Observation: Many people forget about the origins of Silicon Valley. Even more so, many people focus so much on the past that they neglect looking at the present, visualizing the future, and taking action to create the kind of world they want to live in.
Opinion: Venture Capital is the root of amplifying behavior change at scale. To fuel the kind of positive impact that I want to have in the world, I want to start by attacking the problem at its root — Venture Capital. With the recent influx of capital into companies building out next-generation infrastructure (Web3, NFTs, etc.), my mind is imagining something keeping me up at night.
My mind sees a bunch of young, hungry, curious, and giddy entrepreneurs eager to make, break, and aggregate – similar to when Facebook and developing games/applications were originally taking off (2008-10). Twenty years later, at least one massive bubble popped, and over XX in unrealized market potential, this is all I know. And I often tell myself, well if I had been there, I would have made the approach a little more mindful.
Don’t get me wrong, I am thankful to everyone who built in the past and created the world I live in today. At the same time, I see the US, with many people having increased quality of life, yet a decreased quality of mental and/or physical health – for a frame of reference, I’m thinking about the XX in money toward … and … while this might be one of 2-3 bubbles I get to live through, the thought that by being slightly more mindful in our approach to designing the metaverse could prevent trillions in GDP disappearing overnight by simply preventing the death of millions of lives and also accelerating their ability to contribute to society through a job and lead a meaningful life. I’ll pause on this for now, but I’ll come back to it in my next post. For now, here goes with my weekend reading.
Thoughts: The article does a good job sharing other articles and books with the reader that are relevant to get a full picture of the origins of Silicon Valley and the author’s opinions of the book in the review. As an addendum, I noticed that the book and review neglect to include data from VC firms that have returned the most overall funds as well as those that have returned the most on a per fund basis in aggregate across firms. The article neglects to link to actual portfolios when stating that “the sky-high returns reported by VC funds from the most recent vintages will be re-marked to significantly lower levels as illiquid portfolios are ultimately distributed or sold”, which would be very helpful for the reader.
Here’s the thing:
- A massive oversight happens when people attempt to rank venture capital, not to mention venture capitalists, and price them as an asset on their ability to generate alpha and/or yield. Specifically, calculations neglect to take into account that, more often than not, investment decisions are made by a handful of minds at the firm, if not only one. This means that everyone else there is technically operating post-analysis — that is to say that they are there to simply execute on how one mind, and/or a handful of minds, have analyzed, synthesized, and then generated a decision about how to move forward.
- A mispricing of market potential happens because the only people who are given a voice are those who see the markets the same as those with current influence in venture capital. The whole “passing of the torch to the next generation” is a real thing. Yet, more often than not, people pass the torch to those they “feel are a good fit”, rather than those who are and will continue to outperform their peers. And this is mildly troubling. Why? Because people pass to people they trust. And how do we as humans establish trust? Well, I would love to believe that it is by time, effort, and a whole lot of good actions, but as an experimental scientist, the data shows otherwise — people trust people they feel safe around — people they identify with. This means people that look like them, people that behave like them, and most importantly, people that think like them.
In a world where a select few venture capitalists hold most of the wealth in venture capital, how can one compete? Well, over the past few years, time has shown that rising to the occasion goes beyond each individual and is instead about the collective. So rather than stand by and watch negligent fiduciaries let wealth disappear, I’m going to tackle this head-on in my next post.
Other Links In Above Article:
(1) https://www.penguinrandomhouse.com/books/580120/the-power-law-by-sebastian-mallaby/
(2) https://mitpress.mit.edu/books/making-silicon-valley
(3) https://www.hup.harvard.edu/catalog.php?isbn=9780674988002&content=bios
(4) https://www.penguinrandomhouse.com/books/534709/the-code-by-margaret-omara/
(5) https://www.project-syndicate.org/onpoint/the-making-of-the-digital-revolution-by-william-h-janeway-2020-02
(6) https://pitchbook.com/news/reports/q4-2021-pitchbook-nvca-venture-monitor
(7) https://www.bloomberg.com/news/features/2022-02-09/there-are-now-1-000-unicorn-private-company-startups-worth-1-billion-or-more
(8) https://www.hup.harvard.edu/catalog.php?isbn=9780674753402