal people that, yes, they actually are living in the best of all possible
worlds.

He's now in the same bucket as Steven Pinker, David Brooks, Doctor Pangloss,
etc.

~~~
adwn
> _Scott Alexander is the kind of writer that found his niche reassuring
> wealthy liberal people that, yes, they actually are living in the best of
> all possible worlds._

Huh?! You must have him confused with someone else. This assessment of his
writing is so completely wrong that I don't even know where to start
correcting it.

~~~
selimthegrim
He's probably talking about the conclusions your average SSC readers ends up
drawing - a literate, wordy reinforcement of the status quo and "problems are
hard". Whether this is Alexander's intended effect is another story.

~~~
TeMPOraL
Compared to typical stories everywhere else, with simple and obvious solutions
that are totally wrong, I'll take SSC any day. Scott is one of the rare breed
of writers who seem to actually think things through.

------
soVeryTired
I'm not sure I agree with the conclusion of the article: "When Wall Street
screws up, the country is plunged into recession and poor families lose their
homes. When Silicon Valley screws up, people who want a pointless Wi-Fi
enabled juicer get a pointless Wi-Fi enabled juicer."

Silicon valley tech is funded by VC money. A substantial portion of that VC
money comes from institutional investors (i.e. pension funds). The investors
need to see a return at some point. If they don't, the taxpayer will
eventually pick up the bill via pension fund bailouts. The chain of causality
isn't as clear as with the financial crisis, but all that money has to come
from somewhere. If it's squandered, there will be a reckoning eventually.

~~~
potato_mOWX2EVX
> institutional investors (i.e. pension funds)

I don't pensions funds would invest in Start-UPs since they have a low risk
threshold.

~~~
smeyer
>I don't pensions funds would invest in Start-UPs since they have a low risk
threshold.

You seem to be mistaken. Here's a 2014 article titled "Behind the Venture
Capital Boom: Public Pensions" from Bloomberg. Specifically, the article
claims (sourcing a Dow Jones report) that "In 2014, they contributed 20
percent of the sector’s overall haul, down slightly from a 25 percent
contribution in 2013." It's not that a massive fraction of each pension fund
is in venture capital, but a sizable chunk of the money in venture capital is
from pensions.

[https://www.bloomberg.com/news/articles/2014-09-23/are-
publi...](https://www.bloomberg.com/news/articles/2014-09-23/are-public-
pensions-inflating-a-venture-capital-bubble)

------
philh
There's another thing that I think is worth bringing up: sometimes the things
that we think are useless are, in fact, useful to the people who buy them. See
[http://theunitofcaring.tumblr.com/post/160054980296/so-of-
co...](http://theunitofcaring.tumblr.com/post/160054980296/so-of-course-the-
news-that-juicero-is-selling-a) and
[http://theunitofcaring.tumblr.com/post/160099648056/unverifi...](http://theunitofcaring.tumblr.com/post/160099648056/unverified-
claim-i-coincidentally-heard-today)

> that genre of thinkpiece spawned another genre of thinkpiece, which drops
> the ‘marvelling at how poorly-conceived or scammy products get hundreds of
> millions in investor funding’ to just settle on ‘sneering at the fact things
> are sold which I, an enlightened consumer who sees past the horrors of late-
> stage capitalism, would never buy’.

...

> yes, there exist people for whom getting a package regularly is way less
> stress and way more convenient than running out to the nearest convenience
> store. Not everyone lives in cities where the nearest toothbrush is ‘down
> stairs to the bodega’, not everyone has access to a means of transportation,
> not everyone can leave their house or pick things up at the store. The
> store’s hours might be hours you are working. You might be a single parent
> who can’t nip out for a shopping trip without packing up the kids. You might
> be disabled. Literally all of those things at once might be true, and are
> true for many people!

...

> unless you’re a big established company for who [$2300+ is] nothing and the
> cost of the lawyers is no big deal, it’s way safer not to admit that your
> product is for disabled people or to advertise in a way that suggests it is
> a solution to a specific condition. And so we get generically incompetent
> infomercial people

I wonder if that's what the EZ-Crunch bowl does. I'm not sure what disability
it might help with, but I'm hardly an expert on all the disabilities that
exist in the world.

~~~
beaconstudios
I don't understand why the quoted author took issue with Quip in the first
place. Modern life is increasingly complicated, and full of small burdens on
memory and willpower that add up to a huge background stress load. If I can
pay a small amount of money to alleviate just one thing to remember
(refreshing my toothbrush every couple of months) and could do that for every
other annoying little inconvenience of modern life (car
maintenance/insurance/tax, renewing and comparing financial services, buying
in food and finding new recipes, tracking my dietary composition and fitness,
backing up my computer, expensing mileage, and so many hundreds of little
things) then life would be a lot more enjoyable. I have nothing but praise for
the companies who focus on the little things and do them well. We could all do
with not having to think about and remember so many things.

~~~
ghaff
Yeah. I have no particular problem with the quip. It's an expensive electric
toothbrush but not ridiculously so. For me, it ultimately wasn't great as an
electric toothbrush for travel which is what I bought it for. But, in general,
I take advantage of subscriptions and automated billpaying etc. when I really
do want things to be on autopilot as much as possible.

------
anovikov
That's fine, this is how innovation works: for every big hit which changes the
world, there are 9 scams and 90 plain failures. This is the way it should be.
It was same in the age when the car was invented, or a plane - a ton of people
got funded with scam projects, and even more tried to bootstrap obvious
nonsense. We just didn't have the Internet back then so it received a lot less
coverage.

~~~
rtpg
I don't get this logic.

Imagine if doctors had 99 failures for every successful operation. "Well
that's just the way it has to be for that success".

Sure, maybe Juicero could make money, but maybe $120 million could have been
invested into some slightly more useful things?

Who gets to decide? Obviously the investors and VCs, and it's their money.

VCs simultaenously say that their 1:100 hit rate is part of their big
strategies and that everything is luck. You can either be gambling your money
or you can be using skill, but you can't do both!

(modulo probabilities a bit higher than lottery ticket odds)

~~~
anovikov
This is an absolutely wrong comparison. Building startups is R&D, it is not
the production, so acceptability of failure is much higher. Better compare it
this way: what if 99% of all potential new drugs fail clinical trials and
never make it to the pharmacy shelves, of which 9% would be deliberate scams
devised by con artists to extract funding? That will be just fine, and in
fact, that's what it is in the drug world! We are still, as humanity, making
great progress in treating diseases.

------
henrik_w
Related (yesterday in The Guardian): "America has become so anti-innovation –
it's economic suicide"

[https://www.theguardian.com/technology/2017/may/11/tech-
inno...](https://www.theguardian.com/technology/2017/may/11/tech-innovation-
silicon-valley-juicero)

------
bradgessler

        When Silicon Valley screws up, 
        people who want a pointless Wi-Fi enabled juicer 
        get a pointless Wi-Fi enabled juicer. 
        Which by all accounts makes pretty good juice.
    

No. When SV screws up we get a 1.5 billion person social network that shows
indifference towards "fake news"

~~~
hkmurakami
Is that really different than the fellow who only watches FOX News or the
fellow who only watches MSNBC?

~~~
x2398dh1
I don't know if your question is genuine or whether you were more asking out
of anger...it's different from the standpoint of editorial involvement. Fox
News and MSNBC have editors who filter the majority of their content, while
the users (readers) contribute, "feedback" in terms of what stories are,
"hot/trending" as well as comments. In Twitter/Facebook these roles are
reversed, with the users filtering the majority of the content, barring
outright obscene content.

Fox News and MSNBC do have the option of pushing stories which change the
conversation, thereby controlling how things are delivered on a story-by-story
basis, like an art form whereas Facebook has dials and levers to tweak
particular aspects of how sharing is done. I would say news content on
Facebook is 90% sharing, 10% curation while news content on MSNBC and Fox are
80% curation and 20% sharing.

------
gwbas1c
"there’s not a lot of evidence for silly Juicero-style startups being much of
the Silicon Valley business community at all."

"Origin (“Keurig for smoothies”), MoveButter, which compares itself to three
different companies I’ve never heard of in its first sentence but seems to be
grocery-related in some way; Mere Coffee, a better-tasting coffee machine for
small businesses"

All of those businesses just sound like Juicero. A “Keurig for smoothies” is
just Jucero with a small pivot.

~~~
nostrademons
Given that there are thousands of startups that YC alone has funded, and
probably hundreds of thousands in the Bay Area, naming three doesn't really
contradict the author's point.

------
davidjnelson
> some sort of enterprise data solution software application package analytics
> targeting management something something something “the cloud”

that's just flat out hilarious

------
pascalxus
The biggest problems now, aren't technical, they're more political. For the
biggest problems (housing, healthcare and transportation), the biggest
barriers to entry are legal/political in nature. I think we'll need venture
funds that reflect that, otherwise consumer product innovation will become
increasingly meaningless.

------
utkarshohm
Interesting bit- Latest YC batch has 1/4th each of altruistic, cutting-edge,
meat-and-potatoes-for-cloud and Uber-for-tacos companies

------
jondubois
Most of the counter-examples given as being examples of interesting companies
sound terrible to me:

>> ... Neema, an app to help poor people without access to banks gain
financial services...

Neema sounds even more useless than Juicero. Poor people have no money so they
don't need financial services.

>> ... Kangpe, online health services for people in Africa without access to
doctors.

So they don't have access to doctors but they have an iPhone with internet.
Totally realistic.

>> Dost Education, helping to teach literacy skills in India via a $1/month
course

Does the $1 per month include the cost of the computer/iphone, electricity and
internet? It's probably cheaper to just pay a private tutor for one hour a
day. Teachers aren't that expensive in India.

>> ... CBAS, which describes itself as “human bionics plug-and-play"

Nice buzzwords but what is the actual point of this? Does it actually improve
lives? Is this what people really want or is it what silicon valley wants them
to want?

~~~
bonniemuffin
225M people in Africa have a smartphone today (I think that's like 20%?):
[https://qz.com/748354/smartphone-use-has-more-than-
doubled-i...](https://qz.com/748354/smartphone-use-has-more-than-doubled-in-
africa-in-two-years/)

Meanwhile in some places there's only 1 doctor per 100,000 people:
[http://mgafrica.com/article/2015-02-05-hullo-where-have-
all-...](http://mgafrica.com/article/2015-02-05-hullo-where-have-all-of-
africas-doctors-gone)

So yeah, I do think there are probably a lot of people in Africa with a
smartphone but not a doctor.

~~~
SimbaOnSteroids
You can get a smartphone in the US for 20USD I can only imagine that number is
lower in Africa.

In support of your point.

------
prawn
For every Silicon Valley hit, there's a fluff piece (or five). And for every
genuinely innovative or helpful product, there's a gimmick product or
distracting app.

Useful piece though even if just for it highlighting these valuable startups.

------
norea-armozel
I don't know if the writer understands the fundamental problem in the
discussion of Silicon Valley centers on the fact that it's the peak of
capitalism gone awry. So for every little research project he listed there's
ten or more silly "ventures" into DRM'd juicing machines or spying social
media apps.

------
falsedan
#NotAllStartups

------
deepnotderp
I can't recommend this article enough.

~~~
johan_larson
"Enterprise data solution software application package analytics targeting
management something something something 'the cloud'" is my phrase of the
week.

------
RodericDay
"The unwritten story of the Juicero debacle is that high income inequality
causes capital to be misallocated towards luxury production."

\- Matt Bruenig, with a better take. That, if you look a little closer, also
applies to Uber/etc's "sharing servant economy", and even Tesla's "trickle-
down environmentalism".

~~~
ghaff
But is this really anything new. The scale of investment may be different
(although I'm not sure by how much if you take into account high-end real
estate). But walk down Fifth Avenue in Midtown or the typical Las Vegas mall
(or even--especially--the high-end shopping streets in Beijing) and there's
plenty of money allocated toward making and selling things for the 1% plus
that have nothing to do with tech.

