It’s been a stressful week in a stressful couple of years to the point where one barely knows where the road forward is anymore since the landscape is shifting so rapidly.
Given its global footprint, the tech sector is not immune from disruptive global events:
First, Mykhailo Fedorov, who is Ukraine’s Minister of Digital Transformation Urges Apple’s CEO to take action and stop selling products and services in the Russian Federation.
f you’ve been following what’s been going on lately in tech and focusing on the headlines, you might have missed the forest through the trees.
Silicon Valley Disruption Part 1:
Facebook just lost half a million users, the headlines screamed (out of nearly 2B, and no bigs, you’d think, but a) they’re not growing, b) those users are in the US: prime market, which meant they took a big hit on their profits and c) it’s the first time ever that FB lost users), and the stock was devalued 20%, wiping $200BN off the value of parent-firm Meta. Of course, founder Mark Zuckerberg was quick to come up with the excuses, par usual (ever notice that it’s never his bad?):
What captured the attention of the Twitterverse of late was the thread from Bolt founder Ryan Breslow (@theryanking) who called out the Silicon Valley Mob. We quote: “two forces have the most power in Silicon Valley. And like… tenfold more than anyone else. Their names: Stripe and YCombinator. The kicker → Their power is in how they work together. Stripe is the darling child of Silicon Valley. Early to YC (YCombinator), Stripe made payment processing APIs easy and signed up all their YC batchmates to use their product. The “official payment processor for YC”, Stripe became a HOT company. Sequoia, the most powerful VC firm in the world, went all-in. Their position today is upwards of $20-$30B in Stripe stock.
“Three forces combined quickly: 1/ The most powerful VC firm in the world. 2/ The most powerful startup accelerator in the world. 3/ The most powerful startup in the world, with the help of #1 and #2.”
If your reaction to the above was ‘who cares?,’ do not pass go, do not collect $200. How can we so quickly forget one of the seminal unicorns of Web 2.0.
Theranos founder Elizabeth Holmes was convicted of four of the 11 counts of fraud brought against her (three of the charges were dismissed and the jury was deadlocked on the other four, so it may not be over yet), and while she may serve (a reportedly fairly negligible amount of) jailtime, did this send chills through Silicon Valley, which at this point has become a generic term, like ‘Band-Aid’ and ‘google,’ considering that Report: Californians Leaving for Texas So Rapidly, U-Haul Ran Out of Trucks?
Will this verdict be a wake-up call? The Elizabeth Holmes verdict: Silicon Valley’s reckoning or a single bad apple? Will the guilty verdict change “fake it ’till you make it” culture?, the Mercury News asked. “Experts say the guilty verdict and the potential prison sentence it carries are sure to send a chill down the spines of entrepreneurs and investors — especially in the health care field — and prompt them to tread carefully. But it may not be the major reckoning that some have been clamoring for in Silicon Valley, where criminal charges remain rare and money continues to flow.”
We used to play competitive field hockey. Center halfback. Winning team and why? We and our center forward had a strategy: Yours Truly always fell back – to the least protected part of the field – rather than shadowing her. She would invariably get the ball at some point, send it to us, who would guard it until she was in position to score, return it to her. Score! Game over. Worked every time.
It’s one thing to skate to where the puck is going, as per ice hockey great Wayne Gretzky’s advice. And quite another to follow the strategy/keep an eye on the field at large. Which is also potentially a winning play.
As a result of our lessons from field hockey, we personally don’t necessarily only follow where the puck is going, but rather, attempt to sort out the underlying strategy as well – and look to what else is happening on the field. For example, it was recently widely reported that Elon Musk says the US should ‘get rid of all’ government subsidies re EVs. As The Verge said, “Musk’s companies have benefitted from many different federal and state subsidies over the years, and the government is a major SpaceX customer (though SpaceX won much of that business by dramatically undercutting the prices of established players). Tesla has also found tremendous success in China after receiving lots of help from the central government there. Musk said Monday that Tesla “did not anticipate any subsidies” when the company was in its early years.
We are all aware that fake it til you make it is one of the premier mantras of the tech industry. At this point, we should also keep in mind that you can fake it for just so long – Adam Neumann’s WeWork being a notable case in point – and careful what you fake: in the case of Theranos and the company’s founder and CEO Elizabeth Holmes, it led to 11 counts of fraud that are being litigated as we speak.
As the Mercury News reported, “Holmes is charged with allegedly bilking investors out of hundreds of millions of dollars, and defrauding patients with false claims that the company’s machines could conduct a full range of tests using just a few drops of blood.”
Here’s a cautionary tale for you: despite the fact that Holmes followed the Silicon Valley playbook – attend an Ivy League school (Stanford dropout); be mediagenic (the tech might have been flawed, but in every photo of Holmes that the media proffered, she looked perfect); get a LOT of press (aka due diligence for clueless investors). Bonus points: dress in a manner that recalls a tech icon – in this case, Steve Jobs (easy one: black turtlenecks. Done!).
In early July – Independence Day Weekend – 1500 tech leaders and shakers and movers and government representatives met in Sun Valley at the Allen & Co Summit
/Billionaire’s Boys Camp ostensibly to “discuss and somewhat unofficially close on deals that go on to have a greater impact on the rest of the regular world.” Most arrived by private jet as, although lowering the carbon footprint is important to the climate change agenda that applies to the world at large, they’re just not the ‘rest of the world.’
And thank you, Slim Shady…
There’s no doubt that the technology sector has become less tethered to the big cities and major tech hubs – Silicon Valley, New York City and Boston spring to mind – as a result of now long-standing Draconian lockdowns. The exodus from the Bay Area in particular has been well documented. According to The New York Times, They Can’t Leave the Bay Area Fast Enough. After all, The Times noted, “Rent was astronomical. Taxes were high. Your neighbors didn’t like you. If you lived in San Francisco, you might have commuted an hour south to your job at Apple or Google or Facebook. Or if your office was in the city, maybe it was in a neighborhood with too much street crime, open drug use and $5 coffees…But it was worth it. Living in the epicenter of a boom that was changing the world was what mattered. The city gave its workers a choice of interesting jobs and a chance at the brass ring.”
That was then. This is now and precisely to where has the sector gravitated? “They fled to states without income taxes like Texas and Florida,” said The Times.
In late October, MailChimp updated their terms of service. Fair enough, and its Acceptable Use is pretty standard: “Please don’t use Mailchimp to distribute anything offensive, to promote anything illegal, or to harass anyone.” All well and good. They spell out a few other businesses that offer services, products, or content that may be considered questionable, and the list is there, although it’s pretty much the usual offending suspects. Again, fair enough and we certain fall far outside of any of those categories and practices, so all good.
But wait! There’s more!
For years, our urban areas have been attracting the young and the talented away from smaller towns, cities and suburbs, which had been leading to a seeming unabated expansion of our major urban centers into sprawling megalopolises. You could rattle off the destinations almost by rote: New York, San Francisco/Silicon Valley, Seattle, Los Angeles, plus a few more here and there. It didn’t matter that housing costs were absurd and, in many cases, up to half one’s salary would go into living quarters roughly the size of one’s college dorm. These were the epicenters, the hubs, at what may well prove to be, in retrospect, a moment in time.
We have yet to see the full after effects of the lockdowns, and while there have been reports of urban areas and states like New York and California hemorrhaging citizens, we’ve been hearing from our readers that many of them who moved out New York et al seemingly temporarily, sheltering with family or friends, gravitating back to the cities/towns/communities where they grew up, carrying on business over zoom et al, and watching the Draconian lockdowns and more lately, urban rioting, from afar, now have no intention of moving back. In fact, one investor friend who moved to a farm upstate at the onset, recently posted on the gram, showing off his new brood of calves. They were like having little kittens, he said.