SVET Reports
Silicon Valley Corps
Many years ago, before the Bay Area become my home, I, as many other people who came to the Valley at the pinnacle of its glory and power, thought that there is no other place on Earth where technological entrepreneurs are treated better and can feel themselves the real masters of the universe.
Meeting and working each and every day with so many smart, talented and competitive people, who seemingly share your believes system and are openly sympathetic to your crazy ideas, is really mind-blowing and made you disregard for quite some time the ugly truth hiding beneath the shiny public facade of this climatically blessed piece of land laying between the great ocean and the big desert.
During the past five years many people including some of very prominent actors in our industry had been spoken about this unconventional truth but still it is quite intentionally disregarded by the main-stream medias which continue to populate the public mids with the sugarcoated, sterilized, repetitive narrative full of rainbow unicorns lazily chewing avocado toasts, spacious offices packed by A-B-C rounds recipients and evenly tented 20 years olds driving their Teslas to the cash-out parties every night.
Well, first of all, you at this late stage of 2020 ought to already know that the party part is no longer true due to the unparalleled wisdom of our ruling elders, which come out with the brilliant idea to cure with economic crisis the invasion of the non-cellular entity into our sacred bodies, which most of our world's governments had aimed anyway for much better purposes, for example, as an indefinitely taxable gun-meet.
Moreover, most unicorns look now as the bench of quite over-wighted behemoths experiencing a severe digestion issue. As a result their feeding rounds have become much rare although still remain quite fullish economically speaking.
Even leaving aside the viral aliens invasion, which has already converted the Palo Alto University street into some sleepy provincial venue for elderly couples, the Silicon Valley has long before this crisis had already become a Hollywood Western-style city's decoration which is preserved mostly for the touristic consumption.
Here are my 10 reasons why it has happened.
Outdated Regulation.
Overblown Prices.
Unicorns Overhang.
Non Equalities of Opportunities.
Narrow Exit.
Winners Entrenchment and Resistance To Change.
Barriers for International Players.
Valley's Cultural Inertia.
Monopoly of VC Aristocrats.
Industry Over-centralization and Its Fast In-corporation Into Corporations.
Although some of those points are quite familiar to you already still some might rise your eyebrows so let me elaborate a bit.
Outdated Regulation:
Yes, it's all over America, which in the past had been one of the most welcoming places for risk takers and where innovations were admired and served by law. However, as its success has been too wild it leads to the fear of loosing everything and results in traditionalism.
Now we see as the occasional media outcry about a minor technological incidents (f.e. with a self-driving car) can potentially lead to the immediate AI-overlords public panic and effects the congressional hearings, which then sums into cut-entrepreneurs-throat regulations. Also as easily the self-amending ledger wilding cryptographically protected gig money suddenly causes the national security crisis hysteria to the level which is unparalleled even with the early years of Internet adaption.
Overblown Prices:
Logically, the three entities which profit most from regulations are government bureaucrats, lawyers and corporations, which then promptly higher industries entry barriers (as well as, of course, their own prices and fees) spiraling startups' founding and running costs.
The Unicorns Overhang:
That leads to the Valley's main survival formula - get bigger or get lost. As a result, more than 200 VC founded dynos constitute now the all-muscles wall to bang against its heads off for all new founders.
Non equalities of opportunities:
In time it converts VCs into over-extravagant bankers and made them hate and avoid risks as mush as they try to avoid traffic jams on 101 highway. As the result, despite all their public declarations and occasional splash of interest to 'developing markets', they have almost stopped providing for founders outside of high-to- upper-middle-American-class Evy-league-educated white males category (not, of course, to mention immigrant founders from other geographical regions).
That is why from among more than 2-3 thousands-strong Valley's VCs crowd only 20-30 giant firms are occasionally showing positive ROI to its GPs. All of the rest are desperately trying to find a niche on this constantly narrowing on the top and widening at the bottom market where several remaining corporate buyers already start to consider the Valley as the simple extenuation of their HR and R&D departments.
Narrow Exit:
As a result, from about 50-100 million startups which are being launched a year in the entire world only about 1-2 thousands receive financing from VC and 20-30 thousand from so-called 'angels'. That makes it easier for a camel to go through the eye of a needle than for a young founder to enter the VC kingdom and then to Exit it with more than its yearly salary due.
Winners Entrenchment and Resistance To Change:
Moreover, a few startups founders which manage to make it quickly become the part of this closed circle system themselves and start to preach the old 'winner gets everything' and 'my monopoly is good - your monopoly is evil' gospel.
Barriers for International Players:
Reinforced by world governments' uniformed crack down on the free capital flow and the international immigration this system has become absolutely immune for a disruption from outside and it has now become impossible to reproduce the Valley anywhere else in the world (or even anywhere in the United States) as it is impossible to relocate the Yosemite Rock.
Valley's Cultural Inertia:
Celebrated 'Valley Culture', which is mostly defined by rich intelligent people which refuse to embrace negativity now works against the Valley as it prevents its major player to recognize the deep of the Valley downfall and the urgent necessity for the fundamental changes.
Monopoly of VC Aristocrats.
Consequently, the number of VCs beneficiaries of this elaborate but grossly outdated setup (which was designed in late 50th and is still continuing to function until our days without major betterments) becomes more and more limited. It now constitutes the new feudal regime of startups 'prima nocta' where only a few VC executives can issue to an astronomically low number of appropriately 'groomed' and 'cleared' founders a golden entry ticket to their glorious cash-cow non-stop party.
Startup Industry Over-centralization and Its Fast In-corporation Into Corporations:
This party is being progressively more and more expensive which leads us to the final destination in this food-chain game - the corporation. Of course, there is nothing wrong with a corporation until it truly becomes one and starts to actively use its monopolistic positioning to solely serve its shareholders to the expense of everybody and everything else.
Honestly, I do not have any expectations at this early stage :) However, I understand that, as a company representative, you need some certainty before hand. What do you think is reasonable from your previous practices based on my stance with the crypto community and experiences? I am ready to take your word for that.
The ugly truth is that The Valley has now become the Corporation.
Well, I, probably, would not be daring to lead all of you trough this smelly forest of vituperations without equipping you with some anti-odorant.
Yes, I believe there's some hope left for the Valley but it would be a pain to achieve the relief after so many years of disgusting orgy.
As all other things under the skies VC markets are doomed to get through greed and fear super-cycles resulting in their periodic global contraction and expansion.
We have seen their first-stage tremendous expansion in 80-90th followed by the over-concentration and contraction in 00 - 10th (of course, I'm talking about the contraction in relative to the potential market size - not absolute dollar-growth terms).
I believe that we are now entering into the next 20 years of the startup industry expansion era when old VCs will be gradually crashed under the combined regulatory and political burdens to be replaced by the open, decentralized, ledger money technologies based global system of liquid and faceless crypto-investments into the new digital category of assets.
Yes, I know that today this global system still faces a passionate and mighty opposition from the part of its ardent 'everything is the national threat' opponents as well as from multiple 'money is the sacred government privilege' warriors.
However, one lesson which we all might have had learned from the history is that changes are absolutely inevitable only timing is always in question.