Silicon Valley sucks, Venture Capital kills
We hear that millionaires become billionaires and billionaires become trillionaires around the year. It’s almost the same bunch of people, people from the same places. Only a vital few matters for America’s economy.
Catherine Bracy, a civic technologist and community organizer, explores the reasons of Silicon Valley is based on such faulty economic architecture. The economic design is based on technological hype, where startups equal growth. Though it sounds sexy, it is not normal growth, it is a kind of fattening and short-term time faster 1ox speed return. Venture capital is behind this scenario. VC only attracts big winners, which is called the Power Law. Venture capital-based business kills more innovative ideas than it create. More than 90 percent of startups fail, for example, Alicia Rouault’s LocalData and Rob Spiro’s Good Eggs. Jennifer Brandel, CEO of Hearken, and Mara Zapeda, CEO of Switchboard, called it is not creative, it’s masturbatory.
World Eaters: How Venture Capital is Cannibalizing Economy recently published book by Catherine Bracy, is an eye opener, an insider of our state of economy, particularly the state's unequal, illiberal, and hardcore capitalist economy of America. The only goal of venture capital-based tech businesses is an immediate, accelerated return. It has not an iota of focus on the big issues, on the challenges the planet faces. The combined net wealth of three companies, Facebook, Google, and Apple, is 6 trillion US Dollars. It is a dangerous economy, cannibalizing our creativity, undermining our entrepreneurs, and very pertinently, Catherine Bracy announced it as a world-eating mentality.
Blitzscaling is one of the top indicators of venture venture-backed startup ecosystem. The Maximisers are motivated by glory and richness, as the poster children of Silicon Valley. To get a grand slam, nowadays, the innovators are trying to convince the investors, not the customers. Due to these reasons, the book brings some serious claims on the American dream, on the American Economy. The American venture-backed economy is a kind of caste system, heavily white and male-dominated, unfair with gender discrimination. Uber Software engineer Susan Fowler experienced sexual harassment and systematic misconduct by Uber CEO Travis Kalanick. A dual system with low employees of labor, crippling employment generation in the name of the gig economy, overwhelmed with temporary staff, vendors, and contractors (TVCs), labor exploitation like Cheng Fuerte of Google shopping express, Instagram has only 13 permanent staff, and middle-class is a missing dot in Silicon Valley. Research shows that buying a house for millennials or Gen Z is impossible there, as PropTech is not lucrative for venture capitalists.
This is a demotivating and toxic economy. Venture capital creates casino capitalism that is not rational at all. The promise that tech bubbles initially kept seems pretty bleak now.
When the center cannot hold, another sidetrack can be taken for good. Catherine Bracy brings us some finest examples of beyond-the-box solutions. Jennifer Brandel and some other like-minded innovators, investors, entrepreneurs, and other stakeholders of the startup ecosystem created a community called Zebra Unite with two goals: profit and social change. Social impact Investors like Bryce Roberts and Tim O’Reilly are not traditional road takers. They helped to grow Hollywood studios, Everything Everywhere All at Once, Nice HealthCare, ButcherBox, etc. B Corp or Benefit corporation opens up a Public Benefit Corporation (PBC) is a new kind of corporate governance for social outcomes. Perry Chen, Yancey Strickler, and Charles Adler’s Kickstarter is another good example of PBC. Sam Altman’s OpenAI’s ChatGPT is a kind of nonprofit for the greater benefit of humanity. OpenAI’s competitor Anthorpic is also PBC. In Germany, it is known as the Purpose Economy.
Catherine Bacy urges for huge structural change for the greater good of everyone. George Soros Open Society Foundation, MacArthur Fund, Ford Foundation, Rockefeller Foundation, Gates Foundation, the Wallace Global Fund, and NetGain Partnership are some examples of social change missions where venture capital works like the stock market, they are committed to bringing development in ESG or Environment, Society, and Governance. Though this is a less-traveled road in Silicon Valley, the investors and government should come forward with public policy solutions for a sustainable economy with bravery and ingenuity.
