
The Problem With Silicon Valley Is Itself - jmjerlecki
http://thenextweb.com/entrepreneur/2011/07/13/the-problem-with-silicon-valley-is-itself/
======
ChuckMcM
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.

~~~
speckledjim
Surely the recent spate of websites being valued in the _Billions_ rings some
alarm bells that something is seriously up?

I don't know how you can reasonably value a company that has only existed for
a year or two at that level. Things can die / be killed as quickly if not
quicker than they took to grow, and we see it happen every day.

~~~
ChuckMcM
"I don't know how you can reasonably value a company that has only existed for
a year or two at that level."

That is a fair question.

Brad Templeton once observed that if he sent a joke to everyone on the
Internet with the caveat "If you chuckled, click here to send me a penny." and
only 1% of the population found it funny. That would be a $100,000 payday with
a billion readers where 99% of the people didn't even think it was funny.

The secret truth that Brad captured (way before it was well known too) is that
the _rate_ at which a pure information company can earn money is essentially
_unlimited._ Not a lot of people could imagine Brad's scenario, they got
bogged down in the details like "gee processing the payment would cost more
than a penny" or "how do you force them to pay a penny" or whatever. But now
Google comes along and capitalizes on _exactly_ that idea, except that rather
than have the users click on something if they think its funny, they have
someone click on something if they think it may be an answer to their
question, and rather than processing them one penny at a time, Google gathers
those clicks and just does an accounting transaction which becomes an actual
payment once a month for the aggregate transaction. But they don't _make_
anything, rather they convert an action into money, and they do that at web
scale. No limit to how much money they can generate. So from an investment
value, they have a very very large rate of return. The actual limit is how
much money advertisers are willing to inject into the system.

So if you have a company whose revenue is only limited by the amount of money
its 'customers' are willing to inject, and you can make a credible case for
the fact that customers will be willing to inject $100M+ per year into the
system, then you can make the argument that the company is 'worth' a billion
dollars. (or multiple billions of dollars).

So while I agree with the unspoken criticism that some recent valuations seem
high based on available information, if those valuations are coming from folks
who have done their due diligence then I expect they have some line of
reasoning that justifies that value to their own satisfaction. In the
'individual investor' bubble of the late 90's it was clear that individual
investors were doing no diligence at all.

~~~
mixmax
There's a flaw in the argument that most people miss, namely that since it's
so easy to create and distribute information everybody does it, making it so
much harder to create a viral effect.

To extend your example: If just 1% of the population sent a Brad Templeton
joke to everyone on the Internet you would receive 10 million emails with a
funny joke. If you chuckled at 1% of them you'd send a penny to 100.000
people. Not a very likely scenario.

Since none of us receive 10 million joke emails this means that things aren't
as simple as they appear. The fact is that since so much information is being
created the bar for virality is extremely high, and it's rising proportionally
to how easy it is to create information. The chances of your funny email
reaching millions of users are as high as your chances of winning the lottery.
The resemblance to slick entrepreneurs pitching their wares with the clasical
" _if only 1% of the market uses our product we'll make billions_ ". That's
just not how it works.

Note that I'm not necessarily disagreeing with your thesis that once a startup
has reached virality it can be worth a substantial amount of money, I'm simply
stating that reaching that point is as hard as ever.

~~~
ChuckMcM
"There's a flaw in the argument that most people miss, namely that since it's
so easy to create and distribute information everybody does it, making it so
much harder to create a viral effect."

An excellent observation. And you have to consider that not all information
has the same value and that its value varies over time.

Brad's scheme does have the flaw you describe (and it was another of the rat
holes people would fall into, "Well Gee, once he sends out a joke what is to
stop anyone who got from sending the same joke out to everyone but making
_them_ the recipient of the penny?")

The mechanism is valid, but, as you observe, won't work with easily reproduced
information.

Google sells information that is both 'rare' and temporally relevant. They
sell 'a person is looking for X _right now_ ' and advertisers buy access to
that information with their AdWords bids. The nice thing about this
information is that its very valuable to certain people (people who think they
have a product for people looking for X) when it gets created and a couple of
seconds after it gets created it is worth 100x less (maybe even 100,000x less,
basically only as trending data).

~~~
PaulHoule
I was at a conference last month and was talking to a guy from Elsevier (a
major scientific journal publisher.) I was telling him how getting a piece of
content for 5 cents that makes 5 cents of revenue was "a pretty good business"
and he was shaking his head as if I was insane.

~~~
impendia
Elsevier's business model is to take content for free -- indeed, to persuade
people to beg you to accept it -- and then to sell it back to the same people
for thousands of dollars.

------
pg
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.

~~~
redthrowaway
I think you're being a bit flippant here, dismissing out of hand a point that
she's not making with some examples that are only tangentially relevant.

Google was "just" another search engine, sure. But it was _far_ better than
any of the other search engines out there. You can't say that of the groupon
clones. They're all slightly different ways of doing Groupon, and none of them
at this point look like they're offering any significant advantage over
eachother. They may be more or less sustainable or profitable than Groupon,
but they aren't game changers in the sense that Google was.

She wasn't complaining that startups have exits, she was complaining that
startups are being _designed_ around exits. None of the counter-examples you
listed, nor any established company that anyone can name off hand, was
designed for an exit. You can look at the guys who did <s>gmail</s> Google
Maps* or Youtube and say yes, they got a good exit, but both companies were
designed to do something new, and their exit followed from that. A lot of
startups these days seem to be designed to show off design skills and the
ability to write an app, rather than actually do something unique and useful.

Which brings me to your last point. Writing Basic interpreters for hobbyists
wasn't trivial in the sense that the author meant. Finding a cupcake or
sharing a photo is trivial: it doesn't much change anyone's life, and it's
been done a thousand times before. It's trivial in the sense that a fart app
for the iPhone is trivial. Microsoft's innovation was not that it could write
basic interpreters, as people wrote basic interpreters for new architectures
all the time. Their innovation was that they were an independent software firm
who contracted their services out to hardware manufacturers. This is how they
came to land the DOS contract with IBM that catapulted them to success. That
innovation was as big as the innovation where someone first said, "why are we
hosting this on a server in the basement? Why don't we throw it up on some
server _out there_ that doesn't care where we are or what device we're using
to access it?"

If you look at any of the big tech companies around today, they got their
start by doing something either a) no one had done before, or b) an order of
magnitude better than anyone had ever done it. Most of the startups you see
today don't make any effort at a) or b), but they are c) designed to be
flipped in a talent acquisition. This is what the author was complaining
about, and if you don't accept it as a legitimate criticism then you at least
have to address her actual point.

*Edit: see response from protagonist_h

~~~
pg
Founders nowadays think about selling about as much, and in about the same
way, as they always have. But it's meaningless talking about startups being
"designed to flip" because you'd do the same things regardless of whether you
wanted to sell early or keep working on the company for the rest of your life:
you have to make something great and thereby get rapid user growth.

Ironically, the only externally visible sign that a startup's founders are
hoping to sell early is when they _don't_ do something she attacks founders
for doing: raising a lot of money. Raising series A from a VC fund means
ruling out an early, small acquisition, so founders who want to keep that
option open try to raise as little money as possible.

~~~
redthrowaway
Editing your post to say something entirely different after I've written a
rebuttal to it but before I've posted it is cheating ;)

So there's three main methodologies I see at play in the startup world.
There's the go-big-go-home crowd, the facebooks and groupons and squares and
so forth. There's the ramen profitable crowd that operate like typical small
businesses: the fog creeks and the like. Then there's the flippers.

We all know the story of the Go Big or Go Home guys; they've been a part of
the SV psyche for decades. Similarly, the ramen profitables/small businesses
are pretty standard. My uncle started a small game development house about a
decade ago that makes FPS training programs for service rigs in the oil
industry.[1] It's a new take on a very old business model, and while they make
a very comfortable living they're under no illusions of a $40MM buyout. They
expect to be doing roughly the same thing ten years from now that they were
ten years ago.

Compare the above with flippers. We have founders who come up with an idea for
a cool, if maybe gimmicky app. They build it; it's flashy and does something
interesting. They iterate, pivot, and find a userbase. Then they sell to
Google/Apple/Microsoft/whoever. Now, there's nothing wrong with this _per se_.
The issue that the author and I both have is that this appears to have been
the plan all along. There appears to be no _desire_ on the part of the
founders to build a business, rather they're spending a couple years on a
fancy tech demo in the hopes of landing a sweet job with a fat signing bonus.
It's almost like a practicum as opposed to a business, something that you do
for a few years after college so you can get a better job. The defining
question for me is this: how many of the founders would be happy if in 10
years their company had experienced healthy growth and they had 15-30
employees, taking home $300k/year? Alternatively, how many are shooting for an
IPO and a company that will still be around in 50 years?

I'm not saying flipping a small startup is a bad idea, just that it feels a
bit disingenuous to call these ventures businesses. They feel more like a
graduate degree combined with an innovative investment engine. And, while I
understand why you took umbrage at the author singling out YC, these ventures
are exactly the kinds of startups that YC churns out.

[1]Shout out: <http://cooleimmersive.com/>

~~~
grandalf
I think you have a misunderstanding of why people invest.

There is no correlation between the type of business and the willingness of
the founders to sell out quick vs ride it for the long haul, assuming in each
case the founders are equally rational.

There is however a difference in aptitude for running an early stage startup
and building a business that will pay you $300K per year. Many times the
founders intend to do this but fail b/c it's not their strength. Let's face
it, a lot of success has to do with timing and luck.

This is where something like YC is hugely valuable. You're working with
seasoned entrepreneurs who can help avoid common pitfalls (which looks like
luck) and funding is also more readily available so you're less likely to make
a decision out of financial desperation.

I think you have a bit of blindness (no offense) in your argument to the way
that market forces dictate what the right decision is. Given equally rational
and equally risk-hungry decision makers, the decision to be acquired vs
sticking it out is not often ambiguous. To argue that it's a matter of the
individual psyche is I think fairly silly and overly focused on the
personality/pr aspect of startups than on economic reality.

~~~
redthrowaway
I think you're reading my argument as something it's not. I'm not saying that
the current model is in any way bucking market forces, quite the opposite. I'm
saying that the current model of entrepreneurship seems to be focussed more on
a quick ROI/liquidity event rather than innovation or business-building. That
in itself is not bad. My complaint, which I think the author is hinting at as
well, is that this model of startup is far more "credit swap" than "mom and
pop". It is, as she said, a commoditization of entrepreneurship.

YC, while invaluable for founders, is also an investment vessel factory, and
the economic model it embodies shares much more in common with the kinds of
financial products we see from Wall Street than traditional venture
capitalism. Yuri Milner's offer of $100k to each YC graduate embodies this.
It's a scattergun approach that, while likely profitable, incentivizes
flipping over innovating.

~~~
garry
This sentiment is an insult to the hard work, blood, sweat, and tears that my
YC friends and colleagues put in every single day.

YC is made up of brilliant, hard working hackers, designers and hustlers who
are trying to change the world through building disruptive software. It's
never been about flipping. It has _always_ been about making something people
want.

Once you make something people want (which IS none other than innovation),
only then do you have the optionality of selling or doubling down. This
argument is utterly confused. In so many words: You can't flip something that
isn't actually innovative. Because nobody will want it.

~~~
redthrowaway
Not intended to be an insult, although it's nice of you to go ahead and
downvote every comment I made on this thread. Perhaps instead of taking a
criticism of the industry as a personal insult (and reacting in kind), you
could look at the meat of what I'm saying and address those points?

Edit: Sorry, not just every post in this thread, but every post I've made
_today_. Wow. Way to represent YC. Stay classy, man.

------
tptacek
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.

~~~
CodeMage
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
Yes. I'm saying: you're more likely to hear them talking about patient
numbers, or bitching about billing systems or medicare reimbursements.

~~~
timr
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.

------
neilk
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>

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/>

~~~
Apocryphon
Gates, Jobs, Ballmer and Wozniak were supposedly rebels against Big Blue. So,
history repeats.

~~~
neilk
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
But... but they're the nerds who triumphed! The pirates of Silicon Valley!
This messes up my hagiography in all sorts of ways!

------
jonnathanson
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.

~~~
ippisl
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
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.

------
iamwil
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
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.

------
Harj
"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.

------
arram
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.

~~~
guiseppecalzone
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
Sigh. Another inconsistency. Asking how many users you have is another way of
asking what impact you're having.

~~~
argv_empty
A company's having many users/customers is _a type of_ impact, yes.

------
PaulHoule
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
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
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.

~~~
pnathan
Who, me? I don't even live within a day's hard drive of California.

------
buyx
_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_.

------
grandalf
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
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
Were they an "invest because they look like good people to invest in" choice
then pg?

~~~
pg
Yes. We funded them because we liked the founders.

------
mburney
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
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
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
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.

~~~
jeffreymcmanus
Interesting thought, but there's a difference between an "elite" (who may or
may not have earned what they have) and a meritocracy (who worked for what
they have). Most people (except maybe the talentless children of billionaires)
would probably agree that meritocracies are better.

~~~
Apocryphon
I'm not saying that acolytes of YC do not deserve to be there. I'm just
building on to the previous commenter's points about the creation of new
Silicon Valley in-crowd communities. Now, I think this whole point is
debatable- certainly incubated or otherwise guided (like YC alumni) startups
are a minority of startups. And unoriginal, make-a-quick-buck startups can
come from anywhere. I just think that maybe there is a point to be made that
the road of startups is getting more and more structured and unofficially
regimented, whether it is through an incubator, or just by a culture that
promotes certain patterns to success. And with the guidance of groups such as
YC or incubators, it's made more and more easy. But then perhaps that is about
as valid a point as complaining that Stack Overflow (not to mention Google!)
makes it quicker to solve programming problems these days, or that memory
managed languages make developers lazy, or that not walking to school in
8-foot snow distorts the soul, and so on.

------
thingsilearned
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.

------
grellas
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.

------
jonmc12
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-
start...](http://blog.eladgil.com/2011/01/m-ladder-position-your-startup-to-
sell.html).

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
Are you saying "arbitrage" when you actually mean "incremental improvement"?

~~~
jonmc12
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
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?

~~~
jonmc12
Consider Groupon's tipping point sales model to be the innovation.

Groupon clones took a method known to work in one market, and applied them to
new vertical and geographical markets before Groupon could. As far as the
technology (in his case a promotion methodology) can be applied to the market,
and as far as this can be predicted with some certainty, an arbitrage
opportunity exists.

In my mind, yes, arbitrage is inherently a low-risk investment, but only when
compared to the potential return of the investment.

------
nhangen
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.

------
Aloisius
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
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
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
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
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."

------
localhost3000
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.

------
dusklight
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.

------
newobj
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.

------
tlb
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
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
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.

------
invalidOrTaken
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.

------
fady
@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.

------
lisper
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.

------
stcredzero
_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
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
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
"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.

~~~
stcredzero
_"Emerging market" is a euphemism for "developing country" which is a
euphemism for "third world"_

Yes, but "is a euphemism for" isn't the same as just plain "is." For example,
not everything that's a "convenience" is a toilet. That's a huge logical
fallacy there. You use the exact same fallacy twice in an example of
fallacious overreaching to an extent which is fortunately rare here.

 _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?_

You definitely shouldn't do it to please some bored blogger. Are you implying
that's the only reason why anyone, ever would want to do it? You're probably
not the one to go. No one's going to argue that. It would be pointless to
argue that. In fact, I don't see a point to staking out the position in the
first place.

It's also quite clear that there are people out there in the 1st world who
would want to go.

~~~
forensic
I'm responding to the moral outrage of the original post about how SV is too
concerned with making money and running businesses, and not concerned enough
about the author's pet charities.

I'm not against charity work -- I'm against other people telling me to do
charity work.

------
fecklessyouth
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.

------
WorkInKarlsruhe
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
_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.

------
mbesto
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
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.

------
ziadbc
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.

------
dr_
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.

------
protagonist_h
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.

------
csomar
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>) which is an
awfully designed clone to StackOverFlow.

The other start-up I picked is AI Merchant (<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.

------
ChrisBeach
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?

------
forensic
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
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.

------
jjm
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.

------
hxf148
I'm working on a startup (<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.

------
chrischen
> "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.

------
zackelan
> 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.

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

------
barce
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.

------
vlad99
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!

------
NY_Entrepreneur
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.

~~~
david927
_First, sorry to be 'sexist'_

Apology not accepted. The over-200 that upvoted this are not all women; Tim
O'Reilly is not woman.

We all agree with her assessment: that SV has become a place where people are
not so much pushing the edges of technology but "innovating" new ways to make
money with existing technology. The quotes are mine; that's not innovation.

Bob Marley once sang, "It's only machines that make man free." Progress is via
expanded technology is a rising tide that will lift all boats. As computer
scientists, it's our duty to explore what can be done, not what money can be
made. It's our duty to expand the state of the technology, not the state of
the industry. If you want to make money, be a dentist. If you want to
innovate, get out of the valley, because it will corrupt you.

~~~
NY_Entrepreneur
My remarks about women are dead on the center of the target. If you don't
understand that, then I'm sorry: Read slowly and carefully and learn likely
some very important information. The information could save a life, yours,
some woman you know and/or love, and/or some children. NO JOKE. I very much
know just what the heck I'm talking about, very unfortunately.

Sure, not all women are like I described, but some surprisingly large fraction
are. I mentioned the Roman Catholic church as a source; review what you know
about that church and add details for yourself. Sorry you didn't know those
things about women. If you won't take this common wisdom from me, then take it
from the writers of the second 'Jurassic Park' as I noted. The fraction of
such women is so large that my description is a good candidate to explain what
the author is saying. That is, she wants to 'save the world' and wants SV to
do so also.

Deliberately refusing to understand women is foolish down to dangerous down to
fatal. Literally. Do I have to give you names, circumstances, dates, and where
the tomb stones are?

Just because some women are as I described does not mean that no men are.
Okay, some men can be similar.

For your "duty", you are imagining things. You have no such 'duty' at all.
None. Zip, zilch, zero. If following what that 'duty' would say is something
you want to do, then go for it, but no one, neither you nor anyone else,
should agree that you have a 'duty'. You have no such 'duty'.

For 'innovation', I've been there, done that, am doing it now. I'm doing a
startup. I'm in NY, not SV, but I have a list of a dozen or so VCs in SV who
are eager to see my software run and be ready for users.

Your claims of 'corruption' are out of some vulnerability to 'morality' plays,
of some old claims that humans are evil, sinful, do transgressions, get
retribution, and need redemption with sacrifice -- and now we will have the
choir sing while we pass the offering plate. But I'm not "corrupted" at all.
SV has done nothing to 'corrupt' me.

My 'innovation' is some original research in applied math with some theorems
and proofs based on some advanced prerequisites in pure and applied math. Only
a small fraction of university math profs have all the prerequisites; the
fraction among computer science profs is much lower; the fraction among
information technology entrepreneurs is still much lower, essentially at zip,
zilch, and zero. So, my work is, if only being so rare, 'innovative'. It is
also 'innovative' because it provides a new and powerful way for software to
work with 'meaning' of quite general 'media content' as humans understand it
although uses techniques much different than humans do. Maybe, if from my
applied math and corresponding software my Web site becomes worth $150 billion
from being by far the world's best at search, discovery, recommendation,
subscription, and curation for about 2/3rds of the content on the Internet.
then you will be convinced that my work is 'innovative'.

So it's fair for me to say I'm 'innovating'. So, SV has not kept me from
'innovating'. SV has not 'corrupted' me.

But absolutely, positively SV and VCs make no attempt to look at my research
as part of evaluating the financial potential of my project. As I outlined, in
biomedical VC, NSF, NIH, DARPA, ONR, etc., the situation is wildly different.
And THAT is where I would criticize SV and VCs and agree with the article. I
said that.

"Duty", "corrupt" -- you sound a bit 'moralistic'! Calm down. Cool off. Relax.
Have a beer. Watch a movie.

For more on what's wrong with SV, it's not just the VCs who are not qualified
compared with 'project sponsors' at NSF, NIH, DARPA, ONR and at the biomedical
VCs; in addition the information technology (IT) entrepreneurs nearly never
have the 'right stuff'. Sorry 'bout that.

As I've explained often enough, bluntly, frankly, 'computer science' is out'a
gas and not the main path to the future of computing or IT entrepreneurship.
Sorry 'bout that. For 'computer science', it's trivial down to junk think.

The bedrock and crucial content of the future of computing is from: Let me
have the envelope please: Here is it: "Advanced pure and applied math.".
Period. Sorry 'bout that.

E.g., at Stanford, f'get about the Computer Science department, look up D.
Luenberger, and study, say,

David G. Luenberger, 'Optimization by Vector Space Methods', John Wiley and
Sons, Inc., New York.

which is fun and profit mostly from the Hahn-Banach theorem.

Again, there is a fundamental problem: Only a tiny fraction of people can
start really successful businesses. So, only a tiny fraction of people will
know in good terms what the good directions are for the future. So, anyone
with such understanding will necessarily be rarely understood and nearly
always rejected.

For what is wrong with SV, I outlined it, but the details of my view are
likely not widely shared. In particular, I doubt that the author of the
article or many people upvoting this thread would say that the future of
computing is much more in

David G. Luenberger, 'Optimization by Vector Space Methods', John Wiley and
Sons, Inc., New York.

etc. than in computer science.

Right away, don't expect to accept what I'm saying easily. Still, rejection is
dangerous: You have to consider very carefully because I might be right!

~~~
david927
I disagree with your sexist views but I also can see that you've been hurt by
a woman and I'm sorry for that. Let's leave it at that.

I'm writing because I couldn't agree more about this: _'computer science' is
out'a gas and not the main path to the future of computing_

 _The bedrock and crucial content of the future of computing is from ...
"Advanced pure and applied math."_

YES. I'm working on a software construction mechanism that's more about
applied math than computer science. Hit me up with an email sometime. You're
sexist and crazy (everyone decent is crazy) but you seem to be one of the few
that actually _get it_ and I'm impressed by that. I'm david927 at google mail.

------
h4x0r111
just want to chime in real quick: she's a smart brit plus she's hawt.

------
epynonymous
"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
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.

